Sealed Case, In re

• Decision Date: 06 June 1989
• Docket Number: No. 89-5045,89-5045
• Citation: 877 F.2d 83
• Parties: , 28 Fed. R. Evid. Serv. 1 In re SEALED CASE.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 83

877 F.2d 83

278 U.S.App.D.C. 148, 28 Fed. R. Evid. Serv. 1

In re SEALED CASE.

No. 89-5045.

United States Court of Appeals District of Columbia Circuit.

Argued April 3, 1989.

Decided June 6, 1989.

Appeal from the United States District Court for the District of Columbia (Civil Action No. 88-00394).

Before MIKVA, SILBERMAN and WILLIAMS, Circuit Judges.

Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.

Concurring opinion filed by Circuit Judge MIKVA.

STEPHEN F. WILLIAMS, Circuit Judge:

On October 6, 1988 the United States Attorney had appellant served with three grand jury subpoenas duces tecum, addressed to him as custodian of the corporate records of three different corporations. Appellant formally notified the U.S. Attorney that he would not comply with two of the subpoenas, asserting that producing those records would violate his Fifth Amendment privilege against self-incrimination. Upon application by the government, the district court ordered him to comply with the subpoenas and, when he refused, held him in contempt. In re Two Grand Jury Subpoenas Duces Tecum Dated October 6, 1988, Misc. No. 88-394 (D.D.C. Feb. 10, 1989) (compliance orders), (D.D.C. Mar. 2, 1989) (judgment and order of contempt).

Appellant recognizes that the Fifth Amendment privilege does not apply to records of a "collective entity." The exception started with the proposition that a corporation could not invoke the privilege to resist a demand for its records, Hale v. Henkel, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652 (1906), but extends to an agent of a corporation, even where the content of corporate records sought might expose him to individual criminal liability, Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771 (1911) (subpoena directed to corporation); Dreier v. United States, 221 U.S. 394, 31 S.Ct. 550, 55 L.Ed. 784 (1911) (subpoena directed to corporate custodian). The doctrine also applies to non-corporate collective entities, including even a small partnership, see Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974), and a labor union, see United States v. White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542 (1944).

Even for records of an individual, the privilege applies in only a limited fashion. It does not cover the contents of any voluntarily prepared records, including personal ones. United States v. Doe, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984). On the other hand, subject to the collective entity doctrine, the "act of production" of incriminating evidence may be protected by the Fifth Amendment where that act would have independent testimonial significance, as by manifesting the holder's acknowledgement of the existence of the documents or his custody or control over them, or his belief that they fit the description in the subpoena. Fisher v. United States, 425 U.S. 391, 410-11, 96 S.Ct. 1569, 1581, 48 L.Ed.2d 39 (1976); Doe, 465 U.S. at 614 n. 13, 104 S.Ct. at 1243 n. 13; see also Braswell v. United States, --- U.S. ----, 108 S.Ct. 2284, 101 L.Ed.2d 98 (1988) (finding act of production doctrine inapplicable to records of collective entity).

The first of the disputed subpoenas relates to records of an entity we will call Corporation A. As to it, appellant's primary contention is that, although he is president, chief executive officer and majority shareholder of the corporation, its designation of another employee as its official custodian of records means that appellant cannot be considered a custodian. Further, he claims that the records are personal rather than corporate. We reject both claims and so far as Corporation A is concerned uphold the district court's order to compel production and its later contempt citation.

The second of the disputed subpoenas relates to what we will call Entity B. In fact it appears to be little more than a name, and we find insufficient evidence in the record that it is a corporation--or indeed any other kind of collective entity. Accordingly, we reverse the district court's order and contempt citation so far as these records are concerned.

The grand jury which issued the subpoenas is investigating allegations of income tax evasion and conspiracy to defraud the government of taxes. The U.S. Attorney has advised both appellant and Corporation A that they are targets of the grand jury's investigation. Further references to the facts are necessarily somewhat vague. To protect the secrecy of the grand jury investigation, we must refrain from mentioning the individual or the entities named in the subpoenas. As the government summarized its evidence in a statement filed ex parte and reviewed in camera by both the district court and this court, even the appellant is unaware of what facts the grand jury has uncovered. See In re Sealed Case, 832 F.2d 1268, 1281 (D.C.Cir.1987) (approving such submissions when necessary to protect grand jury secrecy).

