Application — European Adoption Consultants, Inc., Applicant v. United States, et al.

Supreme Court briefDec 20, 2021

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No. 21-A

IN THE SUPREME COURT OF THE UNITED STATES

UNITED STATES OF AMERICA

Plaintiff-Appellee

PARRIS; DORAH MIREMBE,

DEBRA

COLE

;

MARGARET

Defendants

and

CONSULTANTS, INC.

ADOPTION

EUROPEAN

Interested Party-Appellant

INTERESTED PARTY-APPELLANT EUROPEAN ADOPTION CONSULTANTS,

INC.’S EMERGENCY APPLICATION FOR A STAY OF EXECUTION OF JUDGMENT

PENDING APPEAL

To the Honorable Brett M. Kavanaugh

Associate Justice of the Supreme Court of the United States

and Circuit Justice for the Sixth Circuit

On Appeal to the Sixth Circuit Court of Appeals (Case No. 21 4053) from the United States

District Court for the Northern District of Ohio (Case No. l:20 cr-00424)

CLARE C. MORAN

COUNSEL OF RECORD

Seeley, Savidge, Ebert & Gourash, Co., LPA

26600 Detroit Road, Third Floor

Westlake, Ohio 44145

Ph: 216-566-8200

Fax: 216-566-0213

cmoranWsseu-law .com

Attorney for Interested Party-Appellant European

Adoption Consultants, Inc.

CORPORATE DISCLOSURE STATEMENT

Pursuant to Supreme Court Rule 29.6, Interested Party-Appellant European Adoption

Consultants, Inc. states that there is no parent or publicly held company that owns 10% or more of

the corporation’s stock.

TABLE OF CONTENTS

INTRODUCTION

FACTUAL AND PROCEDURAL BACKGROUND.

REASONS FOR GRANTING THE APPLICATION FOR A STAY .

A. EAC will suffer irreparable harm if the judgment is not stayed .

B. There is a reasonable probability that four Justices will consider the issues in this case

sufficiently meritorious to grant certiorari and there is a fair prospect that a majority of

the Court will vote to reverse the judgment below

CONCLUSION

CONTENTS OFAPPENDIX

TABLE OF AUTHORITIES

Cases

Commodity Futures Trading Comm’n v. Weintraub , 471 U.S. 343 (1985)

Gilliland v. Geramita, No. 2:05-cv-01059, 2006 U.S. Dist. LEXIS 65546, (W.D. Pa. Sep. 14,

2006)

Harbor Healthcare System, L.P. v. United States, 5 F. 4 593 (5 Cir. 2021)

In re Grand Jury Subpoenas, 454 F.3d 511 (6th Cir. 2006)

In re Lott, 424 F.3d 446 (6th Cir. 2005)

In re Search Warrant Issued June 13, 2019, 942 F.3d 159 (4 Cir. 2019)

INSv. Legalization Assistance Project of Los Angeles County Federation of Labor, 510 U.S. 1301

(1993)

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994)

Lewis v. United States , No. 02-2958 B/AN, 2004 U.S. Dist. LEXIS 26680, 2004 WL 3203121

(W.D. Tenn. Dec. 7, 2004)

Official Comm. Of Admin. Claimants v. Bricker, No. 1:05 CV 2158, 2011 WL 17702113 (N.D.

Ohio May 9, 2011)

Official Comm. Of Admin. Claimants v. Moran, 802 F. Supp . 2d 947, 949 (N.D. Ill. 2011)

PCS Nitrogen, Inc. v. Ross Dev. Corp., Civil Action No. 2:09-3171-MBS, 2011 U.S. Dist. LEXIS

93021 (D .S.C. Aug. 19, 2011)

San Diegans For Mt. Soledad Nat. War Mem’l v. Paulson, 548 U.S. 1301, 1302

(2006) .

Swidler & Berlin, 524 U.S. 399 (1998)

United States v. Coffman, 574 F.App’x 541 (6th Cir. 2014)

Upjohn Co. v. United States, 449 U.S. 383 (1981)

Wallace v. Huntington Nat’l Bank, Nos: 2:09-CV-104, 2:10-CV-469, 2010 WL 3603494 (S.D.

Ohio Sept. 10, 2010)

Rules

Fed. R. Evid. 501

Statutes

28 U .S.C. § 2201

Ohio Revised Code § 1701.88(B)

Ohio Revised Code § 2317.021

TO THE HONORABLE BRETT M. KAVANAUGH, ASSOCIATE JUSTICE OF THE

SUPREME COURT AND CIRCUIT JUSTICE FOR THE SIXTH CIRCUIT:

INTRODUCTION

This matter arises because the Government seized thousands of privileged attorney-client

communications of a corporation without prior judicial authorization, identified and sequestered

the privileged materials with a separate team of agents called a filter team but did not then return

them, and now seeks to void the privilege years later because it eventually debarred the

corporation. This and too many other cases raise the question whether the attorney client privilege

still protects the confidentiality of attorney client communications against government intrusion.

Specifically, it raises several questions of immense importance: whether the Government may

simply retain privileged material indefinitely which it seized without judicial authorization, and

whether the Privilege survives the alleged death of a corporation as it does a natural person. The

review of these questions can only be accomplished with a stay of the Government’s review and

use of the indisputably privileged documents.

Accordingly, pursuant to Rules 22 and 23 of the Rules of this Court, European Adoption

Consultants, Inc. (“EAC”) applies for a stay of the judgment of the Northern District of Ohio

ordering the disclosure of its privileged communications to the Government’s prosecution team,

pending the consideration and disposition of its appeal from that judgment to the United States

Court of Appeals for the Sixth Circuit and, if the court of appeals affirms the judgment, pending

the filing and disposition of a petition for a writ of certiorari and any further proceedings in this

Court.

FACTUAL AND PROCEDURAL BACKGROUND

EAC is an Ohio non-profit corporation that functioned as an adoption agency for over

twenty years until December 2016 when the State Department debarred it from performing

international adoptions for three years, effectively shutting the company down. In February 2017,

the Government executed search warrants at properties owned by EAC and its president, Margaret

Cole, and executed search warrants on e-mail service providers, seizing voluminous records and

communications containing EAC’s attorney-client privileged communications. Thereafter, the

Government requested and EAC provided a list of attorneys whose confidential communications

may be contained in the seized materials, and the Government sequestered approximately 250,000

seized documents based on the list of attorneys provided.

In July 2019, EAC and Cole, without admitting fault, agreed to a consent judgment in a

civil matter brought by the Ohio Attorney General where it was alleged, inter alia, that EAC’s

clients were not provided contracted for adoption services. The judgment resolved only those

claims specified brought in that matter and did not affect claims any consumers may have against

EAC. It also permitted EAC to continue to exist for the purpose of prosecuting and defending

against legal proceedings and required EAC to begin the dissolution process within 30 days after

the final resolution of all legal proceedings.

