United States v. Zolin

PETITIONER:United States
RESPONDENT:Zolin
LOCATION:Kino Community Hospital

DOCKET NO.: 88-40
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 491 US 554 (1989)
ARGUED: Mar 20, 1989
DECIDED: Jun 21, 1989

ADVOCATES:
Alan I. Horowitz – on behalf of the Petitioner
Michael Lee Hertzberg – on behalf of the Respondents

Facts of the case

Question

Audio Transcription for Oral Argument – March 20, 1989 in United States v. Zolin

William H. Rehnquist:

We’ll hear argument next in No. 88-40, United States against Frank Zolin.

Mr. Horowitz, you may proceed whenever you’re ready.

Alan I. Horowitz:

Thank you, Mr. Chief Justice, and may it please the Court:

This summons enforcement case presents two distinct issues.

First, the authority of the district court to place a condition on its enforcement order requiring the IRS to return to the court for prior approval of certain uses of a summon material.

And, second, the correctness of the standard applied by the court of appeals in ruling upon Respondents’ claim of attorney/client privilege for one of the summoned documents.

I will turn my attention initially and primarily to the first question, which has major implications for the effective conduct of IRS investigations generally.

Respondents here oppose the enforcement of the IRS’ summons on the ground that it was not issued in good faith.

Specifically, they alleged that the IRS was seeking the summoned documents not for use in its own tax investigation of Ron Hubbard but for the purpose of furnishing the documents to the Department of Justice for use in the defense of a civil damage suit that had been brought against federal officials by the Church of Scientology.

After a hearing, the district court emphatically rejected these allegations and ordered the summons enforced.

In its order, the court stated, and I quote from page 27(a) at the Appendix to the Petition,

“The Church has failed to raise any doubt of the good faith of the IRS in pursuing this summons enforcement proceeding. “

And the court went on to state that the agent did not issue the summons for an improper or collateral purpose.

At the hearing, the court was even more explicit.

And, again, I quote from page 45 of the Joint Appendix.

“There is not an iota of evidence that this summons is being prosecuted for any reason other than to gather information for the ongoing investigation. “

Nevertheless, faced with continued entreaties by Respondents’ counsel that the IRS’ aim in fact was to turn over the summon material to the Justice Department, and also with the government’s statement that it had no such intention, the court sua sponte placed a condition on its enforcement order.

Namely, the court held that the summoned material could not be disclosed to any other government agency without a prior order of the court.

And the court went on to suggest at the hearing that it would issue such an order if the government could demonstrate that the proposed disclosure complied with the confidentiality rules of Section 6103.

Sandra Day O’Connor:

Mr. Horowitz–

–Mr. Horowitz, how did that order interfere with the IRS’ ability to gather information about its own tax investigation?

I… you know, I had a little difficulty understanding how the government is hurt by that kind of order.

Alan I. Horowitz:

Well, we recognize, Justice O’Connor, that this particular restriction that was entered in this case is a narrow one and it’s fairly benign, in fact, because the government didn’t plan to turn over any information, to the Justice Department.

Sandra Day O’Connor:

Yes, So the IRS wasn’t hindered at all by that–

Alan I. Horowitz:

The probabilities were–

Sandra Day O’Connor:

–as far as I can see it.

Alan I. Horowitz:

–that on the facts of this case… so it would never have occasion to go to the court and nothing would happen.

But… but it is our contention that the general principle that underlies the district court’s, the only way in which its order can be supported by authority, and the principle that was explicitly adopted by the court of appeals is in fact the broad one that has the potential to be extremely damaging to IRS investigations.

John Paul Stevens:

Mr. Horowitz, let me interrupt you too.

You stress that the district court said there is not an iota of evidence of bad faith, harassment, or anything of that kind.

John Paul Stevens:

What if the district judge had said there’s been a lot of evidence offered of bad faith.

I think in balance it doesn’t carry the day and I want to let the government enforce the subpoena.

But just as additional insurance, I’m going to order them to limit its use in this way.

Would your argument be any different?

Alan I. Horowitz:

Well, you’re hypothesizing that the district court in fact finds that there’s legitimate purpose for the summons–

John Paul Stevens:

It comes down to–

Alan I. Horowitz:

–that’s being issued?

John Paul Stevens:

–He says, I’m willing to conclude… I’ve got some doubts in this case.

Because sometimes the facts are close.

We just heard one where there are good arguments on both sides.

And he says, I think the government is… and balance is correct here.

But it’s not a case of no iota of evidence because it really doesn’t make a difference here.

But there are… there is… I am somewhat concerned.

Alan I. Horowitz:

Well–

John Paul Stevens:

Would you… You’d make exactly the same argument, wouldn’t you?

Alan I. Horowitz:

–Well, that’s a somewhat different case.

But our position would be the same, that in fact, as the district court–

John Paul Stevens:

But would you be–

Alan I. Horowitz:

–the district court’s–

John Paul Stevens:

–Are you better off putting the judge to the absolute choice of saying, Well, I’ve got enough doubt.

I guess I’d better deny enforcement.

Alan I. Horowitz:

–Well, I don’t know if–

John Paul Stevens:

Wouldn’t you–

Alan I. Horowitz:

–We’re better off in a particular case.

I mean, it’s possible in a particular case the judge might, might find that he needs to deny enforcement because he finds on the facts that there’s bad faith where in fact under this scheme that the district court and the court of appeals have adopted he would in fact enforce the summons.

That may be, but the structure that Congress set up for summons enforcement, in our view, does not permit this kind of–

John Paul Stevens:

–Well, I understand–

Alan I. Horowitz:

–monitoring of the investigation and obviously our view was–

John Paul Stevens:

–I understand that you’re–

Alan I. Horowitz:

–that on balance we’re better off.

John Paul Stevens:

–argument.

I just was curious as why you stressed the fact that there was no iota of evidence because–

Alan I. Horowitz:

Well, I–

John Paul Stevens:

–in that case it doesn’t really make much difference.

Alan I. Horowitz:

–Well, I stress it, I think, because Respondent in their brief has gone on and on about the evidence that was placed before the district court and so I’m suggesting that the district court in fact made such a finding.

I mean, the fact is that–

John Paul Stevens:

Well, but let’s assume there are some cases out there where the judge might thing there’s… you know, it’s a close case.

You think he should–

Alan I. Horowitz:

–Well–

John Paul Stevens:

–in all close cases just simply rule against the government.

Alan I. Horowitz:

–I mean, a close case in what sense?

A close case as to whether the–

John Paul Stevens:

Well, he thinks there is some reason to believe that one government attorney is concerned about the civil action pending in another court and he just isn’t a hundred percent sure that there is complete good faith in that sense.

And he says, Well, I’ll go ahead and let you get the information if you give me your assurance that you’re not going to use it improperly.

Alan I. Horowitz:

–Well, it’s our position that… that he needs to make a determination at the time the summons is issued and not to keep–

John Paul Stevens:

Well, I–

Alan I. Horowitz:

–keep–

John Paul Stevens:

–Well, how does–

Alan I. Horowitz:

–I think if you look–

John Paul Stevens:

–that hurt you?

