In Re Grand Jury Subpoena , 709 F.3d 1027 ( 2013 )

FILED
United States Court of Appeals
Tenth Circuit
March 1, 2013
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
In re: GRAND JURY SUBPOENA. No. 12-1330
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Before HARTZ, ANDERSON, and GORSUCH, Circuit Judges.
HARTZ, Circuit Judge.
To comply with requirements of grand-jury secrecy, we will refer to the
appellant as “Witness.” Witness is the sole member of a limited liability
company (LLC) whose federal income taxes were being investigated by a grand
jury. The “Custodian of Records” of the LLC was subpoenaed to bring LLC
records to the grand jury. Aplt. App. at 38. As the records custodian, Witness
moved to quash the subpoena duces tecum on the ground that it violated his
personal Fifth Amendment privilege against self-incrimination. Although
recognizing the general rule that the records custodian of a collective entity
cannot invoke a personal Fifth Amendment right to refuse to produce the entity’s
records, see, e.g., Bellis v. United States, 417 U.S. 85 (1974), Witness argued to
the district court that the records should be considered his personal papers
because a single-member LLC is disregarded for federal-income-tax purposes and
treated as a sole proprietorship.
The district court denied Witness’s motion to quash. Witness appealed the
denial and moved the district court for a stay pending appeal. The court refused
to grant a stay and ordered Witness to produce the records within eight days.
Witness complied.
Witness now raises his Fifth Amendment claim in this court. We do not
consider the merits of the claim, however, because we lack jurisdiction. The
general rule is that “an order denying a motion to quash and requiring the
production of evidence pursuant to a subpoena duces tecum . . . is not final and
hence not appealable.” United States v. Nixon, 418 U.S. 683, 690–91 (1974).
A protesting witness may seek appellate review only after he refuses to
obey the subpoena and is held in contempt. “At that point, the witness’ situation
becomes so severed from the main proceeding as to permit an appeal.”
Cobbledick v. United States, 309 U.S. 323, 328 (1940). As the Supreme Court
has explained:
If . . . the subpoena is unduly burdensome or otherwise unlawful, [the
witness] may refuse to comply and litigate those questions in the
event that contempt or similar proceedings are brought against him.
Should his contentions be rejected at that time by the trial court, they
will then be ripe for appellate review. But we have consistently held
that the necessity for expedition in the administration of the criminal
law justifies putting one who seeks to resist the production of desired
-2-
information to a choice between compliance with a trial court’s order
to produce prior to any review of that order, and resistance to that
order with the concomitant possibility of an adjudication of contempt
if his claims are rejected on appeal.
United States v. Ryan, 402 U.S. 530, 532–33 (1971) (footnote omitted).
The legitimacy of a subpoena duces tecum may sometimes be reviewed
immediately, however, when the person claiming privilege is not the subpoenaed
witness. The leading case is Perlman v. United States, 247 U.S. 7 (1918).
Materials owned by Perlman that had been submitted as evidence in a lawsuit
were on file (although sealed) with the clerk of the court when the district court
ordered the clerk to produce them to a grand jury. See id. at 8–10. Perlman
objected on Fourth and Fifth Amendment grounds. See id. at 10, 13. But the
district court overruled the objections. See id. at 11. When Perlman appealed,
the government argued that the order was not reviewable because it was
interlocutory. See id. at 12. The Court summarily rejected this argument, stating
in full:
The second contention of the government is somewhat strange, that
is, that the order granted upon its solicitation was not final as to
Perlman but interlocutory in a proceeding not yet brought and
depending upon it to be brought. In other words, that Perlman was
powerless to avert the mischief of the order but must accept its
incidence and seek a remedy at some other time and in some other
way. We are unable to concur.
Id. at 12–13. We have interpreted Perlman to mean that appellate jurisdiction
arises “when an interlocutory appeal is sought by an intervenor who claims a
-3-
justiciable interest in preventing a third party’s disclosure of documents or
testimony, and the party subject to the subpoena indicates that he or she will
produce the records or testify rather than risk contempt.” In re Grand Jury
Proceedings, 616 F.3d 1172, 1179 (10th Cir. 2010). 1
Witness argues that he comes within the Perlman rule because he is not the
subpoenaed person. He notes that the subpoena was directed to the custodian of
records of the LLC and that the capacity in which he claims a privilege—as an
individual entitled to the protection of the Fifth Amendment—is distinct from his
capacity as the LLC’s records custodian.
