State v. Beno, 82-387

• Court: United States State Supreme Court of Wisconsin
• Writing for the Court: ABRAHAMSON; LOUIS J. CECI
• Citation: 341 N.W.2d 668,116 Wis.2d 122
• Parties: STATE of Wisconsin, Plaintiff-Respondent, v. Sharon BENO, Defendant-Appellant, Speaker of the Assembly Ed Jackamonis, and Richard White, administrative assistant, Intervening Respondents-Petitioners.
• Docket Number: No. 82-387,82-387
• Decision Date: 04 January 1984

Page 668

341 N.W.2d 668 116 Wis.2d 122 STATE of Wisconsin, Plaintiff-Respondent,
v.
Sharon BENO, Defendant-Appellant,
Speaker of the Assembly Ed Jackamonis, and Richard White,
administrative assistant, Intervening
Respondents-Petitioners. No. 82-387. Supreme Court of Wisconsin. Argued Oct. 4, 1983.
Decided Jan. 4, 1984.

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[116 Wis.2d 125] Jon P. Axelrod, Madison, argued, for intervening respondents-petitioners; Douglas L. Flygt and DeWitt, Sundby, Huggett & Schumacher, S.C., Madison, on brief.

Alan Lee, Asst. Atty. Gen., argued, for plaintiff-respondent; Bronson C. La Follette, Atty. Gen., on briefs.

Charles W. Giesen, Madison, argued, for defendant-appellant; Morris D. Berman and Eisenberg, Giesen, Ewers & Hayes, S.C., Madison, on brief.

ABRAHAMSON, Justice.

This is a review of a published decision of the court of appeals, State v. Beno, 110 Wis.2d 40, 327 N.W.2d 712 (Ct.App.1982) (Beno II ), vacating a writ of attachment issued by the circuit court for Dane county, Angela B. Bartell, circuit [116 Wis.2d 126] judge, confining defendant Sharon Beno in Dane county jail until she has testified and produced documents in accordance with a subpoena issued by the Wisconsin Department of Revenue. Execution of the writ was stayed pending appeal.

The issue on review is whether the circuit court erred in quashing defendant's subpoena directed to Richard White, an administrative assistant to then Assembly Speaker Ed Jackamonis, on grounds of legislative privilege. Holding that White had no legislative privilege, ¹ the court of appeals reversed the order of the circuit court quashing the subpoena to White, vacated the writ of attachment against the defendant, and remanded the case for further discovery. We reverse the decision of the court of appeals and affirm the orders of the circuit court.

I.

The facts of the case are not disputed and are set forth in two previously published court of appeals decisions: State v. Beno, 99 Wis.2d 77, 298 N.W.2d 405 (Ct.App.1980) (Beno I ), and State v. Beno, 110 Wis.2d 40, 327 N.W.2d 712 (Ct.App.1982) (Beno II ).

Briefly stated, the significant facts on this appeal are as follows: In May 1977 the Wisconsin Department of Revenue began an audit of the tax returns of Delbert Beno, a lobbyist during the Wisconsin state legislative session. The defendant, Sharon Beno, is the wife of Delbert Beno. ² The

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audit was referred to the Intelligence [116 Wis.2d 127] Section of the department, and in 1978 the department served a subpoena duces tecum on the defendant ordering her to appear and to produce certain financial records. The defendant refused to comply with the subpoena, and the department commenced action in the circuit court to compel compliance. Secs. 71.11(20)(b), 73.04(1), (3), 885.01(4), Stats.1981-82. Relying on United States v. LaSalle National Bank, 437 U.S. 298, 98 S.Ct. 2357, 57 L.Ed.2d 221 (1978), the defendant moved that the subpoena be quashed on the grounds that the Department was using its subpoena powers for the improper purpose of gathering evidence for a criminal prosecution. The circuit court, also looking to federal authority, refused to quash the department's subpoena. Concluding that the LaSalle case was applicable, the court of appeals held in Beno I that the circuit court correctly determined that abandonment of civil tax liability had not occurred but remanded the case for further discovery consistent with United States v. Genser, 595 F.2d 146 (3d Cir.1979), cert. denied, 444 U.S. 928, 100 S.Ct. 269, 62 L.Ed.2d 185 (1979).

[116 Wis.2d 128] After Beno I, the defendant was notified that at a settlement conference in another case Richard White stated that Delbert Beno was about to be indicted on charges of tax fraud. The settlement conference related to a suit brought by then Representative Walter Ward's secretary against Ward and the entire state assembly. Richard White attended this conference on behalf of Ed Jackamonis, Speaker of the Assembly. Apparently there was discussion at this conference about Delbert Beno being called as a witness in the suit. White allegedly stated at the conference something to the effect that Delbert Beno would not be a credible witness since he was about to be indicted on tax fraud.

