U.S. v. Rendahl, s. 83-4053
| Decision Date | 01 November 1984 |
| Docket Number | 83-4054 and 83-4146,Nos. 83-4053,s. 83-4053 |
| Citation | 746 F.2d 553 |
| Parties | 84-2 USTC P 9908 UNITED STATES of America, and Michael W. Cameron, Special Agent, Internal Revenue Service, Petitioners-Appellees, v. James K. RENDAHL, Respondent-Appellant. UNITED STATES of America, and Michael W. Cameron, Special Agent, Internal Revenue Service, Petitioners-Appellees, v. James V. BLAKELEY, Respondent-Appellant. UNITED STATES of America, and Michael W. Cameron, Special Agent, Internal Revenue Service, Petitioners-Appellees, v. Michael P. DRISCOLL, Respondent-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Charles E. Brookhart, Jo-Ann Horn, Dept. of Justice, Washington, D.C., for petitioners-appellees.
Neil Halprin, Missoula, Mont., for respondent-appellant.
Appeal from the United States District Court for the District of Montana.
Before FLETCHER and FARRIS, Circuit Judge, and CRAIG, * District Judge.
Respondents Rendahl, Blakeley and Driscoll appeal the district court's order holding them in civil contempt for failing to obey its order enforcing an IRS summons. All three claimed a Fifth Amendment privilege and made an in camera offer of proof to the district court to support their claims. We reverse.
IRS agent Cameron issued a summons to each of the respondents ordering them to appear before him to testify and produce all documents reflecting money received from, or transactions involving, taxpayer William P. Driscoll (brother of respondent Michael Driscoll) during the years 1976-1980. 1 None of the respondents complied with the summons. The IRS petitioned the district court for enforcement on February 14, 1983. The court set an enforcement hearing for March 11, directing respondents to show cause why they should not be compelled to obey the summons.
None of the respondents appeared at the enforcement hearing, and only Rendahl filed a response to the order to show cause, claiming a Fifth Amendment privilege. The court entered an order directing respondents to appear before Agent Cameron within 15 days.
On March 29, respondents Rendahl and Blakeley appeared before Agent Cameron but did not produce any documents and did not answer questions. Driscoll did not appear.
Concluding that its earlier order was not specific enough as to time and place, the court amended its order, directing respondents to produce documents and give testimony on April 28, 1983. Only Rendahl appeared on that date. He refused to answer questions as to whether he had received any compensation from William P. Driscoll between 1976 and 1980, claiming a Fifth Amendment privilege, and said he had no documents. Blakeley and Driscoll did not appear.
The government moved for an order to show cause why respondents should not be held in contempt for failing to obey the enforcement order. The court set Rendahl's and Blakeley's contempt hearing for July 1. Because of a problem in serving Driscoll with the enforcement order, the court set a second enforcement hearing for Driscoll on the same date. All three respondents appeared, and each made an in camera offer of proof to support their claims of a Fifth Amendment privilege. The court held the claims of privilege invalid, and on August 2 found Rendahl and Blakeley in civil contempt, ordering them incarcerated until they purged themselves of the contempt by producing the documents and giving testimony. 567 F.Supp. 515.
On the same date, the court enforced the summons as to Driscoll, ordering him to appear before Agent Cameron on August 16. He did not appear, and the court held Driscoll's contempt hearing on September 16. Driscoll appeared and the court suspended the hearing to allow him to appear before Agent Cameron that day. Driscoll did so, but he did not produce any documents
and refused to answer questions as to compensation he received from William Driscoll. The court reconvened the contempt hearing and also found Driscoll in contempt. 2
The IRS argues that, because respondents could have pursued their Fifth Amendment claims as defenses to the summons in the enforcement proceedings, the enforcement order is res judicata and prohibits them from litigating that defense in the contempt proceedings. See United States v. Rylander, 460 U.S. 752, 103 S.Ct. 1548, 75 L.Ed.2d 521 (1983) (). Blakeley did not raise any defense to enforcement of the summons. Rendahl and Driscoll contested issuance of the enforcement order but did not appeal it. The IRS claims that respondents, having failed to pursue their defenses to enforcement, are not free to disobey the court's order and then raise those same defenses in the contempt proceedings.
Respondents are not barred from raising their defense of privilege in the contempt proceedings because the Fifth Amendment defense could not have been properly litigated in the enforcement hearing. In United States v. Bell, 448 F.2d 40 (9th Cir.1980), we held that the appellant's Fifth Amendment challenge was premature on appeal from an enforcement order. "Appellant must present himself for questioning, and as to each question elect to raise or not to raise the defense." 448 F.2d at 42. In United States v. Ellsworth, 460 F.2d 1246, 1248 (9th Cir.1972), we further held that a district court's enforcement order restricting the questions that could be asked by an IRS agent was improper because it allowed a blanket assertion of the Fifth Amendment; the person should have been ordered to appear and assert the privilege to particular questions asked. Finally, in Steinert v. United States, 571 F.2d 1105 (9th Cir.1978), we held that an order that required respondents to appear before the IRS and allowed them to determine whether to raise the Fifth Amendment privilege with respect to each question asked or document sought was not a final, appealable order.
Thus, although the court allowed Driscoll to litigate the privilege issue in his enforcement hearing and Rendahl raised it in his, the issue was premature at that stage. Had respondents appealed, this court would likely have responded as in Bell, requiring them to obey the order to appear and raise the privilege in response to particular questions. Because none of the respondents appeared before the IRS until after the enforcement order was entered, their first opportunity to litigate properly their Fifth Amendment claims was at the contempt hearing.
In order to support their assertion of the Fifth Amendment privilege, respondents must show that their testimony would "support a conviction under a federal criminal statute" or "furnish a link in the chain of evidence needed to prosecute the claimant for a federal crime." Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951). The privilege is validly invoked only where there are "substantial hazards of self-incrimination" that are "real and appreciable," not merely "imaginary and unsubstantial." United States v. Neff, 615 F.2d 1235, 1239 (9th Cir.), cert. denied, 447 U.S. 925, 100 S.Ct. 3018, 65 L.Ed.2d 1117 (1980). The existence of such a hazard is generally determined from "examination of the questions, their setting, and the peculiarities of the case." 615 F.2d at 1240.
The district court found that respondents' testimony would have incriminated them under this standard, since evidence that they had received income in any amount could be used to help prove they had received sufficient income to be required to file a return, thus subjecting them to possible liability for failure to file a return in violation of 26 U.S.C. Sec. 7203 (1982). Our review of the transcripts of the in camera proceedings convinces us that the district court's conclusion was correct. The district court nevertheless held that respondents were required to answer questions, despite the likelihood of self-incrimination, under this court's decision in United States v. Carlson, 617 F.2d 518 (9th Cir.), cert. denied, 449 U.S. 1010, 101 S.Ct. 564, 66 L.Ed.2d 468 (1980). We disagree.
In Carlson, ...
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