Source: https://jhoffman.com/publications/what-can-you-afford-to-risk-self-incrimination-in-civil-litigation/
Timestamp: 2019-04-24 08:06:31+00:00

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When a civil action results in criminal charges, often the most compelling evidence in favor of conviction is self- incriminating evidence disclosed in the civil case. Recently, I spoke on a panel addressing the various ways civil litigation can implicate a client in criminal conduct. Following the presentation, a member of the audience submitted a question: “Practically speaking, what options exist if you identify an area where your client might incriminate himself? And, if your client makes an incriminating statement or turns over an incriminating document, what can be done to protect them in the criminal context?” This article is my attempt to answer these practical questions from the perspectives of plaintiff, defendant, and witness.
In order for a person to assert their Fifth Amendment right against self-incrimination, they must have an articulable interest that can be expressed in order to show their testimony would either support a conviction or “furnish a link in the chain of evidence needed to prosecute [them] for a federal crime.”  A court determines whether a person’s Fifth Amendment assertion is justified by deciding “whether [they are] confronted by substantial and real, and not merely trifling or imaginary, hazards of incrimination.”  Of course, the witness does not need to explain why answering a question would incriminate them. “To sustain the privilege, it need only be evidenced from the implications of the question, in the setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered might be dangerous because injurious disclosure could result.”  In other words, the Fifth Amendment protects more than the proverbial smoking gun and other plainly phrased admissions of wrongdoing. It also protects statements that may seem innocent on their faces but, in light of previously developed facts, could be injurious.
In some cases, your client may choose to waive their Fifth Amendment right against self-incrimination and make statements or produce documents in a civil case. Such a waiver must be “knowing, intelligent, and voluntary.”  Before making this choice, however, counsel must carefully advise a client on the risks of doing so. Balancing your client’s interests against likely outcomes is extremely difficult, and the decision is not always clear cut. For example, if your client is the subject of a SEC enforcement action and an ongoing criminal investigation, the answer is far simpler than in a situation where you believe your client could be implicated in a civil matter that involves no known criminal investigation, but which may still carry criminal ramifications. Your advice will also depend on whether your client is a plaintiff, a defendant, or a witness subpoenaed to testify or produce documents.
Advising plaintiffs on whether they should waive their Fifth Amendment right requires contending with a number of emotional considerations. In some instances your client feels wronged, and you, having conducted discovery, also believe that your client has been wronged. In other instances you believe in the client’s cause, and the client either needs financial compensation for his losses, wants to set a precedent, or simply wants to vindicate themselves or repair their reputation. Regardless, if the matter is pursued, the defense may try to implicate your client in wrongdoing, whether fairly or not. There is a significant risk that, even if your client prevails in the civil case, the evidence obtained in that litigation could later be used against your client to build a criminal case. The success in one arena could jeopardize your client’s interests in another.
For a plaintiff, there is really only one option for avoiding criminal liability: not pursuing a claim. Although this outcome is difficult for a client to accept, the added costs of later defending against a criminal prosecution will usually out-weigh any potential recovery in a civil case. Of course, counsel should also consider any avenue to settle a matter in a way that might partially, if not totally, bring about the relief sought in the lawsuit. For example, with the client who sees them- selves as a whistle blower, perhaps you could persuade your client’s employer to adopt new policies that will help ensure that the sort of conduct at issue in the case does not reoccur.
Like plaintiffs, defendants certainly experience strong emotions and the same considerations may exist: vindication, reputation, money, and fear of setting a precedent. Yet the risk of incrimination in formulating a defense may exist because of the nature of the claims and the interest of the accuser. The risk in this situation may be more obvious, but the choices more limited. Defendants, unlike plaintiffs, do not have the initial choice of whether or not to bring the litigation in light of all of the risks. Therefore, before you begin the discussion with your client about what they can “afford to risk,” it is important to understand the various areas where criminal liability arises, and what can or can’t be done to resolve the risk.
