In re GRAND JURY SUBPOENAS DUCES TECUM DATED JUNE 13, 1983
AND JUNE 22, 1983.
No. 337, Docket 83-6256.
United States Court of Appeals,
Second Circuit.
Argued Sept. 28, 1983.
Decided Nov. 1, 1983.
Robert G. Morvillo, New York City (Gilda I. Mariani, Obermaier, Morvillo & Abramowitz, P.C., New York City, of counsel), for witness-appellant.
Peter J. Romatowski, Asst. U.S. Atty., New York City (Rudolph W. Giuliani, U.S. Atty., S.D.N.Y., Andrew J. Levander, Barry A. Bohrer, Asst. U.S. Attys., New York City, of counsel), for U.S.
Before MANSFIELD, KEARSE and WINTER, Circuit Judges.
MANSFIELD, Circuit Judge:
Respondent-appellant, former President of Saxon Industries, Inc. (Saxon) who retained certain of that company's records after leaving its employment, appeals from an order entered in the Southern District of New York by Judge Abraham D. Sofaer holding him in contempt for refusing to produce the documents pursuant to a subpoena duces tecum issued by a grand jury sitting in the Southern District of New York. Appellant is the target of the grand jury's investigation into alleged fraud in the financial statements of Saxon which in 1982 filed a petition for reorganization under Chapter 11 of the Bankruptcy Reform Act. We reverse and remand.
In June 1983 a grand jury subpoena duces tecum was issued by the district court commanding appellant to produce all records of Saxon, its subsidiaries and divisions, in his possession.1 When appellant, who had ceased to be employed by Saxon in mid-1982, refused to comply, the government on July 7, 1983, moved to enforce the subpoena.2 Appellant opposed on the grounds that most if not all of the Saxon documents in his possession were duplicates of records already in the government's hands and that his act of producing them would tend to incriminate him in violation of his Fifth Amendment rights, see Fisher v. United States,
DISCUSSION
The Fifth Amendment provides, "No person ... shall be compelled in any criminal case to be a witness against himself." Beginning with Boyd v. United States,
Thus, under Boyd and its progeny, the Fifth Amendment analysis was focused on the nature and content of the subpoenaed documents. On the one hand, private papers were held privileged, provided they were in the personal possession of the person claiming the privilege. Couch v. United States, supra,
The reason for not permitting an officer or agent of a separate entity to refuse to produce its organization's records is that the privilege is purely personal and designed to protect the human being, not an artificial entity. The latter, being impersonal, has no human dignity needing protection. Its records are usually available to others within the entity and may not be treated as the private confidential papers of any one officer or employee. The officer creates or handles the records in a representative capacity, not on his own behalf. The records, moreover, do not belong to him but to the organization. He has no right to use the papers for his personal purposes, at least without the consent of the entity. To compel him to produce corporate records does not invade his personal privacy or violate his dignity or integrity as a person, protection of which is the aim of the Fifth Amendment. In addition, the organization, unlike the individual, is often the creature of the state, subject to visitation, obligated from its inception to make disclosures needed for enforcement of federal and state laws and subject to greater governmental control and regulation than the individual. Bellis v. United States, supra,
This "corporate records exception" was a logical reaction to the content-oriented approach of Boyd. The scope of the privilege was further reduced by a line of Supreme Court decisions holding that to qualify for the privilege the evidence sought to be withheld by the individual must be not only personal but communicative or testimonial in nature. Requiring a suspect to give a blood test, for instance, is not protected; "blood test evidence, although an incriminating product of compulsion, [is] neither petitioner's testimony nor evidence relating to some communicative act or writing by the petitioner." Schmerber v. California,
In Fisher v. United States,
"A subpoena served on a taxpayer requiring him to produce an accountant's workpapers in his possession without doubt involves substantial compulsion. But it does not compel oral testimony; nor would it ordinarily compel the taxpayer to restate, repeat, or affirm the truth of the contents of the documents sought. Therefore, the Fifth Amendment would not be violated by the fact alone that the papers on their face might incriminate the taxpayer, for the privilege protects a person only against being incriminated by his own compelled testimonial communications. Schmerber v. California, supra; United States v. Wade, supra; and Gilbert v. California, supra. The accountant's workpapers are not the taxpayer's. They were not prepared by the taxpayer, and they contain no testimonial declarations by him. Furthermore, as far as this record demonstrates, the preparation of all of the papers sought in these cases was wholly voluntary, and they cannot be said to contain compelled testimonial evidence, either of the taxpayers or of anyone else. The taxpayer cannot avoid compliance with the subpoena merely by asserting that the item of evidence which he is required to produce contains incriminating writing, whether his own or that of someone else."
