Monday, February 15th, 2010

PC World

It’s been more than a month since the court issued a signed opinion in a criminal case. But here is its latest Per Curiam.

In Re Grand Jury Subpoena Issued June 18, 2009, No. 09-3561-cv (2d Cir. February 1, 2010) (per curiam). In this case, the court rejected a challenge to a subpoena for corporate records where the corporate entities had a sole shareholder, officer and employee, Douglas Rennick. The companies argued that they could resist the subpoena on Fifth Amendment grounds since Rennick was the only person capable of producing the records and his act of production would be testimonial and potentially self-incriminating.

The court noted that the “collective entity rule” prevented the corporations from invoking a Fifth Amendment privilege and that the custodian of corporate records, acting as a representative of the corporation, cannot refuse to produce them on Fifth Amendment grounds. The circuit has long
held that there was no exception to this for corporations that were essentially “one-man” operations, but here the corporations pointed out a more recent Supreme Court case, Braswell, that held that the custodian of a one-man corporation’s records could not resist a subpoena, but that if the custodian were to stand trial, the government could not introduce evidence that the custodian himself produced the records, since he had acted in his representative capacity, not personally. Braswell left open the question whether a custodian could resist a subpoena if he could establish that the jury would “inevitably conclude that he produced the records.”

Despite this language, the circuit held to the rule that there “simply is no situation” in which a corporation can avail itself of the Fifth Amendment privilege, calling it “sensible” because it (1) prevents the erosion of the collective entity rule, (2) recognizes that the decision to incorporate is freely made and generates both benefits and burdens, and (3) avoids creating a category of organizations “effectively immune form regulation” by being outside of the government’s subpoena power.

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