In August 2020, Cole, Deborah Parris (a former EAC employee) and Dorah Mirembe (a

former attorney of EAC) were indicted. Cole and Parris are charged with conspiring to defraud the

United States, and other offenses relative to an adoption of a child from Poland. Parris and

Mirembe are charged, inter alia, with multiple counts of conspiring to bribe foreign officials,

commit visa, mail, and wire fraud, and commit money laundering, related to EAC adoptions from

Uganda. EAC was not criminally charged. Rather, the Government stated that it closed its

investigation of EAC with the caveat that it retained its right to reopen the investigation if the

circumstances merit. Parris has since pleaded guilty and Mirembe has not been arraigned or

apprehended. Cole’s trial is set to begin February 7, 2022.

In December 2020, the Government sought an order in this underlying criminal proceeding

that all information in the possession of its filter team withheld under EAC’s claim of privilege be

disclosed to the prosecution team, (the “Disclosure Motion”) EAC intervened and opposed the

Disclosure Motion. On October 29, 2021, the District Court issued an Opinion & Order granting

the Disclosure Motion. (Appendix A) EAC appealed the judgment to the Sixth Circuit and

requested that the District Court stay the execution of its judgment pending appeal, which motion

was denied on November 12, 2021. (Appendix B) EAC then requested that the Sixth Circuit stay

the execution of the judgment pending appeal, which motion was denied on December 17, 2021.

(Appendix C) The Government advised on December 18, 2021 that it intended to immediately

implement the trial court’s order.

REASONS FOR GRANTING THE APPLICATION FOR A STAY

“In considering stay applications on matters pending before the Court of Appeals, a Circuit

Justice must ‘try to predict whether four Justices would vote to grant certiorari should the Court

of Appeals affirm the District Court order without modification; try to predict whether the Court

would then set the order aside; and balance the so-called ‘stay equities.’” San Diegans For Mt.

Soledad Nat. War Mem’l v. Paulson , 548 U.S. 1301, 1302 (2006), citing, INS v. Legalization

Assistance Project of Los Angeles County Federation of Labor, 510 U.S. 1301, 1304 (1993). This

challenging standard is met in this case.

A. EAC will suffer irreparable harm if the judgment is not stayed.

The Government intends to immediately implement the trial court’s order and provide the

sequestered privileged materials to its prosecution team. The forced disclosure of attorney client

privileged materials and work-product constitutes irreparable harm. See In re Search Warrant

Issued June 13, 2019 , 942 F. 3d 159, 175 (4 Cir. 2019). Indeed, “mandatory disclosure is the

exact harm the privilege is meant to guard against.” In re Lott, 424 F. 3d 446, 451-52 (6 Cir.

2005). The circumstances here are especially concerning because although the Government has

closed its investigation of EAC, it retained the right reopen it. Furthermore, under Ohio law, once

a corporation is dissolved, claims may be continued to be brought against it for up to five years.

See, Ohio Revised Code §1701.88(B). Thus, once dissolved, EAC could find itself the party to a

lawsuit in which these privileged materials may be used as evidence and be unable to assert the

privilege.

No other party will be harmed by the stay. The only defendant proceeding to trial on

February 7, 2022 is Margaret Cole. Additionally, when the Government’s trial counsel inquired

whether Cole would assert any claim of prejudice if the Government agreed not to disclose the

sequestered materials while the Motion to Stay remained pending in the Sixth Circuit, Cole’s

counsel responded: "Ms. Cole agrees not to claim prejudice for the time period the government

refrains from disclosing the material at issue to the prosecution team So that this issue may receive

appellate review.” Accordingly, no harm will be incurred by any party if a stay is granted.

B. There is a reasonable probability that four Justices will consider the issues in this case

sufficiently meritorious to grant certiorari and there is a fair prospect that a majority

of the Court will vote to reverse the judgment below.

This case involves three significant issues: (1) whether it was proper for the District Court

to consider the Government’s Disclosure Motion in a criminal case in which EAC was not a party

and to apply federal privilege law in its consideration of that Motion; (2) whether under federal

common law, a defunct or dissolved corporation may assert the attorney-client privilege and

whether the District Court properly found EAC to be defunct and unable to assert the privilege

under federal common law; and (3) whether the Government’s seizure and continued possession

of the privileged materials was unlawful.

With regard to the first issue, it is well-settled that federal courts are courts of limited

jurisdiction and are presumed to lack jurisdiction over a case. See, Kokkonen v. Guardian Life Ins.

Co. of Am., 511 U.S. 375, 377 (1994). It was the Government’s burden to overcome that

presumption, which it failed to do. Id. EAC is not a party to this case, and the relief the Government

sought in this case, namely, a declaration that EAC may no longer assert the attorney-client

privilege over the sequestered materials, should have been decided in a separate civil matter in

which state privilege law should have been applied. See 28 U.S.C. § 2201 and Fed . Evid. R. 501.

Moreover, this issue is of significant importance where EAC, like all coiporations, exists under

the express laws of the state of its incorporation, and under Ohio law, EAC’s maintains its attorney-

client privilege. See, Ohio Revised Code § 2317.021; Official Comm. Of Admin. Claimants v.

Bricker, No. 1:05 CV 2158, 2011 WL 1770113 ( N.D. Ohio May 9, 2011); Wallace v. Huntington

Nat’l Bank , Nos: 2:09-CV-104, 2:10-CV-469, 20:10-CV-469, 2010 WL 3603494 (S.D. Ohio Sept.

10, 2010). This important issue requires resolution by this Court and there is a fair prospect that a

majority of this Court will reverse the District Court’s judgment in this case as to this issue.

The second issue, regarding whether the attorney-client privilege may be invoked by a

defunct or dissolved corporation under federal privilege law, also requires resolution by this Court

as the lower courts are divided on this issue. See, e.g., PCS Nitrogen, Inc. v. Ross Dev. Corp., Civil

Action No. 2: 09 3171-MBS, 2011 U.S. Dist. LEXIS 93021 (D.S.C. Aug. 19, 2011); Official

Committee of Administrative Claimants v. Bricker, supra , Wallace v. Huntington Nat’l Bank,

supra', Official Comm. Of Admin. Claimants v. Moran , 802 F. Supp. 2d 947, 949 (N.D. Ill. 2011);

Gilliland v. Geramita, No. 2:05-CV-01059, 2006 U.S. Dist. LEXIS 65546, 2006 WL 2642525

(W.D. Pa. Sept. 14, 2006); Lewis v. United States, No. 02-2958 B/AN, 2004 U.S. Dist. LEXIS

26680, 2004 WL 3203121 (W.D. Term. Dec. 7, 2004). Moreover, the federal common law of this

Court which states that the attorney-client privilege attaches to corporations, and that as to

individual clients, survives even their death, counsels that the privilege should be maintained even

if a corporation is defunct or dissolved. See, Commodity Futures Trading Comm’n v. Weintraub ,

471 U.S. 343 (1985); Upjohn Co. v. United States, 449 U.S. 383 (1981); Swidler & Berlin , 524

U.S. 399, 406-411 (1998). Thus, there is also a fair prospect that a majority of this Court will

reverse the trial court’s judgment as to this issue.

