The opinion of the court was delivered by: WILLIAM G. BASSLER
The government has filed this motion to compel respondent,
a target of a federal grand jury investigation, to appear and testify before the grand jury. Specifically, the government seeks to compel respondent, as a custodian of records for a corporation also under investigation, to produce corporate records to the grand jury and to provide oral testimony sufficient to bring the records within the business records exception to the hearsay rule, Federal Rule of Evidence 803(6). The issue presented, one of first impression in this Circuit, is whether compelled business records testimony is (i) implicit in and auxiliary to the required production of documents and therefore not violative of the Fifth Amendment, or (ii) independently incriminating and therefore proscribed by the Fifth Amendment. For the reasons set forth below, the Court concludes that, in the circumstances of this case, compelled business records testimony would violate respondent's Fifth Amendment rights. Thus, the government's motion will be denied.
Respondent was a regional vice-president of a corporation from early 1992 until April of 1994. The corporation became the subject of a grand jury investigation that sought to determine whether the company and various individuals connected with it engaged in a scheme to defraud through the use of the mails in violation of 18 U.S.C. § 1341. In March of 1994, the government informed respondent that he was a target of the grand jury's investigation.
Respondent was served with a grand jury subpoena dated May 6, 1994, requiring his appearance on June 13, 1994. The subpoena directed respondent, in his capacity as a custodian of records for the corporation, to appear and testify before the grand jury and to produce certain specified documents on behalf of the corporation.
At respondent's request, the government adjourned the June 13 appearance so that respondent could consult with an attorney. The government then served respondent through his counsel with a subpoena dated June 14, 1994, requiring respondent's appearance on June 20, 1994. This response date was again adjourned, at the request of respondent's counsel, to June 28, 1994.
On June 27, 1994, respondent's counsel informed the government that respondent would appear before the grand jury and produce and identify the corporate documents in his possession. Respondent contended, however, that the government's intention to have respondent provide oral testimony sufficient to bring the subpoenaed documents within the business records exception to the hearsay rule, Federal Rule of Evidence 803(6), would violate his Fifth Amendment privilege against self-incrimination.
The government declined respondent's offer to turn over and identify the documents and on August 15, 1994 moved for an order to show cause why respondent should not be held in contempt for his failure to comply with the June 14 subpoena. Before the August 26 return date on the order to show cause, the parties agreed that the government would file the within motion to compel compliance with the subpoena, mooting the order to show cause. The Court heard oral argument on this motion on October 6, 1994.
Following oral argument, in a letter dated October 7, 1994, the Court wrote to counsel with the following invitation: "Before the Court has to confront the issue of self-incrimination by [the custodian] the government should first issue a subpoena to the custodian of corporate records in general and give the corporation the opportunity to designate as custodian of corporate records an individual who could provide both authentication and business records testimony." For the reasons outlined in a letter dated October 11, 1994, counsel for the government declined the Court's invitation. The Court then proceeded to consider the merits of this motion.
A. The Fifth Amendment and the Collective-Entity Rule
The Fifth Amendment provides that "no person . . . shall be compelled in any criminal case to be a witness against himself." U.S. Const. Amend. V. This privilege has been interpreted to protect an individual from being compelled to provide testimonial communications that might incriminate him, including the compelled production of personal records. E.g., Bellis v. United States, 417 U.S. 85, 87, 40 L. Ed. 2d 678, 94 S. Ct. 2179 (1974) ("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.").
It is equally well established, however, that a corporation has no Fifth Amendment privilege to refuse to produce its records. E.g., Hale v. Henkel, 201 U.S. 43, 74, 50 L. Ed. 652, 26 S. Ct. 370 (1906). Thus, "for purposes of the Fifth Amendment, corporations and other collective entities are treated differently from individuals. This doctrine--known as the collective entity rule-has a lengthy and distinguished pedigree." Braswell v. United States, 487 U.S. 99, 104, 101 L. Ed. 2d 98, 108 S. Ct. 2284 (1988).
Despite the "lengthy and distinguished pedigree" of the collective entity rule, the Courts of Appeals were split until Braswell regarding whether to recognize a Fifth Amendment privilege when the act of producing collective entity documents might be personally incriminating to the custodian. Id. at 102 n.2. Under the collective entity rule as authoritatively pronounced in Braswell, a custodian of records may not invoke the Fifth Amendment to avoid producing the documents of a collective entity that are in his custody, even where production of those documents would be personally incriminating.
Id. at 105-13 (detailing history of collective entity rule and concluding that, notwithstanding the Court's decisions in Fisher v. United States, 425 U.S. 391, 48 L. Ed. 2d 39, 96 S. Ct. 1569 (1976) and United States v. Doe, 465 U.S. 605, 79 L. Ed. 2d 552, 104 S. Ct. 1237 (1984), "[a] custodian may not resist a subpoena for corporate records on Fifth Amendment grounds"). The Braswell Court offered the following rationale for the collective entity rule:
The Court has consistently recognized that the custodian of corporate or entity records holds those documents in a representative rather than a personal capacity. Artificial entities such as corporations may act only through their agents, and a custodian's assumption of his representative capacity leads to certain obligations, including the duty to produce corporate records on proper demand by the Government. Under those circumstances, the custodian's act of production is not deemed a personal act, but rather an act of the corporation. Any claim of Fifth Amendment privilege asserted by the agent would be tantamount to a claim of privilege by the corporation--which of course possesses no such privilege.
487 U.S. at 109-10 (citation omitted).
The import for this case of the collective entity rule as enunciated by Braswell is that its application here forecloses any argument by respondent that production of the documents cannot be compelled because it would personally incriminate him. Even assuming such incrimination, respondent must produce the documents. In recognition of this, respondent in this case has agreed to produce all corporate records in his custody that are responsive to the government's subpoena.
B. Oral Testimony Implicit in and Auxiliary to the Act of Production
The collective entity rule also requires that the custodian identify or authenticate, by oral testimony, the documents produced pursuant to the subpoena. This corollary to the rule that the custodian must produce collective entity documents was first discussed by the Supreme Court in Curcio ...