Appeal by the custodian of records of a corporation from an order denying a motion to quash two grand jury subpoenas. The government has moved to dismiss on jurisdictional grounds.
Feinberg, Chief Judge, Mansfield and Pratt, Circuit Judges. Mansfield, Circuit Judge (concurring).
This is an expedited appeal from an order entered in the United States District Court for the Southern District of New York, Charles L. Brieant, Judge, denying appellant's motion to quash two grand jury subpoenas duces tecum. Appellant is the custodian of records of a corporation whose name, along with the briefs and record in this case, remains under seal to protect the secrecy of the grand jury proceedings. Fed. R. Crim. P. 6(e)(6). Appellant claims that the effect of the subpoenas is to compel testimony in violation of the fifth amendment "act of production" doctrine. The government has moved to dismiss the appeal on jurisdictional grounds.
We deny the government's motion to dismiss the appeal, and affirm the district court's order declining to quash the subpoenas.
On or about February 7 and 8, 1985, two grand jury subpoenas duces tecum issued by the United States District Court for the Southern District of New York were served at the offices of a corporation ("the corporation") being investigated by the grand jury. One subpoena was addressed to the corporation and called for testimony and production of the corporation's business records. The second subpoena was addressed to "Custodian of Records" of the corporation ("the custodian"), and it, too, called for testimony and production of the corporation's business records.
On February 22, 1985, the custodian moved to quash the subpoenas. At the hearing on the motion before Judge Brieant on March 12, 1985, and in an affidavit accompanying the motion to quash, the custodian's attorney explained that the corporation has three shareholders but is essentially a one-man operation, since the custodian is the corporation's majority shareholder and its sole operating officer and director. The government admitted at the hearing that the custodian is in fact a target of the grand jury investigation. The custodian's argument for quashing the subpoena of corporate records was the "simple proposition" that the Supreme Court's decision in United States v. Doe, 465 U.S. 605, 104 S. Ct. 1237, 79 L. Ed. 2d 552 (1984), means that when records are subpoenaed from a corporation like the one involved here, a corporate representative has a fifth amendment privilege to prevent production of the subpoenaed records, because the act of producing the documents may incriminate him.
After argument the district judge entered an order limiting the subpoenas to corporate business records and declining to quash the subpoenas as limited. The district judge directed that the records "be produced by a person who is not a target and that the government assure whoever produces them that that person is not a target of the grand jury investigation," and he also stated that "any employee of the corporation, who works in the main office where the records are, can be the proper person to produce [the records]."
Because the district court believed that this case presented "an interesting legal question of first impression in this circuit" after the Supreme Court's decision in United States v. Doe, 465 U.S. 605, 104 S. Ct. 1237, 79 L. Ed. 2d 552 (1984), it stayed its order pending appeal. The custodian then brought this expedited appeal, and the government filed a motion with this court asking that the stay be vacated, the appeal dismissed, and the case remanded for further proceedings, such as any contempt adjudication, so that the grand jury investigation would not be further delayed.
A. The motion to dismiss the appeal.
The government's motion is based on the general rule that "a person who has been served with a subpoena may not appeal an order denying a motion to quash without first resisting and undergoing the penalty of a citation for contempt." In re Katz, 623 F.2d 122, 124 (2d Cir. 1980); see Cobbledick v. United States, 309 U.S. 323, 84 L. Ed. 783, 60 S. Ct. 540 (1940). Appellant's response is that this appeal falls within the exception created by Perlman v. United States, 247 U.S. 7, 62 L. Ed. 950, 38 S. Ct. 417 (1918), which allows an immediate appeal from the denial of a motion to quash a subpoena, without at first resisting and being found in contempt, "when the subpoena is directed to a third party and the one seeking to quash the subpoena claims that its enforcement will violate one or more of his constitutional rights." In re Grand Jury Subpoena Served Upon John Doe, Esq., 759 F.2d 968, 971 n.1 (2d Cir. 1985) (citing Perlman); see also In re Katz, 623 F.2d at 124. Appellant's attorney points out that the subpoenas in question seek records of a corporation, yet it is the custodian of the record -- an individual distinct, at least for these purposes, from the corporation -- who moves to quash. In these circumstances, the corporation stands in the position of a third party who "will not be expected to risk a contempt citation and will surrender the documents sought, thereby letting the 'cat out of the bag' and precluding effective appellate review at a later stage." In re Katz, id. Therefore, the argument goes, the appeal should be allowed pursuant to Perlman.
Although one of the subpoenas in question was originally addressed to the custodian himself, rather than to the corporation, the district court's limitations on both subpoenas had the effect of directing them solely to the corporation, which therefore stands as a third party in the present appeal. The district judge specified that the corporation could have the records produced by any employee who works at the main office, and he specifically excluded any grand jury target from having to produce the records. The custodian who brings the present appeal, therefore, is not himself compelled to produce records. Only the corporation is being directed to produce the records, and it is directed to produce them not through the act of the ...