UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION

File No. 2:96-CR-12
HON. ROBERT HOLMES BELL

UNITED STATES OF AMERICA,
Plaintiff,
FREDERICK DAKOTA, and
JERROLD L. POLINSKY,
Defendants.

O R D E R

In accordance with the opinion entered this date,

IT IS HEREBY ORDERED that Frederick Dakota’s objection to the January 14, 1997, order denying his motion to limit the admissibility of Attorney O'Leary's testimony (Docket # 195) is DENIED and the January 14, 1997, opinion and order (Docket #’s 186 & 187) are AFFIRMED.

IT IS FURTHER ORDERED that Defendant Dakota and the KBIC's objections to the January 23, 1997, order permitting the government to inspect the documents segregated by the defendants (Docket #’s 198 & 199) are DENIED and the January 23, 1997, opinion and order (Docket #’s 192 & 193) are AFFIRMED.

Date: February 25, 1997

ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE

---

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION

File No. 2:96-CR-12 V.
HON. ROBERT HOLMES BELL

UNITED STATES OF AMERICA,
Plaintiff,
FREDERICK DAKOTA,. and
JERROLD L. POLINSKY,
Defendants.

O P I N I O N

On January 14, 1997, Magistrate Judge Timothy P. Greeley issued an opinion and order denying Defendant Frederick Dakota’s motion to limit the testimony of Keweenaw Bay Indian Community (KBIC) tribal attorney Joseph P. O'Leary on the basis of attorney-client privilege. On January 23, 1997, the magistrate judge entered an opinion and order denying Defendant Dakota’s motion to prevent the government from obtaining access to segregated documents claimed as privileged and confidential.

Defendant Dakota has filed objections to both orders. KBIC has joined in Defendant Dakota’s objections to the January 23, 1997 order. Although Defendant Dakota refers to the January 14 and 23 opinions and orders as “reports and recommendations,” the magistrate judge's rulings on both motions were properly made in the form of final orders on non-dispositive pretrial matters. See 28 U.S.C. § 636(b)(1)(A); W.D. Mich. L.R. 11(c). This Court reviews the magistrate judge's orders regarding such non-dispositive matters under a clearly erroneous or contrary to the law standard. 28 U.S.C. § 636(b)(1)(A); W.D. Mich. L.R. 13(a). A finding is clearly erroneous when, “although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been Committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948).

The January 14, 1997 opinion and order concerns the issue of whether there was an attorney-client privilege between Defendant Dakota and Attorney Joseph P. O'Leary covering Defendant Dakota’s private business affairs.

Defendant Dakota asserted in his motion that on 3 or 4 occasions in January and February of 1991 he sought and received Attorney O'Leary's opinion on some of his personal business affairs which are related to the subject matter of the Indictment in this case. At the time of these communications, Defendant Dakota was Chief Executive officer of the KBIC and O'Leary was Tribal Attorney for the KBIC. In September 1995, O'Leary disclosed the substance of these conversations to three federal officials without the consent of Defendant Dakota or the KBIC government. In November 1995 O'Leary testified to the same matters in response to a grand jury subpoena.

Defendant Dakota moved to limit O'Leary's trial testimony on the basis that his communications with O'Leary were privileged as attorney-client communications. Defendant Dakota did not divulge the content of the communications. The only evidence he submitted in support of the motion was the affidavit of Attorney O'Leary. O'Leary does not admit in his affidavit that he had an attorney-client relationship with Defendant Dakota, but he does concede that after reflection it appears to him that Defendant Dakota was seeking legal advice. (see 1)

The magistrate judge determined that Defendant Dakota had failed to establish that he had an express or implied agreement with O'Leary creating an attorney-client relationship regarding matters relating to defendant's personal business affairs.

In his objections Defendant Dakota contends that the denial of his motion to limit O'Leary's testimony was erroneous because it focused on O'Leary's subjective belief rather than upon the reasonable, expectations of Defendant Dakota, who is a layman. In support of his objections Defendant Dakota has presented the Court with his own affidavit and an offer to divulge in camera the content of his communications with O'Leary.

Defendant's position suffers from several impediments. First, Defendant Dakota is offering new evidence that was not before the magistrate judge. When a non-dispositive ruling of a magistrate judge is at issue, the district court is not permitted to receive further evidence. Haines v. Liqcrett-Group, Inc., 975 F.2d 81, 91 (3d Cir. 1992); Holmes Products Corp. v. Dana Licrhting, Inc., 926 F.Supp. 264, 267 (D. Mass. 1996).