Finally, the issue of the Government’s unlawful seizure of the sequestered materials

requires resolution by this Court. The Government did not seize the privileged materials with prior

judicial authorization based upon a search warrant particularly describing their seizure as required

by the Fourth Amendment, and the use of a filter team does not render the search lawful. “[TJaint

teams are used primarily in limited, exigent circumstances in which government officials have

already obtained the physical control of potentially-privileged documents through the exercise of

a search warrant.” United States v. Coffman , 574 F. App’x 541, 565 (6 Cir. 2014), citing, In re

Grand Jury Subpoenas, 454 F.3d 511 (6th Cir. 2006). No such exigent circumstances existed in

this case. Moreover, the Government may not indefinitely retain privileged information, in this

case for years, that it had no lawful right to seize in the first place. See Harbor Healthcare System,

L.P. v. United States,5 F. 4th 593, 599 (5th Cir. 2021). Thus, there is a fair probability that a majority

of this Court would reverse the trial court’s judgment as to this issue as well.

CONCLUSION

WHEREFORE, for the foregoing reasons, this Court should grant a stay of the execution

of the District Court’s judgment pending the consideration and disposition of the EAC’s appeal

from that judgment to the United States Court of Appeals for the Sixth Circuit and, if the court

appeals affirms the judgment, pending the filing and disposition of a petition for a writ of certiorari

and any further proceedings in this Court.

Respectfully submitted,

/s/ Clare C. Moran

CLARE C. MORAN

COUNSEL OF RECORD

Seeley, Savidge, Ebert & Gourash, Co., LPA

26600 Detroit Road, Third Floor

Westlake, Ohio 44145

Ph: 216-566-8200

Fax: 216-566-0213

cmorant'usseu-law.com

Attorney for Interested Party-Appellant European

Adoption Consultants, Inc.

CONTENTS OF APPENDIX

Appendix A: October 29, 2021 Opinion & Order of the United States District Court

for Northern District of Ohio granting the Government’s Disclosure Motion

Appendix B: November 12, 2021 Opinion & Order of the United States District Court

for the Northern District of Ohio denying EAC’s request for a stay of execution of

judgment pending appeal

Appendix C: December 17, 2021 Order of the Sixth Circuit Court of Appeals denying

EAC’s request for a stay of execution of judgment pending appeal

APPENDIX A

Case:l:20-cr-00424-JG Doc #: 84 Filed: 10/29/21 lot 7. PagelD #: 1307

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

UNITED STATES OF AMERICA,

Case No. 1:20-cr-424

Plaintiff,

OPINION & ORDER

[Resolving Doc. 34, 41]

vs.

MARGARET COLE, etal.,

Defendant.

JAMES S. GWIN, UNITED STATES DISTRICT JUDGE:

With this decision, this Court decides whether an international adoption business that

is no longer in operation may continue to claim attorney-client privilege over documents

seized in a criminal investigation.

In this case, the government is using a filter team to prevent disclosure of potentially

privileged material.1 Now, the government seeks disclosure of a portion of the filter team's

sequestered material. These materials are subject to an attorney-client privilege claim by

European Adoption Consultants, an international adoption business that has shut down

operations.2 The government argues that European Adoption Consultants is now defunct,

eliminating its attorney-client privilege right.

European Adoption Consultants is not criminally charged and is not under criminal

investigation.4 Acting as an interested party, the corporation opposed the government's

motion for disclosure.

To decide whether privilege protects the documents, the Court considers three issues.

Doc. 34 at 3.

Doc. 38.

Doc. 34 at 1.

Doc. 2; Doc. 38-6

Doc. 38 at 1.

Case:l:20-cr-00424-JG Doc #: 84 Filed: 10/29/21 2 of 7. PagelD #: 1308

Case No. 1:20-cr-424

Gwin, J.

First, should federal or state privilege law apply ? The federal courts majority rule denies

, can a

attorney-client privilege to defunct corporations, while Ohio law does not Second

defunct corporation claim attorney-client privilege? Finally, is European Adoption

Consultants a defunct corporation ?

For the reasons presented below, the Court GRANTS the government's motion for

disclosure.

Background

a. Debarment

European Adoption Consultants formerly operated as an Ohio-based international

An administrative proceeding involving the company laid the

adoption business.6

groundwork for this criminal case. In 2016, the State Department reviewed a series of

complaints about European Adoption Consultants.

The Department issued a notice of

Adoption

temporary debarment, effective December 16, 2016, that required European

Consultants "to immediately cease engaging in intercountry adoptions.

The State Department conducted a hearing the following year. After reviewing

written submissions by the adoption company and the Department, the Hearing Officer

issued findings.9 According to her findings, the State Department proved that European

Adoption Consultants committed fourteen separate violations of 42 U.S.C. § 14944 and 22

C.F.R. § 96, Subpart F.

. 31 2020),

(

Eur. Adoption Consultants, Inc. v. Pompeo, 18-CV 1676, 2020 WL 515959, at * 1 D.D.C. Ian

appeal dismissed 20 5053 , 2020 WL 3406482 (D.C. Cir. May 28, 2020)

. -

Id.

Id. at * 2 .

-2-

Case:l:20-cr-00424-JG Doc #: 84 Filed: 10/29/21 3 of 7. PagelD #: 1309

Case No. 1:20-cr-424

Gwin, J.

The District Court for the District of Columbia upheld the State Department findings.

European Adoption Consultants dropped its appeal of that decision.

b. Consent Decree

The Ohio Attorney General sued European Adoption Consultants after the business's

debarment.13

The Ohio Attorney General alleged that the company made false

representations to adoptive families, board members, and intercountry adoption licensing

agencies.14 The Attorney General also alleged that, after the debarment, European Adoption

Consultants failed to comply with federal regulations to refund client fees and transfer client

records.15

The Ohio Attorney General and European Adoption Consultants entered into a

consent decree to resolve the civil suit without liability admissions

The decree declared

that from that date forward, the business "shall exist only for the purposes of prosecuting

claims of any kind it may have against others, defending itself against any claims, and

litigating matters in connection with proceedings related to its debarment."

Within 30 days

after the final resolution of all legal claims, the corporation was required to begin the

dissolution process.18

c. Criminal Case

After a State Department referral, the FBI began investigating European Adoption

Consultants and its employees. That investigation led to the current criminal case involving

Id. at *1.

May 28 2020).

Fur. Adoption Consultants. Inc v. Pompeo. No. 20-5053, 2020 WL 3406482 (D.C. Cir.

Doc. 38-2.

Id. at 11 8-19.

20-34.

Id. at

/</ at 13, 11.

Id. at 14-15, 1 5 .