I.

The first subpoena was directed to the appellant as "Custodian of Records" for Corporation A. It requested him to produce all bank records relating to a specified account in its name at a Maryland savings and loan association; in addition, he was ordered to testify before the grand jury, but only for the limited purpose of authentication. ¹ The corporate employee who officially holds the position of custodian has testified that he was unable to find any evidence of the savings account. Ex Parte Appendix of the United States ("Ex Parte App.") 27.

Appellant does not deny that Corporation A is a collective entity. He asserts only that he is not custodian of the records for purposes of the collective entity exception and that the particular records sought are personal rather than corporate.

Appellant Can Be Considered a Custodian of Any Records of Corporation A in His Possession or Control.

Appellant's claim that he is relieved of the burdens of the collective entity doctrine by the corporation's designation of another, and not himself, as custodian, finds no support in the doctrine's principle or the relevant cases. The doctrine rests on the combination of the entity's having no collective privilege and the custodian's having voluntarily assumed a duty to hold the records "in a representative capacity ... on behalf of the group." Bellis, 417 U.S. at 89, 94 S.Ct. at 2183; see also Wilson, 221 U.S. at 380, 31 S.Ct. at 544 (custodian may have "voluntarily assumed a duty which overrides his claim of privilege"); White, 322 U.S. at 699, 64 S.Ct. at 1251 (official records and documents are held "in a representative rather than in a personal capacity"). Nothing in this theory suggests that the doctrine can apply only to one representative for a particular entity, or only to a representative officially designated as such by the entity.

Besides having no grounding in the doctrine's theory, any such formalistic requirement would undermine one of the policy values regularly invoked on its behalf--that of facilitating the enforcement of criminal laws against collective organizations and their employees. See, e.g., Braswell, 108 S.Ct. at 2294 & n. 9. Under appellant's theory, if a corporate officer wished to circumvent the doctrine, he could simply designate as official custodian a person ignorant of the critical records' existence and location.

In fact, the Braswell Court expressly rejected a related argument. By way of mitigating the effect that his proposed reading of the act of production doctrine might have on law enforcement, Braswell suggested that if production of the documents would tend to incriminate the subpoenaed agent, the corporation could be allowed to appoint an alternative agent. Under the proposed expedient, the government could not require the original agent to aid in the search for the records, as statements to the surrogate would themselves tend to incriminate. The Court held that the proposal would unduly hinder access to the corporate documents:

[W]here the [originally named] corporate custodian is likely the only person with knowledge about the demanded documents[,] the appointment of a surrogate will simply not ensure that the documents sought will ever reach the grand jury room; the appointed custodian will essentially be sent on an unguided search.

Braswell, 108 S.Ct. at 2294. Appellant's proposal here would equally circumvent the collective entity rule. Accordingly, we interpret "custodian" to encompass any agent of the corporation who under ordinary principles of corporate law has custody or control over corporate documents.

Second, appellant contends that the phrase "foregone conclusion" defines the standard by which the government must prove his custodianship. As support, he cites our pre-Braswell decision In re Sealed Case, 832 F.2d 1268, 1280 (D.C.Cir.1987). There, contrary to Braswell, we held that the act of production doctrine encompassed corporate agents. We went on to say that even if it did not, the "foregone conclusion" concept should govern resolution of factual disputes over custodianship.

The "foregone conclusion" language arose in Fisher and Doe as a component of the act of production doctrine. The Court said that where the existence and location of subpoenaed documents were a "foregone conclusion," it could compel production by the party controlling them, even though the party validly asserted a Fifth Amendment privilege. In such a case, the Court reasoned, the custodian's "communication" would add "little or nothing to the sum total of the Government's information." Fisher, 425 U.S. at 411, 96 S.Ct. at 1581; see also Doe, 465 U.S. at 614 n. 13, 104 S.Ct. at 1243 n. 13; Samuel A. Alito, Jr., Documents and the Privilege Against Self-Incrimination, U.Pitt.L.Rev. 27, 49-50 (1986) (reading "foregone conclusion" reference as relating to government's independent knowledge of records' existence and location); Comment, The Rights of Criminal Defendants and the Subpoena Duces Tecum: The Aftermath of Fisher v. United States, 95...