At the same time, however, the Court recognized that disclosure of contents of personal papers is not the only method of self-incrimination; a person may under some circumstances incriminate himself by the act of producing documents that tend to incriminate, whether or not they be personal. As the Supreme Court pointed out in Curcio v. United States, supra,
"The act of producing evidence in response to a subpoena nevertheless has communicative aspects of its own, wholly aside from the contents of the papers produced. Compliance with the subpoena tacitly concedes the existence of the papers demanded and their possession or control by the taxpayer. It also would indicate the taxpayer's belief that the papers are those described in the subpoena. Curcio v. United States,
In the circumstances of the case before it the Court held that the Fifth Amendment did not entitle the taxpayer to refuse production of the accountant's papers because their existence and possession were not in issue and the taxpayer's production of them did not amount to his authentication of them since they had been prepared by a third party (the accountant). Under these circumstances the Court was "quite unprepared to hold that either the fact of existence of the papers or of their possession by the taxpayer poses any realistic threat of incrimination to the taxpayer."
The Court left for another day the question of whether Boyd and its progeny would continue to shield a person from compelled production of his private incriminating papers. Doubt was cast on the continued viability of that long-standing principle, however, by the Court's shift of concern away from the contents of the subpoenaed documents.4 Indeed, some view Fisher as abandoning Boyd's emphasis on the nature or contents of the documents, and as opting instead for an inquiry into the question of whether ordering their production will result in "compelled testimonial incrimination,"
It is against this uncertain backdrop that the witness in this case has tried to invoke the protection of the Boyd doctrine. He contends that since he disassociated himself from Saxon more than a year ago and no longer is an officer of that company the former corporate records in his possession, most of which apparently are copies of those retained by the company, have somehow become his personal papers and are therefore entitled under the Fifth Amendment to protection from compulsory disclosure. We disagree with this contention, which borders on the frivolous. The papers concededly belonged to the corporation before he departed with them. There is no evidence that ownership or possession of the papers was lawfully transferred to him; on the contrary, there is evidence that shortly after the company filed its Chapter 11 petition and before his departure he was seen cleaning out files in the company's offices and that he retained some original corporate documents of which no copies were kept by the company. The witness has no right to appropriate to himself corporate documents, whether originals or copies. As the Court noted under similar circumstances in Wilson v. United States, supra,
The witness' next contention is more troublesome. Invoking Fisher, he argues that even if the contents of the corporate documents must be disclosed, he is entitled under the Fifth Amendment to refuse to produce them because his act of producing them would amount to an attestation that he has possession of them. His admission that he possesses them, he argues, when viewed with other circumstances in the case, would provide the basis for an inference that he has guilty knowledge of their potentially incriminating contents and that he removed them from company files to prevent disclosure of his guilty knowledge. His post-employment possession, he contends, is therefore an issue in the case; to require him to engage in the act of producing the documents pursuant to subpoena would amount to testimonial compulsion in violation of his Fifth Amendment rights.
The district court did not resolve this claim, choosing instead to accept the government's position that the Fisher act of production doctrine simply does not apply to corporate records. We believe that the district court erred in rejecting this contention out of hand solely on the ground that corporate documents were demanded by the subpoena. Under Fisher the standard is not the potential incriminating nature and contents of the documents subpoenaed but whether their mere production would itself tend to incriminate the possessor. It is true that if the witness were still a Saxon officer or employee he would normally be obligated as a representative of the company to produce its documents, regardless of whether they contained information incriminating him, Bellis v. United States, supra,
Once the officer leaves the company's employ, however, he no longer acts as a corporate representative but functions in an individual capacity in his possession of corporate records. Although his possession of them as a private citizen may have been derived from his wrongful misappropriation of them from the corporation, we do not view such conduct as depriving him, once the documents are in his personal possession (rather than as a corporate representative), of his right under the Fifth Amendment to invoke the act of production doctrine outlined in Fisher. It is elementary that a person need not be guiltless to qualify for invocation of the Fifth Amendment. For the purpose of determining the extent to which a natural person may invoke his Fifth Amendment privilege under Fisher, the fact that the subpoenaed documents in his possession were prepared by a corporation is not directly relevant. The Fisher doctrine simply does not turn on either content or authorship of the documents; it is the fact, and the circumstances, of possession that are controlling. Couch v. United States, supra. If, as the Supreme Court indicated in Fisher, the act of production doctrine applies to one type of otherwise unprivileged document (accountant's workpapers) it can apply as well to corporate records in an individual's possession. Indeed, in In re Katz,
There remains the question of whether the witness' compelled production of the records in this case, quite aside from their contents, could reasonably be viewed as tending to incriminate him. In Fisher the Court held that the question does not lend itself to a categorical answer but must "depend on the facts and circumstances of particular cases or classes thereof."
