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In re Grand Jury Empanelled February 14

UNITED STATES COURT OF APPEALS, THIRD CIRCUIT


decided: April 27, 1979.

IN THE MATTER OF: GRAND JURY EMPANELLED FEBRUARY 14, 1978 UNITED STATES OF AMERICA, APPELLANT

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY -- NEWARK (D.C. Misc. No. 78-28)

Before Rosenn, Garth and Van Dusen, Circuit Judges.

Author: Garth

Opinion OF THE COURT

The issue on this appeal is whether the owner of a business may assert a Fifth Amendment privilege when a Subpoena duces tecum requiring the production of business records is served on both the owner himself and on his employee who prepared and maintained those records. The government served Subpoenas duces tecum on Dominick Colucci, the owner of Colucci Excavating and Trucking, and on Marion DeMato, his office manager. On Colucci's motion, the district court quashed both Subpoenas, concluding that the Fifth Amendment shielded Colucci from the compelled disclosure of his business records. However, the Fifth Amendment does not provide a shield for Colucci's business records when disclosure of those records results from a Subpoena served on DeMato. We hold, therefore, that the district court improperly denied to the government the business records which it sought from DeMato, and we reverse.

I

Colucci Excavating and Trucking ("CET") performs construction and demolition services under contract with public authorities, municipalities, and private concerns. The business has been operated under that name for some twenty years. The parties have stipulated that in 1976, CET had assets of approximately $642,000 and that its annual gross receipts averaged $337,000 in each of the years 1972 through 1975. During recent years, it has employed seven to fourteen persons, one of whom is Marion DeMato. The parties have stipulated that DeMato holds the position of "office manager". The record reveals that DeMato has also signed contracts as "Secretary-Treasurer" of CET. The petitioner, Dominick Colucci, owns CET*fn1 and is its chief executive. On June 27, 1978, Marion DeMato testified before a grand jury in the District of New Jersey. She stated that her responsibilities as office manager included the preparation of two types of records: "job folders" and billing records. She made up "job folders" which contained all of the documents which she had prepared or received pertaining to a particular project.*fn2

She also prepared bills which she mailed to customers, maintaining a file which contained records of all payments made on each project. The job files for projects which had been completed and the billing files for past years were kept in a closet in her office. During her grand jury testimony, she was ordered by the grand jury Foreman to produce the job folders for all work performed by CET for public authorities for the period from January 1, 1972 through December 31, 1977 and the billing files for the years 1972 through 1977.

On July 5, 1978, a Subpoena duces tecum was served on Colucci, directing him to appear before the grand jury on July 11, 1978 with the job files for all work performed by CET from January 1, 1971 through December 31, 1976, and the billings folders for the years 1972 through 1977.*fn3 A Subpoena duces tecum directed to "any responsible officer" of CET was served on DeMato on July 5, directing her to produce those same documents before the grand jury on July 11, 1978. The date for production of the records by Colucci and DeMato was extended to August 29, and on August 28 Colucci moved in the district court to quash the Subpoena. Colucci's motion pertained only to the Subpoena duces tecum served on him, but during oral argument on that motion, Colucci apparently moved to quash the June 27, 1978 Foreman's order to DeMato and the Subpoena duces tecum served on DeMato.

In response to Colucci's motion, the government filed an affidavit (with appended financial reports) describing the business of CET; Colucci stipulated to the accuracy of the affidavit. The government also filed a transcript of DeMato's testimony before the grand jury in which she described the documents demanded by the government as well as her responsibility for preparing and maintaining those documents. Colucci offered no testimony or evidence in support of his motion to quash.

Subsequent to oral argument, the district court on October 4, 1978 entered an order quashing both Subpoenas as well as the order of the grand jury Foreman directed to DeMato. The court also endorsed a consent order which required Colucci's attorney to collect and hold the documents sought in the Subpoenas until final disposition of the government's appeal, so that these records would be available in the event that we reached a conclusion different from the district court's.

The government has appealed from the order quashing the Subpoenas duces tecum and the Foreman's order.

