660 F.2d 563 (5th Cir. 1981), 80-5912, United States v. Miller

Docket Nº:80-5912.
Citation:660 F.2d 563
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Ralph T. MILLER & Joan Miller, Defendants, In re Subpoena Duces Tecum of James M. RUSS, Appellant.
Case Date:November 02, 1981
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 563

660 F.2d 563 (5th Cir. 1981)

UNITED STATES of America, Plaintiff-Appellee,

v.

Ralph T. MILLER & Joan Miller, Defendants,

In re Subpoena Duces Tecum of James M. RUSS, Appellant.

No. 80-5912.

Unit B [*]

United States Court of Appeals, Fifth Circuit

November 2, 1981

Page 564

James M. Russ, pro se.

Don E. Christopher, Asst. U. S. Atty., Orlando, Fla., M. Carr Ferguson, Asst. Atty. Gen., Michael L. Paup, Chief, Appellate Section, R. Russell Mather, Tax Div., U. S. Dept. of Justice, Washington, D. C., for plaintiff-appellee.

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

Before HILL, FAY and ANDERSON, Circuit Judges.

R. LANIER ANDERSON, III, Circuit Judge:

This case is an appeal from an order entered by the district court holding appellant Russ in contempt for failure to comply with a pretrial subpoena duces tecum issued on behalf of the government. Appellant Russ is an attorney and a member of the Florida Bar. He became involved in these proceedings in the normal course of his representation of Mr. and Mrs. Ralph T. Miller, who are the defendants in a criminal tax fraud case presently pending for trial in the district court. 1 The criminal case involves charges against the Millers for income tax evasion for the years 1973, 1974 and 1975, in violation of 26 U.S.C.A. § 7201. The Millers operated a pawn shop as an unincorporated sole proprietorship. The subpoena at issue was issued pursuant to Fed.R.Crim.P. 17(c) and commanded appellant Russ to appear and to produce:

two income ledger books for the years of 1974 and 1975 for the OK Pawn Shop, Daytona Beach, Florida, which books were previously given to agents of the Internal Revenue Service on October 26, 1976, by Charles Kleinschmidt, CPA on behalf of Ralph and Joan Miller, and which books were returned by agents of the Internal Revenue Service on March 28, 1978 to Marshall Barkin, attorney for the Millers.

(R. 414.) On appeal appellant justifies his refusal to comply with the subpoena based upon his assertion that compliance would violate the attorney-client privilege and his clients' constitutional privilege against self-incrimination guaranteed by the Fifth Amendment. Upon appellant's refusal to comply, appellant was found to be in contempt, and fined $100 per day. Contemplating an appeal, the district court stayed imposition of the fine until ten days from the date of the decision of this court on appeal. Appellant filed a timely appeal.

I. FACTS AND POSTURE OF THE CASE

The background facts can be briefly stated. The Internal Revenue Service investigation of the Millers' tax returns for the years 1973, 1974, and 1975 was conducted during 1975 and 1976. Although the audit was conducted as a civil audit, the revenue agent referred the investigation with respect to the 1973 return to the Intelligence Division 2 on April 15, 1975. The Intelligence Division has responsibility for criminal tax investigations. Similarly, the 1974 return was referred to Intelligence on January 15, 1976. On both occasions, the Intelligence Division rejected the referral. In each case the revenue agent followed the Internal Revenue Manual which requires the agent to suspend his examination and refer the case to the Intelligence Division when he discovers "a firm indication of

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fraud on the part of the taxpayer." 3 In each case, the agent complied with the requirement that the civil examination be suspended during the time a referral was pending before the Intelligence Division; accordingly, the revenue agent made no contacts with the taxpayers or their representatives during that time. In each case the civil audit was resumed when Intelligence rejected the referral. The Millers retained an attorney, Marshall Barkin, who in turn retained a certified public accountant on August 27, 1976, to assist him in his legal representation of the Millers. The ledger books at issue were delivered by Barkin to the accountant.

