Grand Jury Subpoena, In re

• Decision Date: 01 June 1981
• Docket Number: No. 80-5377,80-5377
• Citation: 646 F.2d 963
• Parties: 8 Fed. R. Evid. Serv. 720 In re GRAND JURY SUBPOENA. UNITED STATES of America, Appellant, v. Stephen KENT, d/b/a Kent Oil and Gas Company, Appellee. . Unit B
• Court: U.S. Court of Appeals — Fifth Circuit

Page 963

646 F.2d 963

8 Fed. R. Evid. Serv. 720

In re GRAND JURY SUBPOENA UNITED STATES of America, Appellant, v. Stephen KENT, d/b/a Kent Oil and Gas Company, Appellee.

No. 80-5377.

United States Court of Appeals, Fifth Circuit.

Unit B

June 1, 1981.

Frank W. Trapp, Sp. Asst. U. S. Atty., Tampa, Fla., William C. Bryson, Chief, Appellate Section, Criminal Division, U. S. Dept. of Justice. Washington, D. C., for appellant.

Albert J. Krieger, Miami, Fla., for appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before MARKEY ^*, Chief Judge, and HILL and THOMAS A. CLARK, Circuit Judges.

MARKEY, Chief Judge:

The government appeals from an order of the District Court for the Middle District of Florida barring enforcement of grand jury subpoenas. We affirm.

Background

On November 27, 1979, a federal grand jury sitting in the Middle District of Florida issued two identical subpoenas duces tecum in connection with an investigation of the Kent Oil and Trading Company (Kent Oil). One subpoena was directed to the Custodian of Records of Kent Oil, 2300 Houston Natural Gas Building, Houston, Texas, and the other directed to Dianne Allen, at the same address. The subpoenas were served on November 29, 1979, returnable on December 18, 1979.

Kent Oil is a sole proprietorship, owned by Stephen R. Kent (Kent). It employs ten persons in offices in Houston and Los Angeles, and has been engaged in the trading of petroleum products since 1973. The parties agree that, when the grand jury subpoenas were served, Kent was the "custodian of records" of Kent Oil and Allen was its comptroller.

Each subpoena covered the period from June 1, 1973 December 31, 1975, and commanded that the following documents be produced:

1. All documents which are concerned or related in any manner to the Company's accounts at financial institutions including, but not limited to, the name and address of each such financial institution and the account(s) number; the date the accounts were opened; deposit and withdrawal records; balance statements; cancelled checks; and authorizations to transact business on the account.

2. All accounting and bookkeeping records of the Company, including but not limited to, all cash disbursement journals; cash receipt journals; accounts receivable and accounts payable journals; and general ledgers.

3. All documents that reflect, incorporate, concern, relate or refer to the Company's payment of money to another or bestowing any benefit upon another in connection or related to the sale, purchase, exchange, or similar dealing of petroleum product(s), except those documents concerned exclusively with commission paid to salesmen employed full time by the Company need not be produced.

4. All documents that reflect, incorporate, concern or relate to payment of money or bestowing a benefit by the Company upon any employee, agent or officer of another entity involved in any manner in the oil industry or an employee or official of any governmental agency.

5. Such documents as will identify the Company's employees and agents, both during the relevant period and currently.

6. All documents that refer, relate, incorporate or concern each contract, arrangement and understanding between the Company and Charter Oil Company, Charter International Oil Company and Kern County Refining Company.

7. All documents that refer, relate, incorporate or concern the payment of money in connection with or related to each contract, arrangement or understanding responsive to Demand Number 6 (paragraph six) above.

Kent did not appear before the grand jury but instead moved, on February 12, 1980, for a court order quashing both subpoenas. Kent said he was the exclusive owner of the subpoenaed documents and that compelled production of those documents would violate his fifth amendment privilege against self- incrimination. On February 13, 1980, the government filed an opposition to Kent's Motion to Quash.

After one continuance, Allen appeared before the grand jury and testified on February 13, 1980. Kent withdrew the motion to quash the Allen subpoena on that day. Allen declined to produce the subpoenaed documents and the government moved for an order to show cause why she should not be held in contempt. In reply, Allen said she was powerless to produce the documents because Kent exercised exclusive control over them and had instructed her not to produce them. To support that assertion, she filed an affidavit on February 25, 1980, stating in pertinent part:

2. I presently am employed as the Comptroller of Kent Oil which is a sole proprietorship owned by Mr. Stephen Kent and headquartered in Houston, Texas, with a second office in Los Angeles, California. Other than Mr. Kent, Kent Oil presently has 10 employees

3. I started work for Kent Oil in July, 1977 5. I report directly to Mr. Kent, and regularly stay in contact with him as relates to the performance of my duties. Mr. Kent has residences in both Houston, Texas and Los Angeles, California, and splits his time between the Houston and Los Angeles offices. He spends a significant portion of his time in the Houston office, and is regularly present during business hours in connection with the operation of his company.