That’s the thing I don’t understand.

Alan I. Horowitz:

–Well, because… because this idea… I was going to quote what the… in response to Justice O’Connor what the court of appeals actually held here, which is that the district court’s order in this case created a mechanism whereby the district court court monitor the IRS’ use of the summoned documents.

This is an appropriate exercise of the district court’s discretion.

Now, this is an extremely damaging statement, extremely damaging policy for the courts to take because it allows the district courts to issue all kinds of orders that will put various restrictions on the IRS’ investigation and require the IRS to keep coming back to the district court–

William H. Rehnquist:

I suppose one could ask rhetorically what harm would an injunction do against a person who claims he’s going to obey the law anyway?

Alan I. Horowitz:

–Well–

William H. Rehnquist:

But, still, you’re entitled to object to an injunction unless the showings made by law required for injunction are made.

Alan I. Horowitz:

–Well, that’s exactly right, Mr. Chief Justice.

As we pointed out in our reply brief, there is a presumption that the government intends to comply with the law.

And courts cannot go out issuing orders just telling parties that they have to comply with the law.

Alan I. Horowitz:

I mean, the problem here is less substantive, especially in this particular case where the judge at least said that he was going to allow the government to make any disclosure that was authorized under Section 6103.

But the problem is procedural.

And this Court has grappled in many different contexts with the various procedures applicable to summons enforcement proceedings and has constantly reiterated the importance of having summary enforcement proceedings once it will not interfere with the IRS’ investigation.

And it is our view that this kind of regime under which the courts will… well, maybe issue the summons for now but keep looking to see what the IRS is doing with the information, have the IRS come back if they’re going to do something that’s a little questionable, overall poses a great threat to effective investigations and one that outweighs the fact that it may be in some case, as Justice Stevens posits, the court may in fact be impelled to deny enforcement for that reason.

I think these courts’ decisions, in addition to continually emphasizing, as recently as last month’s decision in Stuart, the summary nature of IRS investigations also reflect the fact that the summons enforcement scheme has always been understood as one where the district court’s role is limited and one that takes place in one slice of time.

The district court looks at the IRS’ summons when it’s issue at the time of the enforcement proceeding and decides at that time whether the summons has been issued in good faith for a legitimate purpose under the statute.

And at that point, it decides either to deny or to compel enforcement.

The statute that gives the court jurisdiction, gives it authority only to compel enforcement and, of course, to decline to compel enforcement.

It does not contemplate–

John Paul Stevens:

Mr. Horowitz, in a grand jury context do you think the trial judge would have the authority to condition enforcement of a grand jury’s subpoena on some kind of protective order?

Say it disclosed trade secrets or something like that and say–

Alan I. Horowitz:

–Well–

John Paul Stevens:

–to the government that there are limits on what you can do with the material?

Alan I. Horowitz:

–I think that if you’re talking about a protective order, say… let’s say trade secrets which is the example you gave–

John Paul Stevens:

But any kind.

Would you take the same absolute position in a grand jury’s subpoena you take here, if there’s absolutely no limits that the judge can impose?

Alan I. Horowitz:

–Well, when we say no limits.

I mean, obviously the judge… there are restrictions on the IRS summons power.

John Paul Stevens:

Right.

Alan I. Horowitz:

And that’s what the district court looks at.

John Paul Stevens:

And there are restrictions on grand jury material, too.

Alan I. Horowitz:

Yeah.

We’re talking about the judge here imposing some new restriction–

John Paul Stevens:

Right.

Alan I. Horowitz:

–that’s not authorized by Congress.

Now, I take it your hypothetical is a case where if the judge didn’t impose this restriction there would be no confidentiality protection for the–

John Paul Stevens:

Well, he… whatever the protection is… there are cases where judges have imposed additional restrictions on responses to grand jury subpoenas.

I don’t think it’s ever come to this Court.

I just wonder if the issue is any different.

That’s really all I’m asking.

Alan I. Horowitz:

–Well–

John Paul Stevens:

Because there’s no statutory… you know, program for them as there is… when there is another–

Alan I. Horowitz:

–There is a difference between a restriction and enforcing a summons, and a restriction in which the court retains jurisdiction to keep considering whether the IRS is acting properly.

I mean, a judge obviously doesn’t have to go just up or down on a summons.

It can enforce the summons in part.

It may decide that certain documents are not relevant to the IRS’ investigation.

It may decide that the summons is unduly burdensome in some way and–

John Paul Stevens:

–Right.

But any particular document that is produced, that’s all the judge can do, is say produce it.

He can’t–

Alan I. Horowitz:

–That’s right.

John Paul Stevens:

–Either yes or no.

Alan I. Horowitz:

I mean, the judge’s role ends at the time he makes… he makes a decision–

John Paul Stevens:

Yes.

Alan I. Horowitz:

–on whether the summons should be enforced in a particular respect.

And this kind of restriction… in this case, we don’t really even understand why… why… it’s conceivably argued that there should be such a power in the court.

The… unlike the hypothetical that you gave about the grand jury, the material is already confidential.

This distinguishes it from all the protective order cases that are cited by Respondents.

There is no need for the court to go out and protect the confidentiality of the material.

Byron R. White:

Well, what if the… what if the taxpayer being investigated finds out that the government isn’t living up to the rules and they exchange information, or that people who have no business knowing it are seeing it?

What’s he supposed to do?

Go back to the judge?

Alan I. Horowitz:

No, he’s not supposed to go back to the judge.

He’s supposed to go to a new judge and bring a suit.

Byron R. White:

Go to a new judge?

Alan I. Horowitz:

Go to a new judge, He’s… in that case, he’s claiming that there’s been a violation of Section 6103 and he’s got remedies for that.

Byron R. White:

Then the court has a role in monitoring the IRS’ performance?

Alan I. Horowitz:

No.

I disagree, Justice White.

I mean, he’s got his own remedies under Section 6103.

Alan I. Horowitz:

One of those remedies is to bring a damage action against the government under Section 7431 of the Code.

Byron R. White:

But a judge is going to decide that case.

Alan I. Horowitz:

A judge is going to decide it, but a judge… that is an independent action in which the… the agents involved may or may not have to pay damages.

But it doesn’t act as a prophylactic… as prior restraint–

Byron R. White:

But how about getting an order to stop doing what you’re doing?

Alan I. Horowitz:

–Well, then he would have to go through the usual hoops of getting injunctive relief.

Byron R. White:

Okay.

Alan I. Horowitz:

In this case I’m not sure he could get it because of the Tax Anti-injunction Acts.

Again, another… just another manifestation of Congress’ particular concern that IRS investigations not be hampered by continual court proceedings that interfere with them in the middle.

But I think you have the Anti-injunction Act–

Thurgood Marshall:

What about the judge saying the IRS can get this information on the provision that they let no one else see it?

Nobody else?

Alan I. Horowitz:

–I think, Justice Marshall, that would absolutely be erroneous for the court to do that.

Thurgood Marshall:

Would be what?

Alan I. Horowitz:

The court does not have the power to do that.

There are… Congress has set up very specific limitations–

Thurgood Marshall:

So… so it’s all right for the IRS to give it to the newspapers?

