Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-mc-00080/USCOURTS-caed-2_09-mc-00080-8/pdf.json

Parties Involved:
Diana Dino
Petitioner
Charles Duff
Petitioner
Linda P. Shadley
Respondent
United States of America
Petitioner

Document Text:

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

UNITED STATES OF AMERICA and

DIANA DINO, Revenue Officer,

Internal Revenue Service,

Petitioners,

 v.

LINDA P. SHADLEY,

Respondent. /

NO. 2:09-MC-00080 WBS GGH

MEMORANDUM AND ORDER RE:

PETITION TO HOLD IN CONTEMPT

----oo0oo----

On February 24, 2010, the court issued an Order

requiring respondent Linda P. Shadley to appear before Internal

Revenue Service (“IRS”) Officer Charles Duff on a date to be set

by Duff and produce all testimony, books, and records demanded by

the April 29, 2009 IRS summons. (Docket No. 14) After

respondent failed to comply, the court issued another Order on

May 13, 2010 requiring respondent to appear at the office of IRS

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Officer Duff on June 3, 2010 to comply with the IRS summons. 

(Docket No. 24.) Respondent again failed to comply with the

summons. Presently before the court is petitioners United States

of America and IRS Officer Diana Dino’s1 petition to hold

respondent in contempt for failure to comply with the court’s

February 24, 2010 and May 13, 2010 Orders.

I. Factual and Procedural Background 

On August 31, 2009, petitioners filed a petition to

enforce an IRS summons issued to respondent which ordered her to

testify and produce documents related to her individual tax

liabilities for years 2001-2002, and 2004-2008. (Docket No. 1.) 

Magistrate Judge Gregory G. Hollows held a hearing on this

petition on October 15, 2009, at which respondent appeared. 

(Docket No. 6.) Respondent indicated her willingness to comply

with the summons, and accordingly Judge Hollows ordered

respondent to appear before Officer Duff on November 3, 2009 at

1:00 p.m. (Docket No. 7.) Respondent appeared for the

appointment but failed to bring any of the paperwork required by

the summons or to answer all of Officer Duff’s questions until

she consulted an attorney. (Docket No. 11. at 2.) 

On December 7, 2009 Judge Hollows directed the

government to file ans serve declarations outlining how

respondent failed to comply with the summons. (Docket No. 9.) 

After receiving the declaration of IRS Officer Duff, Judge

Hollows issued his findings and recommendations on February 1,

2010, recommending that the summons be enforced and that

1 IRS Officer Dino was substituted for IRS Officer Duff

in this action on June 15, 2010. (Docket No. 27.)

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respondent be ordered to appear before Officer Duff at a date and

time to be set in writing by IRS Officer Duff. (Docket No. 12.) 

This court then adopted those findings and recommendations on

February 24, 2010. (Docket No. 14.) 

On February 26, 2010, IRS Officer Duff wrote the

respondent, setting the summons compliance date for March 23,

2010 at 1:30 p.m. in the Sacramento IRS Office. (Duff Decl.

(Docket No. 15 Ex. 1) ¶ 3.) Respondent appeared before RIS

Officer Duff but failed to provide any documents as required. 

(Id. ¶ 4.) On April 5, 2010, petitioners filed a petition

requesting that respondent be held in civil contempt for failure

to comply with the court’s February 24, 2010 Order directing

respondent to comply with the Internal Revenue Service Summons

issued to her on April 29, 2009. (Docket No. 15.) On April 7,

2010, the court issued an Order to Show Cause why respondent

ought not be held in contempt. (Docket No. 17.) 

On May 10, 2010, respondent appeared before the court

in response to the court’s Order to Show Cause. After the court

explained the requirements of the Summons to respondent, she

indicated her willingness to fully comply with the Summons after

being afforded an opportunity to gather tax documents and consult

with an attorney. (Docket No. 20.) On May 13, 2010, the court

accordingly issued an Order requiring respondent to appear at the

office of IRS Officer Duff on June 3, 2010 at 9:00 a.m. and

comply with the IRS summons issued on April 29, 2009. (Docket

No. 24.)

On June 3, 2010, respondent appeared before IRS

Officers Duff and Dino, but refused to provide any documents or

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testimony to the officers. (Duff Decl. B (Docket No. 28) ¶ 9;

Dino Decl. ¶¶ 4-5.) Petitioners filed a renewed petition for

contempt on June 15, 2010. (Docket No. 28.) On June 18, 2010,

the court again issued an Order to Show Cause why respondent

ought not be held in contempt. (Docket No. 32.) 

At the hearing on petitioners’ motion on July 19, 2010,

respondent filed a response to the court’s Order to Show Cause,

asserting that her refusal to testify and produce documents in

accordance with the summons was justified by the Fifth

Amendment’s privilege against self-incrimination. The court held

an additional hearing on July 20, 2010, in which it reviewed the

documents requested by the IRS’s summons and questioned

respondent in camera to evaluate respondent’s Fifth Amendment

claim.

II. Discussion

“A claim of Fifth Amendment privilege may be asserted

if there are ‘substantial hazards of self-incrimination that are

real and appreciable, not merely imaginary and unsubstantial,’

that information sought in an IRS summons might be used to

establish criminal liability.” United States v. Bright, 596 F.2d

683, 690-91 (9th Cir. 2010) (internal citations omitted). “The

privilege is not limited to oral questioning; an individual may

refuse to provide documents to an investigative body if the act

of production would be testimonial.” Id. The act of producing

documents in response to an IRS subpoena is not testimonial when

“[t]he existence and location of the papers are a foregone

conclusion and the taxpayer adds little or nothing to the sum

total of the Government’s information by conceding that he in

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fact has the papers.” Id. at 692 (citing Fisher v. United

States, 425 U.S. 391, 410 (1976)). “For this foregone conclusion

exception to apply, the government must establish its independent

knowledge of three elements: the documents’ existence, the

documents’ authenticity and respondent’s possession or control of

the documents.” Id. 

After reviewing the documents in respondent’s

possession and questioning her in camera, the court finds that

production of these documents by respondent would be testimonial. 

The government is admittedly in possession of respondent’s bank

records. However, petitioners have not shown that they were

aware of the existence or contents of respondent’s checkbook

deposit slips or the authenticity of those slips. Accordingly,

production of the documents in respondent’s possession fails to

meet the foregone conclusion exception and would be testimonial. 

Respondent faces a real and substantial hazard of selfincrimination if she were to comply with the IRS’s summons, and

accordingly respondent’s claim of privilege under the Fifth

Amendment is valid. The government is aware that respondent

failed to file tax returns in the years 2001-2002 and 2004-2008.

Any testimony by respondent, either by questioning or production

of documents, indicating that she received income in any amount

during those tax years could therefore be used to prove that she

was required to file a tax return and thereby subject respondent

to criminal liability for failure to file a tax return in

violation of 26 U.S.C. § 7203. See United States v. Rendahl, 746

F.2d 553, 555-56 (9th Cir. 1984). 

For the foregoing reasons, the court will not hold

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respondent in contempt, since her refusal to testify or produce

the documents requested in the IRS summons is validly asserted

under the Fifth Amendment.

IT IS THEREFORE ORDERED that petitioners’ petition to

hold respondent in contempt be, and the same hereby is, DENIED.

Petitioners are given twenty-one (21) days to request

reconsideration of this Order.

DATED: July 20, 2010

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