II

Although neither the government nor Colucci questioned our jurisdiction to review an order quashing a grand jury Subpoena duces tecum, we asked that supplementary briefs be filed addressing the question of whether appellate jurisdiction exists. In its supplementary brief, the government contends that appellate jurisdiction exists under either 28 U.S.C. § 1291 (1976) or 18 U.S.C. § 3731 (1976).

Colucci, however, urges us to invoke the judicially created limitation on government appeals from orders entered in criminal cases. In DiBella v. United States, 369 U.S. 121, 82 S. Ct. 654, 7 L. Ed. 2d 614 (1962), the Supreme Court held that the government could not appeal from an order granting a motion to suppress evidence, where that motion was made after charges had been filed even though an indictment had not yet been returned. Recognizing that it was effectively precluding any opportunity for the government to secure appellate review of such orders, the Supreme Court declared:

What disadvantage there be springs from the historic policy, over and above the constitutional protection against double jeopardy, that denies the Government the right or appeal in criminal cases save as expressly authorized by statute. United States v. Sanges, 144 U.S. 310, 12 S. Ct. 609, 36 L. Ed. 445; United States v. Dickinson, 213 U.S. 92, 102-103, 29 S. Ct. 485, 53 L. Ed. 711; Carroll v. United States, 354 U.S. 394, 400-403 and n. 9-12, 77 S. Ct. 1332, 1 L. Ed. 2d 1442. No such expression appears in 28 U.S.C. § 1291, and the Government's only right of appeal, given by the Criminal Appeals Act of 1907, 34 Stat. 1246, now 18 U.S.C. § 3731, is confined to narrowly defined situations not relevant to our problem. Allowance of any further right must be sought from Congress and not this Court. Carroll v. United States, supra, 354 U.S., at 407-408, 77 S. Ct. 1332.*fn4

Colucci's argument, however, fails to consider the measures enacted by Congress in response to DiBella and other court decisions narrowly construing the government's right of appeal in criminal cases. In particular, the 1968 and 1971 amendments to the Criminal Appeals Act, 18 U.S.C. § 3731, permit the government to appeal from an "order . . . excluding evidence . . . in a criminal proceeding." We hold that 18 U.S.C. § 3731 provides the jurisdictional predicate for review of the district court's order in this case. Furthermore, we observe that if the Criminal Appeals Act was not applicable here, jurisdiction would nevertheless exist under 28 U.S.C. § 1291.

A

The 1971 amendment added the following provision to the Criminal Appeals Act, 18 U.S.C. § 3731:

An appeal by the United States shall lie to a court of appeals from a decision or order of a district courts (sic) suppressing or excluding evidence or requiring the return of seized property in a criminal proceeding, not made after the defendant has been put in jeopardy and before the verdict or finding on an indictment or information, if the United States attorney certifies to the district court that the appeal is not taken for purpose of delay and that the evidence is a substantial proof of a fact material in the proceeding.

The provisions of this section shall be liberally construed to effectuate its purposes.

Three requirements must be satisfied before an appeal may be brought by the government under this provision: (1) The order must "suppress or exclude" evidence (2) in a "criminal proceeding;" and (3) a certificate must be filed in the district court.*fn5 We are satisfied that these requirements have been met by the present appeal.

The legislative history of § 3731 mandates that a broad and liberal construction be given to its provisions. Subsequent to DiBella, Congress in 1968 amended § 3731 to provide for government appeals from orders granting motions to suppress evidence. The 1968 amendment was narrowly drawn and restricted appeals to those orders granting "motion(s) to suppress" which were "made before the trial of a person charged with a violation of any law of the United States."*fn6 When the Criminal Appeals Act was revised in 1971, Congress deleted the provisions which confined government appeals to only pretrial orders granting suppression motions. Under the 1971 amendment, the government's right of appeal was expanded to include all orders "suppressing Or excluding evidence . . . in a Criminal proceeding " (emphasis added). To ensure that the courts would not restrict this right of appeal, Congress also added a provision requiring that § 3731 be "liberally construed." The purpose of this provision is explained in the Senate Report on the amendment:

The amended Criminal Appeal Act is intended to be liberally construed so as to effectuate its purpose of permitting the Government to appeal . . . from all suppressions and exclusions of evidence in criminal proceedings, except those ordered during trial of an indictment or information. S. 3132 (the 1971 amendment) places on the face of section 3731 an explicit expression of this intent, in view of the restrictive judicial interpretations of congressional intent which have resulted from the histories of the earlier versions of section 3731 despite strong indications in the debate on the 1907 act that it should be broadly interpreted.*fn7