Id. at 15, 11 6-7.

-3 -

Case:l:20-cr-00424-JG Doc #: 84 Filed: 10/29/21 4 of 7. PagelD #: 1310

Case No. 1:20-cr-424

Gwin, J.

three individual defendants. European Adoption Consultants' executive director, former

employee, and former service provider were indicted for conspiracy and other related

charges.19 The charges stem from alleged schemes to defraud U.S. and foreign government

agencies in connection with international adoptions

The government also investigated European Adoption Consultants for possible

criminal charges but closed that inquiry nearly a year ago.

II.

Legal Standard

Federal Rule of Evidence 501 governs privilege claims. Under this rule, in federal

criminal cases, "common law —as interpreted by United States courts in the light of reason

and experience—governs a claim of privilege" unless the federal Constitution, a federal

statute, or rules prescribed by the Supreme Court provide an exception.

In other words,

federal court decisions determine the parameters of evidentiary privilege in federal criminal

cases.

"The purpose of attorney-client privilege is to ensure free and open communications

between a client and his attorney." When considering the scope of this privilege, "courts

must ensure that the 'application of the privilege does not exceed that which is necessary

effect the policy considerations underlying the privilege.'"

The privilege is "narrowly

construed" because it "operates to reduce the amount of information discoverable during the

course of a lawsuit."

Doc.iDoc. 38-6.

Fed R. Evid. 501.

In re Grand !ur\' Subpoenas 454 F.3d 511, 519 (6th Cir. 2006).

)

Id. ( quoting In re GrandJur \ Investigation No. 83-2-35, 723 F.2d 447, 451 (6th Cir.1983) .

)

(

24 In

Cir

1996

254

251

1995

Jury

Oct

Proc

re Grand

-4-

Case:l:20-cr-00424-JG Doc #: 84 Filed: 10/29/21 5 of 7. PagelD #: 1311

Case No. 1:20-cr-424

Gwin, J.

Corporations can invoke attorney-client privilege as clients.

"[F]or solvent

the

corporations, the power to waive the corporate attorney-client privilege rests with

corporation's management and is normally exercised by its officers and directors.

n 26

III.

Discussion

a. Federal Privilege Law Applies

The dispute over the government's motion for disclosure turns mainly on whether

federal or state privilege law applies. Under Federal Rule of Evidence 501, federal cases

govern privilege in criminal cases, while state law controls in civil cases where state

law

provides the rule of decision.

European Adoption Consultants argues that Ohio law should apply because the

the

corporation is not a defendant in this criminal case, making the government's motion

equivalent of a civil action.

This argument is unavailing. The Court applies the evidentiary

rule for criminal cases because this is a criminal case.

Federal law governs the privilege issues in this case.

b. A Defunct Corporation Cannot Exercise Attorney-Client Privilege

In federal courts, the "weight of authority . . . holds that a dissolved or defunct

corporation retains no privilege.

// 29

The Court finds that this majority rule is well-supported

by the principles underlying attorney-client privilege.

( 1981)).

Reed v. Baxter 134 F.3d 351, 356 (6th Cir. 1998) (citing Upjohn Co. v. United States, 449 U.S.

383, 389 90

Commodih' Futures TradingComm'n v. Weintraub 471 U.S 343 348 (1985).

Fed. R. Evid. 501.

Doc. 38 at 9.

Apr, 8, 2015) (collecting

S.E.C. v. Carrillo Huette! LLP No. 13 CIV. 1735 , 2015 WL 1610282 . at * 2 ( S.D.N.Y.

Supo

947 948-49 (N.D. III.

cases); see also Off. Comm, of Admin. Claimants ex re!. LTV Steel Co. v. Moran, 802

person, but the

natural

the

client

death

the

survives

201 (collecting cases) ("Attorney-client privilege

)

corporation

the

client

otherwise

suggests

authority

weight of

-5 -

Case: l:20 cr -00424-JG Doc #: 84 Filed: 10/29/21 6 of 7. PagelD #: 1312

Case No. 1:20-cr-424

Gwin, J.

Attorney-client privilege goes only as far as the policy interests supporting the rule

require. Once a corporation becomes defunct, the policy interests supporting shielded

communications fall away. "[T]he need to promote full and frank exchanges between

attorney and agents of his corporate clients disappears when the corporation

those clients has departed."

employing

"No real purpose would be served by continuing the privilege

after operations cease, as the corporation would no longer have any goodwill or reputatio

to maintain."

c. European Adoption Consultants Is a Defunct Corporation

European Adoption Consultants is defunct because of its consent decree with

the

Ohio Attorney General. The consent decree allowed the business to exist solely for

purpose of settling legal claims.

After concluding those claims, the corporation was

required to dissolve. European Adoption Consultants has an uncollected money judgmen

award, granted in 2016 prior to the debarment, that the corporation has not enforced.

The

business's claims against the State Department were resolved in favor of the State

Department, and that decision is now final.

In 2017 and 2018 reports to the Ohio Attorney General, European Adoptio

Consultants reported no revenue, expenses, or assets.

. Int'l, Inc. v. CL Consultants, Inc.. Nos. 05-4120, 05-5164. 2012 WL 874322. at *4 (N.D, IllMar. 14, 2012).

31 TAS Distrib. Co. v. Cummins Inc., No. 07-1141.2009 WL 3255297, at * 2 (C.D. III. Oct. 7. 2009) (quoting

City of Rialto v. U.S. Dep’tofDef. , 492 F. Supp. 2d 1193, 1200 (C.D. Cal. 2007».

Doc. 3 2 at 14-15, fl 5-7.

2, but the judgment

* -1 at 20. Counsel declared an intent to file a foreclosure action, Doc., 38http-1:/at/courts

Doc. 38

.co.ashtabula.oh.us

System

Courts

docket reflects no activity since the 2016 award. Ashtabula County Ohio

30 Trading Techs

. Counsel also does not explain why the judgment has not been enforced for over five

)

32 Eur. Adoption Consultants. Inc v. Pompeo. 18-CV-1676. 2020 WL 515959. at * 1 (D.D.C. Ian. 31, 2020 ,

appeal dismissed 20-5053, 2020 WL 3406482 (D.C. Cir. May 28, 2020).

(last visited October 29, 2021)

years.

Doc. 34-3.

- 6-

Case:l:20-cr-00424-JG Doc #: 84 Filed: 10/29/21 7 of 7. PagelD #: 1313

Case No. 1:20-cr-424

Gwin, J.

Assessing whether a corporation is defunct for purposes of attorney-client privilege

"should be based primarily on the practical realities of the business rather than technical

legal status."36

Like corporations found defunct in other cases, European Adoption

Consultants has no assets, liabilities, or employees.

European Adoption Consultants is defunct and as a result, the corporation can no

longer claim attorney-client privilege.

d. Motion to File a Sur-Reply

European Adoption Consultants moved to file a sur-reply to the government's reply

brief. The Court denies the motion. The government did not raise new issues in the reply

brief that create good cause for filing a sur-reply.

