Opinion ID: 456179
Heading Depth: 2
Heading Rank: 2

Heading: The appeal of the order denying the motion to quash.

Text: 17 Appellant interprets United States v. Doe as modifying or extending existing law covering fifth amendment rights of a corporation or of a custodian of corporate records. We disagree. Present law gives the custodian in this case no fifth amendment privilege to stop the corporation from producing documents, and Doe does nothing to change or augment the custodian's present rights. 18
19 Normally a corporate representative or agent cannot claim a fifth amendment privilege against producing corporate documents, regardless of whether they contain information incriminating him or were written by him, and regardless of whether the corporation is large or small. Bellis v. United States, 417 U.S. 85, 88-89, 100, 94 S.Ct. 2179, 2182-84, 2189, 40 L.Ed.2d 678 (1974); In re Grand Jury Subpoenas Duces Tecum, 722 F.2d 981, 986 (2d Cir.1983). The reason for this is that the corporation itself has no fifth amendment privilege, Curcio v. United States, 354 U.S. 118, 122, 77 S.Ct. 1145, 1148, 1 L.Ed.2d 1225 (1957); Hale v. Henkel, 201 U.S. 43, 74, 26 S.Ct. 370, 379, 50 L.Ed. 652 (1906), and the only way to prevent the corporation from shielding its records from a subpoena is to prevent individual corporate representatives from exercising such a privilege with respect to corporate records. 20 In view of the inescapable fact that an artificial entity can only act to produce its records through its individual officers or agents, recognition of the individual's claim of privilege with respect to the financial records of the organization would substantially undermine the unchallenged rule that the organization itself is not entitled to claim any Fifth Amendment privilege, and largely frustrate legitimate governmental regulation of such organizations. Mr. Justice Murphy put it well: 21 The scope and nature of the economic activities of incorporated and unincorporated organizations and their representatives demand that the constitutional power of the federal and state governments to regulate those activities be correspondingly effective. The greater portion of evidence of wrongdoing by an organization or its representatives is usually to be found in the official records and documents of that organization. Were the cloak of the privilege to be thrown around these impersonal records and documents, effective enforcement of many federal and state laws would be impossible. The framers of the constitutional guarantee against compulsory self-disclosure, who were interested primarily in protecting individual civil liberties, cannot be said to have intended the privilege to be available to protect economic or other interests of such organizations so as to nullify appropriate governmental regulations. [United States v. White, 322 U.S. 694, 700, 64 S.Ct. 1248, 1252, 88 L.Ed. 1542 (1944) (citations omitted).] 22 Bellis v. United States, 417 U.S. at 90-91, 94 S.Ct. at 2184-85. 23 In certain limited circumstances, however, an individual may have a fifth amendment privilege against being personally compelled to produce corporate documents. As explained in Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976), the act of producing documents may constitute personal testimony conceding the document's existence, their possession or control, or the fact that the one producing them believes them to be the documents described in the subpoena. When this testimony would be self-incriminating, one has a personal fifth amendment privilege to refuse to comply with a subpoena requesting production. This privilege, though, protects a person only against being incriminated by his own compelled testimonial communications. Id. at 409, 96 S.Ct. at 1580. It does not protect an individual from being incriminated by a third party's testimonial act of producing records, id., including acts by a third party which is a corporation. 24 When a corporation is asked to produce records, some individual, of course, must act on the corporation's behalf. Usually this will not create any self-incrimination problem, for an employee who produces his corporation's records would not be attesting to his personal possession of them but to their existence and possession by the corporation. In re Grand Jury Subpoenas Duces Tecum, 722 F.2d at 986. Yet even if the situation is unusual and a corporation's custodian of records would incriminate himself if he were to act to produce the company's records, this still does not relieve the corporation of its continuing obligation to produce the subpoenaed documents. United States v. Barth, 745 F.2d 184, 189 (2d Cir.1984), cert. denied, --- U.S. ----, 105 S.Ct. 1356, 84 L.Ed.2d 378 (1985). In such a situation the corporation must appoint some other employee to produce the records, and if no existing employee could produce records without incriminating himself by such an act, then the corporation may be required to produce the records by supplying an entirely new agent who has no previous connection with the corporation that might place him in a position where his testimonial act of production would be self-incriminating. Id. There simply is no situation in which the fifth amendment would prevent a corporation from producing corporate records, for the corporation itself has no fifth amendment privilege. See id. 25 In the present case the district court specifically excluded any grand jury target from having to produce the records, and it provided that the corporation itself could select an employee to produce them. Under existing law this effectively removes any danger that the custodian making the present appeal will have to incriminate himself by an act of producing records. The corporate records in the present case may in fact constitute evidence linking the custodian to crimes, but production of that evidence in the manner limited by the district court would not be compelled testimony of the custodian himself. In short, the custodian cannot claim the fifth amendment privilege to protect records belonging to the corporation, and he himself is not being required to testify through any personal act of production. 26
27 United States v. Doe, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984), involved the subpoena of records of sole proprietorships and a claim by their owner that the fifth amendment prevented the compelled production of the records. The Supreme Court decided that the proprietor could assert the privilege against self-incrimination because, although the contents of the subpoenaed records were not privileged, the testimonial character of the act of producing the records was. 28 The custodian in the present appeal argues that [w]hile Doe involved sole proprietorships, nothing in its holding, its language, or its rationale is limited to sole proprietorships. The custodian apparently reasons that the rationale behind Doe is that a sole proprietorship is not legally distinct from its owner, so that a subpoena cannot compel the business to act to produce records without at the same time compelling the owner, as an individual, to act. The act of producing records can constitute compelled testimony, and, according to Doe, the act of production may be privileged even if the content of the records is not. In the case before us the corporation is a one-man operation which appellant's attorney describes as much akin to a sole proprietorship. As appellant sees it, to compel the corporation to produce its records is to compel appellant to act to incriminate himself because the corporation is so closely identified with appellant. Hence, appellant argues, Doe covers the present case and gives the custodian his fifth amendment privilege. 