Source: https://www.litigationandtrial.com/2013/04/articles/attorney/pleading-the-fifth-adverse-inferences/
Timestamp: 2019-04-19 03:06:47+00:00

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But two problems remain for civil cases.
First, the privilege isn’t boundless, and it doesn’t prevent prosecutors (or adversaries in civil litigation) from finding the same evidence elsewhere. “A party is privileged from producing the evidence, but not from its production.” Justice Holmes, Johnson v. United States, 228 U.S. 457 (1913). The first place to look: corporate records. The right against self-incrimination is a personal privilege that does not extend to a corporation or its records. Bellis v. United States, 417 U.S. 85, 89-91 (1974)(Bellis, it should be noted, held that a lawyer couldn’t withhold his law firm’s documents, even if those documents would tend to incriminate him). Further, a corporate record custodian may not resist a subpoena on the grounds that the contents of the documents would be personally incriminating. See Braswell v. United States, 487 U.S. 99, 110 (1988)(there remains, however, an open question where the “custodian” is also the sole employee and officer of the corporation).
So all those entities ‘affiliated’ in one way or another with Prenda Law can expect some subpoenas coming their way, perhaps as part of the discovery by some of the people they sued into whether they violated Federal Rule of Civil Procedure 11 with their alleged misrepresentations.
Second, although in a criminal procedure, the court must instruct the jury that it cannot draw an inference of guilt from a defendant’s failure to testify about facts relevant to his case, Griffin v. California, 380 U.S. 609 (1965), in civil cases, “the Fifth Amendment does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them.” Baxter v. Palmigiano, 425 U.S. 308, 318 (1976).
The rule under Baxter is akin to Cicero’s maxim, “Though silence is not necessarily an admission, it is not a denial, either.” That is to say, an opposing party can’t simply point to the silence and claim victory in their civil case, but a court is entitled to draw adverse inferences against the party that “pleads the Fifth.” (Justice Brandeis said: “Silence is often evidence of the most persuasive character.” United States ex rel. Bilokumsky v. Tod, 263 U.S. 149 (1923)). Thus, pleading the Fifth in a civil case in federal court is never helpful, is rarely harmless, and is typically very damaging — indeed, it’s often fatal to the party’s claims or defenses.
In re Carp, 340 F.3d 15, 23 (1st. Cir. 2003)(“When all is said and done, the trial court has discretion over whether a negative inference is an appropriate response to the invocation of the Fifth Amendment in a particular civil case.”).
SEC v. Graystone Nash, Inc., 25 F.3d 187, 192 (3d Cir.1994)(“Because the privilege [against self-incrimination] is constitutionally based, the detriment to the party asserting it should be no more than is necessary to prevent unfair and unnecessary prejudice to the other side.”).
Thus, under federal law, a bar association can use the assertion of the Fifth Amendment against an attorney in a disciplinary action, so long as disbarment isn’t automatic, but some state laws preclude their state courts from drawing negative inferences against a party who asserts a privilege and refuses to testify. As two corporate defense lawyers at Gibson Dunn noted back in 2010, several states have statutes or rules of evidence that forbid courts from drawing adverse inferences after a party asserts a testimonial privilege. See, e.g., Alaska R. Evid. 512(c); Ark. R. Evid. 512; Cal. Evid. Code § 913(a); Del. R. Evid. 512; Haw. Rev. Stat. § 626-1, R. 513; Idaho R. Evid. 512; Ky. R. Evid. 511; N.D. R. Evid. 512; Nev. Rev. Stat. § 27-513; Nev. Rev. Stat 49.405; N.J. R. Evid. 532; N.M. R. Evid. 11-513; Okla. Stat. Ann. §2513; Or. Rev. Stat. § 40.290; Vt. R. Evid. 512. In those states, the court has to tell the jury to not use the silence against the party. I’m sure Cicero wouldn’t approve, but those are issues for another day, and they’re state-specific.
Yet another interesting question is when the adverse inference may be used to break through attorney–client privilege by way of the crime–fraud exception, and force an attorney to disclose communications with the client, over the client’s objection. The Southern District of New York tore through that one back in February: “Stern invoked his privilege against self-incrimination in response to nearly every question asked of him during his deposition. By refusing to answer any questions, Stern obstructed the discovery process, which justifies drawing an inference that any answers he gave in response to the questions would have been unfavorable to him. … Accordingly, plaintiff will be permitted to draw adverse inferences against Stern to support its efforts to invoke the crime/fraud exception.” The Court then used those negative inferences to find the crime–fraud exception likely applied.
Now, the question for a lawyer is, when an opposing party asserts their right against self-incrimination, what do you do? You can move on to another subject, but that’s not the right way to do it. When a party asserts the Fifth, you make them dig as deep and as wide a hole as you can, asking as many specific questions as possible to prompt the assertion of the privilege. That way, you can both (a) examine the contours of the asserted privilege, to see if it is being asserted improperly and (b) develop a thorough record on every issue upon which you are seeking an adverse inference. The more “I plead the Fifth” answers you get, the better.
I pondered that sentence when I wrote it (writing “never” or “always” in the law is never a good idea), but I’ll go out on the limb and say: never. I’ve never seen it benefit a party in a civil case. I’d be happy to revise if I saw a counterexample.
Of course, I’m talking just about the civil case. If in the big picture losing your civil case is small potatoes compared to confessing to a crime (or setting yourself up for perjury) then, well, keep your trap shut.
Testifying to the truth may be worse than a negative inference. It could be the difference between punitive damages for drunk driving and mere negligence that is covered on an auto policy.
It certainly could be, but IMHO that situation is unlikely. Taking the drunk driving as an example, if the evidence is there to prove the drunk driving, then the inference is going to be bad enough to justify the punitive damages anyway — but if the evidence is not there, then the party is likely going to testify and just lie about it.
I suppose that leaves the issue of the defendant voiding their coverage by testifying — where the testimony versus the inference matters — but that’s separate from the overall liability, which IMHO is likely at least the same.
Excellent work. As a matter of trial dynamics, I am happy to have an opponent assert the 5th in a civil case. Under all but the most restrictive views, the jury will invariably draw its own conclusions about the missing evidence, especially if the case is carefully framed as a threat to community safety.
Without fail, in every case where a criminal prosecution is a possibility, the insurer’s counsel proudly tells me “he’s going to assert the Fifth” and that I should really think about the consequences, as if it was a magical incantation that ended the lawsuit. Months later, after summary judgment is denied, and the trial judge has used every hearing as an informal settlement conference, defense counsel suddenly concedes that, well, of course this is trouble for the defense, and so they’d like to settle. It’s baffling.
But from the Plaintiff’s side in these cases, the “Months later” can be a problem. We have had cases where the extended duration of the criminal case, and the several continuances granted in the civil case resulting from it, have been a real burden.
This is such a great article. I wrote a similar article from the copyright perspective and what it means for Judge Wright in this case.
Why would laws governing state courts apply to bar association proceedings?
I don’t practice before disciplinary boards, but it’s my general understanding (from others that do) that, while the rules of evidence do not expressly apply, the hearing boards generally try to follow them. E.g., they frequently discount hearsay testimony. As a practical matter, I can see a board examiner pausing when faced with a directly on-point rule of evidence.

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