IV.

Conclusion

For the stated reasons, the Court GRANTS the government's motion for disclosure.

The filter team should disclose materials that have been sequestered solely because of

European Adoption Consultants' attorney-client privilege claim. This order does not apply

to any material sequestered because of privilege claims by any Defendants.

The Court DENIES European Adoption Consultants' motion to file a sur-reply.

IT IS SO ORDERED

Dated: October 29, 2021

James S. Gwin

JAMES S. GWIN

UNITED STATES DISTRICT JUDGE

' illiland v. Ceramita, No. 2:05-CV-01059 2006 WL 2642525, at * 2 (W.D. Pa. Sept. 14, 2006).

)

d No. 02Lewis v United States No. 02-2958, 2004 WL 3203121, at * 4 (W.D. Tenn. Dec. 7, 2004 , aff'

the

after

reported

that

Adoption

Consultants

)

European

2958 B, 2005 WL 1926655 (W.D. Tenn June 20 2005

Doc

employees

its

and

operations

all

terminated

down

shut

debarment, it "

38 Eldridge

v. CardifLife Ins. Co. , 266 F.R.D. 173, 175 (N.P. Ohio 2010).

APPENDIX B

Case:l:20-cr-00424-JG Doc #: 91 Filed: 11/12/21 lofll. PagelD #: 1365

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

UNITED STATES OF AMERICA,

Case No. 1:20-cr-424

Plaintiff,

OPINION & ORDER

[Resolving Doc. 86]

vs.

MARGARET COLE, etal.,

Defendant.

JAMES S. GWIN, UNITED STATES DISTRICT JUDGE:

On October 29, this Court granted the government's motion to disclose documents

held by the government's filter team in this criminal case involving intercountry adoptions.

The government seized the documents while executing two search warrants.

European

Adoption Consultants— an adoption business that is no longer operating—claimed attorney

client privilege over more than 200,000 documents. Following the rule that a majority of

federal courts have adopted, this Court held that European Adoption Consultants was defunct

and could no longer claim the privilege.

Now, the defunct corporation, European Adoption Consultants, moves to stay the

Disclosure Order pending appeal.

With this decision, this Court determines whether

European Adoption Consultants meets its burden to justify a stay. The Court consider

whether: ( 1 ) the corporation is likely to prevail on the merits on appeal, (2) whether the

corporation will suffer irreparable harm without a stay; (3) whether a stay would harm other

interested parties; and (4) whether public interest favors a stay.

Doc. 84.

Doc 82 at 3-4,

Doc. 90-1

Doc. 86.

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Case No. 1:20-cr-424

Gwin, j.

For the reasons presented below, the Court DENIES European Adoption Consultants'

motion for a stay pending appeal.

Background

a. Debarment

European Adoption Consultants formerly operated as an Ohio-based international

adoption business.5 An administrative proceeding involving the corporation preceded this

criminal case. In 2016, the State Department reviewed a series of complaints about European

Adoption Consultants. The Department issued a notice of temporary debarment, effective

December 16, 2016, that required European Adoption Consultants "to immediately cease

engaging in intercountry adoptions."

The State Department conducted a hearing the following year. After reviewing

written submissions by the adoption corporation and the Department, the Flearing

Officer

issued findings.8 According to her findings, the State Department proved that European

Adoption Consultants committed fourteen separate violations of 42 U.S.C. § 14944 and 22

C.F.R. § 96, Subpart F.

The District Court for the District of Columbia upheld the State Department findings.

European Adoption Consultants abandoned its appeal of that decision.

b. Consent Decree

The Ohio Attorney General sued European Adoption Consultants after the

(

. . , 31, 2020),

Ear. Adoption Consultants inc. v. Pompeo, 18 CV-1676 2020 WL 515959, at * 1 D.D C Ian

)

May

2020

appeal dismissed. 20-5053 . 2020 WL 3406482 (D.C. Cir.

id.

id. at *2.

id.

id. at * 1

(

Cir. May 28 2020).

Eur. Adoption Consultants, inc. v. Pompeo No. 20-5053 2020 WL 3406482 D.C.

-2-

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Case No. 1:20-cr-424

Gwin, J.

corporation's debarment.

The Ohio Attorney General alleged that the corporation made

false representations to adoptive families, board members, and intercountry adoption

licensing agencies.13 The Attorney General also alleged that, after the debarment, European

Adoption Consultants failed to comply with federal regulations to refund client fees and

transfer client records.14

The Ohio Attorney General and European Adoption Consultants entered into a

consent decree to resolve the civil suit without liability admissions.

The decree declared

that from that date forward, the corporation "shall exist only for the purposes of prosecuting

claims of any kind it may have against others, defending itself against any claims, and

litigating matters in connection with proceedings related to its debarment."

Within 30 days

after the final resolution of all legal claims, the corporation was required to begin the

dissolution process.17

c. Criminal Case

After a State Department referral, the FBI investigated European Adoption Consultants

and its employees. That investigation led to the current criminal case against three individual

defendants. European Adoption Consultants' former executive director, former employee,

and former service provider were indicted for conspiracy and other related charges.

The

charges stem from alleged schemes to defraud U.S. and foreign government agencies in

connection with international adoptions.

Doc. 38-2.

Id. at HI 8-19.

Id. at 11 20-34.

Id. at 13, 11.

Id. at 14-15, 1 5 .

Id. at 15, 116-7.

Doc.112

-3 -

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Gwin, J.

The government also investigated European Adoption Consultants for possible

criminal charges but closed that inquiry nearly a year ago.

d. This Court's Order

European Adoption Consultants claimed attorney-client privilege over thousands of

documents the government seized in its criminal investigation.

The government's filter

team then sequestered those documents, preventing disclosure to the prosecution

team. In

December 2020, several years after European Adoption Consultants shut down operations,

the government moved to disclose the documents.

The government argued that European

Adoption Consultants was defunct, eliminating its privilege claim.

European Adoption Consultants, acting as an interested party, opposed the

government's motion.

European Adoption Consultants argued that it was not yet defunct

because the corporation had an uncollected money judgment and planned to file another

suit against the State Department.

This Court granted the government's motion for disclosure.

In the Disclosure Order,

the Court adopted the federal court majority rule: defunct corporations cannot exercise

. The Court found that European Adoption Consultants was defunct

attorney-client privilege

under its consent decree with the Ohio Attorney General. The Court supported this finding

Doc. 38 6.

Doc. 34 at 4.

federal

The corporation reported no revenue, assets, or expenses in 2017 and 2018. Doc. 34 -4 . In a 2018

and

all

operations

down

shut

debarment

the

after

that

court filing, European Adoption Consultants reported

terminated] its employees." Doc 34-2 at 16.

Doc 34.

Doc. 38.

Id. at 3.

Doc. 84 (Disclosure Order).

