680 F.2d 327 (3rd Cir. 1982), 81-1782, Matter of Grand Jury Empanelled March 19, 1980

Docket Nº:81-1782.
Citation:680 F.2d 327
Party Name:In the Matter of GRAND JURY EMPANELLED MARCH 19, 1980 United States of America, Appellant.
Case Date:June 10, 1982
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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680 F.2d 327 (3rd Cir. 1982)

In the Matter of GRAND JURY EMPANELLED MARCH 19, 1980 United

States of America, Appellant.

No. 81-1782.

United States Court of Appeals, Third Circuit

June 10, 1982

Argued Feb. 17, 1982.

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William W. Robertson, U. S. Atty., Newark, N. J., for appellant; Samuel A. Alito, Jr., Asst. U. S. Atty., Maryanne Trump Desmond, Executive Asst. U. S. Atty. (argued), Newark, N. J., on brief.

Richard T. Philips (argued), DeCotiis & Philips, P.A., Newark, N. J., for appellee; George G. Frino, Newark, N. J., on brief.

Before ADAMS and SLOVITER, Circuit Judges, and VanARTSDALEN, District Judge. [*]


ADAMS, Circuit Judge.

The United States appeals from a district court order quashing, subject to a limited exception, a number of grand jury subpoenas duces tecum. The wide-sweeping subpoenas, if enforced, would require a sole proprietor, who is a target of the grand jury's investigation, to produce a host of records allegedly pertaining to his business and in his possession and control. Aside from those records required to be kept by law, the district judge, citing the protection against self-incrimination afforded by the fifth amendment, declined to direct that the requested documents be made available to the grand jury. We affirm.


This appeal arises out of an investigation by a federal grand jury in New Jersey into corruption relating to the awarding of county and municipal contracts. A portion of the investigation focused on the appellee, 1 who, according to the United States, operated as a sole proprietor several companies that did business with various units of local government. In November and December 1980, the appellee received five separate subpoenas duces tecum, which commanded him to appear before the grand jury and produce certain documents. Specifically, the appellee was directed to provide the jurors with numerous records relating to two of appellee's companies, including ledgers, journals, workpapers, vouchers, bank statements, contracts, corporate minutes, etc.; 2 "all records, including but not limited to bank statements, cancelled checks, check stubs and deposit tickets" connected with specified bank accounts of the appellee or his companies; and the telephone

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toll records of certain businesses. The appellee moved to quash the subpoenas on fifth amendment grounds.

The district judge conducted two hearings before ruling on the appellee's motion. Counsel for the United States conceded, for purposes of the argument, that "all the corporations described in the subpoenas are sole proprietorships," and that the subpoenaed records "are in (the appellee's) hands." Additionally, the Government admitted that the documents it sought to obtain "will or may incriminate" the appellee. See note 17 infra.

In an opinion and order dated February 4, 1981, the district court granted substantially all the relief sought by the appellee. The court reasoned that, "(a)lthough the Fifth Amendment does not protect the records of corporations, unincorporated associations or partnerships, a sole proprietor can invoke the privilege to his benefit." The court then determined that the fifth amendment right of the appellee would be infringed were he forced to turn over the various subpoenaed documents, inasmuch as the appellee thereby would be compelled to make an incriminating testimonial communication. In this connection, the district judge observed that "the (mere) act of producing the documents has communicative aspects which warrant Fifth Amendment protection.... (E)nforcement of the subpoenas would compel (the appellee) to admit that the records exist, that they are in his possession, and that they are authentic." The court accordingly granted the appellee's motion to quash, except as the motion related to those subpoenaed items, such as tax returns and W-2 statements, that are required by law to be kept or to be disclosed to a public agency.

After its motion for reconsideration was denied, the United States filed a timely appeal. We have jurisdiction under 18 U.S.C. § 3731, which has been held to authorize an appeal by the Government from a district court order quashing a grand jury subpoena duces tecum. See In re Grand Jury Empanelled (Colucci), 597 F.2d 851, 854-58 (3d Cir. 1979).