Alan I. Horowitz:

–It’s not all right for the IRS to give it to the newspapers because Congress–

Thurgood Marshall:

Well, suppose–

Alan I. Horowitz:

–has provided that it does not.

Thurgood Marshall:

–that the court says IRS shouldn’t get this but you shall not release it to the newspapers?

Alan I. Horowitz:

Well, that’s essentially what we have in this case, the same kind of order.

The IRS–

Thurgood Marshall:

And you say that’s wrong?

Alan I. Horowitz:

–That’s right.

The court is telling the IRS that you can’t do something that the IRS already is not allowed to do.

There is no purpose for such a–

Thurgood Marshall:

Does the IRS have the right to turn over confidential material to the newspapers?

Where did they get it from?

Alan I. Horowitz:

–No.

Alan I. Horowitz:

They do not have that right.

That’s the point I’m trying to make.

That Congress has already decided that that material is confidential.

And there is no reason for the court to enter a new order under penalty of contempt–

Thurgood Marshall:

I don’t see why a court doesn’t have a right to control its own orders rather than to have the IRS control the court’s discretion.

Alan I. Horowitz:

–Well–

Thurgood Marshall:

Do you understand what I mean?

Alan I. Horowitz:

–I understand what you’re saying.

But I think this just goes back to the basic point that the Chief Justice made, which is that the courts cannot go out running around issuing orders telling various litigants to obey the law that’s already out there.

There are procedures for enforcing the laws and they don’t include having courts–

Thurgood Marshall:

What is a procedure to stop the IRS from giving this information to the Justice Department?

Alan I. Horowitz:

–The procedure is the procedures provided for enforcing Section 6103, which is largely at Section 7431, Damage Action.

Thurgood Marshall:

Damage action?

Alan I. Horowitz:

Yes.

Thurgood Marshall:

Have you ever seen one of those?

Alan I. Horowitz:

Yes, I have.

Thurgood Marshall:

You’re sure?

Alan I. Horowitz:

In the Barrett case that’s pending in this Court there is one.

Thurgood Marshall:

You’ve seen one?

Alan I. Horowitz:

I’ve seen several of them, actually.

And probably some of them will percolate up here sooner or later.

The fact is that that is the mechanism that Congress–

Thurgood Marshall:

Do you–

Alan I. Horowitz:

–chose to enforce–

Thurgood Marshall:

–I thought I hadn’t seen one I–

Alan I. Horowitz:

–Well, we’ve been trying to spare the Supreme Court from this–

Thurgood Marshall:

–I was in another position; I didn’t see it either.

Alan I. Horowitz:

–The statute, I think, was enacted in 1976.

Section 7431.

Well, let me given an example in a different context.

Alan I. Horowitz:

If there was a Freedom of Information Act suit that was brought and… and the requestor claims that he’s entitled… that there’s no exceptions applicable… he’s entitled to the documents and the government has to turn them over under the FOIA, surely the judge’s role in that kind of a suit is to look at the Freedom of Information Act and decide whether the information is protected or whether it should be disclosed.

It’s not the Judge’s business to find out what the requestor plans to do with the information after he gets it.

It’s not the judge’s concern whether the requestor is planning to use it to get more information to run some extortion scheme, or something.

That’s just not the Judge’s province in that kind of suit.

It’s up to the judge to decide, under the standards set forth in FOIA, whether the information is to be disclosed.

And when the judge has made that determination, he either orders the information disclosed or not.

And then he is done.

He doesn’t tell the requestor, okay, I’m going to give you the information but you come back here every six months and I want to make sure that you’re not using it for some–

Anthony M. Kennedy:

Are you aware of cases in which enforcement has been denied?

Alan I. Horowitz:

–Enforcement of IRS summons?

Anthony M. Kennedy:

Yes.

Alan I. Horowitz:

Yes.

There have been many cases where an IRS summons was denied.

And–

Antonin Scalia:

But you don’t advertise them a lot, right?

[Laughter]

Alan I. Horowitz:

–I think I’d like to mention one other policy point that’s involved here in addition to the delay that can occur.

Actually, the delay can occur at two stages.

If these kinds of restrictive orders are permitted, we think (a) that it will cause additional delay at the initial summons enforcement stage where, as opposed to the normal fairly summary proceeding where litigants occasionally are challenging whether there’s bad faith or good faith and whether the summons should be enforced, there will be a whole additional set of litigation over what sort of restrictions are appropriate for which documents.

They are appropriate and possible appeals from that kind of litigation.

And also, of course, down the road you have the problem of where the IRS is required to come back to the court for permission to make the particular use that’s been restricted.

Even if the Court agrees with the IRS that the disclosure, or whatever it is, is permissible, it’s still a serious problem because the investigation is halted in the middle, the IRS has to run back to the court.

As you know, they have to get a court date.

They can’t just walk in that morning.

And the whole thing is halted for a period of time.

Second, at least in the 6103 context, most of the disclosures that are going to be sought by the IRS in this connection… or, many of them anyway… are going to come under Section 6103(k)(6) which is disclosures that are necessary for law enforcement purposes for the IRS investigation.

I think in order for the IRS to persuade the court that the disclosure is necessary for that purpose, it’s going to have to give a little bit of a roadmap of its investigation to the court to explain why the disclosure is necessary.

And that obviously can inhibit the success of the investigation if that kind of information is provided to the target, a problem that this Court alluded to in the O’Brien case.

I think I should turn briefly now to the attorney/client question, if there are no further questions on the summons issue.

The question here is whether the tape recording of a meeting between certain church officials and their counsel is protected by the attorney/client privilege because the government did not prove by evidence independent of the communications themselves that the meeting was in furtherance of a crime or fraud.

Alan I. Horowitz:

The IRS here produced as evidence that the crime-fraud exception applied a partial transcript of the tape that had been furnished by an informant.

And, in addition, because this tape had actually been in the possession of the IRS for a short time, and an IRS official had listened to the tape, the IRS also proffered the affidavit of an IRS agent describing the contents of the tape.

The court of appeals held that this highly-probative evidence cannot be considered in determining the applicability of the crime-fraud exception because it is not independent of the communications itself… themselves.

The result of the court of appeals rule is that there are going to be cases where the court knows to an absolute certainty that the communications are not privileged.

Nevertheless, it will be bound to deny probative evidence to the factfinder on grounds of attorney/client privilege.

This rule leads to a perverse result–

Antonin Scalia:

Mr. Horowitz, can I… do I understand your position correctly?

You do not deny that you need some prima facie evidence before you go in camera?

You… You don’t assert that you can just come into the judge and say, you know, we suspect that this is not really a privileged communication.

We want you to look it over in camera.

Alan I. Horowitz:

–Well, let me say two things, Justice Scalia.

First of all, this case itself doesn’t involve in camera inspection at all because the government already has–

Antonin Scalia:

Right.

Alan I. Horowitz:

–the nonindependent evidence from these other sources I just mentioned.

Antonin Scalia:

Right.

Alan I. Horowitz:

In that case, we recognize that the district court has discretion to deny in camera review.