In light of this legislative direction to construe broadly the government's right of appeal, this Court has held that orders which do not, "strictly speaking," suppress evidence but which have the "practical effect" of excluding evidence from a proceeding, are within the ambit of § 3731. United States v. Beck, 483 F.2d 203, 206 (3d Cir. 1973), Cert. denied, 414 U.S. 1132, 94 S. Ct. 873, 38 L. Ed. 2d 757 (1974); United States v. Helstoski, 576 F.2d 511, 520-21 (3d Cir. 1978), Aff'd, 442 U.S. 477, 99 S. Ct. 2432, 61 L. Ed. 2d 12 (1979). The order from which the government has appealed in this case undeniably has the effect of excluding CET's records from the grand jury's proceedings.*fn8 The other concerns which this Court identified in Beck as limitations on § 3731 appeals are not present here: an ongoing trial will not be interrupted,*fn9 and Colucci has not suggested that an appeal would place him twice in jeopardy.

The second requirement under § 3731 is that the order must have the effect of excluding evidence "in a criminal proceeding." The question here is whether a grand jury proceeding is a Criminal proceeding within the meaning of § 3731. We conclude that it is.

Congress adopted the language "criminal proceeding" in the 1971 amendment superseding language in the 1968 amendment which limited appeals to orders entered in pretrial proceedings in order to broaden the circumstances under which the government could appeal from orders "excluding" evidence.*fn10 One of the problems perceived by the draftsmen of the 1971 amendment was that "appealability of suppressions ordered in proceedings other than pretrial hearings is . . . unclear and unduly limited." Senate Comm. on the Judiciary, Amendments to the Criminal Appeals Act, S.Rep.No.91-1296, 91st Cong., 2d Sess. 5 (1970). In response to this problem, one of the "principal changes" effected by the amendment was to "make the Government's right to appeal an order suppressing evidence applicable to all criminal proceedings, including probation revocation hearings, not merely to pretrial suppressions." Id. at 2.

In view of the liberal interpretation which Congress has mandated for § 3731, we have no doubt that a grand jury proceeding is a "criminal proceeding" for this purpose. The grand jury is governed by the Rules of Criminal Procedure. Its return of an indictment is a necessary step in the federal criminal justice system,*fn11 and ordinarily it cannot be used to gather evidence for civil cases.*fn12 Furthermore, in DiBella, the Supreme Court declared that "presentations before . . . a grand jury . . . are parts of the federal prosecutorial system leading to a criminal trial."*fn13 See also Cobbledick v. United States, 309 U.S. 323, 60 S. Ct. 540, 84 L. Ed. 783 (1940). In deciding questions pertaining to appellate jurisdiction, this circuit and others have adopted the view that the grand jury is a criminal proceeding. In Smith v. United States, 377 F.2d 739, 742 (3d Cir. 1967), we held that, although the motion to suppress was made before the grand jury had returned an indictment against the individuals, "the prosecution was nevertheless in esse" at the time that they were called to testify before the grand jury.*fn14 The Sixth Circuit has also held that a grand jury investigation is a "criminal proceeding" within the meaning of § 3731. United States v. Calandra, 455 F.2d 750, 752 (6th Cir. 1972).

Therefore, we conclude that § 3731 provides the jurisdictional predicate for an appeal by the government from an order quashing a grand jury Subpoena duces tecum.