(1) 'O'Leary stated in his affidavit:
Although it was not initially apparent to me, upon reflection, and from recalling the context of the conversation, I believe that Frederick Dakota was seeking legal advice in his individual and official capacities. I also believe that he did not want the substance of our conversation shared with anyone else.

The magistrate judge's determination, based upon the record before him, was not clearly erroneous or contrary to law. The burden of establishing the existence of the attorney-client privilege rested with Defendant Dakota, the party asserting the privilege. In re-Grand Jury Investigation No. 83-2-35, 723 F.2d 4i-7, 454 (6th Cir. 1983). Whether an attorney-client relationship has formed is a matter of contract formation, either expressed or implied by the conduct of the parties. Innes v. Howell Corp., 76 F.3d 702, 712 (6th Cir. 1996). Because an attorney for a corporation does not automatically represent the corporation's constituents in their individual capacities absent clear consent, id., Defendant Dakota had the burden of coming forward with evidence that O'Leary consented to represent him in an individual capacity. The magistrate judge's determination that O'Leary's affidavit was insufficient to establish the existence of an attorney-client relationship between O'Leary and Defendant Dakota in his personal capacity is not clearly erroneous.

Even if this Court were to consider Defendant Dakota’s affidavit, the evidence would still not be sufficient to establish an attorney-client relationship. Defendant Dakota states in his affidavit that he disclosed his personal business affairs to O'Leary because O'Leary was an attorney, Defendant Dakota was seeking legal advice, and Defendant Dakota expected that O'Leary would hold his disclosures in the strictest confidence. Defendant appears to be of the opinion that his self-serving statement of his subjective belief alone is sufficient to establish the existence of an attorney-client relationship. The Court does not read the case law so broadly. Most cases require some objective evidence that the communication was made within the confines of an attorney-client relationship.

For example, in United States v. Costanzo, 625 F.2d 465 (3rd Cir. 1980), cert. denied, 472 U.S. 1017 (1985), the Third Circuit held that the trial court erred in failing to hold an evidentiary hearing to determine whether an attorney-client relationship existed between Costanzo and Paglianite, an attorney who provided information about Costanzo to the FBI. In that case, however, there was evidence that Costanzo had previously employed the services of Paglianite as an attorney on a number of civil and criminal matters and that the government knew of and took advantage of Paglianite's relationship with Costanzo. 625 F.2d at 467.

In In re Grand Jury Proceeding, Detroit, Michigan, August. 1977, 570 F.2d 562 (6th Cir. 1978), a corporate vice-president and target of the government's investigation moved to quash a subpoena directed at the corporation's counsel. The Sixth Circuit affirmed the trial court's denial of the motion to quash. Because the target of the grand jury proceeding had not clearly claimed a personal privilege at the time he communicated with the corporation counsel, he could not assert that privilege later. Id. at 563.

In United States v. Keplinqer, 776 F.2d 678 (7th Cir.), cert. denied, 439 U.S. 829 (1985), where there was little or no evidence that defendants either sought legal advice on an individual basis from corporate counsel or manifested in any way their belief that they were being represented individually, their mere subjective belief that they were being represented individually was not a sufficient basis for finding an attorney client relationship between the individual defendants and corporate counsel. Id. at 701. The court stated that “at least in the absence of any relatively clear indication by the potential client to the attorney that he believed he was being individually represented, we think no individual attorney-client relationship can be inferred without some finding that the potential client's subjective belief is minimally reasonable.” id.

In this case O'Leary was counsel for the KBIC. Defendant Dakota dealt with O'Leary in his official capacity as Chief Executive Officer of the Tribe. There is no evidence that Defendant Dakota ever requested O'Leary to represent him in an individual capacity. There is no evidence that O'Leary had previously represented him in his personal capacity on other matters. The subjective belief of Defendant Dakota, offered without any objective evidence in support, is insufficient to establish the existence of an attorney-client relationship. This Court will not find an attorney-client relationship based upon friendship, accidental spillover of personal matters during official business or on after-thought.

The Magistrate Judge's opinion specifically provides that the ruling does not apply to privileged communications between O'Leary and Defendant Dakota in his capacity as Chief Tribal Officer. Defendant Dakota contends that the disclosures at issue are made in both an individual and official capacity. Defendant Dakota argues that the magistrate judge erred by failing to address Defendant Dakota’s assertion of KBIC's corporate privilege in his official capacity as Tribal Chair.

