Grand Jury Proceedings, In re, 84-5235

• Decision Date: 23 August 1985
• Docket Number: No. 84-5235,84-5235
• Citation: 771 F.2d 143
• Parties: , 2 Fed.R.Serv.3d 1144 In re GRAND JURY PROCEEDINGS. Appeal of David MORGANSTERN and Fred Morganstern.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 143

771 F.2d 143

54 USLW 2133, 2 Fed.R.Serv.3d 1144

In re GRAND JURY PROCEEDINGS Appeal of David MORGANSTERN and Fred Morganstern.

No. 84-5235.

United States Court of Appeals Sixth Circuit.

Argued June 14, 1985.

Decided Aug. 23, 1985.

Shelby C. Kinkead, Jr., argued, Bulleit, Kinkead, Irvin & Reinhardt, Lexington, Ky., for appellants.

Louis DeFalaise, U.S. Atty., Barbara Edelman, argued, Lexington, Ky., for appellee.

Before LIVELY, Chief Judge, and ENGEL, KEITH, MERRITT, KENNEDY, MARTIN, JONES, CONTIE, KRUPANSKY, WELLFORD and MILBURN, Circuit Judges.

LIVELY, Chief Judge.

The question in this case is whether a subpoena duces tecum requiring the production of partnership and corporate records should be quashed on the ground that production of the documents will violate the appellants' Fifth Amendment privilege against compulsory self-incrimination. The district court denied the motion to quash and a panel of this court reversed, concluding that the appellants could not be required to produce the records in the absence of a grant of use immunity. In re Grand Jury Proceedings (Morganstern), 747 F.2d 1098 (6th Cir.1984). A majority of the judges in active service voted to rehear the case en banc, thus vacating the panel opinion and the previous judgment of the court. Rule 14, Rules of the Sixth Circuit. Following supplemental briefing the case was argued before the full court. We now affirm the judgment of the district court.

I.

As the panel opinion makes clear, the subpoena ordered the production of partnership and corporate records only; no personal records of the Morgansterns are involved. Also, though an earlier motion to quash relied on three grounds, this appeal is from the denial of a motion based solely on the contention that compelled production of the records would violate the appellants' Fifth Amendment right against self-incrimination. 747 F.2d at 1099. Thus, our inquiry is a narrow one.

A.

In Bellis v. United States, 417 U.S. 85, 88, 94 S.Ct. 2179, 2183, 40 L.Ed.2d 678 (1974), the Supreme Court noted that it had been established by a long line of cases "that an individual cannot rely upon the [Fifth Amendment] privilege 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." The petitioner in Bellis was a member of a three-partner law firm who argued that the small size of the partnership made it unrealistic to consider the firm as an entity independent of the three partners.

Speaking through Justice Marshall the Court rejected this argument, concluding that the law firm had an "established institutional identity independent of its individual partners," id. at 95, 94 S.Ct. at 2187; and that the petitioner held the subpoenaed records in a representative capacity. Id. at 97, 94 S.Ct. at 2187. Referring to its earlier decision in United States v. White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542 (1944), the Bellis Court stated the rationale for the "collective entity" rule:

Since no artificial organization may utilize the personal privilege against compulsory self-incrimination, the Court found that it follows that an individual acting in his official capacity on behalf of the organization may likewise not take advantage of his personal privilege. In view of the inescapable fact that an artificial entity can only act to produce its records through its individual officers or agents, recognition of the individual's claim of privilege with respect to the financial records of the organization would substantially undermine the unchallenged rule that the organization itself is not entitled to claim any Fifth Amendment privilege, and largely frustrate legitimate governmental regulation of such organization.

Id.

B.

The Supreme Court reexamined the basis of many of its earlier decisions applying the Fifth Amendment privilege against compelled testimony to the production of documents in Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976), though a shift in the emphasis of inquiry was foreshadowed by Couch v. United States, 409 U.S. 322, 93 S.Ct. 611, 34 L.Ed.2d 548 (1973). In Fisher the Court held that insofar as the Fifth Amendment applies to non-oral evidence, it protects against the compelled production of documents if the act of production is "testimonial." 425 U.S. at 408, 96 S.Ct. at 1579. The Court was concerned with the "communicative aspects" of the act of producing evidence in response to a subpoena, "wholly aside from the contents of the papers produced." Id. at 409-10, 96 S.Ct. at 1580. Despite this shift in emphasis from the contents of subpoenaed documents to the testimonial act of production, the Court did not retreat from the collective entity rule. Rather, the Court repeated the holding of Bellis that "neither a partnership nor the individual partners are shielded from compelled production of partnership records on self-incrimination grounds." Id. at 408, 96 S.Ct. at 1580. In addition the Court referred twice to White, Bellis and related cases in rejecting arguments of the taxpayer.