Apr, 8 ,

(

Id. at 5 ( citingS.EC v. Carrillo Huette! LLP, No. 13 CIV. 1735 , 2015 WL 1610282, at * 2 S.D.N.Y.

948

947

-49

[

802

Moran

Sui

Steel

LTV

ret

2015) (collecting cases); Off. Comm, of Admin Claimants

(N D. III. 2011) (collecting cases)).

-4-

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Case No. 1:20-cr-424

Gwin, J.

with evidence showing that, since 2017, the corporation had reported no revenue, expenses,

assets, or employees.

II.

Legal Standard

Granting a stay pending appeal is "an exercise of judicial discretion," not a "matter of

right."28 "The party requesting a stay bears the burden of showing that the circumstances

»29

justify an exercise of that discretion.

Courts look to four factors to guide their discretion in granting a stay: (1) "the movant'

likelihood of success on appeal"; (2) "whether irreparable injury to the movant will result in

)

the absence of a stay"; (3) "prospective harm to others if a stay is granted"; and (4 "the

public 's interest in granting a stay."

The first two factors "are the most critical."

"The strength of the likelihood of success on the merits that needs to be demonstrated

is inversely proportional to the amount of irreparable harm that will be suffered if a stay does

. 32 At a minimum, to justify a stay, the movant must demonstrate "serious questions

not issue "

going to the merits and irreparable harm that decidedly outweighs the harm that will

inflicted on others if a stay is granted.

III.

// 33

Discussion

Likelihood of Success on the Merits

European Adoption Consultants fails to show a strong likelihood of success on the

Id. at 6-7 (citing Doc. 38-2; Doc. 34-3; Doc. 34-2); see also Doc. 34-4.

, 672

Nken v. Holder, 556 U . S . 418 , 433 (2009) (quoting Virginian Ry. Co. v. United States. 272 U S 658

(1926))

Id. at 434.

Dodds v. U.S. Dep'tofEduc., 845 F.3d 217 220 (6th Cir. 2016)

\ d. at 221 (quoting Nken. 556 U S. at 434).

Baker v. Adams Counh /Ohio Valley Sch. Bd 310 F.3d 927, 928 (6th Cir. 2002).

relationship

Id;, see also A . Philip Randolph Inst, v. Hosted, 907 F. 3d 913 919 (6th Cir. 2018) (explaining the

)

between the stay factors

-5 -

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Gwin, J.

short

merits. The corporation also fails to show serious questions going to the merits, falling

of this lower standard applicable to movants showing clear irreparable harm.

European Adoption Consultants addresses the merits of the Court's order in a short

paragraph citing no legal authority.

The corporation argues that "this matter should have

been decided in a civil proceeding," but cites no authority supporting this claim. European

Adoption Consultants also provides no support for its claim that "federal law dictates that

privilege should be retained."

the

In the Disclosure Order, the Court held that the federal court majority rule denies

attorney client privilege to defunct corporations.

European Adoption Consultants does not

engage with that conclusion or cite any authority suggesting that this Court's

decision will

be overturned on appeal.

The Court also found that European Adoption Consultants is defunct. In its motion,

the corporation did not challenge that finding.

European Adoption Consultants does not show a strong likelihood of success on

merits or serious questions going to the merits. The corporation cites no legal authority

the

and

does not discuss the Court's holding, that defunct corporations cannot exercise attorneyclient privilege. European Adoption Consultants does not challenge (or even mention

) the

show a

Court's factual finding that it is a defunct corporation. The corporation fails to

likelihood of success on appeal.

b. Irreparable Harm

Doc. 86 at 2-3.

Id. at 3.

Id.

Doc. 84 at 5-6.

-6-

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Gwin, ) .

European Adoption Consultants does not show that it will suffer irreparable harm

absent a stay.

Like other federal courts adopting the majority rule on defunct corporations' privilege,

the Court based its Disclosure Order reasoning on the public policy concerns underlyi

Once a corporation is defunct, the "need to promote full and

attorney-client privilege.

and the corporation "no longer [has] any goodwill or

frank exchanges" disappears,

reputation to maintain."

European Adoption Consultants does not explain how a corporation that shut

down

Adoption

operations can be irreparably harmed by document disclosure. And European

consultants does not give a clue how attorney-client privilege would apply to the more than

200,000 documents it seeks to stop disclosure of.

( )

Attorney-client privilege may be invoked for: "(1) a communication; 2 made

between privileged persons; (3) in confidence; (4) for the purpose of obtaining or providin

legal assistance for the client."

To qualify for the privilege, the communication must occur

with a lawyer acting as a "professional legal adviser," giving legal advice.

European Adoption Consultants argues that the communications at issue here

are

privileged because they involve communications with 18 foreign attorneys who helped

facilitate intercountry adoptions.

Yet it appears that many or most of the communications

. 84 at 5-6.

38 Doc

. inti, Inc y. CL Consultants, Inc.. Nos. 05-4120, 05-5164, 2012 WL 874322. at *4 (N.D. IllMar. 14 2012).

40 TAS Distrib. Co. v. Cummins Inc. , No. 07-1141, 2009 WL 3255297. at * 2 (C.D. III. Oct. 7. 2009) (quoting

))

City of Rialto y. U.S. Dep't of Def., 492 F. Supp. 2d 1193, 1200 (C.D. Cal. 2007 .

39 Trading Techs

Restatement (Third) of the Law Governing Lawyers § 68 (2000).

Reed v. Baxter 134 F.3d 351, 355 (6th Cir. 1998).

Doc. 38 at 5.

-7-

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Case No. 1:20-cr-424

Gwin, J.

involved administrative or business tasks, rather than legal advice.

For example, many

email subject lines on the log reference administrative tasks such as translations and invoice

involved in the

payments. The government also argues that at least one of the attorneys

communications was not licensed in the country where she worked, requiring European

Adoption Consultants to engage separate legal counsel for court appearances.

The communications may not meet the elements for attorney-client privilege, further

reducing the likelihood of irreparable harm. Even those documents that do meet the

elements could be subject to the crime-fraud exception.

Co-Defendant Dorah Mirembe is

an attorney, and her communications are among the sequestered documents.

The corporation argues that it could be irreparably harmed because the government

could reopen its criminal investigation into the corporation.

investigation almost a year ago.

Yet the government closed its

The executive director is already criminally charged, one

former employee is also charged, and one former employee already pled guilty to criminal

charges.49 It is very unlikely that the United States would reopen a criminal investigation

a non-operating corporation without assets or employees that is required to dissolve

as soon

the

as it concludes legal proceedings. While it is possible for the government to reopen

criminal investigation long after closing it, the possibility appears remote given European

Adoption Consultants' defunct status.

Beyond the possibility of a reopened criminal investigation, European Adoption

Court. The log

The Court reviewed a privilege log from the filter team that was distributed to counsel and the

tions

the

communica

listed

was not publicly filed because unindicted individuals were

Doc. 34 at 5-6.