We note, however, that should production itself be potentially incriminatory, the government could either by stipulation or by obtaining a grant of immunity pursuant to 18 U.S.C. Secs. 6002-6003, immunize the act of production; such immunity would preserve the appellant's Fifth Amendment rights with respect to his conduct in producing the documents, Kastigar v. United States,
Reversed and remanded for further proceedings consistent with the foregoing.
Notes
One subpoena, dated June 13, 1983, directed appellant to produce for Saxon, its predecessor and subsidiary corporations and divisions thereof, and for Camden Industrial Sales Corp. and Mill Factors, originals or, if not available, copies of any and all books, records and documents of whatever description, including but not limited to:
"(a) records of any and all business conducted; including but not limited to notes, memoranda, correspondence, telexes, telephone logs, telephone bills and records, diaries and calendars used in connection with the business, officers', employees' and agents' personal files, contracts, bills, receipts, invoices, purchase orders, shipping records, price lists, brochures, financial statements, accounting and inventory records;
(b) corporate records; including but not limited to certificates of incorporation or partnership, minute books, corporate resolutions, stock certificates and records, corporate kit, corporate seals and stamps, shareholder lists, any lists of officers, employees and agents; and all evidence of the names of the principals or owners of the entities;
(c) bank, brokerage and other financial records; including but not limited to account statements, cancelled checks, deposit tickets, credit and debit memoranda and advices, wire transfers; promissory notes, loan agreements and any and all records pertaining to any and all advances of credit or payments or disbursements to or from the entities;
(d) records pertaining to any and all local, state and federal tax returns or liability, including but not limited to partnership and corporate tax returns, payroll tax returns, payroll Forms W-2, W-3, W-4 and Forms 1099;
(e) evidence of any and all transactions engaged in by [WITNESS] for or on behalf of the entity, whether conducted in his own name or in the name of the entity, including but not limited to any and all checks or withdrawals of funds drawn by [WITNESS] on any bank account of any of the entities.
B. If any items called for by this subpoena are withheld based upon a claim of privilege or otherwise, state the basis for such withholding and identify the nature of each such item by date, author, and recipient if any, and general contents so as to allow the matter to be litigated."
A second subpoena, dated June 22, 1983, commanded production of similar documents with respect to Mill Group Purchasing Associates, Inc.
Appellant advised that he had no records in his possession with respect to three of the companies
Judge Sofaer questioned whether appellant's hand-written notations on some of the documents qualified as "personal" papers but allowed him to move for modification of the subpoena to exclude them. However, no such motion was made
The district court's decision in United States v. Fox has since been reversed on the ground that the witness there was entitled to invoke his Fifth Amendment privilege with respect to production of the documents in that case--his sole proprietorship records sought by the IRS in connection with its income tax investigation--which might incriminate him. See United States v. Fox,
It was this doubt that led Justices Brennan and Marshall to write separate concurring opinions divorcing themselves from the implications of the majority opinion that a person might no longer be protected by the Fifth Amendment against production of his private papers except to the limited extent of not being required to admit their existence, authentication and possession if those facts were in issue
The government argues that for purposes of determining the applicability of the act of production doctrine corporate documents should be treated the same as required records kept pursuant to a regulatory scheme, Shapiro v. United States,
Indeed the government has conceded that the problem of self-incrimination through act of production could be obviated by immunization. Gov't Brief at 4