In determining whether your client may be facing criminal liability, you should consider whether the facts used to establish your client’s claims or defenses, or the facts that will come out in their testimony, could also be used to satisfy the elements of a criminal charge. You should also determine whether the government is already investigating your client.
If you are unsure whether there is an active investigation, but believe your client has potential criminal liability, it can be wise as a first step to reach out to the law enforcement agency or prosecutor’s office that would be the entity investigating your client. Although prosecutors are not required to inform prospective defendants that they are being investigated, they cannot engage in “trickery or deceit” in order to affirmatively mislead the subject of parallel civil and criminal investigations into believing that the investigation is exclusively civil in nature pursuant to the “parallel proceedings” doctrine.  Regardless of what a prosecutor tells you about the status of their investigation, an initial inquiry will at a minimum open up a dialogue and, in some circumstances, the dialogue itself can help counsel understand whether or not their client’s case is the type that the prosecutor would have an interest in. It can also create an opportunity for you to explain your client’s role in the matter. If you have a compelling argument to make at this early stage, it could make the difference between your client being a cooperating witness or a defendant in a future criminal proceeding.
In addition to asserting the Fifth Amendment there are several alternatives available to defendants that, if successfully obtained, can at least temporarily mitigate the risk of criminal liability.
Settlement is, of course, the obvious choice if the parties can reach an acceptable agreement. Even with a settlement, however, counsel must carefully draft written agreements to ensure recitals and other factual provisions do not implicate their client.
In a case where a settlement is not an option, a defendant can move to stay a civil case in whole or in part if the facts of the lawsuit parallel possible criminal liability. However, a court has discretion to refuse to stay the proceeding after balancing the following factors: (1) the interest of the plaintiffs in proceeding expeditiously, and the potential prejudice to plaintiffs of a delay; (2) the burden which any particular aspect of the proceedings may impose on defendants; (3) the convenience of the court, and the efficient use of judicial resources; (4) any relevant interests of persons not parties to the civil litigation; and (5) the interest of the public in the pending civil and, if applicable, criminal litigation.  Put more simply, a defendant will not be granted a stay based on the mere possibility of criminal liability, and will have to assert their Fifth Amendment right if denied a stay.
A client who is subpoenaed to testify as a witness or pro- duce documents in a matter where they may be exposed to criminal liability is in a different situation than a plaintiff or a defendant. Such a client lacks the power to stay a proceeding, and has no claim to drop. Furthermore, they cannot simply refuse to comply with a subpoena or decide not to attend the proceeding. A witness can, however, refuse to answer questions by asserting their Fifth Amendment right without having to worry about an adverse inference being drawn against them. But, the act of refusing to answer will certainly place the spotlight on them and their conduct. It may also cause reputational damage. This sort of client, because of their role in society or within a company, may be reluctant to assert their Fifth Amendment right. Such a client is also the very person with whom having the discussion regarding risks may be the most important.
Third, and most importantly, the statements will be admissible in evidence in a criminal prosecution against your client as admissions of a party opponent. Unfortunately, regardless of your client’s intent when making the statements, there is no similar right for a criminal defendant to use the exculpatory portions of the same deposition. Such a deposition can be particularly damaging if your client chooses not to testify during a criminal trial and has no chance to explain the context of the statement or what they were thinking when they made it.
Under the rules of evidence, in order to mitigate the harm of the prior statement, defense counsel can (1) find other areas of testimony from the prior statement, omitted by the prosecu- tor, that are admissible under the “rule of completeness;”  (2) challenge the prosecutor’s characterization of the statement as an admission; or (3) argue a constitutional basis for exclusion that would otherwise make the statement involuntary.