Id. at 4 n.1.

Doc. 86 at 3.

Doc. 38-6.

. 9, 2019)

(

Doc. T Order Accepting Guilty Plea, United States v. Longoria, No. 19 cr-482 N.D Ohio Oct

Doc.

-8-

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Case No. 1:20-cr-424

Gwin, J.

Consultants does not argue any other form of irreparable harm. The corporation cites cases

holding that disclosing privileged communications can cause irreparable harm.

But those

nt.51

cases involved an actively operating corporation and an individual criminal defenda

European Adoption Consultants does not explain how a corporation no longer in operation

privilege

can suffer similar harm, nor does it cite any authority recognizing attorney-client

for a defunct corporation.

European Adoption Consultants does not show that it will be irreparably injured

without a stay of the Disclosure Order.

c. Prospect of Stay Harming Other Interested Parties

European Adoption Consultants argues that a stay would cause only "minimal " harm

to the parties in this criminal case because, to its knowledge, "no party raised

any concern

that this information was imminently needed " while the motion for disclosure was pending.

Opposing the motion, the government argues that a stay "could delay the Government'

ability to complete discovery," resulting in trial delays

The Court finds that granting a stay would harm government and the Defendants by

delaying trial. This factor does not weigh heavily in the analysis, but it reinforces the Court'

conclusion that European Adoption Consultants does not meet its burden to justify a stay.

d. Public Interest

European Adoption Consultants does not show that granting a stay serves the public

interest. The corporation argues that the attorney-client privilege serves an important role in

In re Search Warrant Issued June 13 2019 942 F.3 d 159 175 (4th Cir. 2019 ; In re Lott

)

52 ( 6th Cir 2005).

In research Warrant 942 F.3d at 164; In re Lott, 424 F.3d at 447.

Doc. 87 at 3-4.

-9-

424 F.3 d 446 451-

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Gwin, J.

the legal system. This is true. But European Adoption Consultants does not argue and

not show that a defunct corporation retains the privilege or that the public interest

does

would

support such a rule.

All privileges reduce truth-assisting fact finding by limiting information available to

the jury. In some circumstances, the trade-off makes sense. But attorney-client privilege

must be "strictly construed" because it "operates to reduce the amount

discoverable during the course of a lawsuit."

of information

The scope of the privilege "does not exceed

free

that which is necessary to effect the policy considerations underlying the privilege": "

and open communications between a client and his attorney."

For a corporation with no income, no employees, no prospect of coming back,

the

Consultants

attorney-client privilege application cannot be justified. European Adoption

shows no public interest in granting a stay.

The public does, however, have an interest in a fair trial without unnecessary delay

on these serious charges related to intercountry adoptions.

European Adoption Consultants does not meet its burden to show that public interest

favors a stay pending appeal.

IV.

Conclusion

For the stated reasons, the Court DENIES European Adoption Consultants' motion

an emergency stay of the Court's October 29 Disclosure Order.

IT IS SO ORDERED

Dated: November 12, 2021

James S. Gwin

In re Grand jury Proc. Oct 12. 1995 78 F.3d 251, 254 (6th Cir. 1996)

ur\ Investigation No.

In re Grand / un Subpoenas. 454 F.3 d 511 , 519 (6 th Cir. 2006) (quoting In re Grand!

)

(

83-2-35, 723 F.2 d 447 451 6th Cir 1983

-1053

for

Case: l:20-cr-00424-JG Doc #: 91 Filed: 11/12/21 11 of 11. PagelD #: 1375

Case No. 1:20-cr-424

Gwin, J.

JAMES S. GWIN

UNITED STATES DISTRICT JUDGE

-11

APPENDIX C

Document: 16-1

Case: 21-4053

Filed: 12/17/2021

Page: 1

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

100 EAST FIFTH STREET, ROOM 540

POTTER STEWART U.S. COURTHOUSE

CINCINNATI, OHIO 45202-3988

Deborah S. Hunt

Clerk

Tel. (513) 564-7000

www.ca6.uscourts. gov

Filed: December 17, 2021

Ms. Clare Moran

Seeley, Savidge, Ebert & Gourash

26600 Detroit Road

Suite 300

Westlake, OH 44145

Mr. Jeremy Raymond Sanders

U.S. Department of Justice

Criminal Division

1400 New York Avenue, N. W.

Washington, DC 20005

Re: Case No. 21-4053, USA v. Margaret Cole, et al

Originating Case No. l :20-cr- 00424-001

Dear Counsel,

The Court issued the enclosed Order today in this case.

Sincerely yours,

s/Robin L Baker

Case Manager

Direct Dial No. 513-564-7014

cc: Ms. Samantha Bateman

Ms. Sandy Opacich

Ms. Chelsea S. Rice

Enclosure

(1 of 6)

Case: 21-4053

Document: 16-2

Filed: 12/17/2021

No. 21 4053

FILED

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

MARGARET COLE, et al.,

Defendants,

EUROPEAN ADOPTION CONSULTANTS, INC.,

Interested Party-Appellant.

(2 of 6)

Page: 1

)

Dec 17, 2021

DEBORAH S. HUNT, Clerk

ORDER

Before: NORRIS, WHITE, and THAPAR, Circuit Judges.

European Adoption Consultants, Inc. (“EAC”) appeals a district court order authorizing a

filter team to disclose to the government materials seized from various EAC locations but

stay

sequestered based on EAC’s assertion of the attorney-client privilege. EAC moves to

disclosure of the materials pending appeal, asserting that it has a likelihood of success on appeal

because disclosure of the documents should have been resolved in a separate civil matter rather

than this criminal case, it is not a defunct corporation, it retains the privilege under state law and

the government unlawfully seized the documents. The government opposes a stay, and EAC

replies.

“The party requesting a stay bears the burden of showing that the circumstances justify an

exercise of [our] discretion.” Nken v. Holder , 556 U.S. 418, 433-34 (2009). We balance four

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No. 21-4053

- 2factors to determine whether a stay is appropriate: (1) whether the movant “has made a strong

showing that [it] is likely to succeed on the merits”; (2) whether the movant “will be irreparably

injured absent a stay”; (3) whether issuance of a stay will “substantially injure” other interested

parties; and (4) “where the public interest lies.” Id. at 434 (citation omitted). The first two

factors “are the most critical.” Id. More than a “mere possibility” of relief and irreparable injury

is necessary to satisfy these factors, respectively. Id. at 434-35 (cleaned up). The first two

factors are also “inversely proportional” in that “more of one excuses less of the other.” See

Mich. Coal, of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 153 (6th Cir

1991).