We proceed to analyze the scope of protection under the fifth amendment available to a sole proprietor whose records and papers have been subpoenaed by a grand jury. Our inquiry in this regard is fourfold: (A) Can the fifth amendment privilege be invoked by a sole proprietor in response to a subpoena for his business-related records? (B) If so, under the particular circumstances of this case, would compelled production of the subpoenaed documents amount to an incriminating testimonial communication, thereby entitling the appellee to take refuge in the protection afforded by the amendment? (C) Did, as the United States contends, the appellee fail to qualify for that protection by proffering an overly-broad motion to quash? (D) And, even if the appellee prevails with respect to the previous questions, can the Government nonetheless compel production of the requested records by suggesting that the act of their surrender be "immunized"?


As has often been noted, the constitutional privilege against self-incrimination is "essentially a personal one, applying only to natural individuals," United States v. White, 322 U.S. 694, 698, 64 S.Ct. 1248, 1251, 88 L.Ed. 1542 (1944) (emphasis added). The privilege, consequently, cannot be asserted by a collective group, such as a corporation or a union, or by a representative, employee, or agent of a collective group. Employing this principle, the Supreme Court has refused to recognize a claim of fifth amendment protection with respect to individually held records of corporations, Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771 (1911); labor unions, United States v. White, supra ; organizations, McPhaul v. United States, 364 U.S. 372, 81 S.Ct. 138, 5 L.Ed.2d 136 (1960); political parties, Rogers v. United States, 340 U.S. 367, 71 S.Ct. 438, 95 L.Ed. 344 (1951); and partnerships, Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974). "(A)n individual cannot rely upon the privilege

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to avoid producing the records of a collective entity which are in his possession in a representative capacity, even if these records might incriminate him personally." Bellis, supra, 417 U.S. at 88, 94 S.Ct. at 2182.

From this, the United States urges that the appellee should be obligated to turn over the documents requested here, however incriminating, for the same reasons that an individual in possession of corporate or partnership records is required to comply with a grand jury subpoena. The Government maintains that "it would be anomalous to hold that a corporation or partnership, no matter how small or personal, enjoys no fifth amendment rights, while a sole proprietorship, no matter how large and impersonal, is shielded from producing business records." Brief for Appellant at 13.

Although the Government's position has considerable analytic appeal, 3 it is clear that, under the present state of the law, the fifth amendment may be invoked by a sole proprietor regardless of the magnitude of his business. In Bellis, supra, the Supreme Court made it clear that, in evaluating a fifth amendment claim, the critical factor was not the size of the organization the records of which were being subpoenaed, but rather the nature of the capacity-either personal or representational-with respect to which the privilege was claimed. The Bellis Court drew "a bright line between organizations which have 'a recognizable juridical existence apart from (their) members,' " such as corporations or partnerships, and "those which do not," such as sole proprietorships. In re Grand Jury Empanelled (Colucci), supra, 597 F.2d at 859 (quoting In re Grand Jury Investigation, 483 F.2d 961, 962 (3d Cir. 1973), aff'd, Bellis, supra ). While extending the Wilson line of cases to a partnership, on the ground that a partnership constituted an "organized, institutional activity," 417 U.S. at 92, 94 S.Ct. at 2185, the Justices explicitly declined to conclude that the same would be true with respect to sole proprietorships:

It has long been established, of course, that the Fifth Amendment privilege against compulsory self-incrimination protects an individual from compelled production of his personal papers and effects as well as compelled oral testimony.... The privilege applies to the business records of the sole proprietor or sole practitioner as well as to personal documents containing more intimate information about the individual's private life.

Id. at 87-88, 94 S.Ct. at 2182 (emphasis added).

In a straightforward application of Bellis, this Court rejected a previous effort on the part of the United States to construe the fifth amendment so as to distinguish between, for example, a small, family-operated sole proprietorship, and a large, corporate-like solely owned entity. Judge Garth, writing for the Court, noted that the decisional law clearly did not support such a distinction:

An individual who holds records in a representative capacity for a collective entity (e.g. a corporation, union or partnership) may not assert a Fifth Amendment privilege when he is compelled to produce those records. On the other hand, a sole proprietorship has no legal existence apart from its owner, and such records may be protected from disclosure by the Fifth Amendment.

In re Grand Jury Empanelled (Colucci), supra, 597 F.2d at 859. See also In re Grand

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Jury Subpoena (Kent), 646 F.2d 963, 968 (5th Cir. 1981) ("(t)he fifth amendment protection applicable to a sole...

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