U.S. v. First Nat. Bank of Chicago, 80-2713

• Decision Date: 01 March 1983
• Docket Number: No. 80-2713,80-2713
• Citation: 699 F.2d 341
• Parties: 83-1 USTC P 9159, 12 Fed. R. Evid. Serv. 422 UNITED STATES of America and Earl Tripplett, Revenue Officer, IRS, Petitioners-Appellees. v. The FIRST NATIONAL BANK OF CHICAGO, Respondent-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 341

699 F.2d 341

83-1 USTC P 9159, 12 Fed. R. Evid. Serv. 422

UNITED STATES of America and Earl Tripplett, Revenue Officer, IRS, Petitioners-Appellees. v. The FIRST NATIONAL BANK OF CHICAGO, Respondent-Appellant.

No. 80-2713.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 30, 1981.

Decided Jan. 24, 1983.

As Amended March 1, 1983.

Leon Bordelon, III, Chicago, Ill., for respondent-appellant.

Mary L. Fahey, Tax Division, Dept. of Justice, Washington, D.C., for petitioners-appellees.

Before SPRECHER ^* and BAUER, Circuit Judges, and FAIRCHILD, Senior Circuit Judge.

FAIRCHILD, Senior Circuit Judge.

The district court granted enforcement of an Internal Revenue Service summons directed to First National Bank of Chicago, seeking disclosure of certain records in First Chicago's branch bank in Athens, Greece. We decide that First Chicago has adequately demonstrated that compliance will subject its employees to the risk of substantial criminal penalties under Greek law, and that a balancing of relevant competing interests weighs against compelling disclosure at this time. We therefore reverse the judgment of the district court, but remand for consideration of an order requiring First Chicago to make a good faith effort to secure permission to make the information available.

I. The Facts

On September 24, 1979, Internal Revenue Service Officer Earl Tripplett issued a summons to the First National Bank of Chicago ("First Chicago") requiring production of bank statements of Christ and Helen Panos for the month of June 1978 and the balance of funds in their account at the Athens, Greece, branch of First Chicago on June 19, 1978. (The Panoses now reside in Greece.)

First Chicago refused to furnish the requested information, stating:

[O]ur Greek counsel has informed us that under the Greek Bank Secrecy Act, any and all of our employees--whether in Greece or elsewhere--who reveal exact account information about depositors of our Branch in Athens to any third party may be subject under the Act to criminal penalties, including, inter alia, not less than a six-month prison sentence. He further informs us that in two very recent Greek court decisions, it has been made clear that this Act does indeed apply to branches of foreign banks doing business in Greece.

However, in what it termed an effort to cooperate as much as possible without jeopardizing the welfare of its employees, First Chicago did advise the IRS that only one account for the Panoses existed, and that during the month of June 1978 the balance was "in the range of 40,000 Greek drachmas" (approximately $1,100 American money). ¹

Thereafter, the IRS filed a petition in the district court to enforce the summons. Upon First Chicago's failure to respond timely to an order to show cause, the court, on May 7, 1980, ordered compliance.

First Chicago then filed a motion to vacate the enforcement order, arguing that disclosure would expose its employees to penal sanctions under Greek law. The motion was supported by a memorandum and copies of two unsworn letters from George V. Tsarouchas, of the law firm of George Lazarimos & Sons, First Chicago's Greek counsel, dated respectively March 9, 1972 and July 1, 1978, interpreting the Greek Bank Secrecy Act (the "Act"). In relevant part, the letters stated that information concerning customer deposits could not lawfully be supplied to American authorities, that the penalty for violation was at least six months in prison, and that such sanction could not be suspended or converted into fines. After receiving the Government's answering memorandum, accompanied by a Library of Congress translation of the Act, the court, without opinion, denied the motion to vacate on September 15, 1980.

A motion for reconsideration was filed by First Chicago on October 3, 1980, stating in part that it had been denied the opportunity to file a reply to the Government's answering memorandum prior to the ruling of September 15. A hearing was held, and the court permitted First Chicago to file a reply. Two sworn affidavits accompanied First Chicago's submission. The first, dated October 24, 1980, by Nick C. Gravenites, the manager of First Chicago's Greek branch for more than 5 years, stated, "on the basis of his knowledge acquired in the performance of his duties," that the Act was in full force and effect at the time the subpoena was issued, that it continued to remain in effect and applied to his employees, and that for more than nine years the Lazarimos firm had served as counsel to the Greek branch. The affidavit further stated that:

Greek currency (the drachma) is a non-convertible currency. The foreign exchange control laws of the Republic of Greece at all times relevant to the proceeding at bar restricted the free conversion of Greek currency (drachmas) into another foreign currency and, further, restricted the transmittal of drachmas outside the Republic of Greece.

