Custodian of Records of Variety Distributing, Inc., In re, s. 90-5646

• Decision Date: 26 February 1991
• Docket Number: 90-5662,Nos. 90-5646,s. 90-5646
• Citation: 927 F.2d 244
• Parties: , 32 Fed. R. Evid. Serv. 417 In re Trial Subpoena Duces Tecum to CUSTODIAN OF RECORDS OF VARIETY DISTRIBUTING, INC. UNITED STATES of America, Plaintiff-Appellee, v. ELLWEST STEREO THEATRES OF MEMPHIS, INC. d/b/a Executive South; Charles Long; Rodney Skinner; and Diane Wells, Defendants, Charles Mello (90-5646), Witness-Appellant, Elliot Siegel (90-5662), Witness-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 244

927 F.2d 244

59 USLW 2566, 32 Fed. R. Evid. Serv. 417

In re Trial Subpoena Duces Tecum to CUSTODIAN OF RECORDS OF VARIETY DISTRIBUTING, INC UNITED STATES of America, Plaintiff-Appellee, v. ELLWEST STEREO THEATRES OF MEMPHIS, INC. d/b/a Executive South; Charles Long; Rodney Skinner; and Diane Wells, Defendants Charles Mello (90-5646), Witness-Appellant Elliot Siegel (90-5662), Witness-Appellant.

Nos. 90-5646, 90-5662.

United States Court of Appeals Sixth Circuit.

Argued Jan. 22, 1991.

Decided Feb. 26, 1991.

W. Hickman Ewing, Jr., U.S. Atty., Dan Newsom, Asst. U.S. Atty. (argued), Memphis, Tenn., for U.S.

Kemper B. Durand (argued), Thomason, Hendrix, Harvey, Johnson, Mitchell, Blanchard, Memphis, Tenn., for Charles Mello.

John H. Weston, Beverly Hills, Cal., for Elliot Siegel.

Before KEITH and MILBURN, Circuit Judges, and CONTIE, Senior Circuit Judge.

CONTIE, Senior Circuit Judge.

Appellant Charles Mello, a witness in the obscenity trial of United States v. Ellwest Stereo Theatres of Memphis, Inc., appeals the district court's charge of contempt of court for refusing as custodian of records of Variety Distributing, Inc. to produce records subpoenaed by plaintiff-appellee, the United States. Appellant Elliot Siegel, also a witness in the trial of defendant Ellwest Stereo, appeals the district court's charge of contempt of court for refusing as custodian of records for Western Visuals, Inc. to authenticate records subject to a subpoena duces tecum in order for the records to be submitted into evidence under Federal Rule of Evidence, Rule 803(6), the business records exception to the hearsay rule. For the following reasons, we affirm the decision of the district court.

I.

On September 27, 1989, a federal grand jury returned a one-count indictment charging Ellwest Stereo Theatres of Memphis with engaging in the business of selling or transferring obscene matter in violation of 18 U.S.C. Sec. 1466. Charles Long and Rodney Skinner, corporate officers of Ellwest, and Diane Wells, a sales clerk, were also charged. On April 16, 1990, a jury was selected to hear the trial. Because the district judge was involved in another trial, the trial in the present case did not commence until April 30, 1990. Interstate shipment is a necessary element of the offense charged in the indictment. On April 19, 23, and 24, the government issued subpoenas duces tecum to the following corporations in order to prove interstate shipment of the particular videotape, entitled Blacks & Blondes, Vol. 7, which was involved in the trial:

1. To the custodian of records of Western Visuals, Inc. of California, the corporation alleged to have produced and distributed the video.

2. To the custodian of records of Variety Distributing, Inc. of Michigan, the corporation alleged to have distributed the video.

3. To the custodian of records of Modern Bookkeeping of Michigan, the corporation where Ellwest was alleged to send its account records.

Charles Mello, the appellant in appeal No. 90-5646, appeared at trial as custodian of records for Variety Distributing, Inc., but refused to produce the corporate business records subject to the subpoena on the ground that the act of production could incriminate him personally in violation of the Fifth Amendment. The district court found that, as custodian of corporate records, Mello did not have a Fifth Amendment right to refuse to produce the records and held appellant Mello and the corporation, Variety Distributing, Inc., in contempt of court for refusing to produce the records. ¹

Both witnesses Mello and Siegel had requested use immunity under 18 U.S.C. Sec. 6002 in exchange for producing and authenticating the subpoenaed records, but the request was denied by the prosecution.

Elliot Siegel, the appellant in appeal No. 90-5662, appeared at trial as custodian of records for Western Visuals, Inc. Two subpoenas had been served on Western Visuals. The first required production of the following:

All invoices, records and other documentation evidencing distribution of videotapes (and copies) to the following entity:

Variety Distributing

1112 N. Saginaw

Durand, Michigan 48429

Variety Distributing

P.O. Box 408

Durand, Michigan 48429

Variety or Variety Distributing (anywhere in Michigan) [.] Above requested records should be for a period of between January 1988 to the present date.