This Court has also time and again allowed subpoenas against the custodian of corporate documents or those belonging to other collective entities such as unions and partnerships and those of bankrupt businesses over claims that the documents will incriminate the custodian despite the fact that producing the documents tacitly admits their existence and their location in the hands of their possessor. E.g., Wilson v. United States, 221 U.S. 361 [31 S.Ct. 538, 55 L.Ed. 771] (1911); Dreier v. United States, 221 U.S. 394 [31 S.Ct. 550, 55 L.Ed. 784] (1911); United States v. White, 322 U.S. 694 [64 S.Ct. 1248, 88 L.Ed. 1542] (1944); Bellis v. United States, 417 U.S. 85 [94 S.Ct. 2179, 40 L.Ed.2d 678] (1974); In re Harris [221 U.S. 274, 31 S.Ct. 557, 55 L.Ed. 732], supra.

425 U.S. at 411-12, 96 S.Ct. at 1581.

Moreover, in Wilson v. United States, supra; Dreier v. United States, supra; United States v. White, supra; Bellis v. United States, supra; and In re Harris, supra, the custodian of corporate, union, or partnership books or those of a bankrupt business was ordered to respond to a subpoena for the business' books even though doing so involved a "representation that the documents produced are those demanded by the subpoena," Curcio v. United States, 354 U.S. , at 125 [77 S.Ct. 1145, at 1150, 1 L.Ed.2d 1225 (1957) ].

Id. at 413, 96 S.Ct. at 1582 (footnote omitted).

C.

This court has had several opportunities to apply the Fisher approach of examining circumstances related to the act of production where IRS summonses and grand jury subpoenas have been resisted on Fifth Amendment grounds. In United States v. Schlansky, 709 F.2d 1079 (6th Cir.1983), cert. denied, --- U.S. ---, 104 S.Ct. 1591, 80 L.Ed.2d 123 (1984), after discussing the shift in emphasis by the Supreme Court from consideration of the contents of documents to consideration of the circumstances related to the act of production, this court wrote:

Under this focus the key question is whether the compelled production involves compelled testimonial communication. The answer to this question in turn depends on whether the very act of production supplies a necessary link in the evidentiary chain. Does it confirm that which was previously unknown to the government; e.g., the existence or location of the materials? Does it supply assurance of authenticity not available to the government from sources other than the person summonsed? Though the party seeking to avoid compliance does not have to show more than is required to demonstrate that the privilege is properly claimed, he must make some showing that the act of production alone would involve an incriminating testimonial communication.

Id. at 1084 (citation omitted).

Schlansky, concerned individual tax records. However, In re Grand Jury Empanelled March 8, 1983, 722 F.2d at 294 (6th Cir.1983), cert. dismissed sub nom. Butcher v. United States, --- U.S. ---, 104 S.Ct. 1458, 79 L.Ed.2d 774 (1984), dealt with the precise issue now before the court. There a panel of this court concluded that the collective entity rule was not affected by Fisher, and that Fisher "did not extend Fifth Amendment protection to the production of the records of a corporation or other collective entity." 722 F.2d at 296. The distinction between personal records and those of a collective entity was emphasized, in particular the fact that one who produces the records of a collective entity acts in a purely representative capacity.

Other courts of appeals which have considered the question of the survival of the collective entity rule have reached the same conclusion. E.g., United States v. Malis, 737 F.2d 1511, 1512 (9th Cir.1984), ("It is well established that an individual may not assert the fifth amendment privilege to avoid producing the records of a collective organization where he possesses such records in a representative capacity," citing Bellis ); In re Grand Jury Proceedings (Vargas), 727 F.2d 941 (10th Cir.), cert. denied sub nom. Vargas v. United States, --- U.S. ---, 105 S.Ct. 90, 83 L.Ed.2d 37 (1984) (discussing post-Fisher applications of the collective entity rule and the significance of the custodian's representative capacity).

II.

The panel in this case concluded, and the appellants argue here that the decision of the Supreme Court in United States v. Doe, 465 U.S. 1237, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984), rendered meaningless the distinction between personal records and those of a collective entity where the act of production is claimed to be incriminating. The appellants contend that Doe extended to the custodian of corporate and partnership records the same right to refuse to produce those records as an individual has with respect to personal records. We do not read Doe so expansively. The panel also held that the government could enforce the Morganstern...