If the government just came in and said, we want you to look at the documents in camera with nothing else,… I’m not saying they couldn’t do it, but I suspect the judge would deny it.

And I don’t think we would have any grounds for complaining.

I think naturally any time you’re going to ask the district court to do something like that, you’re going to have to come in with some sort of reason to make the judge do it.

Antonin Scalia:

Well, that’s… that’s comforting.

But you’re not willing to admit that the district court can’t do it?

Alan I. Horowitz:

I guess I’m not.

It seems to me if the district court did do it and in fact found that the documents proved crime or fraud, I don’t think that would be reversible on appeal.

I don’t think you could get the attorney/client privilege reinstated on the ground that the district court shouldn’t have looked at them in the first place.

John Paul Stevens:

Well, that may be true.

But wouldn’t you say that if there was nothing except a… a suspicion by the government, or by anybody else, that the crime… crime-fraud… fraud exception would be met the judge would have a legal duty not to look.

Wouldn’t he have to respect the privilege?

He or she have to respect the privilege?

Alan I. Horowitz:

Well, I’m not sure how to answer that, Justice Stevens.

It seems to me unrealistic to assume that the government would have no evidence of that.

Alan I. Horowitz:

I suppose if it had absolutely no reason other than some–

John Paul Stevens:

So, basically as a practical matter the question is how much evidence–

Alan I. Horowitz:

–Yes.

John Paul Stevens:

–does the government need.

Alan I. Horowitz:

Yes.

How much of it.

And that, I think, is a hard question to answer.

It’s largely–

John Paul Stevens:

And what–

Alan I. Horowitz:

–In the discretion of the court.

John Paul Stevens:

–And what is your position?

Because I think I have the same difficulty Justice Scalia did in reading your brief.

You seem to be saying they don’t really need anything.

But I think you’ve kind of acknowledged they need something.

Alan I. Horowitz:

Yes.

I think as a practical matter they need something.

But I–

John Paul Stevens:

Then how do we define–

Alan I. Horowitz:

–don’t really know where to draw the line.

So–

John Paul Stevens:

–And that’s the question.

How do we define that something?

Alan I. Horowitz:

–Well, I don’t know.

Antonin Scalia:

But not as a legal matter, just as you still keep on saying.

As a practical matter they need something here.

Alan I. Horowitz:

Well, I’m willing to say–

Antonin Scalia:

You still won’t concede–

Alan I. Horowitz:

–they need something.

You know, the counsel never wants to concede anything, but it seems to me that this Court–

Antonin Scalia:

–Have you noticed that–

Alan I. Horowitz:

–would probably be mistaken in looking at documents with no reason to suspect crime or fraud other than the government begging them to look at them.

So,–

John Paul Stevens:

–And your position is–

Alan I. Horowitz:

–But I don’t know how to draw the line exactly and it’s not an issue in this case.

John Paul Stevens:

–I see.

Your position is that, whatever the line is, that you met it in this case, and if you can meet that line, you can look at the document to be sure that there… I mean to be satisfied or something.

Alan I. Horowitz:

Though, in this case–

John Paul Stevens:

That’s basically what–

Alan I. Horowitz:

–As I said, in this case we didn’t even… we’re not really… well, we did ask for in camera review if the court–

John Paul Stevens:

–Yes.

Alan I. Horowitz:

–in fact wasn’t persuaded by what we submitted.

But we submitted a lot of nonindependent… proffered, at least, a lot of nonindependent evidence without the court ever having to look at the documents in camera.

And the court of appeals… under the court of appeals’ rule none of the–

John Paul Stevens:

Yes.

Alan I. Horowitz:

–this is in probative of–

Thurgood Marshall:

Does the IRS still use outside people to get this information?

Alan I. Horowitz:

–Which information?

Thurgood Marshall:

Electronic.

Alan I. Horowitz:

Which information, Justice Marshall?

Thurgood Marshall:

Electronically, does the IRS still shop it out for private people to do it?

Alan I. Horowitz:

I don’t know.

This tape recording was made by the Respondents themselves.

This is not a wiretap.

I don’t know the answer to your question.

I’d like to reserve the remainder of my time.

William H. Rehnquist:

Very well Mr. Horowitz.

Mr. Hertzberg.

Michael Lee Hertzberg:

Mr. Chief Justice, and may it please the Court:

I believe that the… addressing, first, the crime-fraud issue… I believe that the government has effectively conceded that there is a need for some independent evidence… an independent evidence rule, as it were… before a court may upon a mere incantation of the words crime-fraud review privileged communications between an attorney and a client for which a privilege has already been established.

If I understood counsel’s answers to the questions posed by Justice Scalia and Justice Stevens, he said there has to be some sort of evidence, there has to be some sort of reason submitted by the government.

Antonin Scalia:

But the issue is simply whether that evidence can be the communication itself, which the government has gotten ahold of in some other fashion.

Why can’t that evidence be the communication itself?

Michael Lee Hertzberg:

It should not be the communication itself because otherwise, in the first instance, a party… whether it be the government or an adverse civil litigant… could come into court and just ritualistically intone the terms crime-fraud with respect to privileged communications, and under the scenario which the government outlines–

John Paul Stevens:

No.

I think you’re leaving out a step.

I think Justice Scalia and I are both assuming that without just coming into court and referring to the privilege the government has legitimately acquired possession of a privileged communication which it had a right to look at.

Could it then go ahead and ask the judge also to look at it to make this determination?

Michael Lee Hertzberg:

–It should not be able to.

First, let me just make it clear that in this particular case there is no record to show that the government legitimately obtained the particular communications which are at issue in this case.

There was no determination made about that below.

That was not the issue below.

John Paul Stevens:

No.

But the trial judge or the court of appeals… I can’t remember which… assumed that they may well have had it legitimately but, nevertheless, said we don’t care about that, we cannot look inside this–

Michael Lee Hertzberg:

Well, in fact, Justice Stevens, the trial judge over our objections did look at the massive excerpts from the tape recordings, which are the communications in this particular case, and in fact found that they did not establish a prima facie case of crime or fraud.

So, the district court in this case, in an ironic twist, over our objection, did look at the communication.

The court of appeals, however, said that the district court should have initially considered independent evidence only to determine whether there was communication in furtherance of a crime or fraud.

And we think that that test, which was enunciated by the Ninth Circuit, and which as we have demonstrated in our briefs is in practice employed in one form or another by many courts of appeals and federal district courts throughout the country, is the proper approach.

The… the analysis should not turn on whether fortuitously the government or an adverse civil party has managed to get privileged communication, and has them, and can submit them to the court along with an allegation of crime-fraud.

There has to be a standardized, methodical and logical approach before the analysis can be made.

Byron R. White:

–But what is the standard, though, when you need independent evidence?

Is it a probable cause standard or a preponderance of the evidence, or what?

Michael Lee Hertzberg:

Your Honor, the courts have given slightly different formulations.

The Second Circuit apparently does use a probable cause standard.

The Ninth Circuit, without elaboration referred to… and all the courts, of course, refer to the prima facie test.

We submit that the prima facie test in the general sense in which that term is used means a case… a prima facie showing… a case which is enough to support a directed verdict if unrebutted.

