"The Governor's idiot fiance"....what might be read into Duke Shepherd's "harsh" email about Cylvia Hayes

Wow.

The other day, the Oregonian published an unsolicited email from Duke Shepherd, who had served as ex-Governor Kitzhaber's labor and human services policy adviser. The key part of the email reads:

For the record, other than keeping her occasionally updated on what we might be doing, the Governor's idiot fiancé had no engagement into the $100 M. Kitzhaber wanted a "game changing" investment in housing for homeless families -- because it cut across all the key priorities, but especially Early Learning. He directed Margaret and me to make it happen. We did. Margaret especially (we initially were aiming for $200M).

Cylvia had lots of mind numbing meetings on poverty. She gave lots of speeches. She had no role in this substantial and critically important decision on housing for the 15-17 budget. We kept her posted to keep her off our backs and off of his. But the budget wasn't hers.

"[I]diot fiance" ... ? That is pretty harsh (as the Oregonian characterized it).

Note that Shepherd now works for the Oregon Health & Science University. Back when he was working for Kitzhaber, though, he apparently dared not express such open contempt to Cylvia Hayes. The Oregonian printed a presumably representative email in which Shepherd, after being castigated by Hayes for not keeping her updated about some project, responded, "I'm very sorry for my oversight in communication on this matter. I should have remembered to update you in a timely manner."

To be fair, Shepherd's response seems entirely professional and civil. The point is that it stands in stark contrast to his current email. So what are we to make of the change in tone and substance?

One possibility is that this is some kind of damage control on behalf of Kitzhaber. By calling Hayes the "idiot fiance," Shepherd distances himself from her, and thereby adds credibility in stating that she had no influence on the low income housing project. If other former aides to the ex-Governor have similar things to say, that would benefit Hayes and Kitzhaber - though at the price of public humiliation - because it would tend to weaken any theory of influence peddling by her.

I went back to the known FBI subpoena to see if Duke Shepherd's name is listed; it's not. Of course, just because someone is listed on the subpoena doesn't mean he or she is a potential target*, and not being listed on the subpoena isn't any kind of immunity. However, it does suggest that as of right now, Shepherd's previous project isn't of primary interest to the FBI.

* Nkenge Harmon-Johnson is probably the easiest example of this; she's listed on the subpoena as someone whom emails to or from are to be produced to the FBI, yet she hasn't requested public funding for a lawyer, and it appears that she was a victim of Hayes' capricious temper.

Another possibility for the harsh email is that there is no more concern about burning a bridge, because the bridge has already collapsed completely with no hope of ever being rebuilt. If other former aides also recognize that the bridge is gone, there may be cooperation with the FBI going on behind the scenes.

Oregonian's account of ex-Gov. Kitzhaber's final days in office

The Oregonian has a gripping story about the twists and turns of John Kitzhaber's last days in office, sourced largely from unnamed advisors. It provides a detailed, behind the scenes peek at why Kitzhaber went back and forth about whether to resign from office. Not surprisingly, there was a sharp divide between the political advisors, who felt that there was no choice but to resign, and the lawyers, who felt that an offer to resign was a valuable bargaining chip to use with state and federal investigators:

Rival factions of his team contributed to his uncertainty with compelling but contradictory advice. For months heading to the end, his political advisers were increasingly pointed: The love of his life was political poison and would bring him down unless he distanced himself from her and disclosed everything about her business affairs. 

The attorneys argued just as adamantly that transparency was a luxury the governor could no longer afford.  Above all, the attorneys told him, don't quit. His job was his most important bargaining chip for likely settlement negotiations of ethical and perhaps criminal accusations.

Last month, Willamette Week published a story based in part on leaked emails between Kitzhaber and his lawyers (the same lawyers giving the advice in the quoted paragraph above), raising a question of whether the paper was relying on attorney-client privileged materials. This portion of the Oregonian story, on the other hand, appears to be sourced entirely through interviewed subjects. Unless the sources were Kitzhaber or his lawyers, it would mean that someone else was privy to those communications between the ex-Governor and his legal counsel.

This would mean that those particular discussions appear to be not privileged, because either the lawyers were providing this advice to Kitzhaber in front of other persons, or they provided it to him in private, and either they or he subsequently shared it.

ORS 40.225 (Oregon Evidence Rule 503) defines a "confidential communication" as:

[A] communication not intended to be disclosed to third persons other than those to whom disclosure is in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication.

Typically, the "in furtherance of the rendition of professional legal services" would mean paralegals, legal assistants, law clerks, or other non-lawyers working for the lawyer. "[T]hose reasonably necessary for the transmission of the communication" might be people similarly situated to the client, except instead of the relationship of furthering the providing of legal advice, is limited to the "transmission of the communication." It's hard to see how political advisors would fit into that category.

