Tuesday, February 13, 2018

Third Circuit Affirms Summons Enforcement for Client Identity Information (2/13/18)

In United States v. Martin, 2018 U.S. App. LEXIS 2526 (3d Cir. 2018) (nonprecedential), here, the Court of Appeals affirmed the district court's order enforcing an IRS administrative summons issued to a lawyer in a collection action to discover his income and assets.  The Court said that the scope of the summons was:
Specifically, it sought to verify the income Servin generated through his law practice. The summonses requested two categories of information: (1) Servin's current client list, including the names and addresses of each client; and (2) a list of his cases that will be settling or have settled within a specified time period, including the parties' names and addresses. In response to the summonses, Servin appeared, but refused to disclose the requested information.
The district court ordered compliance, but limited the compliance to "only those cases that have settled, not cases that may settle[.]"  Martin then appealed.  There is no indication that the court held him in contempt for noncompliance with the order but that is the usual way that a summons enforcement order gets to the court of appeals.  In any event, the court rejected Martin's claim of attorney-client privilege and attorney-client confidentiality.

Basically, the Court said that, based on precedent, there was no attorney-client privilege to protect client identities except in unusual circumstances no present here.
Servin fails to identify any unusual circumstances here that suggest protected communications would be revealed by disclosing the names and addresses of his clients and other parties. Because he has not shown that the attorney-client privilege shields the information requested by the IRS, the privilege cannot constitute grounds for quashing the summonses.
As to any state law confidentiality requirement beyond the scope of the attorney-client privilege, the Court said:

Nor has Servin shown that the Pennsylvania Rules of Professional Conduct are a basis for quashing the summonses. The rule he relies on, Rule 1.6, provides in pertinent part: "A lawyer shall not reveal information relating to representation of a client unless the client gives informed consent, except for disclosures that are impliedly authorized in order to carry out the representation[.]" Pa. Rules of Prof'l Conduct 1.6(a). Although Pennsylvania courts have recognized that "a lawyer's duty of confidentiality to a client is quite extensive[,] ... the Rules of Professional Conduct are not substantive law." In re Estate of Wood, 2003 PA Super 72, 818 A.2d 568, 573 (Pa. Super. Ct. 2003) (citing Commonwealth v. Chmiel, 558 Pa. 478, 738 A.2d 406, 415 (Pa. 1999), cert. denied, 528 U.S. 1131, 120 S. Ct. 970, 145 L. Ed. 2d 841 (2000)). Rather, those rules govern disciplinary proceedings against Pennsylvania attorneys, and, through its Supreme Court, the Commonwealth has said that the rules "do not govern or affect judicial application of ... the attorney-client ... privilege." Id. (internal quotation marks omitted) (quoting Chmiel, 738 A.2d at 415). We take Pennsylvania at its word. n6 Thus, Rule 1.6 does not provide a defense, and Servin has not established a basis to avoid enforcement of the summonses. n7
   n6 The comments to Rule 1.6 state that its scope is limited by substantive law:
The principle of client-lawyer confidentiality is given effect by related bodies of law: the attorney-client privilege, the work product doctrine and the rule of confidentiality established in professional ethics. The attorney-client privilege and work-product doctrine apply in judicial and other proceedings in which a lawyer may be called as a witness or otherwise required to produce evidence concerning a client. The rule of client-lawyer confidentiality applies in situations other than those where evidence is sought from the lawyer through compulsion of law.
Pa. Rules of Prof'l Conduct 1.6 cmt. 3. The comments to Rule 1.6 further state:
   A lawyer may be ordered to reveal information relating to the representation of a client by a court or by another tribunal or governmental entity claiming authority pursuant to other law to compel the disclosure. Absent informed consent of the client to do otherwise, the lawyer should assert on behalf of the client all nonfrivolous claims that the order is not authorized by other law or that the information sought is protected against disclosure by the attorney-client privilege or other applicable law.
Id. cmt. 21. Although we do not minimize Servin's concern about complying with Pennsylvania's ethical rules, those rules do not, as a matter of substantive law, shield attorneys from complying with a court order. E.g., In re Estate of Wood, 818 A.2d at 573 (concluding that an attorney "simply is not entitled to utilize Rule 1.6 in an effort to avoid the trial court's order").
   n7 Servin's remaining suggestion that an "alternative collection procedure" would suffice, or that compliance would yield "de minimus" results, is without legal support. Cf. Fed. R. App. P. 28(a)(8) (stating that an appellant's argument must include the "appellant's contentions and the reasons for them, with citations to the authorities ... on which the appellant relies"); Clarke, 134 S. Ct. at 2367 (noting that, when contesting a summons's validity, "[n]aked allegations of improper purpose are not enough").
As an aside (really aside), I noticed that Martin used the term "de minimus," quoted in footnote 7.  Back when I took Latin learning from, among others Julius Caesar, I learned the expression as "de minimis."  Wikipedia, here, says: "De minimis is a Latin expression meaning "about minimal things", normally in the locutions de minimis non curat praetor ("The praetor does not concern himself with trifles") or de minimis non curat lex ("The law does not concern itself with trifles") a legal doctrine by which a court refuses to consider trifling matters.Queen Christina of Sweden (r. 1633–1654) favoured the similar Latin adage, aquila non capit muscās (the eagle does not catch flies)."  The Wikipedia entry does not mention "de minimus."  But other web resources do use "de Minimus."  Wiktionary, here, says it is from the Latin minim and quotes this use from Shakespeare, A Midsummer Night's Dream:

Get you gone, you dwarf;
You minimus, of hindering knot-grass made;
You bead, you acorn.

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