B

If, however, § 3731 does not provide jurisdiction in this court, we are satisfied that 28 U.S.C. § 1291 would. The limitation on government appeals described in DiBella applies only in criminal cases. Therefore, if an order quashing a grand jury Subpoena cannot be said to have been entered in a "criminal proceeding" within the meaning of § 3731, the order would then be subject to the usual § 1291 test for finality. If we were to assume that there is no "criminal proceeding" against Colucci to which his motion to quash might be related, we would then have to view the district court's proceeding as plenary,*fn15 and its order of October 4, 1978 as a "final decision" of the government's right to compel Colucci to produce the subpoenaed document.*fn16

Colucci argues, however, that we should apply to the government's appeal the familiar rule that an individual may not appeal from an order Refusing to quash a Subpoena. See United States v. Ryan, 402 U.S. 530, 91 S. Ct. 1580, 29 L. Ed. 2d 85 (1971); Cobbledick v. United States, 309 U.S. 323, 60 S. Ct. 540, 84 L. Ed. 783 (1940). But the Supreme Court's holdings in those decisions were predicated on the availability of other avenues of review (See Perlman v. United States, 247 U.S. 7, 38 S. Ct. 417, 62 L. Ed. 950 (1918)) and the effect of delay on grand jury proceedings. This rationale has no application when it is the Government rather than an Individual which is appealing from an order Granting a motion to quash. An order refusing to quash does not finally decide the government's right to compel production of the documents, because the individual may ignore the Subpoena and contest its validity in a contempt proceeding. The government, on the other hand, lacks this avenue to secure review; therefore, an order quashing a Subpoena is a final order which determines that production of the documents may not be compelled.*fn17 Moreover, as previously indicated (See note 9 Supra ), the government has an interest in avoiding appeals which will unnecessarily delay grand jury proceedings. Therefore, neither the holding nor the rationale of Ryan requires us to dismiss this appeal.

If we had concluded that this order was not entered in a "criminal proceeding," thus placing it outside both § 3731 and the DiBella limitation on government appeals in criminal cases, we would nevertheless have concluded that the order quashing the Subpoenas duces tecum was a final order under § 1291. Having been satisfied that we have jurisdiction, we turn then to the merits of the government's appeal.

III

Since Boyd v. United States, 116 U.S. 616, 630, 6 S. Ct. 524, 29 L. Ed. 746 (1886), the Fifth Amendment has been interpreted as a limitation on government use of the Subpoena duces tecum to compel an individual to produce his private papers. Recently, in Fisher v. United States, 425 U.S. 391, 96 S. Ct. 1569, 48 L. Ed. 2d 39 (1976), and Andresen v. Maryland, 427 U.S. 463, 96 S. Ct. 2737, 49 L. Ed. 2d 627 (1976), the Supreme Court has held that Fifth Amendment protection of private papers is limited to those cases in which the individual asserting the privilege is compelled to make a testimonial communication which may be incriminating. The interface of these concepts is presented on this appeal in which we must determine whether the sole proprietor of a business may assert a Fifth Amendment privilege to quash Subpoenas duces tecum served on him and on his employee, where the Subpoenas require each of them to produce for inspection by the grand jury the proprietor's records which were prepared and held by the employee.

A

The government contends that the Fifth Amendment affords no protection to the records of CET, because that enterprise has, by virtue of its longevity and size, taken on the character of an "organized, institutional activity." Bellis v. United States, 417 U.S. 85, 92, 94 S. Ct. 2179, 40 L. Ed. 2d 678 (1974). The Supreme Court has held that the Fifth Amendment does not protect the records of corporations, Wilson v. United States, 221 U.S. 361, 31 S. Ct. 538, 55 L. Ed. 771 (1911), unincorporated associations, United States v. White, 322 U.S. 694, 64 S. Ct. 1248, 88 L. Ed. 1542 (1944), or partnerships, Bellis v. United States, 417 U.S. 85, 94 S. Ct. 2179, 40 L. Ed. 2d 678 (1974). The government argues that those decisions confine the Fifth Amendment's protection to the personal records of individuals, and that CET which has been in business for 20 years and has substantial sales, assets and payroll is an organization which cannot avail itself of this "personal" protection.

The government would have us distinguish between sole proprietorships which are owned and operated by an individual or his family, and sole proprietorships which are large organizations with many employees, like CET. While that distinction may have merit in a different connection,*fn18 the decisional law does not support the government's argument here. Bellis did not hold that the records of any organized and sustained activity are outside the ambit of the Fifth Amendment. Instead, the Supreme Court has drawn a bright line between organizations which have "a recognizable juridical existence apart from (their) members" and those which do not. See In re Grand Jury Investigation, 483 F.2d 961, 962 (3d Cir. 1973), Aff'd Bellis v. United States, 417 U.S. 85, 94 S. Ct. 2179, 40 L. Ed. 2d 678 (1974). An individual who holds records in a representative capacity for a collective entity (e. g. a corporation, union or partnership) may not assert a Fifth Amendment privilege when he is compelled to produce those records. On the other hand, a sole proprietorship has no legal existence apart from its owner, and such records May be protected from disclosure by the Fifth Amendment.