29 We find this argument unpersuasive. The very language of Doe limits its holding, for the first sentence of Justice Powell's opinion for the Court unmistakeably states that the issue to be decided concerns sole proprietorships rather than corporations or other collective enterprise forms: This case presents the issue whether, and to what extent, the Fifth Amendment privilege against compelled self-incrimination applies to the business records of a sole proprietorship. Id. at 1239 (emphasis added). Nowhere in Doe is it said, or even suggested, that the privilege applies when it is corporate records that are subpoenaed. 30 Appellant argues that Doe should be read as covering all documents, those of corporations as well as sole proprietorships, because the Supreme Court's opinion refers simply to the production of documents, without any limit as to ownership. Had the Court wished to say that the act of producing documents of a sole proprietorship only might be privileged, appellant maintains, it would have done so. To the contrary, the Court held that the act of producing any document could be privileged. 31 This is not reasonable. The entire Doe case is predicated on the fact that the documents at issue are documents of sole proprietorships, not corporate documents. The Court states that the issue concerns sole proprietorships, and explicitly notes how puzzling it is that some records were listed in the subpoena as corporate records when the company named in the subpoena was an unincorporated sole proprietorship. United States v. Doe, 104 S.Ct. at 1239 n. 2. In addition, although the Supreme Court notes that the circuit court's decision in Doe stressed the difference between fifth amendment law as it applies to corporations and as it applies to sole proprietorships, 104 S.Ct. at 1240, the Supreme Court never indicated that the circuit court's statements on this point were incorrect or overbroad. Appellant's conclusion is actually the inverse of what it should be; the reasonable conclusion is that Doe 's holding refers only to documents of a sole proprietorship, and that if the Court had meant to make its holding any broader it would have said so in definite terms. 32 Moreover, Doe 's rationale is clearly limited by the fact that the opinion fails to discuss the long-standing rules set down by the Supreme Court that have limited, emphatically, the fifth amendment privilege in the corporate setting. Since 1906 the Supreme Court has regarded the distinction between an individual and a corporation as vitally important in determining the reach of the fifth amendment. See Hale v. Henkel, 201 U.S. 43, 74, 26 S.Ct. 370, 379, 50 L.Ed. 652 (1906). Appellant would have us read Doe not only as ending the long and insistent history of restricting the use of the fifth amendment by collective entities, but also, in effect, as overturning the boundaries of the fifth amendment privilege carefully drawn in Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974). Bellis insisted on drawing a bright line between organizations which have a recognizable, juridical existence apart from their members, such as corporations and partnerships, and those organizations which do not, such as the sole proprietorship. Bellis rejected the argument that a three-person partnership was so like a sole proprietorship that a fifth amendment privilege could be asserted when the partnership records were subpoenaed, an argument quite parallel to the one made by appellant in the present case. The custodian here argues that the fifth amendment privilege should be applicable because his three-shareholder corporation is so much like a sole proprietorship. This argument, however, is simply inconsistent with the reasoning in Bellis. 33 Appellant's argument that this circuit has not interpreted Bellis as drawing a sharp line against the use of the fifth amendment privilege by collective organizations is not convincing. The appellant claims that in In re Grand Jury Subpoenas Duces Tecum, 722 F.2d 981 (2d Cir.1983), this court applied the act of production doctrine to prevent the government from compelling production of corporate records. But that case involved a former officer of a corporation who had taken the corporation's records without authorization. The subpoena there did not provide that someone else could produce the records in question, and it was clear that if the former officer did produce the records, that fact alone would qualify as testimony incriminating him for having taken those records. Moreover, at the time of the subpoena the former officer was not a corporate representative at all, and the subpoena was not even directed at the corporation. That was totally different from the situation in the present case, and in no way casts doubt on the line drawn in Bellis. 34 Appellant also can extract no help from In re Katz, 623 F.2d at 125-26, the other case cited to show that this circuit has not accepted Bellis as drawing a sharp line against using the fifth amendment to shield production of corporate documents. Katz held only that an individual may claim the fifth amendment privilege on the basis of the act of production doctrine when a subpoena of corporate records is directed at him individually. In Katz there was no subpoena directed at the corporations whose records were involved, those corporations had no option to choose who should produce their records, and in no way were the corporations allowed the benefits of the fifth amendment privilege. 35 The only way we could accept the appellant's position would be if Doe overruled or limited Bellis, but such an interpretation would be implausible. Nowhere in Doe is there any express statement that Bellis is overruled or limited, and, given the significance of the issue, it would be unreasonable to suppose that the Doe Court intended to do so without expressly stating so. The bright line of Bellis still holds. The appellant in the present case chose the corporate form in order to gain its attendant benefits; he cannot now disregard this form in order to shield its business records from production. 36 Panels in two other circuits have interpreted Doe along the lines urged by appellant in the case before us, but the reasoning in those decisions seems conclusory, and both decisions are being reheard in banc. In re Grand Jury Matter (Brown), 744 F.2d 338 (3d Cir.1984), vacated and reh'g granted (November 20, 1984; reargument heard May 6, 1985); In re Grand Jury Proceedings (Morganstern), 747 F.2d 1098 (6th Cir.1984), reh'g granted (February 6, 1985; reargument heard June 14, 1985). Nothing in the panel decisions convinces us that our analysis of Doe is wrong.CONCLUSION 37 The Government's motion to dismiss the appeal is denied. The district court's order limiting the subpoenas and denying appellant's motion to quash the subpoenas as limited is affirmed. The clerk shall issue the mandate forthwith.