United States v. Zolin

491 U.s. 554 (1989)

Justice BLACKMUN delivered the opinion of the Court.

I

In the course of its investigation, the IRS sought access to 49 documents that had been filed with the Clerk of the Los Angeles County Superior Court in connection with a case entitled Church of Scientology of California v. Armstrong, No. C420 153. The Armstrong litigation involved, among other things, a charge by the Church that one of its former members, Gerald Armstrong, had obtained by unlawful means documentary materials relating to Church activities, including two tapes. Some of the documents sought by the IRS had been filed under seal.

The District Court and the Court of Appeals found that the tapes at issue in this case recorded attorney-client communications and that the privilege had not been waived when the tapes were inadvertently given to Armstrong. 809 F.2d, at 1417 (noting that Armstrong had acquired the tapes from L. Ron Hubbard's personal secretary, who was under the mistaken impression that the tapes were blank). These findings are not at issue here. Thus, the remaining obstacle to respondents' successful assertion of the privilege is the IRS' contention that the recorded attorney-client communications were made in furtherance of a future crime or fraud.

A variety of questions may arise when a party raises the crime-fraud exception. The parties to this case have not been in complete agreement as to which of these questions are presented here. In an effort to clarify the matter, we observe, first, that we need not decide the quantum of proof necessary ultimately to establish the applicability of the crime-fraud exception. Cf. [Clark v. United States, 289 U.S. 1, 15 (1933), quoting O'Rourke v. Darbishire, [1920] A.C. 581, 604 (P.C.);] S. Stone & S. Liebman, Testimonial Privileges §1.65, p.107 (1983). Rather, we are concerned here with the type of evidence that may be used to make that ultimate showing. Within that general area of inquiry, the initial question in this case is whether a district court, at the request of the party opposing the privilege, may review the allegedly privileged communications in camera to determine whether the crime-fraud exception applies. If such in camera review is permitted, the second question we must consider is whether some threshold evidentiary showing is needed before the district court may undertake the requested review. Finally, if a threshold showing is required, we must consider the type of evidence the opposing party may use to meet it: i.e., in this case, whether the partial transcripts the IRS possessed may be used for that purpose.

A

We consider first the question whether a district court may ever honor the request of the party opposing the privilege to conduct an in camera review of allegedly privileged communications to determine whether those communications fall within the crime-fraud exception. We conclude that no express provision of the Federal Rules of Evidence bars such use of in camera review, and that it would be unwise to prohibit it in all instances as a matter of federal common law.

(1)

At first blush, two provisions of the Federal Rules of Evidence would appear to be relevant. Rule 104(a) provides: "Preliminary questions concerning the qualification of a person to be a witness, the existence of a privilege, or the admissibility of evidence shall be determined by the court.... In making its determination it is not bound by the rules of evidence except those with respect to privileges" (emphasis added). Rule 1101(c) provides: "The rule with respect to privileges applies at all stages of all actions, cases, and proceedings." Taken together, these Rules might be read to establish that in a summons-enforcement proceeding, attorney-client communications cannot be considered by the district court in making its crime-fraud ruling: to do otherwise, under this view, would be to make the crime-fraud determination without due regard to the existence of the privilege.

Even those scholars who support this reading of Rule 104(a) acknowledge that it leads to an absurd result.

Because the judge must honor claims of privilege made during his preliminary fact determinations, many exceptions to the rules of privilege will become "dead letters," since the preliminary facts that give rise to these exceptions can never be proved. For example, an exception to the attorney-client privilege provides that there is no privilege if the communication was made to enable anyone to commit a crime or fraud. There is virtually no way in which the exception can ever be proved, save by compelling disclosure of the contents of the communication; Rule 104(a) provides that this cannot be done.

21 C. Wright & K. Graham, Federal Practice & Procedure: Evidence §5055, p.276 (1977) (footnote omitted).

We find this Draconian interpretation of Rule 104(a) inconsistent with the Rule's plain language. The Rule does not provide by its terms that all materials as to which a "clai[m] of privilege" is made must be excluded from consideration. In that critical respect, the language of Rule 104(a) is markedly different from the comparable California evidence rule, which provides that "the presiding officer may not require disclosure of information claimed to be privileged under this division in order to rule on the claim of privilege." Cal. Evidence Code §915(a) (West 1966 & Supp. 1989) (emphasis added). There is no reason to read Rule 104(a) as if its text were identical to that of the California rule.

