Opinion ID: 580009
Heading Depth: 1
Heading Rank: 14

Heading: Plaintiff Foltz

Text: 124 Plaintiff Foltz challenges the sanctions imposed by the district court for his refusal to provide information regarding his income, taxes and employment during the discovery process. He argues that the sanctions were improper because he based his refusal on the fifth amendment privilege against self-incrimination. In the alternative, he argues that the sanctions were excessive. 125 We undertake a two-part inquiry in reviewing a discovery sanction when the party has asserted a fifth amendment privilege: (1) did the party resisting discovery properly assert his Fifth Amendment privilege, and (2) if not, did the district judge abuse his discretion in imposing the sanction involved. Davis v. Fendler, 650 F.2d 1154, 1159 (9th Cir.1981) (footnote omitted), citing Baker v. Limber, 647 F.2d 912 (9th Cir.1981). 126 Applying the first part of this test, we find that Foltz did not have a fifth amendment privilege concerning the requested information and records. Foltz' concern is that disclosure of this information might have subjected him to prosecution for tax crimes. But the fifth amendment's self-incrimination clause does not give taxpayers a right to withhold financial information from the IRS unless they can show an appreciable possibility of prosecution for a non-tax crime. Fuller v. United States, 786 F.2d 1437, 1439 (9th Cir.1986). We have applied this principle in the civil discovery context, upholding dismissals of taxpayers' actions for redetermination of deficiencies when taxpayers refused to comply with the IRS's discovery requests on fifth amendment grounds. McCoy v. CIR, 696 F.2d 1234, 1236 (9th Cir.1983); Edwards v. CIR, 680 F.2d 1268, 1270 (9th Cir.1982). 127 Since Foltz could not assert the fifth amendment vis-a-vis the IRS directly in the civil discovery context when he faced the possibility of incriminating himself with regard to tax crimes, it is difficult to see how he could have a fifth amendment privilege vis-a-vis third parties. Foltz cites no authority for such a privilege and it is doubtful that any such authority exists. Plaintiffs who voluntarily come into court and seek economic damages must be prepared to prove their economic loss: The scales of justice would hardly remain equal ... if a party can assert a claim against another and then be able to block all discovery attempts against him by asserting a Fifth Amendment privilege to any interrogation whatsoever upon his claim. Lyons v. Johnson, 415 F.2d 540, 542 (9th Cir.1969), cert. denied, 397 U.S. 1027, 90 S.Ct. 1273, 25 L.Ed.2d 538 (1970). 128 Although sanctions were appropriate because Foltz did not have valid reasons for resisting discovery, we conclude that the sanctions imposed in this case were excessive. The district judge shut Foltz out of any recovery. 10 This was an abuse of discretion because Foltz only withheld information that pertained to his claims for economic loss. His refusal did not prevent the jury from assessing his claims for emotional distress, punitive damages or reinstatement to the pension plan. Hence, the court was justified in determining that he could not recover economic damages such as back pay, but erred in barring him from other relief. We have overturned the punitive damages and emotional distress awards, but Foltz must be reinstated to the pension plan.