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Whippany Paper Board Co. v. Alfano

Decided: November 13, 1980.

WHIPPANY PAPER BOARD CO., INC., A NEW JERSEY CORPORATION, PLAINTIFF-RESPONDENT,
v.
MICHAEL ALFANO, ROBERT K. DRAIN, DOMINICK IAFRATO, JAMES A. DERRICO, JR., JOSEPH DERRICO, BARKER STREET BALING CORP., WEST BRIGHTON MILL SUPPLIES, FRANK IAFRATO CORP., BAY WASTE TRUCKING, J & J SALES CORP. AND INTERSTATE PAPER SALES CORP., DEFENDANTS-APPELLANTS



On Appeal from the Superior Court, Law Division, Morris County.

Matthews, Morgan and Morton I. Greenberg. The opinion of the court was delivered by Morton I. Greenberg, J.A.D.

Greenberg

Plaintiff brought this action on August 21, 1979. The complaint alleged that its former employees, defendants Alfano*fn1 and Drain, had conspired with the other defendants to cause plaintiff to pay for wastepaper purportedly delivered to it by the corporate defendants when the paper was not in fact delivered or lesser amounts were delivered than the amounts for which plaintiff was charged. In addition, it was alleged that defendants conspired to upgrade the rating of certain paper so that it would meet plaintiff's requirements. Defendants filed answers denying improper conduct and liability. At about the time that the civil complaint was filed, the United States Attorney for the District of New Jersey commenced a criminal investigation of the same matters dealt with in the complaint.

Shortly after institution of this civil case plaintiff served notice that it would take the depositions of the individual defendants Michael Alfano, Joseph Derrico, James A. Derrico,

Jr., Dominick Iafrato, Robert K. Drain and a representative of certain of the corporate defendants designated pursuant to R. 4:14-2(c). Additionally, plaintiff requested that the witnesses produce specified documents at the depositions. R. 4:14-2(d). The persons sought to be deposed did not voluntarily appear. Consequently, plaintiff served a motion seeking an order compelling their attendance. Certain defendants served cross-motions requesting a stay of discovery because of the potential criminal proceedings. The motions were heard November 16, 1979. The judge ordered defendants to appear at the depositions and produce the documents demanded by plaintiff. Defendants' cross-motions for a stay were denied. The depositions were then rescheduled. The witnesses appeared but did not answer most questions. They based their refusals to testify on the ground that the answers would tend to incriminate them and thus they had a Fifth Amendment right to refuse to answer.*fn2 Defendants also refused to produce documents.*fn3

Plaintiff then moved to compel defendants to answer specific questions and to produce certain documents. When its motion was originally heard on January 11, 1980 the motion judge considered adopting a procedure by which defendants would be compelled to answer the questions but the transcripts of the depositions would be sealed. Argument was adjourned for two weeks so that the position of the United States Attorney could be determined. An Assistant United States Attorney appeared when the motion was again heard on January 25, 1980. He urged that discovery be stayed. He contended that if defendants

testified on depositions they would do so at their own peril and that the United States would not be bound by any order sealing discovery.

Nevertheless, the judge decided to establish a procedure which he felt would protect defendants' Fifth Amendment rights but still permit plaintiff to proceed with discovery. The order which he entered on March 7, 1980 provided that any witness could assert a Fifth Amendment claim not to answer any question or produce any document, but that notwithstanding the claim of privilege the question must be answered or the document produced. The depositions were to be privately conducted and the transcripts sealed. Counsel was limited in his use of information gained at the deposition.*fn4 Defendants moved for leave to appeal from this order. This court on April 15, 1980 granted their motions and consolidated the appeals. The United States has been permitted to appear as amicus curiae on the appeal.

We note initially that a witness may assert the privilege against self-incrimination in a civil proceeding. Maness v. Meyers , 419 U.S. 449, 95 S. Ct. 584, 42 L. Ed. 2d 574 (1975); Mahne v. Mahne , 66 N.J. 53 (1974). And it is not disputed by plaintiff before us that some questions counsel for plaintiff asked could require answers which would tend to be incriminating. In fact, the civil complaint itself alleged conduct of a criminal nature. The United States Attorney indicated at oral argument that the matter is still the subject of a grand jury investigation though no indictments had been returned by that time. Thus we reach the substantial issue of whether the trial court could override defendants' claim of privilege.

We conclude that the trial judge should not have ordered defendants to testify or turn ...


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