In October 1976, the Millers received a written demand from the revenue agent that they produce the two ledger books at issue; on October 26, 1976, the accountant turned over the two books to the revenue agent. The Service conducted handwriting and ink analyses of the ledgers and made photocopies of the ledgers. Upon demand by the Millers' attorney, the Service returned the original books but kept the copies. On October 28, 1976, the revenue agent again referred the Millers' tax returns for 1973, 1974 and 1975 to the Intelligence Division. This time the referral was accepted. Again following the Internal Revenue Manual, the revenue agent made no further contacts until February 18, 1977, when the revenue agent and a special agent 4 visited the pawn shop, advised the Millers that they were under investigation for possible criminal violations of the tax laws, and advised them of their constitutional rights under the Fifth Amendment and their right to legal counsel.

Neither the taxpayers nor their representatives were advised of the suspected criminal overtones at the time of any of the three referrals to Intelligence. They were not advised until February 18, 1977. However, neither the taxpayers nor their representatives ever asked whether the investigation had criminal overtones.

In due course the Millers were indicted, the Rule 17(c) subpoena was issued, appellant Russ' refusal to comply after having been ordered to do so resulted in the contempt order, and the instant appeal was filed. 5 The only significant issue 6 before us

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is whether the district court erred in rejecting appellant's reliance in refusing to produce two ledger books upon the attorney-client privilege, including the protection afforded by the attorney-client privilege to preexisting documents turned over to the attorney to obtain legal advice, when the documents would have been privileged in the hands of the client by reason of the Fifth Amendment. Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976). We hold that attorney Russ had no attorney-client privilege with respect to the books, and therefore we affirm.

II. ATTORNEY-CLIENT PRIVILEGE AND THE FIFTH AMENDMENT

All parties agree on one basic legal proposition, i. e., that if a document would have been protected in the client's hands by reason of the Fifth Amendment, then the attorney-client privilege protects the document assuming it otherwise qualifies as confidential information delivered to the attorney in order to obtain legal advice. Fisher v. United States, supra, so held. Otherwise, a client would be reluctant to turn over possession to an attorney, and the ability to obtain legal advice would be diminished.

III. DOES FISHER v. UNITED STATES PERMIT ONLY A NARROW FOCUS ON THE ACT OF PRODUCING A DOCUMENT

Before discussing the crucial attorney-client privilege issue, we consider and reject the government's argument that the Supreme Court in Fisher confined the Fifth Amendment's application to documents to a single, narrow approach. The government argues that Fisher permits only a single analysis, namely, a focus on the act of producing a document, so that the content of a document is no longer relevant. In Fisher the Court did analyze the act of producing. The Court said that the act of producing documents: (1) acknowledged the existence of the documents; (2) acknowledged taxpayer's possession and control of the documents; and (3) indicated the taxpayer's belief that the documents were the ones described in the subpoena. Without deciding whether the implicit admission of the first two aspects the existence and possession of documents might rise to the level of testimony within the protection of the Fifth Amendment, the Court held the existence and location of the accountant's work papers at issue there was a "foregone conclusion," that taxpayer's implicit admission would add nothing, and therefore that no constitutional rights were touched. 425 U.S. at 411, 96 S.Ct. at 1581. With respect to the third or authentication aspect, the Court found no substantial threat of self-incrimination because the documents at issue were accountant's work papers which the taxpayer could not authenticate in any event.

Applying this analysis, the government notes that the two ledger books at issue here were previously turned over to the Internal Revenue Service, that authentication by the agents is a "foregone conclusion" without the necessity of any admission by the Millers or their attorney, and that the existence and location of the books are likewise a "foregone conclusion." Therefore, the government argues there is no Fifth Amendment shield with respect to these books in the Millers' hands, and accordingly none in the hands of their attorney.

We assume arguendo that the authentication of the books, and their location and existence, is a "foregone conclusion," and accordingly that the testimonial aspects of the act of producing the books does not present a substantial threat of self-incrimination. In this regard, the government persuasively suggests that the facts of the instant case are more...

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