Wednesday, June 03, 2015

Fifth Amendment Privilege Against Self-Incrimination Inapplicable to Corporate Custodian Under Collective Entity Doctrine

In In re: In the Matter of the Grand Jury Empaneled on May9, 2014, 2015 WL 2262650, No. 15-1264 (3d Cir., May 15, 2015), a clinical blood laboratory in New Jersey had been charged with bribing area doctors to refer their patients to the lab for blood testing. Two of the defendants, a medical doctor and his incorporated medical practice, were charged with accepting said bribes. A grand jury subpoenaed the custodian of records for the medical practice seeking to obtain documents related to, inter alia, the medical practice’s patient list and corporate records. The medical practice initially maintained a staff of six; however, due to financial difficulties arising as a result of the instant matter, the doctor was forced to terminate the staff. Consequently, the doctor ultimately served as the sole owner and employee of the medical practice, as well as its custodian of records. The doctor moved to quash the grand jury subpoena, arguing that compelled disclosure of the corporate records would violate his Fifth Amendment privilege against self-incrimination. He also argued that the subpoena was overbroad. The district court denied his motion, ruling that a corporation may not assert the Fifth Amendment privilege. The court also ruled that the subpoena was not overbroad.  Nonetheless, the defendants, i.e., the doctor and the medical practice, refused to comply with the subpoena. The district court ultimately found the defendants in civil contempt.  

The Third Circuit ruled that the district court’s refusal to quash the subpoena was not an abuse of discretion. The court applied the “collective entity” doctrine, as enunciated in Bellis v. United States, 417 U.S. 85 (1974), and Braswell v. United States, 487 U.S. 99 (1988), to determine that, as a representative of a collective entity, the corporate custodian acts on behalf of the corporation, which may not assert the Fifth Amendment privilege itself. The Third Circuit adopted the Supreme Court’s reasoning in rejecting the “act-of-production” doctrine, which focused on the communicative nature of compelled disclosures and their potential to personally incriminate the corporate custodian.  The Third Circuit concluded that a corporate custodian may not enjoy the benefits of incorporation without also enduring its attendant burdens.  

The Third Circuit also determined that, as a grand jury traditionally possesses broad investigatory powers, a grand jury subpoena is valid if it merely identifies materials which could reasonably contain information that is relevant to the government’s investigation. The Third Circuit concluded that the district court properly had ruled that subpoena at issue was sufficiently specific.


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