evidentiary privilege

Stockholders of First American Life Insurance Company of Alabama brought, in the Northern District of Alabama, a class action against the company and its directors, officers, and controlling persons. They alleged violations of the Securities Act of 1933, the Securities Exchange Act of 1934, SEC Rule 10(b)(5), the Investment Company Act of 1940, the Alabama Securities Act and common law fraud, seeking to recover the purchase price which they and others similarly situated paid for their stock in FAL. They also asserted a derivative action claiming that FAL was itself damaged by alleged fraud in the purchase and sale of securities. FAL filed a cross-claim against all other defendants, asserting in its own behalf the rights the plaintiff shareholders had claimed in the derivative aspect of their complaint. R. Richard Schweitzer served as attorney for the corporation in connection with the issuance of the FAL stock here involved. After the transactions sued upon were complete he became its president. On deposition Schweitzer was asked numerous questions concerning advice given by him to the corporation about various aspects of the issuance and sale of the stock and related matters. Other questions went into the content of discussions at meetings attended by him and company officials and information furnished to him by the corporation. All questions related to times at which Schweitzer acted solely as attorney, before he became an officer of the company and before the filing of suit. The plaintiffs had served a subpoena duces tecum on Schweitzer to bring various documents to the taking of his deposition. Both he and the corporation claimed the privilege with respect to some of the documents. The District Court treated the subpoena as though it were a motion to produce under Rule 34. The District Judge held that the privilege is not available to the corporation as against these plaintiff stockholders. Contemporaneously the District Judge ordered the case transferred to the Southern District of Alabama under 28 U.S.C. § 1404(a). With respect to both orders he entered appropriate findings pursuant to 28 U.S.C. § 1292(b), the interlocutory appeal statute. This court granted applications to allow both interlocutory appeals — the plaintiffs from the transfer order, docketed as No. 26168, and the defendants from the order denying the claim of privilege, docketed as No. 26266 — but provided that ultimate disposition of the appropriateness of interlocutory appeal would be taken with the case on the merits. Also the plaintiffs filed with this court a petition for a writ of mandamus directing the District Judge to retain jurisdiction of the case in the Northern District. The court has concluded that the consolidation of the two interlocutory appeals should be vacated. In this opinion we decide No. 26266, the interlocutory appeal of FAL on the privilege issue.

In January 1970 respondent A. Ernest Fitzgerald lost his job as a management analyst with the Department of the Air Force when his position was eliminated during a departmental reorganization and reduction in force. One year earlier, on November 13, 1968, Fitzgerald had testified before the Subcommittee on Economy in Government of the Joint Economic Committee that cost overruns on the C-5A transport plane could approximate $2 billion. Concerned that the dismissal might constitute retaliation for the congressional testimony, the subcommittee held public hearings. At a December 8, 1969 news conference President Richard Nixon promised to look into the matter and directed White House Chief of Staff H. R. Haldeman to arrange for Fitzgerald's reassignment to another administration position. An internal White House memorandum from aide Alexander Butterfield recommended that Fitzgerald "bleed, for a while at least" because of perceived disloyalty, and no further White House efforts to reemploy him occurred. Fitzgerald complained to the Civil Service Commission alleging unlawful retaliation. The Examiner held that Fitzgerald's dismissal had offended applicable civil service regulations based on a finding that the departmental reorganization was motivated by reasons purely personal to respondent. The Examiner recommended Fitzgerald's reappointment to his old position or to a job of comparable authority. The Commission explicitly found that the evidence did not support Fitzgerald's allegation of retaliation for his 1968 testimony. At a January 31, 1973 news conference President Nixon stated that he had approved Fitzgerald's dismissal. A day later the White House press office issued a retraction of the President's statement. In 1978 Fitzgerald filed a second amended complaint in the United States District Court for the District of Columbia naming Nixon as a defendant and alleging violations of the First Amendment and two federal statutes. The District Court denied Nixon's motion for summary judgment on absolute immunity grounds. The Court of Appeals for the District of Columbia Circuit dismissed the collateral appeal. Shortly after Nixon petitioned for certiorari the parties agreed that Nixon would pay Fitzgerald $142,000 immediately and an additional $28,000 if the Supreme Court ruled he was not entitled to absolute immunity.

In August 1994, an Independent Counsel was appointed to investigate possible violations of federal law relating to the Whitewater Development Corporation. In December 1994, Webster Hubbell pleaded guilty to charges of mail fraud and tax evasion arising out of his billing practices as a member of an Arkansas law firm from 1989 to 1992. He was sentenced to 21 months in prison. As part of the plea agreement, Hubbell promised to provide the Independent Counsel with full, complete, accurate, and truthful information about matters relating to the Whitewater investigation. While Hubbell was incarcerated in October 1996, the Independent Counsel served him with a subpoena duces tecum calling for the production of 11 categories of documents before a grand jury sitting in Little Rock, Arkansas. Hubbell appeared before the grand jury and initially invoked his Fifth Amendment privilege. After being granted immunity pursuant to an order under 18 U.S.C. § 6003(a), he produced 13,120 pages of documents and records. The documents provided the Independent Counsel with information that led to a second prosecution. On April 30, 1998, a grand jury in the District of Columbia returned a 10-count indictment charging Hubbell with tax-related crimes and mail and wire fraud. The District Court dismissed the indictment on the ground that the Independent Counsel's use of the subpoenaed documents violated 18 U.S.C. § 6002. The Court of Appeals vacated the judgment and remanded for further proceedings to determine the extent of the Government's independent knowledge of the documents. On remand, the Independent Counsel acknowledged that he could not satisfy the reasonable particularity standard and entered into a conditional plea agreement with Hubbell. The Supreme Court granted certiorari to determine the precise scope of a grant of immunity with respect to the production of documents in response to a subpoena.

Open the case page for the full write-up.

On June 27, 1991, Police Officer Mary Lu Redmond responded alone to a dispatcher's report of a fight in progress at the Grand Canyon Estates apartment complex in the Village of Hoffman Estates, Illinois. Upon arrival, she learned from two women that there had been a stabbing inside the building and requested backup and an ambulance. As Redmond approached the apartment building, five men ran out the front door yelling and screaming. One of the men was waving a pipe above his head. Almost immediately thereafter, two more men — a Caucasian man followed by an African-American man in hot pursuit — came running out of the door of the building. Officer Redmond testified that she ordered Allen to drop the knife multiple times before firing a single shot when he began the downward motion with the knife. Allen fell to the ground, and a butcher knife was later observed near his body by arriving officers. Allen's siblings who witnessed the event testified that Allen was unarmed at the time of the shooting. After the incident, Officer Redmond sought counseling from Karen Beyer, a licensed clinical social worker employed by the Village, meeting with her two or three times per week for several months. During pretrial discovery, the plaintiffs, who are the surviving family members of Ricky Allen, Sr., learned of the counseling sessions and subpoenaed Beyer for her notes and testimony. The defendants moved to quash the subpoena asserting privilege, but the district court denied the motion, ordered production, and later permitted unrestricted inquiry into the communications. When the defendants did not fully comply, the court instructed the jury that it could presume the notes would be unfavorable to the defendants. The jury returned a verdict awarding $45,000 on the federal claim and $500,000 on the state wrongful death claim. Officer Redmond and the Village appealed the judgment to the United States Court of Appeals for the Seventh Circuit, raising challenges to the deadly force jury instruction and the refusal to recognize the counseling privilege.