We’re comfortable enough with that definition.

And the government failed to–

Byron R. White:

–probable cause?

Michael Lee Hertzberg:

–Excuse me, Your Honor?

You’re not comfortable with the Second Circuit’s standards?

Michael Lee Hertzberg:

Oh, I’m sure that there is… if anything, it may be a higher standard, and I would be equally if not more comfortable with it.

I’m not urging one standard or another because in this case at every stage the government failed… in the district court, with the court looking at the communications and the independent evidence, in the court of appeal, with the court… the Ninth Circuit panel determining that the government had not even made out a prima facie–

William H. Rehnquist:

Well, but if–

Michael Lee Hertzberg:

–case of illegality.

William H. Rehnquist:

–If we sustain the government’s position here, the case would go back to the Ninth Circuit for them to review the district court’s determination, I suppose.

Michael Lee Hertzberg:

That’s–

William H. Rehnquist:

That the tapes themselves… so, it’s not as if the thing were totally moot.

The government says that your argument is inconsistent with our opinion a couple of years ago in the Bourjaily case.

Michael Lee Hertzberg:

–We don’t see any such inconsistency at all.

In fact, if anything, Justice Rehnquist, we think that the Bourjaily case supports us.

In that case this Court merely determined that the showing the preliminary evidentiary determination by a district court judge on the co-conspirator hearsay exception under Rule 801 could be made by looking at the hearsay statements themselves.

This Court did not reach a question of whether it could be made exclusively by looking at those statements, but it said they could be considered.

William H. Rehnquist:

Well, does–

Michael Lee Hertzberg:

And this Court–

William H. Rehnquist:

–The government here is asking for nothing more than consideration along with whatever evidence is–

Michael Lee Hertzberg:

–However, Justice Rehnquist, the foundation for this Court’s decision in Bourjaily was referenced to Rule 104(a) of the Federal Rules of Evidence.

And that Rule provides that in making preliminary evidentiary determinations a court may look at any evidence except privileged communications.

And we are, of course… we fall within the privilege.

These… These tapes which are at issue in this case were found to be privileged communications.

So, the 104(a) exception–

William H. Rehnquist:

–Well, how… how do you know whether they’re privileged communications, though, if… if… before you decide this challenge in one way or the other, because the crime-fraud exception says it’s not privileged if there is crime-fraud involved?

Michael Lee Hertzberg:

–Well, Your Honor, in this way.

Because we were able to establish without submission to the court in camera below in the district court that these documents were presumptively privileged.

And then the burden shifts… when somebody comes later on, as the government did, the burden shifts to the opponent of the privilege.

And they carry a serious burden here to try to strip the privilege.

And that’s the analyses.

This is not just a concurrent mix necessarily.

In the first instance, these communications–

William H. Rehnquist:

Well, what’s the authority for… for that line of progression that you’re… first, a claim of privilege or prima facie?

And then the burden shifts?

William H. Rehnquist:

Does that come from one or more of our cases?

Michael Lee Hertzberg:

–Your Honor, I’m not basing this on a particular case.

William H. Rehnquist:

What are you basing it on?

Michael Lee Hertzberg:

I’m basing it on what happened in this case.

William H. Rehnquist:

Well, but maybe… maybe we could have some higher authority than that.

Michael Lee Hertzberg:

Well, Your Honor, I don’t have… I’m not sure that there’s an authority that specifically addresses the order in which the crime-fraud exception is applied on a claim of privilege.

But in very many cases it is undisputed that communications are protected by the attorney/client privilege, save for the possibility that they may be subject to the crime-fraud exception and that the crime-fraud exception will strip them of the privilege.

For instance, when the government’s subpoenas for documents from an attorney office for a grand jury, for example, they rarely will say these were not communications in confidence between the attorney and the client.

They will assert… they will in effect concede that but for their claim of the crime-fraud exception the documents are privileged.

And that’s what I’m referring to in this particular instance.

Antonin Scalia:

Mr. Hertzberg, I’m… I’m not sure what… what you would require by way of prima facie evidence.

Suppose the advice is given at a meeting in which a third party is present and the government has testimony from the third party saying this wasn’t just legal advise; they were in fact planning… planning the fraud.

Would that be enough?

Michael Lee Hertzberg:

Yes.

Antonin Scalia:

Because he was there and he overheard it?

Michael Lee Hertzberg:

Yes.

Antonin Scalia:

But if you had a tape of it, that would be no good?

Michael Lee Hertzberg:

No.

Antonin Scalia:

What sense is there in that distinction?

I can’t understand that at all.

Michael Lee Hertzberg:

Well, I’ll tell you what the difference is.

Your Honor’s question turns on the fortuity of the government happening to have the tape here.

Antonin Scalia:

And the other one turns on the fortuity of somebody happening to have been present.

I mean–

Michael Lee Hertzberg:

If there was a witness… if there is a witness, the witness confirms… I suppose… backing up for one moment, Your Honor.

I suppose the witness might not be able to testify absent independent evidence.

Antonin Scalia:

–Well, that would seem more logical, I must say.

Michael Lee Hertzberg:

Yes.

I was too quick to… to agree with–

Antonin Scalia:

You wouldn’t let the witness in either?

Michael Lee Hertzberg:

–No, I would not, because if the rule is to be served–

Antonin Scalia:

Well, what kind of evidence do you want of… that the fraud exists?

Michael Lee Hertzberg:

–The kind of evidence that invariably the government or civil parties have anyway.

That there was some wrongdoing.

I mean, presumably the government is not conducting a grand jury investigation or allegations made in a civil case in a vacuum.

They’re not taking… randomly accusing somebody of wrongdoing.

They have some evidence that there was wrongdoing going on, and they have prima facie evidence or reason to believe that the attorneys may have furthered the wrongdoing.

And they make the allegation of the crime-fraud exception.

But the government cannot go around and… and I do not understand counsel to suggest that they could randomly without any basis in fact suspect that an attorney/client communications between… confidential communications were in furtherance of a crime-fraud.

And that’s all the prima facie case requires.

It only requires that the mere invocation of the words crime-fraud be supported by some factual underpinning before–

William H. Rehnquist:

But what if the government has in its possession the things that you’re claiming are privileged, and it’s perfectly evident from examining those documents that there was crime and fraud afoot?

Michael Lee Hertzberg:

–Well, if we’re addressing this case in particular, Justice Rehnquist, I think that at the least there would have to be a question on remand about whether the government was rightfully in possession of the… of the tapes.

And I think that’s a question that wasn’t reached and need not have been reached under the prevailing–

William H. Rehnquist:

Well, and certainly not raised by any party to this case.

Michael Lee Hertzberg:

–But what we’re saying is that the independent evidence test serves a very logical purpose.

It balances the need for relevant evidence with the need for society to–

William H. Rehnquist:

Why do you need an independent evidence when the government is in possession of the documents for which the privilege is claimed and the documents themselves plainly… just have crime and fraud written all over them?

Michael Lee Hertzberg:

–Well, first, let me remind the Court that in this case they did not and they were found not to… not to have–

William H. Rehnquist:

No?