We see no basis for holding that the tapes in this case must be deemed privileged under Rule 104(a) while the question of crime or fraud remains open. Indeed, respondents concede that "if the proponent of the privilege is able to sustain its burden only by submitting the communications to the court" for in camera review, Brief for Respondents 14-15 (emphasis in original), the court is not required to avert its eyes (or close its ears) once it concludes that the communication would be privileged, if the court found the crime-fraud exception inapplicable. Rather, respondents acknowledge that the court may "then consider the same communications to determine if the opponent of the privilege has established that the crime-fraud exception applies." Id., at 15.

(2)

Having determined that Rule 104(a) does not prohibit the in camera review sought by the IRS, we must address the question as a matter of the federal common law of privileges. See Rule 501. We conclude that a complete prohibition against opponents' use of in camera review to establish the applicability of the crime-fraud exception is inconsistent with the policies underlying the privilege.

We begin our analysis by recognizing that disclosure of allegedly privileged materials to the district court for purposes of determining the merits of a claim of privilege does not have the legal effect of terminating the privilege. Indeed, this Court has approved the practice of requiring parties who seek to avoid disclosure of documents to make the documents available for in camera inspection, see Kerr v. United States District Court, 426 U.S. 394, 404-405, 96 S. Ct. 2119, 2124-25, 48 L. Ed. 2d 725 (1976), and the practice is well established in the federal courts. See, e.g., In re Antitrust Grand Jury, 805 F.2d 155, 168 (CA6 1986); In re Vargas, 723 F.2d 1461, 1467 (CA10 1983); United States v. Lawless, 709 F.2d 485, 486, 488 (CA7 1983); In re Grand Jury Witness, 695 F.2d 359, 362 (CA9 1982). Respondents do not dispute this point: they acknowledge that they would have been free to request in camera review to establish the fact that the tapes involved attorney-client communications, had they been unable to muster independent evidence to serve that purpose. Brief for Respondents 14-15.

Once it is clear that in camera review does not destroy the privileged nature of the contested communications, the question of the propriety of that review turns on whether the policies underlying the privilege and its exceptions are better fostered by permitting such review or by prohibiting it. In our view, the costs of imposing an absolute bar to consideration of the communications in camera for purpose of establishing the crime-fraud exception are intolerably high.

B

We turn to the question whether in camera review at the behest of the party asserting the crime-fraud exception is always permissible, or, in contrast, whether the party seeking in camera review must make some threshold showing that such review is appropriate. In addressing this question, we attend to the detrimental effect, if any, of in camera review on the policies underlying the privilege and on the orderly administration of justice in our courts. We conclude that some such showing must be made....

We think that the following standard strikes the correct balance. Before engaging in in camera review to determine the applicability of the crime-fraud exception, "the judge should require a showing of a factual basis adequate to support a good faith belief by a reasonable person," Caldwell v. District Court, 644 P.2d 26, 33 (Colo. 1982), that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies.

Once that showing is made, the decision whether to engage in in camera review rests in the sound discretion of the district court. The court should make that decision in light of the facts and circumstances of the particular case, including, among other things, the volume of materials the district court has been asked to review, the relevant importance to the case of the alleged privileged information, and the likelihood that the evidence produced through in camera review, together with other available evidence then before the court, will establish that the crime-fraud exception does apply. The district court is also free to defer its in camera review if it concludes that additional evidence in support of the crime-fraud exception may be available that is not allegedly privileged, and that production of the additional evidence will not unduly disrupt or delay the proceedings....

D

In sum, we conclude that a rigid independent evidence requirement does not comport with "reason and experience," Fed. Rule Evid. 501, and we decline to adopt it as part of the developing federal common law of evidentiary privileges. We hold that in camera review may be used to determine whether allegedly privileged attorney-client communications fall within the crime-fraud exception. We further hold, however, that before a district court may engage in in camera review at the request of the party opposing the privilege, that party must present evidence sufficient to support a reasonable belief that in camera review may yield evidence that establishes the exception's applicability.

It is so ordered.

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