The second affidavit, by Ralph J. Borkowitz, First Chicago's Records Manager, dated October 24, 1980, stated that records responsive to the IRS request were maintained only in the bank's branch office in Athens, Greece.

In addition, the record shows that attached to First Chicago's reply memorandum was another page, the top half of which was a copy of the listing of the attorneys in the Lazarimos firm (including Mr. Tsarouchas) from the 1980 Martindale-Hubbell Law Directory, Volume VI, p. 3634B, and the bottom half of which was a typed statement, headed "Affidavit," and signed in ink by Laurence C. Franklin, an attorney for First Chicago. The statement purported to certify that the above listing was a true and accurate reproduction. There is no indication that the "Affidavit" was ever notarized, nor is it dated. But we take judicial notice of the accuracy of the copy.

First Chicago also separately furnished the court with a copy of the Act in the original Greek and a translation of the Act certified by the Greek Ministry of Foreign Affairs. Respectively, they are dated, in handwriting or by stamp, as having been secured July 18, 1980 and July 21, 1980.

On November 6, 1980, the district court, without opinion, denied the motion for reconsideration. It granted a stay pending this appeal.

II. The Merits

First Chicago does not argue that the Government failed to make out a prima facie case for enforcement. And indeed there is no suggestion that the summons did not relate to a proper purpose, albeit levy and collection rather than determination of tax liability, that the material sought was irrelevant or already within the Commissioner's possession, or that necessary administrative steps remained to be taken. Cf. United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 254-55, 13 L.Ed.2d 112 (1964). Rather, First Chicago urges that cause has been established for denying enforcement, notwithstanding the Government's prima facie showing. As we view the case, the arguments raised on appeal fall into two categories. First, whether First Chicago has sufficiently proved that Greek law forbids, under penalty of imprisonment, disclosure of the information in question. Second, whether (if it has so demonstrated) it should nonetheless be compelled to comply with the IRS summons.

A.

First Chicago maintains that the letters from Attorney Tsarouchas, the affidavits of Branch Manager Gravenites and Records Manager Borkowitz, and the translations of the Act submitted by both sides amply establish that disclosure of the information sought is prohibited by Greek law. In response, the Government asserts that even the minimum formal requirement for proving foreign law has not been satisfied, in that First Chicago has failed to introduce a sworn affidavit by Greek counsel interpreting the Act. The attorney's letters, it points out, are unsworn, and the affidavits in the record are by nonlawyers. Further, the Government asserts there are discrepancies between the Library of Congress' and the Greek Ministry of Foreign Affairs' translations, and that it has not been properly established that the Act was and continues to remain in effect.

We cannot accept the Government's contentions. To begin with, a sworn statement by an attorney--that is to say, a written expert opinion--is not a prerequisite to proving foreign law. The Federal Rules of Civil Procedure provide in Rule 44.1:

A party who intends to raise an issue concerning the law of a foreign country shall give notice in his pleadings or other reasonable written notice. The court, in determining foreign law, may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination shall be treated as a ruling on a question of law.

(Emphasis added.)

A major treatise interpreting this Rule states:

[T]he court may consider any material the parties wish to present.... In addition to primary materials and expert testimony, a litigant may present any other information concerning foreign law that he believes will further his cause.... The trial judge is free to accept these items and to give them whatever probative value he thinks they deserve....

... An expert witness is not required to meet any special qualifications. Indeed he need not even be admitted to practice in the country whose law is in issue.

9 C. Wright & A. Miller, Federal Practice & Procedure Sec. 2444, at 406 (1971). Thus, there can be no doubt that the district court was entitled to consider the letters, affidavits, and translations before it, and could properly have based its determination on that evidence.

Because the district court did not issue an opinion detailing its reasons enforcing the summons, we do not know whether it found that First Chicago had failed to prove that Greek law forbade the disclosure or whether it determined that such a showing was made but was nonetheless insufficient to prevent enforcement. However, this uncertainty does...