The decision of whether to assert the Fifth Amendment right against self-incrimination can have a dispositive impact on civil litigation. Clients facing this choice may be dealing with the potential loss of a business, a job, emotional or physical pain, or a dire need for financial compensation or even simple vindication. These clients certainly never imagined they would need to choose between asserting legal claims or defenses and taking the Fifth. I have learned over the years that in order to resolve the issue the most important question to explore with the client is: “What can you afford to risk?” For each client in each situation, the answer may be very different. An outsider may assume that the obvious answer is, “I cannot afford a criminal conviction,” or, “I cannot afford a prison sentence.” But sometimes, despite counsel’s concern for their client’s criminal prosecution, that is not the most important factor to a client. Some clients may care more about their reputation in the proverbial “court of public opinion,” or the business they have built up over time, or conveying to their children that you can’t just give in to bullies. Each client is unique, and each has a different take on what constitutes too large a risk. Helping a client figure out the risks and how to navigate the areas that are potentially incriminating is one of the most difficult areas for counsel to advise, and for the client to decide what is ultimately not worth risking.
 The jurisprudence regarding the Self-Incrimination Clause of the Fifth Amendment generally applies to the Oregon Constitution’s analogous privilege.
 United States v. Balsys, 524 U.S. 666, 672 (1998).
 See id.; State v. Langan, 301 Or. 1, 5 (1986) (Article I, section 12 privilege against self-incrimination applies in any judicial or non-judicial setting where compelled testimony is sought that might be used against the witness in a criminal prosecution).
 United States v. Rendahl, 746 F.2d 553, 555 (9th Cir. 1984) (quoting Hoffman v. United States, 341 U.S. 479, 486 (1951)).
 United States v. Apfelbaum, 445 U.S. 115, 128.
 Hoffman, 341 U.S. at 486-7.
 Because the Fifth Amendment only protects a person from compelled self- incrimination, a document that was voluntarily created is not protected. See Fisher v. United States, 425 U.S. 391, 396 (1976); Schmerber v. California, 384 U.S. 757, 761 (the privilege “protects an accused only from being compelled to testify against himself, or otherwise provide the state with evidence of a testimonial or communicative nature”).
 “[I]n order to be testimonial, an accused’s communication must itself, explicitly or implicitly, relate a factual assertion or disclose information.” Doe v. United States, 487 U.S. 201, 210 (1988).
 See id. at 216 (noting that authentication by production would be “testimonial” in nature).
 In re Grand Jury Subpoena, 383 F.3d 905 (9th Cir. 2004).
 Edwards v. Arizona, 451 U.S. 477, 482 (1981); State v. McAnulty, 356 Or 432, 455 (2014).
 United States v. Stringer, 521 F.3d 1189, 1198 (9th Cir. 2008) (citing United States v. Robson, 477 F.2d 13, 18 (9th Cir. 1973).
 Doe ex rel. Rudey-Glanzer v. Glanzer, 232 F.3d 1258, 1264 (9th Cir. 2000) (“[W]hen there is no corroborating evidence to support the fact under inquiry, the proponent of the fact must come forward with evidence to support the allegation, otherwise no negative inference will be permitted.”).
 OEC 513(1) (“The claim of privilege, whether in the present proceeding or upon a prior occasion, is not a proper subject of comment by judge or counsel. No inference may be drawn from a claim of privilege.”); John Deere Co. v. Epstein, 307 Or 348 (1989).
 See United States v. Seifert, 648 F.2d 557, 561 (9th Cir. 1980).
 For example, if a subpoena to a banker ordered the production of “all documents related to the unauthorized cashing of checks,” a court would almost certainly quash it.
 However, before the statement can be used for such a purpose, the government must demonstrate that “the defendant gave false testimony on a material matter with willful intent.” See, e.g., United States v. Herrera- Rivera, 832 F.3d 1166, 1175 (9th Cir. 2016) (quoting United States v. Castro-Ponce, 770 F.3d 819, 822 (9th Cir. 2014)).
 United States v. Kordel, 397 U.S. 1, 11 (1970).
 Coolidge v. New Hampshire, 403 U.S. 443, 488 (1971).
 United States v. Cleaveland, 38 F.3d 1092, 1093 (9th Cir. 1994) (quoting United States v. Reed, 15 F.3d 928, 931 (9th Cir. 1994)).

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