Courts can be sticklers about the need to protect the confidentiality of attorney-client communications. This came up during Martha Stewart's prosecution for false statements and obstruction of justice, when she forwarded an email from her attorney to her daughter. Although she was ultimately able to prevent the government from introducing that email into evidence because it was ruled to be attorney work product*, the trial judge agreed that the attorney-client privilege had been lost by sending it to her daughter: "Stewart's June 23 e-mail to Nussbaum was clearly protected by her attorney-client privilege [snip] until she waived that privilege by forwarding a copy of the e-mail to her daughter...."

* Work product is a related kind of protection than the attorney-client privilege, but somewhat broader in scope. The attorney-client privilege is essentially inviolate, whereas work product can, on rare occasions, be overcome. However, work product can be shared more freely than privileged materials.

US DOJ clears up (sort of) who is being investigated in the U.S. Attorney's Office in Oregon

Near the end of last week, news broke that U.S. Attorney Amanda Marshall, who had earlier announced that she was taking a leave due to a health problem, was under investigation by the Justice Department for an alleged "inappropriate relationship."

Subsequently, Marshall's attorney, Charese Rohny, told the press that DOJ had informed her that the investigation was of the Assistant U.S. Attorney in the alleged relationship, not Marshall. Today, the Oregonian reported:

On Monday, the Justice Department took issue with Rohny's statement. 

"The statements in the article attributed to a lawyer for U.S. Attorney Marshall do not accurately represent the position of the OIG," the department said. 

That apparently means  Kerin isn't the subject of the investigation and that Marshall is. But Justice Department officials declined to elaborate. 

"Consistent with our policies regarding OIG investigations, we will not comment further," the department said.

Hmm.... That's not explicit confirmation that Marshall is the subject of the investigation, but it's probably as close as you can expect from the Justice Department. Did Rohny misunderstand or mis-state what she had been told by DOJ, or did DOJ change its tune?

Taking a look at Cylvia Hayes' lawsuit against the Oregonian

Former Oregon First Lady Cylvia Hayes filed a lawsuit against the Oregonian on Wednesday, seeking to block access to her emails stored on her computer, after the newspaper made a public records request a month earlier. Let's take a look at the complaint.

First, it seeks a "declaratory judgment" that (1) she is neither a public body nor a public official; (2) compelling her to produce her emails would be an unreasonable violation of her privacy; (3) compelling her to produce her emails would violate her right against self-incrimination; (4) if required to produce the emails, she should have "reasonable time" to respond and she should be able to recover fees for the cost involved.

Like a regular lawsuit, a declaratory judgment settles a legal issue between parties. ORS 28.010 states:

Courts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations, whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment is prayed for. The declaration may be either affirmative or negative in form and effect, and such declarations shall have the force and effect of a judgment.

A party who would normally be the defendant in a lawsuit might seek a declaratory judgment as a way to get a jump on the other side. For example, if there were a potential contract dispute between parties to the contract, one side might want to get a court ruling that the contract is invalid without breaching the contract and then raising the invalidity as a defense - after all, if you lose that lawsuit, you are then on the hook for breach of contract. With a declaratory judgment, you could find out if you are correct that the contract is invalid; if you're wrong, you can still comply with it and not be in breach.

So in this instance, Hayes is basically asking the court to determine that she doesn't have to turn over the emails, as opposed to her refusing to turn over the emails and then defending her failure to do so later on in court. It's primarily a matter of timing.*

* Sometimes there is a question of whether a complaint seeking declaratory relief is sufficiently "ripe," meaning, ready to be resolved by a court. Generally, this problem arises when the dispute is too abstract or uncertain. In this instance, however, Hayes' status as a public official or private citizen seems concrete enough, especially given the Attorney General's earlier ruling that she indeed was a public official.

Second, Hayes argues that she is neither a public body nor a public official, and hence her emails are not public records within the meaning of the public access statute. Here, she seems to rely on the points she earlier raised unsuccessfully before the Attorney General - that her role was "largely advisory or ceremonial," that she lacked "actual or apparent authority to make binding decisions for the State of Oregon," that she was not paid, that she was not supervised by anyone (though that seems to have been part of the problem!), that she was neither an employee nor an officer of the State, nor elected nor appointed to any position. The Attorney General's order is quite detailed and thorough, and addressed Hayes' points (though of course, a court might view the relevant precedents differently).

