Grand Jury Proceedings; Subpoenas for Documents, In re

• Decision Date: 29 November 1994
• Docket Number: No. 94-2594,94-2594
• Citation: 41 F.3d 377
• Parties: 94-2 USTC P 50,612 In re GRAND JURY PROCEEDINGS, SUBPOENAS FOR DOCUMENTS, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 377

41 F.3d 377

94-2 USTC P 50,612

In re GRAND JURY PROCEEDINGS, SUBPOENAS FOR DOCUMENTS, Appellant.

No. 94-2594.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 13, 1994.

Decided Nov. 29, 1994.

Randall W. Ishmael, Jonesboro, AR, argued, for appellant.

John E. Bush, Asst. U.S. Atty., Little Rock, AR, argued, for appellee.

Before McMILLIAN, Circuit Judge, BRIGHT, Senior Circuit Judge, and MORRIS SHEPPARD ARNOLD, Circuit Judge.

BRIGHT, Senior Circuit Judge.

Doye L. Bayird and Judy L. Bayird appeal from an order entered in the district court denying a motion to quash grand jury subpoenas duces tecum served on the Bayirds' attorney and accountant, requiring production of certain business and financial records. For reversal, the Bayirds argue, inter alia, that the motion to quash should have been granted because the act of producing the documents would violate their fifth amendment privilege against compelled testimonial self-incrimination. For the reasons discussed below, we reverse the order of the district court.

I. BACKGROUND

Taxpayers Doye L. Bayird and his wife Judy L. Bayird are owners and operators of a used car dealership in Arkansas. During the course of an Internal Revenue Service (IRS) civil tax audit, the Bayirds voluntarily produced some business and financial records for the years 1990 and 1991. ¹

Subsequent to the IRS investigation, the Bayirds became the targets of a federal grand jury investigation. In April 1994, the United States District Court for the Eastern District of Arkansas issued subpoenas to Randy Ishmael, the Bayirds' attorney, and Dale E. Coy, an accountant, requiring production of certain business and financial records of the Bayirds' in their possession. Specifically, the subpoenas sought the production of the following documents:

[o]riginal records of Doye J. [sic] Bayird and Judy L. Bayird, and/or any business entity they have owned an interest in, which includes but is not limited to notes, letters, agreements, contracts, correspondence, schedules, workpapers, summaries, computer printouts, ledgers, journals, bank records (cancelled checks, statements, and deposits slips), loan applications, financial statements, contracts, recap sheets, car invoices, sales summaries, and any other documents regarding financial transactions for the periods of 1989, 1990, 1991, and 1992.

Appellant's Appendix at 3, 4.

The record indicates the following: all of the documents in the possession of the Bayirds' attorney and accountant are the Bayirds' private papers, as individuals and sole proprietors. No corporation or other entity exists in which the Bayirds have an interest. None of the documents are records of any entity other than the Bayirds as individuals. Appellants' Brief at ix. The Bayirds employed the attorney for the exclusive purpose of representing the Bayirds during the IRS investigation, and in preparation for possible litigation. The Bayirds' attorney did not possess the documents for any other purpose. Appellants' Appendix at 12-13. Although Dale E. Coy, the accountant, prepared the Bayirds' income tax returns for the year 1992, that is the only work that he performed for the Bayirds directly. The Bayirds' attorney employed Coy to assist him in representing the Bayirds in preparation for possible litigation. No distinction exists between the documents in the attorney's possession and the accountant's possession because the accountant acts as an agent for the Bayirds' attorney. Appellants' Appendix at 14. The government does not dispute any of these factual assertions, and, for purposes of this appeal, we consider these assertions as true.

The Bayirds filed a motion to quash the subpoenas, arguing that compliance with the subpoenas would violate their fifth amendment privilege against self-incrimination and violate their attorney-client privilege. In addition, the Bayirds contended that the scope of the subpoenas was overbroad and repetitious insofar as they relate to the years 1990 and 1991 because the IRS already examined the 1990 and 1991 documents. On April 21, 1994, the district court held a telephone hearing on the motion and determined that an in camera inspection would assist in determining which of the documents should be produced and directed the parties to submit briefs on the matter.