Michael Lee Hertzberg:

–not to have.

William H. Rehnquist:

Well, but… but that finding has not been reviewed by the Ninth Circuit.

Michael Lee Hertzberg:

Well, it has in part because the Ninth Circuit found–

William H. Rehnquist:

Well, let’s not get into… into those side issues.

What’s your answer to my question?

Michael Lee Hertzberg:

–Your Honor, we would say that the salutary effect of the independent evidence rule in those rare instances where a party happens to have the confidences to begin with… and that would be extremely rare… normally when the party is seeking access to the attorney/client communications, they don’t have them to begin with.

But in those rare, rare instances, as by happenstance occurred for instance in this case, the purpose of the rule is better served by still requiring that there be a prima facie showing at the outset.

William H. Rehnquist:

But not–

Michael Lee Hertzberg:

To satisfy the court–

William H. Rehnquist:

–where you can’t rely on the documents at all even though the documents virtually scream fraud?

William H. Rehnquist:

Is that your position?

Michael Lee Hertzberg:

–That the court should not look at them, in the first instance.

Yes, that is our position.

In those rare instances.

Again, I want to stress that it is not… it is far from normal… it is highly unusual to contemplate a situation where a… whether it’s a government or a civil party… is seeking the court’s process to obtain documents that they have already.

We do not want… we don’t think the court should give an advantage to a party that manages to get within its possession before a determination by a court of the privileged communications.

This could encourage, for instance–

William H. Rehnquist:

Well, there could be an incentive… it could be at fault.

There’s certainly… you can’t say conclusively that in effect the other party has a privileged communication means that it acquired it by fault.

Michael Lee Hertzberg:

–Not necessarily.

But I think that if this Court had a different rule for that particular unusual circumstance, it might encourage situations… particularly in the civil arena where major corporations are litigating against each other, and there could be an inducement for a corporation to try to… if it were a disaffected employee or otherwise… to get confidential communications from the other side and then feel all they have to do is holler crime-fraud and the court can start going through the entirety of the communications.

So, we think that that would be… for purposes of uniform application, there should be some quantum, which we maintain to be the prima facie showing, of crime or fraud to support that allegation before in camera review can be sought.

I want to turn to the other issue that is raised by the government.

And that is the question about the order of this Court.

We believe that that order is well-supported by the inherent power of Article III courts to insure that their process is not abused.

It is fundamental.

It comes from as long ago as the Gumbel v. Pitkin decision of this Court in 1888, though the Powell case which specifically in the context of summons enforcement actions warned that it is the process of the Court that is being sought to enforce a summons by the Internal Revenue Service, and courts should not allow that process to be abused.

Anthony M. Kennedy:

In the Stuart case issued just a few years… a few weeks ago, Counsel, we said that once the IRS shows that it’s entitled to the order, that’s the end of the matter.

Michael Lee Hertzberg:

I… I read that, Your Honor.

However, respectfully, the Stuart case presented a very far and different issue and was not… I think that that one statement that you’ve extracted, Justice Kennedy, certainly not made in the context of the issue that’s before this Court on the protective order that was issued below.

What the government seems… the government, by the way, has really retreated, as I understand their oral argument, from the premise of their brief… the question presented in their brief.

In the brief, and the question on which they sought and obtained certiorari in this Court, was the argument that district courts are wholly without authority under any circumstances whatsoever in summons enforcement proceedings to take any steps to make sure that their process is not abused.

They said enforcement or denial, there’s no in between.

Now, they start their argument off today by quibbling about the record below.

Did we make a sufficient showing?

Well, the district court, notwithstanding the language which my learned opponent quoted to the Court, the district court did find that we had raised a real fear that the five documents which we were enforcing through the summons would be turned over to the government and possibly then given to civil attorneys for the Department of Justice.

And he articulated that fear in the record.

And the Ninth Circuit reviewed, looking for abusive discretion, specifically reviewed the record… and it was an ample record that was before the court… there was a hearing and there was considerable testimony to substantiate what the court of appeals decided was a real fear that information purportedly being sought under authority of the summons might be used for an improper purpose and disseminated improperly later on.

And the result was what my colleague calls now the narrow order or the fairly benign order of the Court.

And we think it was extremely narrow.

Michael Lee Hertzberg:

All it does is say to the government you can’t use those five documents that I’m giving you for any purpose other than… reference to the Department of Justice for criminal prosecution, which is the premise on which you came to this Court in the first place.

Or, you must obtain an order of this Court.

It didn’t say you can’t communicate with other government agencies.

It didn’t say you can’t go out in the world and look for witnesses and talk to them and–

Anthony M. Kennedy:

Well, what if it had?

Michael Lee Hertzberg:

–proceed with an investigation.

Sandra Day O’Connor:

What if it had?

Are there limits on the court’s power in this regard to enter protective orders?

Michael Lee Hertzberg:

That’s, I think, a fairly broad question.

It’s hard for me to say that there couldn’t be some limits, but those limits are not in our case.

I don’t think we need reach that question, Justice O’Connor.

I think that the–

Anthony M. Kennedy:

Well, but we have to write the opinion and you’re arguing that there should be a rule that gives the district court some authority to control the IRS.

So, we’re certainly entitled to inquire what the dimensions of the rule are that you’re proposing.

Michael Lee Hertzberg:

–Well, I think that… I think that the dimensions of the rule are that, as I… as I can formulate them, that the Court can fashion an order when it feels that the record warrants it to insure that its process is not abused.

Within those parameters, it has that inherent power.

And the government… as long as there is no indication that… I would add this.

As long as there is no indication that it would interfere with the investigation of the government.

And there has been no such real argument made in this case by the government.

Byron R. White:

What kind of evidence?

I suppose you’d say there would have to be a record made before the district judge, there must be some evidence of some danger or risk of disclosure?

The judge just can’t say, I don’t trust the IRS and I’m going to enter this order, I don’t suppose.

Michael Lee Hertzberg:

Well, presumably he would have a factual record which would warrant applying–

Byron R. White:

What kind of facts?

Michael Lee Hertzberg:

–I think the kind of facts–

Byron R. White:

Actual concrete evidence and here are these other unreliable government attorneys.

Michael Lee Hertzberg:

–Yes.

The kind of record that was adduced in this case, Justice White.

And a record that would be reviewed by a court of appeal for abuse of discretion.

Byron R. White:

And you think you made that kind of a record here… that raising a real valid doubt about the veracity and trustworthiness of the testimony in this–

Michael Lee Hertzberg:

Yes.

The district court felt we had and the court of appeals felt we had… and called it a wise exercise of control and exercise of discretion.

And that record… I don’t want to get too much into the record… but in a very brief hearing that we were afforded, there was an undisputed record of constant communication between the Department of Justice civil attorneys engaged in non-tax related litigation in Washington against the Church of Scientology.

On the telephone constantly–

William H. Rehnquist:

–Mr. Hertzberg, on page 26A of the petition for certiorari where it’s Judge Hupp’s ruling on a motion for reconsideration, he says when the government asked him to reconsider his order conditioning… he says,

“Since the entire basis of the summons proceeding was to obtain material for a tax investigation, the court thinks it reasonable to restrict the use of the material for that purpose unless a criminal prosecution is administered. “

Now, that sounds just… it doesn’t sound from that… perhaps there’s something else… he was moved particularly by any showing in this case, but just the idea that the IRS shouldn’t disobey the law.