Defendant Dakota was indicted in his personal capacity rather than in his capacity as Chief Executive Officer of the KBIC. Defendant Dakota’s personal interests will not always coincide with the interests of the KBIC. His defense counsel does not represent the KBIC. Accordingly, if Defendant Dakota believes that any issue should be raised on behalf of the KBIC, that issue should be raised by the KBIC through the KBIC Tribal Attorney, rather than by Defendant Dakota through his personal criminal defense attorney. See In re Grand Jury Proceeding, 434 F.Supp. 648 (E.D.Mich. 1977), affl’d, 570 F.2d 562 (1978). If the KBIC deems that O'Leary"s testimony will violate the KBIC's attorney-client privilege, the KBIC should raise the issue before trial. At such time an in camera disclosure of the contents of the statements allegedly made to O'Leary may very well be necessary to determine whether statements at issue were made by Defendant Dakota in his personal capacity or in his official capacity.

For the reasons stated, the magistrate judge's opinion and order dated January 14, 1997 denying Defendant Dakota's motion to limit testimony is affirmed.

---

II

In the second opinion and order at issue, dated January 23, 1 997, the magistrate judge denied Defendant Dakota’s motion to prevent the government from obtaining access to segregated documents claimed to be privileged and confidential. The magistrate judge denied the motion on the basis that any privilege with respect to the documents subpoenaed from the Tribal Center had been waived by the KBIC. Defendant Dakota has filed objections to the ruling, and the KBIC has joined in those objections.

Defendant Dakota’s first objection to the ruling is that it rests on the assumption that he does not have an attorney-client relationship with O'Leary and because it prohibits him from asserting the attorney/client privilege on behalf of the KBIC. He argues that because the KBIC is a solvent Indian community, he, as Tribal chair, is part of the tribe’s top management and has standing to assert an attorney-client privilege on behalf of the Tribe. Both of these arguments have been addressed and rejected in Part I of this opinion.

Defendant Dakota and the KBIC also object to the magistrate judge's determination that the KBIC waived any attorney-client or sovereign privilege with respect to these documents. They contend that neither their inability to control illegal occupiers of the Tribal Center, their use of document inspectors, nor their inclusion of persons associated with co-defendant Polinsky on the document inspector list amounts to a waiver of the privilege.

Contrary to Defendant's assertions, the magistrate judge did not base his finding of a waiver upon the FFJ's seizure and publication of the documents. Waiver in this case is not based upon the mere inadvertent disclosure of privileged documents to the FFJ. The focus of the magistrate judge's opinion is on KBIC's voluntary actions rather than its involuntary loss of the documents to the FFJ.

Neither is waiver in this case based upon the use of tribal members to assist in the organization and inspection of the voluminous documents. The magistrate judge determined that KBIC waived any privilege associated with the documents by failing to object to the validity of the Rule 17 subpoena and by allowing third-parties access to the documents. The attorney-client privilege is waived when there is disclosure to a third party because disclosure runs counter to the notion of confidentiality. In re Grand Jury Proceedings October 12, 1995, 78 F.3d 251, 254 (6th Cir. 1996).

The KBIC never objected to the magistrate judge's finding in its August 14, 1996 opinion that the KBIC had specifically waived any privilege with respect to the review of documents by defendant Polinsky and his attorneys. Neither did the KBIC object to the order allowing inspection of the documents by some 50 individuals, including those associated with Polinsky. Polinsky is not a member of the governing body of the KBIC. He is a third party with respect to the KBIC, and disclosure to him and links agents constitutes a clear waiver of the KBIC's attorney-client privilege.

Defendant Dakota and the KBIC argue that disclosure to Polinsky does not constitute a waiver because of a joint-defense agreement with Polinsky. The attorney-client privilege is not waived if a privileged communication is shared with a third person who has a common legal interest with respect to the subject matter of the communication. Hodges, Grant & Kaufmann v. United States, 768 F.2d 719, 721 (5th Cir. 1985). Thus, the joint-defense agreement relied upon by Defendant Dakota may very well protect communications shared between Dakota, Polinsky, and their trial counsel. It does not, however, protect disclosures between the KBIC and Polinsky. The KBIC and Polinsky do not have a common legal interest. The KBIC is not on trial, so its disclosures to Polinsky are disclosures to a third-party rather than disclosures under a joint-defense theory. An attorney client privilege cannot be preserved merely by sharing information with selected third-parties under a promise that those third-parties will not disclose the information any further.

The Court finds no error in the magistrate judge's determination that the KBIC has waived its attorney-client privilege with respect to the documents obtained from the FFJ and that Defendant Dakota must make those documents available to the government. The magistrate judge's opinion and order dated January,23, 1997, is accordingly affirmed.

An order, consistent with this opinion will be entered.

Date: February 25, 1997
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE