Feinberg v. Commissioner
808 F.3d 813
10th Cir.2015Background
- Petitioners (the Feinbergs and McDonald) operate a Colorado medical-marijuana dispensary (Total Health Concepts) licensed by the state but whose conduct violates federal law (21 U.S.C. § 841).
- IRS disallowed their business-expense deductions under 26 U.S.C. § 280E and issued a large tax assessment; petitioners challenged the denial in Tax Court.
- During Tax Court proceedings the IRS served discovery probing whether petitioners trafficked in marijuana; petitioners invoked the Fifth Amendment and declined to produce responsive materials.
- The IRS moved to compel production, arguing DOJ memoranda advising non-prosecution of state-licensed dispensaries meant petitioners faced no real risk of federal prosecution and therefore could not invoke the Fifth Amendment.
- The Tax Court granted the IRS’s motion to compel; petitioners sought mandamus relief from the Tenth Circuit before final judgment, arguing the discovery order violated their Fifth Amendment rights.
- The Tenth Circuit denied the mandamus petition, concluding petitioners failed to show mandamus was warranted because an appeal after final judgment would provide adequate remedies and precedent (Mid-America’s Process) foreclosed immediate intervention.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether petitioners may invoke the Fifth Amendment to refuse IRS discovery about marijuana trafficking | Petitioners: answering would pose a real, authentic risk of self-incrimination because distribution violates federal law | IRS: DOJ memoranda counsel non-prosecution of state-licensed dispensaries, so no real risk; petitioners should be compelled to produce | Court did not decide the ultimate validity of the privilege here; acknowledged plausible Fifth Amendment claim but found no immediate relief via mandamus |
| Whether mandamus is appropriate to review the Tax Court’s discovery order before final judgment | Petitioners: extraordinary relief is warranted because disclosure would irreparably harm Fifth Amendment rights | Government: mandamus is inappropriate because ordinary appeal after final judgment suffices | Denied mandamus; appeal after final judgment is adequate and Mid-America’s Process controls |
| Whether DOJ memoranda remove the danger of prosecution such that the Fifth Amendment cannot be invoked | Petitioners: memoranda are insufficient and non-binding; danger of prosecution remains | Government: memoranda show practical non-enforcement and negate risk of prosecution | Court skeptical of giving dispositive weight to internal DOJ memoranda; noted they can change and do not eliminate the constitutional question |
| Whether potential remedies on appeal (suppression, reversal of sanctions, new trial) are inadequate to prevent irreparable injury | Petitioners: compelled production could be used in future criminal prosecution causing irreparable harm | Government: if production was involuntary or improperly used, remedies (suppression, reversal, new trial) exist on appeal | Court held petitioners failed to show irreparable injury or inability to obtain adequate relief on appeal; therefore mandamus improper |
Key Cases Cited
- Baxter v. Palmigiano, 425 U.S. 308 (recognizes in civil contexts an adverse inference may follow a valid Fifth Amendment invocation)
- Cheney v. U.S. Dist. Court, 542 U.S. 367 (standards for granting mandamus and intervening in ongoing proceedings)
- Mid-America's Process Serv. v. Ellison, 767 F.2d 684 (10th Cir.) (error in compelling civil discovery subject to Fifth Amendment may be remedied on appeal after final judgment)
- United States v. Jones, 703 F.2d 473 (10th Cir.) (Fifth Amendment may be invoked once witness shows answers would tend to incriminate, regardless of speculation about prosecution)
- Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100 (collateral-order appeals doctrine does not generally render discovery orders immediately appealable)
- Braswell v. United States, 487 U.S. 99 (corporate invocation of Fifth Amendment is limited)
- United States v. Rivas-Macias, 537 F.3d 1271 (10th Cir.) (requires an authentic danger of self-incrimination to invoke the Fifth Amendment)