Michael Lee Hertzberg:

–Now, Justice Rehnquist, our Joint Appendix–

William H. Rehnquist:

Well, are you saying this doesn’t say what I just read to you?

Michael Lee Hertzberg:

–Well, you… I… I was confused.

I thought you said 26A.

William H. Rehnquist:

That’s exactly what I said… 26A of the petition for certiorari.

Michael Lee Hertzberg:

Right.

Yes.

Well, what he’s referring to, Justice Rehnquist, when he says reasonable is the record, which is reflected at Joint Appendix page 67.

There are the court’s concerns articulated.

At page–

William H. Rehnquist:

Well, but I think that it’s very difficult to read that sentence that way.

It starts out,

“Since the entire basis of a summons proceeding was to obtain material for a tax investigation, the court thinks it reasonable. “

It doesn’t say any reference to the facts shown here.

It’s just the idea if you’re getting this material for a tax investigation, you ought to follow the rules.

Michael Lee Hertzberg:

–Justice Rehnquist, in context… with all due respect, in the context of the record that was adduced, what the court is saying there is that because the government said they wanted it for a tax investigation and because my order would allow the government to use it for that proper purpose but not for an improper purpose, I am imposing the restriction.

That is… That is precisely the context of that remark by the court.

And it’s further amplified–

Byron R. White:

Well, that just means that I’m going to make the government obey the law.

Michael Lee Hertzberg:

–Well, but it’s more than that, Justice White.

Because in this case, as both courts below found… as both courts found below, there was ample reason to believe in this sul generis case, as the district court stated–

Byron R. White:

What page of the Joint Appendix are you–

Michael Lee Hertzberg:

–Page 67.

Byron R. White:

–All right.

Michael Lee Hertzberg:

The colloquy there, particularly that of the court.

The court misspoke on the third line where it says,

“The IRS and the United States in general carrying on litigation. “

He meant the IRS and the Church of Scientology.

Mr. Hertzberg, what did–

Michael Lee Hertzberg:

Could I just add one thing, please?

–All right.

Michael Lee Hertzberg:

I just want to stress as emphatically as I can, that the issue before this Court, is the inherent power of the court.

Not the strength of the record.

The government lost below on the strength of the record.

The stark issue that they posed by the petition is, is the court under any circumstances… strong record or not… permitted to issue this kind of order?

And I don’t think that this Court should be reviewing the record in that context.

The only question that the Court was asked to resolve by the government is does the court have the power, assuming there is a sufficient record.

As the courts below found–

Antonin Scalia:

As it happens, that’s what my question goes to.

That happens exactly to be it.

Section 552 of the Administrative Procedure Act authorizes a court to order the production of records from an agency.

The same section says that agencies don’t have to turn over law enforcement investigatory records if they would, among other things, endanger the life or physical safety of a law enforcement officer.

Now, suppose a court has a refusal by the FBI to turn over some information on the ground that it would… it would endanger witnesses or law enforcement agents.

And the requestor happens to be someone who has mob connections.

And the court says, well, gee, I don’t really know whether it would endanger or not.

But, just to be sure, I’ll order the production of the documents.

But you shouldn’t give them to anybody else.

Or, it puts some other condition on them.

Do you think a court has inherent power to do that?

Michael Lee Hertzberg:

–If… yes, it does.

If–

Antonin Scalia:

Is that right?

Under the APA?

Antonin Scalia:

Do you know any court that’s ever done it under the APA?

I always thought the choice was you either turn it over or you don’t turn it over.

If you have enough doubts, you don’t turn it over.

You can’t say, we’ll turn it over, but–

Michael Lee Hertzberg:

–I would distinguish… I can’t cite a case, Justice Scalia–

Antonin Scalia:

–No, I don’t think… I don’t think–

Michael Lee Hertzberg:

–But I would distinguish the hypothetical–

Antonin Scalia:

–Trust me.

I bet you there aren’t any.

Michael Lee Hertzberg:

–Okay.

Antonin Scalia:

Now, why is this different from… here you have a statute that’s… that’s in most respects similar.

Why is it different from the–

Michael Lee Hertzberg:

It’s different because the Internal Revenue Service comes to the district court for enforcement of the summons.

The summons cannot be enforced without the authority of the district court.

And, for instance, the statutes under which the Internal Revenue Service must move to get summons enforcements… those are 7402(b) and 7604(a) of the Internal Revenue Code… say, by appropriate process the district court may enforce a summons.

The IRS must come to the district court and the moment that they do, and the moment the concept of appropriate process is implicated, at that time we submit that the court has inherent power, if it is satisfied by the showing made before it, as it was in this case, to insure that his process is not abused later on.

And the government has not demonstrated any way… the quibble with the record, but I submit again that’s not the issue before this Court.

The legal issue before this Court is, is the Court… does it have that inherent power or is it utterly without that inherent power?

Antonin Scalia:

–You’ve told me why this distinguishes your case from the Freedom of Information Act.

Why can’t you say the same thing under FOIA?

We want to make sure that our process isn’t abused.

We are… we are compelling the agency to produce these documents, as we’re authorized to, and we want to be sure that this process isn’t abused.

So, we’re telling you don’t turn over the name to the mob on pain of being in contempt.

Michael Lee Hertzberg:

I’m not… I must say I’m not following the… the–

Antonin Scalia:

Well, I’m just saying the principle that espousing would whenever the court issues an injunction or any sort of order for the obtaining of records.

Are you prepared to say that it is that generally applicable?

That whenever, under any statute, a court has the authority to compel the production of records it may condition the receipt of those records?

Michael Lee Hertzberg:

–I don’t see why it wouldn’t have that power.

Pursuant to the inherent power of the court, I don’t see why it would not.

If it has adequate reason to believe that its process could be abused, I don’t see why it would not.

Michael Lee Hertzberg:

On the–

Byron R. White:

Well, if Congress… Congress though in a statute, in the summons statues, they set the ground rules… they impose the confidentiality and say what’s going to happen if you break the law.

Why should the judge be able to supplement that statutory regime?

Michael Lee Hertzberg:

–The court is not supplementing it, Justice White.

The court is in fact aiding and seeing to it that that statute and other statutes are obeyed.

The statutory scheme not only in 6103 but, for instance, such as in 7206 of the Internal Revenue Code which sets forth the precise narrow grounds on which a summons may be issued by the Commissioner of the Internal Revenue Service, implicates a valuation by the district court as to whether the summoned material is going to be used for a proper purpose.

And the government must go to the district court and it must say we want enforcement.

And by the way, the interests… what we’re suggesting we think also strikes a perfect balance… the government is saying it’s all or nothing.

The… the… in effect, with their argument, at worst for us there would have to be a remand to the district court if it was without power to issue the protective order that it did to determine whether it wants to deny enforcement under the circumstances.

But we think the kind of order that was well-reasoned and entered into this case strikes a perfect balance.