Third, Hayes' claim of the Fifth Amendment privilege against self-incrimination has drawn a lot of media headlines. (Oregonian; Portland Business Journal; Daily Astorian) The Fifth Amendment protects a person from being forced to testify about matters that might tend to incriminate him or her. To the extent that the compelled disclosure of Hayes emails might incriminate her, the self-incrimination problem isn't about the emails, which speak for themselves, but rather, the act of producing those emails.

Hayes' complaint cites United States v. Hubbell, which provides a good discussion of the problem. Hubbell was investigated by the Office of the Independent Counsel as part of the Whitewater matter during the Clinton Administration. Following his conviction pursuant to a plea deal where he agreed to cooperate, the OIC served a subpoena to get access to documents to check the veracity of Hubbell's cooperation. Hubbell refused to do so, claiming his Fifth Amendment privilege. The Supreme Court explained:

More relevant to this case is the settled proposition that a person may be required to produce specific documents even though they contain incriminating assertions of fact or belief because the creation of those documents was not “compelled” within the meaning of the privilege. Our decision in Fisher v. United States, 425 U.S. 391 (1976), dealt with summonses issued by the Internal Revenue Service (IRS) seeking working papers used in the preparation of tax returns. Because the papers had been voluntarily prepared prior to the issuance of the summonses, they could not be “said to contain compelled testimonial evidence, either of the taxpayers or of anyone else.” [snip] It is clear, therefore, that respondent Hubbell could not avoid compliance with the subpoena served on him merely because the demanded documents contained incriminating evidence, whether written by others or voluntarily prepared by himself.

On the other hand, we have also made it clear that the act of producing documents in response to a subpoena may have a compelled testimonial aspect. We have held that “the act of production” itself may implicitly communicate “statements of fact.” By “producing documents in compliance with a subpoena, the witness would admit that the papers existed, were in his possession or control, and were authentic.” Moreover, as was true in this case, when the custodian of documents responds to a subpoena, he may be compelled to take the witness stand and answer questions designed to determine whether he has produced everything demanded by the subpoena. The answers to those questions, as well as the act of production itself, may certainly communicate information about the existence, custody, and authenticity of the documents. Whether the constitutional privilege protects the answers to such questions, or protects the act of production itself, is a question that is distinct from the question whether the unprotected contents of the documents themselves are incriminating.

What this means is that by responding to the Attorney General's order and turning over the emails, Hayes would be implicitly conceding that (1) these are her emails; and (2) they fall within the scope of the public records request. Those concessions would be important if the matter were to proceed to trial, because the emails could be entered into evidence without any further need for authentication (which basically means, a showing that they are real).

One way to see the significance of this concession is to imagine if, say, the FBI had obtained the same emails through a search warrant. Not only would law enforcement have to figure out which of her emails were responsive (as opposed to making her do the work), but now in a trial, the prosecution would have to figure out some way to authenticate the emails. Perhaps it would be enough to show that they were taken from Hayes' personal computer, but there would have to be some way to show that the email was hers. (This might not be that difficult here, in that people who received emails from Hayes could presumably testify that they recognize her email address.)

If the Fifth Amendment privilege applies, does that mean that the emails can't be obtained? I'd guess that for the vast majority of responsive emails, the answer is no, because they were sent to someone else whom the media can obtain them from. However, I suppose there might be some that might be responsive between Hayes and ex-Governor Kitzhaber (e.g., hypothetically discussing how she would or would not act with regard to Oregon business), and if each raised the Fifth Amendment act of production issue, both sender and recipient would be blocking public access.

That would leave immunity as the other option. There are three kinds of immunity: transaction, use, and derivative use. Transactional immunity is the gold standard; having transactional immunity means that the person can't be prosecuted for the subject matter of the immunity. Use immunity means that the specific testimony being compelled can't be used as evidence against the person, but the government can still bring charges using evidence it gets elsewhere. Derivative use immunity means the government can't use not just the specific testimony being compelled, but also any evidence that it discovers as a result of what it learned from the compelled testimony. In other words, say that a person receives use immunity and then is compelled to testify about a crime, during which the person admits to burying the murder weapon in a particular location. The person's confession is protected by use immunity, while the murder weapon is protected by derivative use immunity (unless the government can show it would have found the weapon anyway). The Fifth Amdnment doesn't require transactional immunity, but it does require use AND derivative use immunity as an alternative to the privilege itself, according to Kastigar v. United States.

This brings us back to Hubbell. The typical Kastigar situation (i.e., use and derivative use immunity) occurs when a person is compelled to testify; it's not generally about the act of production. Hubbell, by contrast, was. So Hubbell is a much closer analogue to Hayes' claimed defense. Hubbell received immunity for the act of production, and in his subsequent prosecution, the OIC indeed honored the immunity by not using the act of production to authenticate any documents compelled via subpoena. As the Supreme Court put it, the OIC took the position that it was as if the documents had magically appeared in the grand jury room.

Hubbell ruled, however, that the use of the compelled documents to find other sources of evidence was indeed a derivative use, and critically, that it was not enough that the OIC refrained from using the act of production itself. The problem - and here, I should note that Hubbell is far from a straightfoward case - seems to have been that the subpoena directed against Hubbell was so broad that it required him to use his own thinking against himself in deciding what was covered by the subpoena. Indeed, although the OIC was not even thinking about tax fraud at the time it issued the subpoena, that is one of the charges that it indicted Hubbell on after receiving the documents and studying them. Hubbell stands as a warning, therefore, that with a very broad subpoena, derivative use immunity might cast a long shadow.

As the FBI investigation mounts, beware section 1001 . . . .

Sprinter Marion Jones

Corporate executive Martha Stewart

Movie director John McTiernan

What do sprinter Marion Jones-Thompson, corporate executive Martha Stewart, movie director John McTiernan, and Scooter Libby (Vice President Cheney's chief of staff) have in common? All were convicted of making false statements to federal agents - and those statements weren't under oath.

Title 18 of the United States Code, Section 1001, states in relevant part:

[W]hoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully— 

(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
(2) makes any materially false, fictitious, or fraudulent statement or representation; or
(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; 

shall be fined under this title, imprisoned not more than 5 years.

In other words, it is a federal crime to lie to federal agents in any matter within the scope of their duties. Obviously, FBI agents are federal agents. Therefore, section 1001 could rear its head at some point down the road in the Kitzhaber/Hayes saga, especially given the latest news that FBI agents have already been interviewing government officials. The Oregon Live story gives some more indication of what the FBI is interested in:

Two agents - one FBI, one IRS - questioned [Dept. of Administrative Services Director Michael] Jordan for an hour. He said they focused on three questions. Two were about Hayes' work for Demos, a nonprofit that was one of her consulting clients. They asked about emails showing that Kitzhaber urged Jordan to hire a man connected to Demos.

Jordan said he told the agents he didn't feel pressure to hire the man and that he didn't know at the time Hayes was being paid by Demos.

Jordan said he also answered agents' questions about whether Kitzhaber's emails were being preserved. They were, he said.

I should emphasize that there's no reason to think that DAS Director Jordan made any false statements during the interview with the FBI. Indeed, anyone whom the FBI questions in this ongoing matter would be in a similar position of wanting to be careful about not giving any false responses. I'm simply using this aspect of the news story because (1) it shows that the FBI is actually talking to people already; and (2) these appear to have been fairly specific questions with specific answers, whose accuracy the FBI no doubt will be checking.

Section 1001 can be perilous territory for anyone who speaks to government agents because one can violate it by lying - or more importantly, by being perceived as lying - even if the subject-matter of the lie turns out not to have been a crime. This in fact perfectly describes what happened to Martha Stewart. The short story is that the Securities and Exchange Commission suspected that Stewart had engaged in insider trading with regard to stock in a biotech company named ImClone, which was working on a cancer drug called Erbitux. The day before the FDA announced that it was denying approval for further testing of Erbitux, Stewart had sold her entire holding of ImClone stock. By doing so, she avoided the severe drop in the stock price following the FDA's announcement, and saved herself over $45,000. When the SEC investigated, Stewart offered a number of false explanations* to conceal the fact that she had been tipped off to sell ImClone by her brokerage agent's assistant. The assistant was aware that something would be happening to ImClone stock because the agent also represented Samuel Waksal, the ImClone CEO, who had tried to sell his entire stake that same day (i.e., the day before the FDA announcement).

* For example, Stewart and her broker claimed that they had had an automatic sell order in the event ImClone stock fell below a certain price. If this were true, there would have been no need for the broker's assistant to have called Stewart to see if she wanted to sell.

This use of one client's (Waksal) information to benefit another (Stewart) may have been a violation of the brokerage firm's internal policies, but it did not constitute insider trading for the purposes of the securities laws. Hence, what Stewart did in terms of the stock sale was not insider trading. Yet, because she lied about it to SEC lawyers and FBI agents, she was convicted of violating section 1001 and served a short prison sentence. Thus, as the New Yorker's Jeffrey Toobin put it, "lying about something that wasn’t a crime."

Hence, numerous legal commentators have noted that section 1001 creates a disincentive to speak to the FBI, at least, not without a lawyer present. Oregon, by the way, doesn't have an equivalent statute to section 1001. There is a state crime of providing a false unsworn declaration, but that pertains to a false statement made under penalty of perjury but not under oath. There is also a state crime of unsworn falsification, but that relates to false statements made in connection with applying for a government benefit.

For much more about the history and rationale of section 1001, download an academic article I wrote a few years ago and read Part I.A.

The recent Willamette Week story on emails, including apparently privileged ones ...

Reporter Nigel Jaquiss of Willamette Week has been publishing scoop after scoop on the Kitzhaber-Hayes matter, and his latest story, which is online and in print today, gives an inside look at some of the ex-Governor's and ex-First Lady's emails that WW and The Oregonian have been fighting to get access to. Jaquiss weaves a picture of co-mingled finances, a Governor's fiance who refused to abide by the ethical guidelines set forth by the Governor's staff, and broad and grandiose ambitions on the part of Cylvia Hayes.

The end of the article delves into a different set of emails between Kitzhaber and attorney Steve Janik, who was representing Kitzhaber with respect to the investigation opened by the state Ethics Commission, quoting liberally from an email and a response.

Having gone through law school and practiced law for a short stint before getting into full-time law teaching, I still have seared into my brain the importance of the attorney-client privilege. It exists to ensure that the client will feel free to reveal all relevant information to his/her attorney without needing to worry about whether those revelations will become public. This in turn enables the lawyer to provide the most accurate legal advice to the client.*

* There are exceptions. A client's statement about future crimes that he/she intends to commit would not be privileged, because the lawyer is not there to help the client plan new wrongdoings, only to help defend against alleged past wrongs.

Therefore, whenever I see a communication between a lawyer and his/her client, I immediately wonder, is this privileged material? It's for that reason that I'm not going to get into the substance of the emails between Kitzhaber and Janik and what they might mean in terms of the mounting investigations against the ex-Governor and his fiance.

Oregon Revised Statute 40.225 codifies Evidence Rule 503, governing attorney-client privilege, and states in relevant part:

A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client ...

(emphasis added). I've bolded "any" because I've seen some arguments floating around to the effect that the privilege only protects the attorney from being forced by a court to disclose the confidential communications. That can't be right, because when attorneys inadvertently disclose privileged material to opposing counsel during discovery, they are sometimes able to prevail upon the court to force the opposing counsel to return the privileged documents. See, e.g., Tinn v. EMM Labs, Inc., 556 F. Supp. 2d 1191 (D. Or. 2008) (applying Oregon law); State v. McGrew, 46 Or. App. 123 (Or. Ct. App. 1980). These are not cases in which lawyers used the privilege to shield themselves from courts; rather, they used the privilege to persuade a court to force another party to return privileged materials.

As the above discussion implies, occasionally privileged material gets disclosed by mistake to the other side. The mistake lies in not recognizing the privileged nature of the material during document review. In this instance, while it's not entirely clear how WW got the emails, it seems like they were leaked by someone with access to them.

I mention this possibility (probability?) because one might analogize the situation to ones where whistleblowers send classified government documents to the press in order to expose perceived government wrongdoing. RAND Corp. analyst Daniel Ellsberg famously copied most of the so-called Pentagon Papers* to send to the New York Times first, and later to the Washington Post.

* This was a secret, multivolume history of the United States' embroilment in the Vietnam War prepared by the Defense Department. The government claimed that irreparable harm would follow its publication, but in fact, it turned out that the harm stemmed from embarrassment.

More recently, former Booz Allen Hamilton contractor Edward Snowden gave author/activist Glenn Greenwald a huge trove of classified documents taken from the National Security Agency, which formed the basis of articles that Greenwald wrote.

There is a certain similarity where the whistleblower and the publisher know that the documents are classified government material (in the Ellsberg/Snowden examples) or attorney client privileged (in the current matter), but can argue that the public is entitled to know what the government wants to keep secret, particularly where the documents may reveal government misconduct. I'm not sure how far this analogy goes, however, because there is a difference: attorney client privileged materials reveal legal advice and strategy. To the extent they reveal past misconduct, it is a by-product of the need to disclose relevant facts to obtain accurate legal advice.

There's one other oddity about this story. The WW story hit the newstands early this morning, and the online version was posted one minute after midnight. Yet, as of 8:53 p.m. (i.e., nearly 21 hours later), neither Kitzhaber nor his attorneys had responded to inquiries from the Oregonian. (I say this based on the time stamp of the updated version of the Oregonian's story, which still states that there was no response.) You would think that even if they had nothing else to say, they would be screaming about the inappropriateness of publishing attorney client privileged materials.