MATTER OF SPECIAL GRAND JURY NO. 1, IMPANELLED DEC.

• Decision Date: 31 August 1978
• Docket Number: Civ. No. K-78-1220.
• Citation: 465 F. Supp. 800
• Parties: In the Matter of SPECIAL GRAND JURY NO. 1, IMPANELLED DECEMBER, 1977 TERM.
• Court: U.S. District Court — District of Maryland

465 F. Supp. 800

In the Matter of SPECIAL GRAND JURY NO. 1, IMPANELLED DECEMBER, 1977 TERM.

Civ. No. K-78-1220.

United States District Court, D. Maryland.

August 31, 1978.

COPYRIGHT MATERIAL OMITTED

Harold Buchman and Barbara B. Mello, Baltimore, Md., for petitioner.

Russell T. Baker, Jr., U. S. Atty. and Herbert Better and Richard D. Bennett, Asst. U. S. Attys., Baltimore, Md., for Government.

FRANK A. KAUFMAN, District Judge.

On June 29, 1978, a Special Grand Jury of this Court issued a subpoena duces tecum to the "Custodian of Records" X and X¹ requiring production of —

any and all records, books and documents for the period 1/1/72 through 12/31/75 that are described below: 1. All ledgers and journals; 2. All bank statements, checks, cancelled or otherwise, check vouchers, check stubs, checkbooks, deposit tickets, savings account books for escrow accounts and any and all other checking and savings bank accounts; 3. Any and all settlement sheets and other records of settlements involving clients who were represented in connection with claims for bodily injuries arising out of automobile accidents.²

The Government takes the position that the within Petitioner, the older of the two brothers, is the "Custodian of Records" of X and X and is seeking herein compliance with the grand jury subpoena by him only and not by his younger brother. The older brother has moved to quash the subpoena, asserting his Fifth Amendment privilege against self-incrimination. The Government, opposing that motion, asks this Court to require the said older brother X to comply with the grand jury subpoena.

Based upon the record in this case including testimony taken during a hearing on August 27, 1976, this Court finds the following facts:³

(1) The brothers practiced law continuously from November, 1968, to June 29, 1978, when the subpoena involved herein was issued to the older brother, in the same suite on the door of which appeared their individual names. The directory board on the entrance floor of the building in which that office is located also lists only their individual names and not the firm name. (Tr. 102-03, 18 et seq. and Exhibits 2 and 3, the latter being photographs referred thereat).

(2) The brothers used stationery and professional cards and filed in one or more courts documents bearing the name of "X and X." However, while the stationery and calling cards used by both brothers carried the name of "X and X," the respective card and the respective stationery of each brother set forth the telephone number of that brother only. Each brother had his own telephone number and separate telephone listing, and paid his own telephone bill. There was seemingly no firm telephone listing. (Tr. 32-35, 44-47, 83-85, 91, 115).

(3) Letters and hospital bills were addressed and checks were made payable to "X and X." (Tr. 58-59, 87-89).

(4) Letters were addressed by one or both brothers to insurance companies referring to the "office" having been retained by personal injury claimants. (Tr. 85-86).

(5) The brothers would sometimes handle each other's cases although the older brother seldom handled the younger brother's cases and received no compensation for so doing when he so did. (Tr. 37, 54, 70-71).

(6) The brothers kept separate books and financial records and paid their own expenses although the older brother paid most of the costs of operation of the office the brothers shared. (See, e. g., 42-43, 56, 105).

(7) The older brother paid for the rental of the law office and signed the written lease document as the sole lessee. The younger brother apparently contributed toward the monthly rent on only two occasions. (Tr. 21-22, 44).

(8) There was seemingly no partnership agreement, written or oral. (See, e. g., Tr. 44, 85).

(9) Each brother had access to the case files of the other but not to the books of the other; and neither was required to account to the other. (Tr. 56-57, 69, 105, 110).

(10) The brothers sometimes worked or consulted together with regard to cases. (Tr. 79-71).

(11) The brothers filed separate federal and state income tax returns, did not file any partnership tax returns, maintained separate bank accounts, did not maintain any joint bank account either under the name of X and X or otherwise, and did not share profits. (Tr. 40-41, 54, 56-57, 106, 116).

(12) The older brother shared with the younger brother fees paid by clients of the older brother and resulting from work in cases upon which the younger brother did work for the older brother. The older brother seemingly decided what amounts to pay to the younger brother. (Tr. 37-40).

