Grand Jury Subpoena Dated Nov. 12, 1991, FGJ 91-5 (MIA), In re

• Decision Date: 12 November 1991
• Citation: 957 F.2d 807
• Parties: , 35 Fed. R. Evid. Serv. 1 In re GRAND JURY SUBPOENA DATED
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 807

957 F.2d 807

60 USLW 2624, 35 Fed. R. Evid. Serv. 1

In re GRAND JURY SUBPOENA DATED NOVEMBER 12, 1991, FGJ 91-5 (MIA).

David L. PAUL, Appellant.

No. 92-4129.

United States Court of Appeals,

Eleventh Circuit.

March 18, 1992.

Aubrey B. Harwell, Jr., James G. Thomas, Delta Anne Davis, Neal & Harwell, Nashville, Tenn., for appellant.

Cheryl A. Bell, Asst. U.S. Atty., Miami, Fla., for appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before EDMONDSON, COX and DUBINA, Circuit Judges.

PER CURIAM:

This is an expedited appeal from a judgment of civil contempt under the Recalcitrant Witness Statute, 28 U.S.C. § 1826. For the reasons which follow, we affirm.

I. PROCEDURAL BACKGROUND

On November 12, 1991, a federal grand jury for the Southern District of Florida issued a subpoena requiring contemnor-appellant, David A. Paul ("Paul"), to produce documents which largely fall into two general categories: (1) corporate records of CenTrust Bank, which Paul had removed from the bank premises; and (2) residential construction records relating to Paul's estate at 42, 44 and 46 La Gorce Island, Miami Beach, Florida.

Paul refused to comply with the grand jury subpoena and filed a motion to quash asserting that (1) his act of producing both corporate and personal documents would incriminate him; (2) the subpoena was overbroad and unduly burdensome; and (3) compliance with the subpoena would violate Florida's non-disclosure statute, Fla.Stat. § 655.057. Paul's primary claim, both before the district court and before us, is that his act of producing both the corporate and personal records sought by the subpoena would incriminate him personally and was therefore protected by the Fifth Amendment to the United States Constitution.

The district court held a hearing on Paul's motion to quash on December 18 and 19, 1991. At the conclusion of the hearing, the district court entered an order denying Paul's motion to quash the purely corporate documents (only those documents which both parties had agreed were corporate in nature), pursuant to Braswell v. United States, 487 U.S. 99, 108 S.Ct. 2284, 101 L.Ed.2d 98 (1988); the records were ordered to be produced in three stages--on January 24, 1992, February 14, 1992 and February 28, 1992. As to the claimed personal documents, including Paul's residential construction records, Paul was granted an additional two months, until February 28, 1992, within which to provide the district court with a list of those documents and an explanation as to why the Fifth Amendment privilege should apply. ¹

On January 6, 1992, Paul filed on his own initiative a "Notice of Intent to Resist Compliance for Purposes of Obtaining Appellate Review," in which he acknowledged the necessity of the contempt citation as a predicate for appellate review. This notice informed the government and the district court of Paul's decision not to comply with the pertinent portion of the December 23 order well in advance of the January 24, 1992, initial deadline for document production called for by the order. Shortly after Paul filed his notice, the government filed a motion for order to show cause why Paul should not be held in contempt and for modification of deadlines established by the district court's order entered on December 23, 1991. That motion initiated the contempt proceedings underlying this appeal.

After Paul defied the district court's order to produce the purely corporate records, the district court issued an order to show cause on February 7, 1992, directing Paul to appear on February 20, 1992, and demonstrate why he should not be held in civil contempt for his disobedience. On February 20, 1992, Paul appeared as directed and conceded that his defiance was willful and deliberate and that he should be held in civil contempt pursuant to 28 U.S.C. § 1826. He also admitted that incarceration was the only appropriate means of coercing compliance with the district court's order to produce the corporate documents. After hearing arguments from both parties, the district court held Paul in civil contempt and sentenced him to conditional incarceration. Paul then moved the district court for a stay or bail pending appeal, which was denied. He then filed a motion for bail pending appeal or, in the alternative, for stay of commitment order in this court which was also denied. Consequently, Paul is presently incarcerated.

