In Re Grand Jury Proceedings.appeal of John Doe, 831 F.2d 222 (11th Cir. 1987)

This is an appeal from a district court order denying appellant's Fed. R. Crim. P. 41(e)¹  motion for return of property and his motion to quash a grand jury subpoena served on his attorney. Because we conclude that both of these dispositions are nonappealable interlocutory orders, we dismiss this appeal.

On May 8, 1984, United States Internal Revenue Service (IRS) Special Agents executed a search warrant²  upon the law office of Robert L. Schwind and David L. Hill, two Atlanta, Georgia attorneys. The search related to an ongoing investigation into their involvement in illegal offshore tax avoidance activities. Among the documents the agents seized were copies of various bank and corporate records contained in a file Schwind maintained for work he was performing for the appellant, John Doe. The documents, considered in the light of other information obtained by the agents, indicated that Doe, with the assistance of Schwind, may have fraudulently avoided federal income taxes by diverting funds offshore to a bank and to a corporation in the Cayman Islands.

In November 1984, six months after the IRS seized these documents, Doe, amended his federal income tax returns for the years 1981, 1982, and 1983 to reflect additional taxes due on a previously unreported $41,755 short-term capital gain from a sale of real estate and on the earnings derived from the investment of a portion of the proceeds of the sale.³  The IRS thereafter initiated an investigation to determine whether Doe's failure to report such gain and earnings in his original tax returns may have constituted tax evasion.

The IRS investigation eventually developed into a grand jury inquiry, in the Northern District of Georgia, concerning Doe's 1981, 1982, and 1983 tax returns, and Schwind was subpoenaed to testify. Doe promptly moved the district court to quash Schwind's subpoena on the ground that any questions the grand jury might ask Schwind about his dealings with Doe would necessarily and improperly invade their attorney-client relationship. Doe also moved the court pursuant to Fed. R. Crim. P. 41(e) to order the Government to deliver to him the documents relating to his business relationship with Schwind that the IRS agents had seized on May 8, 1984.⁴  Doe contended that the agents' search warrant did not reach these documents; therefore, their seizure was unlawful.

The district court referred Doe's motions to a magistrate for an evidentiary hearing and recommended disposition. The magistrate conducted the hearing and recommended that Doe's Rule 41(e) motion be denied on the ground that he lacked standing to challenge the search. The magistrate also recommended that Doe's motion to quash Schwind's subpoena be denied. He concluded that none of the Schwind-Doe communications the grand jury might seek to obtain from Schwind were privileged, because they had been made in the furtherance of a criminal scheme to help Doe evade federal income taxes. The district court adopted both of the magistrate's recommendations and accordingly denied Doe's motions.⁵  This appeal followed.

We decline to review the district court's denial of appellant's Rule 41(e) motion because the ruling is nonappealable; it is not a "final decision" within the meaning of 28 U.S.C. § 1291 (1982). As we observed in In re Grand Jury Proceedings (Berry), 730 F.2d 716 (11th Cir. 1984), the denial of a Rule 41(e) motion brought by the target of a grand jury investigation is "merely a step in the criminal case preliminary to trial" and as such is a nonappealable interlocutory order. Id. at 717. We noted that if we were to review such a ruling, we would impermissibly "interfere with the grand jury proceedings and ... with any criminal proceedings that may result." Id. at 718 (citations omitted).⁶ 

We also decline to review the district court's denial of Doe's motion to quash Schwind's subpoena. What Doe asks us to do is to pass on a hypothetical case.⁷  That is, he asks us to assume the following facts: (1) that Schwind appears before the grand jury as commanded by his subpoena; (2) that the grand jury seeks information protected by the attorney-client privilege, e.g., information that was not acquired by Schwind in the furtherance of a criminal scheme to help Doe avoid federal income taxes; (3) that notwithstanding Doe's instruction that he assert the attorney-client privilege, Schwind does not assert the privilege; and (4) that Schwind discloses the privileged information to the grand jury. Article III of the Constitution precludes us from passing on the merits of such a hypothetical case, see Dixie Elec. Co-op. v. Citizens of Alabama, 789 F.2d 852, 858 (11th Cir. 1986) ("The case must consist of a 'real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.)' " (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 241, 57 S. Ct. 461, 464, 81 L. Ed. 617 (1937))); see also In re Klein, 776 F.2d 628, 630, 633-34 (7th Cir. 1985), and, accordingly, we refuse Doe's invitation to do so.

The courts of appeals have traditionally declined to review district court orders denying motions to quash grand jury subpoenas ad testificandum. Rather, they have deferred ruling on the merits of the movant's argument that the grand jury be barred from obtaining, for example, privileged information from the witness until after the witness has appeared before the grand jury and been sworn, the grand jury has attempted to elicit the information the movant sought to protect, the witness, asserting the movant's objection, has refused to answer, and the trial court has ruled on the objection.⁸  At that point, a concrete, well-defined controversy exists, which the court of appeals can resolve without the sort of speculation that appellant would have us indulge in this case and, moreover, without requiring the witness to disclose in advance the information the movant seeks to protect.⁹ 

For the foregoing reasons, this appeal is

DISMISSED.