Shearn Moody, Jr. v. Internal Revenue Service
210 U.S. App. D.C. 80, 654 F. 2d 795, 48 A.F.T.R.2d (RIA) 5170 (1981)
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Rule of Law:
An attorney's unprofessional conduct may vitiate the work product privilege if a court, after balancing the circumstances, determines that the policy favoring disclosure of the misconduct outweighs the client's legitimate interest in the secrecy of the work product. The privilege cannot be used to protect activities that are antithetical to the adversary system it is designed to serve.
Facts:
- The Internal Revenue Service (IRS) conducted a wide-ranging investigation known as "Project Southwest" into political corruption in Texas.
- Shearn Moody, Jr. was one of the targets of the Project Southwest investigation, although he was never indicted.
- During a related legal matter involving the receivership of W. L. Moody & Sons, Banker, an IRS attorney held a meeting with the presiding federal district judge.
- This meeting concerned the enforcement of a summons the IRS had served on the bank's receiver.
- Counsel for the opposing party, Moody, was not notified of and was not present at this meeting between the IRS attorney and the judge.
- Following the meeting, the IRS attorney prepared a memorandum to the file, designated Document 19, which detailed the substance of the meeting.
- The IRS also possessed a 17-page memorandum, Document 73, detailing the operation and results of Project Southwest, which included information on particular taxpayers.
Procedural Posture:
- Shearn Moody, Jr. filed three Freedom of Information Act (FOIA) requests with the IRS for records concerning himself, his businesses, and 'Project Southwest.'
- The IRS released numerous documents but withheld approximately 150 documents or portions thereof, claiming FOIA exemptions.
- Moody filed suit against the IRS in the U.S. District Court for the District of Columbia to compel disclosure of the withheld records.
- The district court conducted an in camera examination of a sample of the withheld documents.
- The district court issued a judgment upholding the IRS's claims of exemption for nearly all the documents at issue, including Document 19 under the work product privilege and Document 73 as non-segregable tax return information.
- Moody, as appellant, appealed the district court's judgment to the U.S. Court of Appeals for the D.C. Circuit, with the IRS as the appellee.
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Issue:
Does an attorney's professional misconduct, such as engaging in an improper ex parte communication with a judge, vitiate the attorney work product privilege that would otherwise protect a document generated from that conduct under FOIA Exemption 5?
Opinions:
Majority - Wald, Circuit Judge
Yes, in some circumstances, a lawyer’s unprofessional behavior may vitiate the work product privilege. The work product privilege exists to protect the adversary trial process, not to shield activities that are destructive to that system. It would be perverse to allow a lawyer to use the privilege to hide work product generated by the very type of unfair practices the privilege was meant to prevent. However, unlike the attorney-client privilege, the work product privilege protects the interests of both the attorney and the client. A client's interest in the confidentiality of their case may survive the misfortune of being represented by an unscrupulous attorney. Therefore, a court must balance all the circumstances, including the severity of the misconduct and the availability of other disciplinary measures, to determine if the policy favoring disclosure outweighs the client's legitimate interest in secrecy. A court should not order disclosure if doing so would traumatize the adversary process more than the underlying misconduct did. The case is remanded for the district court to determine whether the IRS attorney's conduct violated professional standards and, if so, whether that misconduct vitiates the work product privilege for Document 19.
Analysis:
This decision establishes that the attorney work product privilege is not an absolute shield for professional misconduct, creating an exception analogous to the crime-fraud exception. The court introduces a new balancing test for lower courts, requiring them to first make factual findings about an attorney's alleged unethical conduct and then weigh competing policy interests before determining if the privilege applies. This ruling complicates the application of the work product doctrine by holding that the integrity of the process through which a document is created can strip it of its privileged status. It underscores that the privilege's purpose is to serve the adversary system, not to protect attorneys who act contrary to it.