Planning to use information to be derived from White as evidence of the department's institutional bad faith, the defendant's attorneys subpoenaed White to appear for a deposition. White and Speaker Jackamonis appeared specially and moved the circuit court to quash the subpoena issued to White claiming a legislative privilege under article IV, section 15 (legislator not subject to civil process), and article IV, section 16 (legislator not liable for words spoken in debate), of the Wisconsin Constitution; a legislative privilege under the common law; and a statutory privilege under sec. 905.10(1), Stats.1981-82 (nondisclosure of identity of informer). To assist the circuit court in determining the nature of the discovery sought, counsel agreed that the defendant could submit written interrogatories to White in lieu of oral testimony. The defendant sought to learn any information White had about the tax liability or tax investigation of Delbert or Sharon Beno and the identity of White's informant.

The affidavits of the speaker and White filed with the circuit court state that Ed Jackamonis, as Co-chair of the Joint Committee on Legislative Organization (JCLO), Chairperson of the Assembly Organization, and Speaker [116 Wis.2d 129] of the Assembly, had begun an investigation into allegations of misconduct and violations of law by a legislator (not named) and a staff employee pursuant to sec. 13.905, Stats., 1981-82; that as part of the investigation, Speaker Jackamonis directed Administrative Assistant White to interview witnesses and compile information concerning such alleged misconduct

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for use by JCLO; that while acting within the scope of his responsibilities as a legislative aide conducting this investigation White had received information from an informant concerning the allegations of misconduct in return for a promise that the informant's identity would not be disclosed; and that answering the interrogatories fully and accurately would require disclosure of both the substance and the source of the information given by the informant.

The state moved the circuit court to quash the defendant's subpoena to White on the ground that it exceeded the scope of permissible discovery under Beno I. The circuit court held an evidentiary hearing; the testimony viewed most favorably to the defendant indicated that White may have said that Department of Revenue agents told him that Delbert Beno was about to be indicted on tax fraud. ³

On December 28, the circuit court, ruling from the bench, reaffirmed its earlier decision of August 27, 1981, holding that White was protected by a constitutional legislative privilege and that the privilege had not been waived. The circuit court also held that the department had not abandoned a civil tax purpose and granted the state's request for a writ of attachment against the defendant who continued to refuse to produce the subpoenaed documents. As we stated previously, in Beno II the court of appeals held that White had no legislative [116 Wis.2d 130] privilege and reversed the circuit court's order quashing the subpoena issued to defendant White.

II.

The department contends that this court need not reach the issue of legislative privilege since the testimony sought from White exceeds the permissible scope of discovery.

In Beno I, the court of appeals analogized the department to the Internal Revenue Service and adopted the United States Supreme Court's reasoning in United States v. LaSalle National Bank, 437 U.S. 298, 98 S.Ct. 2357, 57 L.Ed.2d 221 (1978), as to the department's subpoena powers during a tax investigation. In LaSalle the Court held that the Internal Revenue Service must issue a subpoena before the Service recommends a criminal prosecution and that the Service must use the subpoena authority in good faith pursuit of authorized purposes. The taxpayer may resist a subpoena upon meeting the "heavy" burdens of demonstrating institutional bad faith, 437 U.S. at 316, 98 S.Ct. at 2367. Particularly, the taxpayer may demonstrate "institutional bad faith" by proving that the "institutional posture" of the agency was to delay a recommendation of criminal prosecution in order to gather evidence for the Department of Justice through the use of an administrative subpoena. 437 U.S. at 317, 98 S.Ct. at 2367.

The federal circuit courts of appeal have had difficulty applying the LaSalle rule and have differed over the extent of discovery allowed the taxpayer challenging the subpoena. ⁴ If the scope of discovery is too restrictive, [116 Wis.2d 131] the defendant's protection against institutional bad faith is illusory and the defendant's right to challenge an administrative subpoena is a meaningless formality. If the scope of discovery is too

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broad, the department's investigation and the enforcement of the subpoena are unnecessarily and unreasonably delayed.

In Beno I the court of appeals applied the guidelines for discovery set forth in United States v. Genser, 595 F.2d 146 (3d Cir.1979), and remanded the case to the circuit court for further discovery. Neither party sought or seeks review of Beno I. Consequently the sole issue before us on this review with regard to discovery is the circuit court's and court of appeals' application of the court of appeals' Beno I decision.

Under Genser a court considering requests for discovery must determine whether the information sought is relevant to the issue in contention and should limit discovery to issues relevant to the validity of the subpoena and the guarantees of LaSalle. See United States v. Genser, 595 F.2d 146, 152 (3d Cir.1979), cert. denied 444 U.S. 928, 100 S.Ct. 269, 62 L.Ed.2d 185 (1979); United States v....