It gives to the Internal Revenue Service the materials it sought for the summons purposes that it wanted it.

But it insures, when it feels that there’s a danger that it might be abused, and it at the same time insures that the court’s process will not be abused and that the summons materials will not be used for an improper purpose.

We would think, actually, that the government would be in favor of this.

It historically poses the question of whether there has to be summons denial or not.

And, in fact, the government says that there are instances where summons are denied.

We think that if their all-or-nothing test is adopted, perhaps there will be more denials of summons, because district courts will then be without the option of deciding that they can take a middle ground, as the court did in this case under the circumstances which were well-warranted.

Byron R. White:

Well, a judge can say I’m sure that they’d be more likely to obey me than the statute?

Michael Lee Hertzberg:

Well, Your Honor, that question subsumes that the court just did this automatically in a vacuum, and it did not.

There was a record, and it does… it does perhaps subsume that.

Perhaps that is exactly what is necessary, that district courts admonish or remind the government of what their obligations are.

Byron R. White:

And set up a regime where they could punish the breach of their order.

Michael Lee Hertzberg:

That’s correct.

That’s right.

And we feel that that would be well-warranted under the… and so did the Ninth Circuit, under the circumstances of this case.

Anthony M. Kennedy:

Counsel, if we can go back to the crime-fraud exception for a moment.

Michael Lee Hertzberg:

Yes.

Anthony M. Kennedy:

Is it your position that the government simply submitted excerpts of the tape and, therefore, it’s not in a position to complain that it was error for the court not to listen to the whole tape?

Michael Lee Hertzberg:

That I don’t think is the issue before this Court, Justice Kennedy.

But, in fact, what happened was… that is not the reason we say that the court could not hear the whole tape.

To answer your question, that is not the reason why the court couldn’t hear the whole tape.

Michael Lee Hertzberg:

We submit that without–

Anthony M. Kennedy:

But you think that on this record the failure to listen to the whole tape is properly before us?

Michael Lee Hertzberg:

–It is not.

It is not before you.

That issue was not reached by the Ninth Circuit below because–

Anthony M. Kennedy:

Because on the excerpts were submitted?

Michael Lee Hertzberg:

–Because… for two reasons.

Because the Ninth Circuit did not review the government’s… the issue of the government’s belated submission relying on the whole tapes.

And it relied only… it only looked at the independent evidence.

Anthony M. Kennedy:

I understand that.

Michael Lee Hertzberg:

And it did not find, even under the independent evidence test, sufficient… it did not find sufficient allegation of wrongdoing, of illegality.

And it didn’t go beyond that.

William H. Rehnquist:

Thank you, Mr.–

Michael Lee Hertzberg:

The issue of the entire–

William H. Rehnquist:

–Mr. Hertzberg, your time has expired.

Mr. Horowitz, you have seven minutes.

Mr. Horowitz, can I ask you a question before you get started because it’s, you know, been troubling me ever since you sat down.

The statute says by appropriate process such attendance, testimony, production of books, papers, and records.

Do you think a trial judge would have the authority to allow a responding party to produce summaries rather than original documents?

Say, he asked for all the accounting records of General Motors or something.

They could say, well, we’d like to give summaries.

And then set up a procedure for verifying the summaries?

Alan I. Horowitz:

My immediate reaction is no.

John Paul Stevens:

That wouldn’t be–

Alan I. Horowitz:

I don’t think they do.

And I don’t think that has anything to do with the language in the statute by appropriate process.

They’re just talking about the court’s ability to bring other parties before the court or to enforce its order of–

John Paul Stevens:

–Or production of books, records, papers, or other data?

Alan I. Horowitz:

–Well, that’s the way–

John Paul Stevens:

You would say–

Alan I. Horowitz:

–the way the court can compel–

John Paul Stevens:

–But you said they could not substitute an interrogatory or summary procedure, or something like that?

Alan I. Horowitz:

–No, I don’t think so.

John Paul Stevens:

Okay.

Alan I. Horowitz:

Getting back to what I said before, there’s a summons there and if the IRS is entitled to enforcement, the court is supposed to compel enforcement of the summons, not change it.

And there has been litigation on that kind of subject.

I’d like to talk briefly about this idea of abuse of process because it seems to me this is just the core of Respondents’ argument.

Is that the notion the courts have an inherent authority to prevent abuse of their process basically gives them carte blanche in whatever sort of order they want in a case like this.

We don’t deny there’s inherent authority to control abuse of process, but there’s nothing like that going on here.

This is discussed at great length by this Court in Powell case and follows through in subsequent summons enforcement cases.

We know what abuse of process is in this context and it is the issuance of a summons in bad faith for an illegitimate purpose that is not encompassed by the congressional grant of authority and the other is sort of power criteria.

If the court were… if the IRS were to get a summons under the circumstances where it did not satisfy those criteria, that would be an abuse of the court’s process, and the court is entitled to protect itself against that.

And that’s why there is a summons enforcement proceeding.

In this case, and in most cases, the court looked at those criteria and it found… and it found quite unequivocally that there was no bad faith.

That the IRS was entitled to enforcement of its summons.

That ends the abuse of process inquiry, and it does not give this kind of carte blanche for the court to go out there to see what the IRS is going to do with the documents down the road.

And I should mention, I guess, that all through summons enforcement law you see that the court does not really take it upon itself to worry about what the IRS does with documents down the road.

In the LaSalle case, of course, there was a great controversy over whether the summons should be enforced there because of the danger at that time information would immediately infringe on criminal discovery and the role of the grand jury because there had already been a criminal referral in effect.

But, of course, in the typical IRS investigation where there is no criminal referral in effect, documents are furnished to the IRS pursuant to a summons and then later on down the road, a year later, a year and a half later, the case may be referred to the Justice Department for criminal prosecution.

And that information that came through the summons goes to the Justice Department at that point.

And there’s nothing wrong with that.

That doesn’t show abuse of the court’s process or bad faith, or anything like that.

The idea of the summons enforcement proceeding is to decide at that time whether the summons should be enforced.

As far as the benignness of this particular restriction, we think the real problem here is that there is no way to draw a line between the kind of restriction that the court imposed here and much broader and more intrusive restrictions.

If the court has the authority to monitor the IRS’ investigation, as the Ninth Circuit says, then there will be other… a lot of litigation and a lot of other restrictions that are very damaging.

Just to quickly summarize the attorney/client issue.

Of course, we don’t concede that there is any independent evidence requirement.

When I was induced to concede that the district court would have to at least have some evidence before it made an in camera inspection, there’s certainly no reason why that evidence has to be independent in the sense that Respondent was talking about.

Neither the court of appeals nor Respondents have given any reason why there should be such a rule, and we suggest that there shouldn’t be one.

But, again, the issue in this case is whether the court is precluded from ever looking at so-called nonindependent evidence before it decides whether the attorney/client privilege should be taken away because of crime-fraud.

Alan I. Horowitz:

Thank you.

William H. Rehnquist:

Thank you, Mr. Horowitz.

The case is submitted.

The honorable Court is now adjourned until tomorrow at 10 o’clock.