On May 24, 1994, after considering the briefs, but without an in camera inspection of the documents, the district court denied the Bayirds' motion to quash the subpoenas. Relying on Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976) and Doe v. United States, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984), the district court focused on the issue of whether the act of production of the documents in question has testimonial and self-incriminating aspects. The district court held that because the act of production of the documents does not have testimonial and self-incriminating aspects, the Bayirds' fifth amendment privilege would not be violated. In addition, the district court also held that the subpoenas were not unreasonable, overbroad or repetitious.

On June 23, 1994, the district court denied the Bayirds' motion to reconsider and directed counsel to comply with the grand jury subpoena immediately. This appeal followed.

II. DISCUSSION

The fifth amendment of the United States Constitution provides that no person "shall be compelled in any criminal case to be a witness against himself." U.S. Const. amend. V. The Bayirds argue that compliance with the subpoenas would violate their fifth amendment privilege against self-incrimination. In addition, the Bayirds contend that the scope of the subpoenas is overbroad and unreasonable.

At oral argument, the government maintained that because the Bayirds' attorney possesses the documents, the Bayirds' fifth amendment privilege is no longer implicated. This contention lacks merit. When material has been transferred from a client to an attorney for the purpose of seeking legal advice and the subpoena is directed to the attorney, the proper inquiry is whether the subpoena, if directed to the client himself, would require compelled testimonial self-incrimination. In re Grand Jury Subpoena (85-W-71-5), 784 F.2d 857, 860 (8th Cir.1986).

We now examine whether compliance with the subpoenas would violate the Bayirds' fifth amendment privilege against self-incrimination. In Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976), the IRS served summonses on the taxpayers' attorneys for the production of tax returns that had been prepared by accountants. The Court held that the taxpayers' fifth amendment privilege would not be violated because the fifth amendment only protects compelled testimonial communications that are incriminating. The Court focused its analysis on the testimonial and incriminating nature of the act of producing documents and not on the contents of the documents themselves. The Court held that the act of producing documents in response to a subpoena "has communicative aspects of its own, wholly aside from the contents of the papers produced." Id. at 410, 96 S.Ct. at 1580-81.

The Court determined that the fifth amendment privilege could protect the act of production in response to a subpoena that has testimonial and self-incriminating aspects. Id. at 410-11, 96 S.Ct. at 1580-81. The Court recognized that the act of producing documents can communicate testimonial aspects as to the existence of the documents, possession or control of the documents, or the authenticity of the documents. Id. at 410-13, 96 S.Ct. at 1580-82. The Court added that the question of whether the act of production was testimonial does not lend itself to categorical answers and depends on the facts and circumstances of a particular case. Id. at 410, 96 S.Ct. at 1580-81.

After analyzing whether the production of the accountants' workpapers involved testimonial self-incrimination, the Court determined that the existence and location of the papers were a "foregone conclusion" and that the taxpayers would add little to the government's case by conceding possession of the documents. Id. at 411-12, 96 S.Ct. at 1581-82. In addition, the Court held that the production of the documents would not authenticate the documents because the taxpayers did not prepare the documents and could not vouch for their accuracy. Id. at 413, 96 S.Ct. at 1582.

Subsequently, in United States v. Doe, 465 U.S. 605, 612, 104 S.Ct. 1237, 1242, 79 L.Ed.2d 552 (1984), the Supreme Court held that the fifth amendment did not protect the contents of business and tax records of a sole proprietorship because they had been voluntarily prepared. Relying on Fisher, the Court found that although the contents of the documents were not protected, the act of producing the individual's tax records in his possession may have testimonial and self-incriminating aspects. Id. The Doe Court determined that act of production of sole proprietor's documents was protected by the fifth amendment and could only be required through a grant of use immunity under 18 U.S.C. Secs. 6002 and 6003. Doe, 465 U.S. at 612-14, 104 S.Ct. at 1242-43.

The Bayirds do not contend that they were compelled to create the documents or that they created the records involuntarily. The voluntary creation of the subpoenaed documents means that the contents of the documents do not fall under the protection of the fifth amendment. As Fisher instructs, the contents of voluntarily produced documents do not contain compelled testimonial evidence. Fisher, 425 U.S. at 409, 96 S.Ct. at 1580.

Although the contents of the documents are not protected, the Bayirds argue that the act of producing the documents in response to the subpoenas would entail compelled...