Appellant Siegel produced the records requested by this subpoena and identified them as the documents called for by the subpoena. However, he refused to testify that they were records which the corporation regularly kept in the course of its regular business activities. Such testimony was necessary in order to have the records admitted into evidence at trial under the business records exception to the hearsay rule, Federal Rule of Evidence, Rule 803(6). ² The district court found that appellant Siegel did not have a Fifth Amendment right to refuse to authenticate the records and held appellant Siegel and the corporation, Western Visuals, Inc., in contempt of court for refusing to authenticate the records.

The second subpoena issued to Western Visuals demanded production of a videotape entitled Blacks & Blondes, Vol. 7 and all records and documents showing production and distribution of the videotape to four entities, including corporate defendant Ellwest Stereo, and to three individuals, including individual defendants Long and Skinner. Appellant Siegel failed to produce a copy of the videotape and would not state whether the videotape was turned over to the agent serving process pursuant to the subpoena. Appellant Siegel also refused to testify whether any of the documents he had produced were the documents requested in the second subpoena. However, the district judge did not hold appellant Siegel in contempt for the failure to produce the videotape or to state whether the documents produced were those requested by the second subpoena. ³

Because a novel legal issue was involved, the court did not direct that the witnesses be jailed until they purged themselves of contempt, but instead released the witnesses upon their own recognizance. Both appellants Siegel and Mello appealed the district court's determination that they and the corporations that they represent are in contempt of court. Ultimately, the court signed documents releasing appellants from custody during the pendency of this appeal.

The obscenity trial of United States v. Ellwest Stereo Theatres proceeded to conclusion without the business records at issue in this appeal being submitted into evidence. The two corporate officers of Ellwest, Charles Long and Rodney Skinner, were convicted, and the sales clerk, Diane Wells, was acquitted.

Appellants-witnesses Mello and Siegel timely filed this appeal of their contempt charges.

II.

We must first decide whether the district court erred in determining that appellant Mello, as custodian of records of Variety Distributing, Inc., did not have a Fifth Amendment right to refuse to produce the corporate records subject to a subpoena duces tecum.

Appellant Mello concedes that he was not entitled to refuse to produce the subpoenaed records on the ground that they could incriminate him personally, because the Supreme Court has dispositively held that a custodian of corporate records may not resist a subpoena for corporate records on the ground that the act of production will incriminate him in violation of the Fifth Amendment. Braswell v. United States, 487 U.S. 99, 108 S.Ct. 2284, 101 L.Ed.2d 98 (1988).

We agree that appellant Mello's reading of Braswell is correct. In Braswell, the Supreme Court rejected the petitioner's argument that even though corporations are not protected by the Fifth Amendment, his act of producing corporate documents as the custodian of corporate records had independent testimonial significance which would incriminate him individually and compulsion of the act was thus prohibited by the Fifth Amendment. Id. at 111-12, 108 S.Ct. at 2291-92. The Court stated, "A custodian may not resist a subpoena for corporate records on Fifth Amendment grounds." Id. at 113, 108 S.Ct. at 2290. The Court reasoned that a custodian of business records is the representative of a collective entity, the corporation, and acts as the corporation's agent in producing corporate business records. Any claim of Fifth Amendment privilege asserted by the agent would be tantamount to a claim of a privilege against self-incrimination by the corporation, which possesses no such privilege.

[T]he Court has consistently recognized that the custodian of corporate or entity records holds those documents in a representative rather than a personal capacity. Artificial entities such as corporations may act only through their agents, and a custodian's assumption of his representative capacity leads to certain obligations, including the duty to produce corporate records on proper demand by the Government. Under those circumstances, the custodian's act of production is not deemed a personal act, but rather an act of the corporation. Any claim of Fifth Amendment privilege asserted by the agent would be tantamount to a claim of privilege by the corporation--which of course possesses no such privilege.

Id. at 109-10, 108 S.Ct. at 2291 (citation omitted). See also In re Grand Jury Proceedings (Morganstern), 771 F.2d 143, 148 (6th Cir.) (en banc), cert. denied, 474 U.S. 1033, 106 S.Ct. 594, 88 L.Ed.2d 574 (1985) (the privilege against compulsory self-incrimination is a personal one and no collective entity may claim it).

The Supreme Court in Braswell stated that if the petitioner had conducted his business as a sole proprietorship, its decision in United States v. Doe, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984) would require that he be provided the opportunity to show that his act of production would entail testimonial self-incrimination as to admissions that the records existed, were in his possession, and were...