10. Because I was not an employee at the time, I played no role in the preparation, filing or maintenance of any documents during 1973, 1974 and 1975. Although I now have access to documents dated during 1973, 1974 and 1975, as do the other employees of the Company, I have never exercised nor have I had any reason to exercise any exclusive control of such documents to the exclusion of any other employee. Thus, as to documents generated during the 1973 thru 1975 time period covered by the Subpoena, I do not have any exclusive or other special responsibility with respect to any such documents.

11. To the best of my knowledge, no employee has been refused access to the business records of the Company. While Mr. Kent entrusts to his subordinates such as myself certain aspects of the day-to-day operations of the Company and charges us with the general responsibility for maintaining certain of the Company's records of his behalf, any such records belong to Mr. Kent as the proprietor of the business Mr. Kent has not relinquished his possession and control over the Company's records to any employee, including myself, and indeed he has so informed me.

14. In early February, 1980, and prior to my traveling to Jacksonville, Florida, Mr. Kent reiterated to me that all records of the Company are "his records and no one else's." He further informed me that no employee of Kent Oil including myself, had permission or authority to take any of the documents of the Company anywhere Paul Norris, an associate of Albert Krieger who is counsel for the Company in this matter, also informed me by telephone on February 11, 1980, and in person on February 13, 1980, of Mr. Kent's position with respect to the Company's records and my lack of authority to take them to Jacksonville. Having been so informed, I followed these instructions.

On April 18, 1980, the district court issued an order on Kent's Motion to Quash, reading in pertinent part:

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO QUASH

The Court finds that Kent Oil is a sole proprietorship of Steven Kent and that the government has not shown that either Diane Allen or any other custodian of the records exercised such exclusive control or possession of the subpoenaed documents to vitiate Kent's Fifth Amendment rights. At the hearing counsel for Kent volunteered to produce all subpoenaed documents the company is required by law to prepare and/or maintain.

Therefore, it is

ORDERED:

1. That Kent Oil shall produce immediately all documents requested by the subpoena which it is required by law to prepare and/or maintain.

2. That by noon on April 28, 1980, Kent Oil shall provide the government with a list specifically identifying all documents covered by the subpoena which it refuses to produce and the reason for such refusal.

The court issued a separate order of even date denying the government's motion for issuance of an Order to Show Cause directed to Allen. Kent made timely delivery of the documents specified in paragraph 1 of the order and of the list of documents required by paragraph 2. On May 14, 1980, the government appealed.

The government's notice of appeal is directed only to denial of its motion for a Show Cause order, and not to the separate order granting in part Kent's Motion to Quash. However, Kent has not been prejudiced. The district court barred enforceability of both subpoenas, and the parties have argued the enforceability of both subpoenas. For purposes of this appeal, we construe the notice of appeal as though taken from one district court order partially quashing both subpoenas. See Comfort Trane Air Conditioning v. Trane Co., 592 F.2d 1373, 1390 n. 15 (5th Cir. 1979), discussing the purpose underlying the notice of appeal requirement.

The issues

(1) Whether the district court's order is ripe for review.

(2) Whether Kent's fifth amendment privilege protects "non-required" documents from production pursuant to the Kent subpoena.

(3) Whether Kent's fifth amendment privilege protects "non-required" documents from production pursuant to the Allen subpoena.

OPINION

(1) Ripeness

The government urges that this court has jurisdiction to review a district court order quashing a grand jury subpoena duces tecum and, for reasons stated in Matter of Grand Jury Empanelled (Colucci), 597 F.2d 851 (3d Cir. 1979), we agree. Jurisdiction is alternatively provided by 18 U.S.C. § 3731 (1976), authorizing appeals by the government from a district court order "excluding evidence" in a "criminal proceeding", ¹ or by 28 U.S.C. § 1291 (1976), the general jurisdictional statute authorizing appeals from final decisions of the district courts. ² Colucci, 597 F.2d at 854-58.

Kent argues that...