II. STATEMENT OF THE FACTS

The material facts underlying this appeal are not in serious dispute and can be summarized succinctly. Paul was chairman of the board and chief executive officer of CenTrust Bank in Miami, Florida. He served in that capacity from November 1983 through February 2, 1990, when CenTrust was taken over by the Resolution Trust Corporation ("RTC"). Before he was removed from his positions at the bank, Paul admits that he caused a substantial volume of CenTrust corporate documents to be copied, and he kept them when he left. Paul presently exercises custody and control over these corporate documents. He contends that he had copies made of the corporate documents, took them when he left, and has retained them for purposes of defending himself, individually, in the civil, criminal and administrative proceedings that are being mounted against him. ²

By letter dated November 12, 1991, the United States Attorney for the Southern District of Florida informed Paul that he was the target of a federal grand jury investigation of "violations of federal criminal law arising out of the business and financial activities of CenTrust Bank and its related corporations." Among the crimes being investigated are bank fraud, misappropriation of bank funds and property, and false entries on bank records.

III. STANDARD OF REVIEW

The applicability of a privilege involves a mixed question of law and fact. See In re Grand Jury Proceedings 88-9, 899 F.2d 1039, 1042 (11th Cir.1990). Purely factual issues are subject to the "clearly erroneous" standard of review and the application of law to facts is determined de novo by the court of appeals. Newell v. Prudential Ins. Co., 904 F.2d 644, 649 (11th Cir.1990). ³

IV. ISSUE

The issue presented in this appeal is whether the district court properly held that the production of purely corporate records is not protected by the Fifth Amendment, even when the custodian's employment is terminated after he acquires custody of the corporate records and even though the custodian claims that he had "personal reasons" for acquiring and maintaining the records.

V. ANALYSIS

In his brief, Paul argues that "the 'collective entity doctrine' is inapplicable to the facts of this case because [Paul] had no agency relationship with CenTrust when he was served with the grand jury subpoena, nor has he had such a relationship for over two years (at this point)." The government on the other hand argues that in a line of cases culminating in Braswell, 487 U.S. 99, 108 S.Ct. 2284, the Supreme Court has repeatedly held that a custodian may not resist a subpoena for corporate records on Fifth Amendment grounds. The government contends that the Supreme Court has expressly refused to create an exception for custodians who are no longer employed by the corporation because the corporation no longer exists.

The law is clear that an individual may not invoke his personal Fifth Amendment privilege to avoid producing the documents of a collective entity that are in his custody, even if his production of those documents would prove personally incriminating. Braswell, 487 U.S. at 111-112, 108 S.Ct. at 2291-92; Fisher v. United States, 425 U.S. 391, 411, 96 S.Ct. 1569, 1581, 48 L.Ed.2d 39 (1976); Bellis v. United States, 417 U.S. 85, 88, 94 S.Ct. 2179, 2183, 40 L.Ed.2d 678 (1974); Wilson v. United States, 221 U.S. 361, 385, 31 S.Ct. 538, 546, 55 L.Ed. 771 (1911); Dreier v. United States, 221 U.S. 394, 400, 31 S.Ct. 550, 550, 55 L.Ed. 784 (1911). Paul urges us to limit the scope of these cases by creating an exception for custodians who are former corporate officers; that is, officers who assumed custody of corporate documents during their employment, but who have terminated their employment with the corporation by the time the grand jury subpoena issues. In dealing with this same argument, the district court stated: "Paul's formalistic view of the Fifth Amendment would directly undermine Braswell, and would create an obvious haven for those who seek to frustrate the legitimate demands for the production of relevant corporate records made by a grand jury." We agree.

The Supreme Court has held that a corporation has no Fifth Amendment privilege to refuse to produce its records. Hale v. Henkel, 201 U.S. 43, 74, 26 S.Ct. 370, 378, 50 L.Ed. 652 (1906). Because a corporation can only produce its records through its human representatives, the corollary to this rule is that a corporate representative may not invoke his personal Fifth Amendment privilege to shield corporate records from a subpoena. Braswell, 487 U.S. at 111-112, 108 S.Ct. at 2291-92; Wilson, 221 U.S. at 385, 31 S.Ct. at 546; Dreier, 221 U.S. at 400, 31 S.Ct. at 550. This principle is known as the "collective entity doctrine," and was explained by the Supreme Court in Bellis as follows:

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 corporation would substantially undermine the unchallenged rule that the organization itself is not privileged to claim any Fifth Amendment privilege, and largely frustrate the governmental regulation of such organizations.

417 U.S. at 90, 94 S.Ct. at 2184.

The question before us, however, is whether the collective entity doctrine applies to custodians who are no longer employed by the corporation. In Braswell, the Supreme Court held that the president and sole...