(13) The older brother employed and paid two or three part-time secretaries and reported and paid social security and withholding taxes with regard to them. The secretaries did work for both brothers and had access to their records. (Tr. 40-41, 71).

(14) The older brother provided office space, within the suite of offices shared by the brothers X, to two other attorneys, one of whom was a cousin of the brothers X. Those two attorneys each had other full-time jobs and sometimes worked part-time in the suite occupied by the brothers X. On an occasional basis, one or the other or both of the two attorneys did work for the older brother on the older brother's cases. The record does not disclose what rent, if any, the other two attorneys paid. (Tr. 27, 43, 64, 72-74).

(15) Most of the office equipment and furniture was purchased by the older brother. There was no jointly owned property nor any jointly owned records or documents. (Tr. 57, 105).

(16) The older brother worked much harder than the younger brother. The latter was apparently not interested in pushing himself. One of the principal reasons the older brother held himself out as a partner of his younger brother was to please their parents. The older brother listened to his brother's suggestions, but he (the older brother) managed the office, made the decisions, and controlled his own practice. (Tr. 47-48, 53, 57-58, 110).

(17) The older brother had no arrangement with his brother or anyone else concerning succession to his practice. The older brother is married. (Tr. 43, 85).

(18) The Grand Jury involved in this case is investigating allegations that certain attorneys in Maryland have conspired with their own clients and with physicians, examining and treating those clients, to inflate and falsify alleged personal injuries of those clients and to defraud liability insurance companies who had issued policies to persons alleged to have tortiously injured those clients by obtaining settlements based on such inflated, false doctors' reports and evaluations.

The Government seeks to require the older brother to comply with the grand jury subpoena. The older brother seeks to quash that subpoena.

Two legal issues are present in this case: (1) whether the records sought are partnership records; and (2) whether the types of records involved may be withheld by the older brother pursuant to his assertion of his Fifth Amendment privilege against self-incrimination.

I

"It has long been established, of course, that the Fifth Amendment privilege against compulsory self-incrimination protects an individual from compelled production of his personal papers and effects as well as compelled oral testimony. * * * The privilege applies to the business records of the sole proprietor or sole practitioner as well as to personal documents containing more intimate information about the individual's private life." Bellis v. United States, 417 U.S. 85, 87-88, 94 S.Ct. 2179, 2182-2813, 40 L.Ed.2d 678 (1974). However, an attorney may not claim the privilege if he has incorporated his practice, Reamer v. Beall, 506 F.2d 1345 (4th Cir. 1974), cert. denied, 420 U.S. 955, 95 S.Ct. 1338, 43 L.Ed.2d 431 (1975); see Bellis, supra, 417 U.S. at 100, 94 S.Ct. 2179. That is because "an individual cannot rely upon the 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." Id. at 88, 94 S.Ct. at 2183. The decisions of the Supreme Court preceding Bellis⁴ "reflect the Court's consistent view that the privilege against compulsory self-incrimination should be `limited to its historic function of protecting only the natural individual from compulsory incrimination through his own testimony or personal records.' United States v. White, supra, 322 U.S. at 701 64 S.Ct. 1248." Bellis v. United States, supra at 89-90, 94 S.Ct. at 2184. Accordingly, the "organizational records held in a representative capacity" by someone acting on behalf of "an organized collective entity" which itself is an "independent entity existing apart from its individual members" and which itself is "relatively well organized and structured, and not merely a loose, informal association of individuals," are not subject to the claim of the privilege. Id. at 92-93, 94 S.Ct. at 2185.

In Bellis, Mr. Justice Marshall held that a "modest size" (417 U.S. at 94, 94 S.Ct. 2179) law partnership was such an entity. The law firm in Bellis was composed of three partners, had about six employees (two attorney associates; three secretaries and a receptionist) and had existed about 15 years. Id. at 85-86, 94 S.Ct. 2179. It is not clear as to whether there was a formal partnership agreement. Id. at 96 n. 4, 94 S.Ct. 2179. The partners seemingly were not related by blood or marriage. Mr. Justice Marshall held that "while small, the partnership here did have an established institutional identity independent of its individual partners. This was not an informal association or a temporary arrangement for the undertaking of a few projects of short-lived duration." Id. at 95, 94 S.Ct. at 2186. In so concluding, the Justice noted the existence of a partnership bank account, stationery with a firm letterhead, the fact that the partners filed federal tax returns, and the fact that the...