Under Federal Rule of Criminal Procedure 41, an aggrieved person may move for the

return of seized property. Fed. R. Crim. P. 41(g). Pursuant to that Rule, a motion for return of

property in the absence of an ongoing criminal proceeding should be pursued through a civil

)

action. See Harbor Healthcare Sys., L.P. v. United States, 5 F.4th 593, 596 (5th Cir. 2021

(“Because there was not yet any criminal proceeding against Harbor, the motion was filed as its

own civil case.”); United States v. Bailey, 508 F.3d 736, 737-38 (5th Cir. 2007) (“Because

Bailey’s criminal case had concluded, the court properly construed [his Rule 41(g) motion for

the return of property] as a civil complaint.”). Here, however, it is the government moving for

disclosure of sequestered communications held by a filter team to use in its criminal proceeding

against defendants. No Federal Rule of Criminal Procedure specifically governs such a request

but this court has permitted the government to seek disclosure of sequestered communications

retained by filter teams in an ongoing criminal proceeding. See, e.g. , United States v. Coffman

574 F. App’x 541, 564-65 (6th Cir. 2014).

Although EAC contends that state law applies to its assertion of privilege, “[t]he common

—

law as interpreted by United States courts in the light of reason and experience governs a

—

claim of privilege” in a federal criminal case. Fed. R. Evid. 501; see also In re Lott, 424 F.3d

Case: 21-4053

Document: 16-2

Filed: 12/17/2021

(4 of 6)

Page: 3

No. 21-4053

-3446, 450 (6th Cir. 2005). Under common law, the privilege survives the death of a client who is

a natural person, even in criminal cases, Swidler & Berlin v. United States, 524 U.S. 399, 410 11

. .

(1998), and it can be asserted on behalf of a corporation, Upjohn Co. v. United States, 449 U S

383, 389-90 (1981). It is unsettled, however, whether a corporation may assert the privilege

after it is dissolved. See In re Grand Jury Subpoena # 06-1, 21A F. App’x 306, 308-09 (4th Cir

2008) (per curiam). But the majority of district courts “hold[] that a dissolved or defunct

corporation retains no privilege.” S.E.C. v. Carrillo Huettel LLP , No. 13 Civ. 1735, 2015 WL

1610282, at *2-3 (S.D.N.Y. Apr. 8, 2015) (collecting cases and discussing the rationales

of a

supporting this holding). Those courts “holding] that the privilege survives the dissolution

corporation generally do so on the basis of state law.” Id. at *3.

The district court found that EAC is defunct because of a consent decree with the Ohio

Attorney General that required it to dissolve. EAC argues that the district court erred because

the consent decree allowed it to continue to “exist only for prosecuting claims” and “defendin

itself against any claims.” But EAC doesn’t explain why this alone suggests it would not still

considered defunct. And the district court did not rely exclusively on the consent decree. It also

pointed to the fact that EAC has no assets, liabilities, or employees. EAC has not identified

any

cases suggesting similarly situated companies have been treated as not defunct for privilege

purposes.

EAC also argues that state law should apply to its privilege claim. See Ohio Rev. Code

§ 2317.021(A) (extending the attorney-client privilege to dissolved corporation’s “last board

directors, their successors or assigns, or to the trustees, their successors or assigns.”). But

here

EAC asserted its privilege in a criminal proceeding. So, as explained above, Federal Rule

Evidence 501 suggests federal common law applies. EAC has pointed to no case in which

federal court has applied state privilege law in a criminal proceeding. Nor has EAC pointed

any case suggesting that, under federal common law, attorney-client privilege survives the

Case: 21-4053

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No. 21-4053

-4dissolution of a company. In light of the authority contrary to its position and the lack of

authority in its favor, EAC has not made a “strong showing” that it is “likely to succeed on the

merits.” Nken, 556 U.S. at 434.

EAC must also demonstrate that it will suffer irreparable harm upon disclosure. It

—

summarily represents that it will and the government will not given the government’s delay

in seeking disclosure, the length of time the motion was pending below, and that a co-conspirator

has not yet been arraigned. “The attorney client privilege is one of the oldest recognized

privileges for confidential communications.” Swidler & Berlin, 524 U.S. at 403. “[A]n order to

disclose

privileged

information

intrudes

the

confidentiality

attorney-client

communications.” Mohawk Indus., Inc. v. Carpenter , 558 U.S. 100, 109 (2009). Yet immediate

appeals generally do not lie from orders requiring disclosure of privileged materials, in part

because “a ruling [that] ‘may burden litigants in ways that are only imperfectly reparable by

appellate reversal of a final district court judgment . . . has never sufficed.’” Id. at 107 (quoting

Digit. Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 872 (1994)); see id. at 109; In re

United Shore Fin. Servs. , No. 17-2290, 2018 WL 2283893, at *2 (6th Cir. Jan. 3, 2018) (order).

Here, the order is immediately appealable only because of EAC’s status as a third party, which

depends not on the irreparability of harm from disclosure but on the third party’s lack of

incentive to comply with the order. See Church of Scientology of Cal. v. United States, 506 U.S.

9 , 18 n. ll (1992). Further, a movant must show more than “some possibility of irreparable

injury.” Nken, 556 U.S. at 434 (internal quotation marks and citation omitted). The government

10.

has not indicted EAC and represents that such a possibility is “remote.” Appellee’s Br. at

Although a co-conspirator who has not yet been arraigned may have an interest in retaining the

attorney client privilege over some of these documents, those concerns appear to have been

addressed in the prior civil litigation and to the extent they were not, she may challenge them on

(5 of 6)

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Page : 5

No. 21-4053

-5her own behalf. Under these circumstances, therefore, EAC has not shown a possibility of

irreparable harm.

The remaining “factors merge when the Government is the opposing party.” Nken, 556

U.S. at 435. The government did not unduly delay moving to obtain the documents by filing its

motion four months after indicting Cole. The parties promptly filed and briefed the motion,

rendering it ripe for a decision within a month of it being filed, but the district court did not rule

on the motion until nine months later. In the interim, however, Cole moved to file a sur-reply,

and to suppress documents from her home and office which included sequestered

communications. Only after the district court granted Cole leave to file a sur-reply and denied

her motion to suppress did it rule on the government’s motion to disclose. The district court’s

denial of the motion to suppress also cuts against Cole’s contention that seizure of the documents

was unlawful, and the use of taint teams to sequester privileged communications is not alone a

basis for rendering the search unlawful. See United States v. Jarman, 847 F.3d 259, 266 (5th

Cir. 2017). The government’s prosecution of Cole and Parris is ongoing, and trial is scheduled

to commence in February 2022. “[W]hen the ground for asserting privilege . . . for use in

criminal trial is based only on the generalized interest in confidentiality, it cannot prevail over

the fundamental demands of due process of law in the fair administration of criminal justice” and

“must yield to the demonstrated, specific need for evidence in a pending criminal trial.” United

States v. Nixon, 418 U.S. 683, 713 (1974) (addressing executive privilege). The communications

among the conspirators are undoubtedly probative and relevant given the charges involved.

The motion to stay is DENIED .

ENTERED BY ORDER OF THE COURT

Deborah S. Hunt, Clerk

(6 of 6 )

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.