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In re Grand Jury Proceedings Gary Katz

decided: July 1, 1980.


Appeal from orders of the United States District Court for the Eastern District of New York, Hon. Henry Bramwell, denying motions to intervene and to quash a grand jury subpoena on ground that documents sought were "public" and therefore not protected by the attorney-client privilege. Reversed and remanded.

Before Lumbard, Mansfield and Mulligan, Circuit Judges.

Author: Mulligan

Gary Katz, an attorney, was served with a subpoena on March 18, 1980 directing him to appear before a grand jury empanelled in the Eastern District of New York which is investigating the unlicensed exports of devices on the Munitions Control List in violation of the Arms Export Control Act of 1954, 22 U.S.C. § 2778. The subpoena required Katz to testify and to bring with him "all documents relating to any dealings or business with CCS, Communications Control Systems, Benjamin Jamil or any company owned, operated or controlled by Benjamin Jamil." Katz, who was thought by the Government to be simply an employee of CCS, actually had served as an attorney for CCS as well as Jamil personally. Katz obtained an adjournment of his appearance before the grand jury from March 21 to March 25, 1980 and in the interim sought the advice of the Westchester County Bar Association which informed him that compliance with the subpoena would be "unethical" and "improper" under the New York attorney-client privilege statute, N.Y.C.P.L.R. § 4503 (McKinney Supp. Pamphlet 1964-1979).*fn1

Upon discovering that Katz had served as an attorney for Jamil and CCS, the Government modified its request. At the March 25 hearing Hon. Henry Bramwell denied Katz' motion to quash the subpoena but orally amended it to require Katz to produce all public documents or documents that had come into the public record, relating to CCS or Jamil, or any company owned, operated or controlled by Jamil.

Katz failed to appear before the grand jury on April 3, the date set for compliance, and on the same day Jamil moved by order to show cause to intervene and to quash the subpoena.

Oral argument on these motions was conducted on April 7, 1980. The court denied the motion to intervene without explanation and held that the attorney-client privilege does not extend to public documents or records publicly filed and ordered compliance with the subpoena to that extent. Stay of the order compelling production was denied.

On April 9,1980, appellant applied to this court for a stay of the enforcement order pending resolution of this appeal. The next day attorney Katz appeared before the grand jury and produced some of the requested documents, but handed over to the district court a packet apparently containing the documents that appellant claims are privileged, to be held under seal pending the outcome of the motion for a stay. This court granted the stay on April 22, 1980. The contents of the packet remain unknown.


The Government did not raise any issue of appealability in its brief or on the oral argument of this appeal. It is well settled that the denial of a motion to intervene as of right is an appealable final order under 28 U.S.C. § 1291. Shore v. Parklane Hosiery Co., Inc., 606 F.2d 354, 356 (2d Cir. 1979). The appealability of the denial of the motion to quash is equally clear. Generally, a person who has been served with a subpoena may not appeal an order denying a motion to quash without first resisting and undergoing the penalty of a citation for contempt. Cobbledick v. United States, 309 U.S. 323, 60 S. Ct. 540, 84 L. Ed. 783 (1940). However, where the subpoena is directed against a third party, the movant who claims that production of the subpoenaed material would violate his fifth amendment privilege against self-incrimination is permitted an immediate appeal. Perlman v. United States, 247 U.S. 7, 38 S. Ct. 417, 62 L. Ed. 950 (1918); In re Grand Jury Subpoena for New York State Income Tax Records, 607 F.2d 566, 570 (2d Cir. 1979); United States v. Guterma, 272 F.2d 344 (2d Cir. 1959). The theory of immediate appealability in these cases is that the third party will not be expected to risk a contempt citation and will surrender the documents sought, thereby letting the "cat out of the bag" and precluding effective appellate review at a later stage. Maness v. Meyers, 419 U.S. 449, 463, 95 S. Ct. 584, 42 L. Ed. 2d 574 (1975); see United States v. Ryan, 402 U.S. 530, 533, 91 S. Ct. 1580, 29 L. Ed. 2d 85 (1971). Here the cat apparently is still in the bag since the disputed documents are being held under seal in the district court. Cf. United States v. Lavender, 583 F.2d 630, 632-33 (2d Cir. 1978). The order is therefore now appealable.

The denial of appellant's motion to intervene was error. Fed.R.Civ.P. 24(a) (2) holds that anyone "shall be permitted to intervene in an action' when

"the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties."

Appellant's contention that his fifth amendment interests are threatened, and that his attorney cannot be expected to protect those interests by being held in contempt, presents a paradigmatic case of entitlement to intervention as of right. See In re Grand Jury Proceedings, 604 F.2d 798, 800-01 (3d Cir. 1979); Velsicol Chem. Corp. v. Parsons, 561 F.2d 671, 673 (7th Cir. 1977), cert. denied, 435 U.S. 942, 98 S. Ct. 1521, 55 L. Ed. 2d 538 (1978).


The Government argues here that the appellant has asked this court to decide this appeal in a "vacuum" as we have no inkling of what "if anything" may be contained in the packet of documents turned over to Judge Bramwell and now under seal in that court. While this is certainly true it does not follow at all that the appeal is without merit. Even if we were privy to the contents of the packet we could not on the basis of the record before us determine whether Jamil's claim of attorney-client privilege properly attaches and whether his fifth ...

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