We are not persuaded. The “necessity for expedition in the administration
of the criminal law,” Ryan, 402 U.S. at 533, which ordinarily forecloses an
appeal unless the witness is held in contempt, applies with full force here.
Witness, unlike Perlman, is not at the mercy of a third party who can produce
records in compliance with the subpoena at issue. In whatever capacity Witness
was acting, he had full control of whether to refuse disclosure and risk contempt.
He has not suggested that he had a duty to the LLC as its custodian of records that
conflicted with or could override his personal interests. Witness was required to
1
In Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100 (2009), the Supreme Court
held that an order in a civil case to disclose documents allegedly protected by the
attorney-client privilege could not be immediately appealed under the collateral-order
doctrine because the privilege issue could be effectively reviewed postjudgment and
through other means. We discern some tension between Perlman and Mohawk, but
need not address the matter. See, e.g., In re Grand Jury, Nos. 12-1697, 12-2878, 2012
WL 6156176, at *8–*9 (3d Cir. 2012) (discussing the matter).
-4-
make the choice of whether to violate the subpoena, lest the grand-jury
proceedings be unnecessarily delayed by a challenge to a subpoena that is too
insubstantial for the challenger to risk contempt to pursue it. Requiring the
witness to violate the subpoena and risk a contempt citation “puts the objecting
person’s sincerity to the test.” Wilson v. O’Brien, 621 F.3d 641, 643 (7th Cir.
2010).
We recognize that this circuit reads Perlman more narrowly than the great
majority of the other circuits, which generally allow a third party to appeal the
denial of a motion to quash without any showing that the person subpoenaed is
likely to comply with the subpoena. 2 But we doubt that any would extend
Perlman to the situation presented here. In the only appellate case we have found
that raised the issue before us—whether Perlman applies when a party
subpoenaed as a custodian of records claims a privilege in another capacity—the
2
See In re: Grand Jury Subpoenas, 123 F.3d 695, 699 (1st Cir. 1997); In re
Grand Jury Subpoena Duces Tecum Dated Jan. 2, 1985 (Simels), 767 F.2d 26, 29 (2d
Cir. 1985); In re Grand Jury Proceedings, 604 F.2d 798, 801 (3d Cir. 1979); United
States v. (Under Seal), 748 F.2d 871, 873 & n.2 (4th Cir. 1984); In re Grand Jury
Proceedings in Matter of Fine, 641 F.2d 199, 203 (5th Cir. Unit A Mar. 1981); In re
Grand Jury Proceedings–Gordon, 722 F.2d 303, 307 (6th Cir. 1983); In re Klein, 776
F.2d 628, 630–32 (7th Cir. 1985); In re Grand Jury Proceedings Subpoena To Testify
to: Wine, 841 F.2d 230, 232 (8th Cir. 1988); In re Grand Jury Proceedings, 689 F.2d
1351, 1352 n.1 (11th Cir. 1982). But see United States v. Krane, 625 F.3d 568, 572 n.2
(9th Cir. 2010) (appeal from denial of motion to quash not permitted “where the
subpoena is directed at an attorney who is currently representing the party moving to
quash the subpoena” (emphasis added; internal quotation marks omitted)); In re Sealed
Case, 754 F.2d 395, 399 (D.C. Cir. 1985) (immediate review permitted when attorney
subpoenaed and “circumstances make it unlikely that [the] attorney would risk a
contempt citation in order to allow immediate review of [client’s] claim of privilege”).
-5-
circuit court held that it lacked jurisdiction to review the claim. See In re Grand
Jury Matter Impounded, 703 F.2d 56, 58–59 (3d Cir. 1983) (custodian of
corporation records). (That circumstance almost arose in In re Two Grand Jury
Subpoenae Duces Tecum, 769 F.2d 52 (2d Cir. 1985); but the district court
directed that the records be produced by someone other than the individual
claiming a Fifth Amendment privilege, see id. at 54. The circuit court held that it
had jurisdiction but then went on to rule that the privilege could not be claimed
with respect to the corporation’s records.)
Accordingly, we hold that we lack jurisdiction to review Witness’s claim of
privilege. We DISMISS the appeal.
-6-