CET is a sole proprietorship, wholly owned by and having no existence at law apart from Colucci.*fn19 Therefore, the decisional law dealing with records held by "representatives of a collective group" does not defeat Colucci's claim of privilege.

B

When the Supreme Court decided in Boyd v. United States, 116 U.S. 616, 6 S. Ct. 524, 29 L. Ed. 746 (1886) that the Fifth Amendment prevented the government from forcing an individual to produce documents which might incriminate him, it viewed the Fifth Amendment as protecting "the sanctity of a man's home and the privacies of life." Id. at 630, 6 S. Ct. at 532. In the recent cases in which it has considered the scope of the Fifth Amendment's protection against compulsory disclosure of personal records, the Supreme Court has rejected the Boyd view of the Fifth Amendment as a safeguard of "privacy". It has adopted instead a construction "moored" to the language of the amendment: "No person . . . shall be compelled in any criminal case to be a witness against himself." In Fisher v. United States, 425 U.S. 391, 96 S. Ct. 1569, 48 L. Ed. 2d 39 (1976), the Court declared that the text of the Fifth Amendment restricts its operation to cases in which an individual "is compelled to make a Testimonial communication that is incriminating". Id. at 408, 96 S. Ct. at 1579 (emphasis in original); See also Andresen v. Maryland, 427 U.S. 463, 473-75, 96 S. Ct. 2737, 49 L. Ed. 2d 627 (1976). Therefore, before it may quash a Subpoena duces tecum directing the production of personal records, a court must be satisfied that three requirements have been met: (1) Compulsion of a (2) Testimonial communication that is (3) Incriminating.*fn20

We are satisfied that the Foreman's order and the Subpoena served on DeMato, while they may require her to produce documents that incriminate Colucci, do not compel Colucci to make a testimonial communication. In reaching this conclusion, we have focussed on the order to DeMato and the subpoena served on DeMato, because they call for the production of documents identical to the documents which are the subject of the Subpoena served on Colucci himself. As a practical matter, once having compelled production through DeMato, the government can have virtually no interest in the Subpoena served on Colucci. In this connection, we observe that DeMato has not asked that the Subpoena or Foreman's order be quashed, nor has she asserted that production of the documents would incriminate her. It is her employer, Colucci, who has asked that the Foreman's order and Subpoena served on DeMato be quashed on the ground that Her production of the documents might incriminate Him. Colucci's claim of privilege Vis a vis the Subpoena and order directed to DeMato fails on two distinct grounds.

First, the order and the Subpoena duces tecum compel DeMato to produce the documents. In no way do they compel Colucci to testify, to make any declarations or to produce or identify any documents. The Supreme Court has declared that the Fifth Amendment is a personal right which may be exercised only by the person against whom governmental compulsion is directed: "The Court has held repeatedly that the Fifth Amendment is limited to prohibiting the use of "physical or moral compulsion' exerted on the person asserting the privilege . . . "*fn21 Therefore, Colucci's right under the Fifth Amendment was not infringed by the order and Subpoena served on DeMato, and his motion to quash those orders properly should have been denied.

Second, the Subpoena served on DeMato can not be said to have forced Colucci to make any "testimonial communications".*fn22 The service and enforcement of that Subpoena has not subjected Colucci to "the cruel trilemma of self-accusation, perjury or contempt."*fn23 Although the subpoenaed records may contain entries made by Colucci, those entries in the records necessarily would have been made prior to service of the Subpoena ; hence, the government's Subpoena could not have compelled such entries.*fn24 It is true that a Subpoena duces tecum will compel the act of producing the documents,*fn25 which act itself may be deemed a communication having testimonial significance as an admission that the subpoenaed records exist and that they are authentic. But here, it is DeMato, rather than Colucci, who is required to produce the records and thereby admit their existence and authenticity. Thus, whatever "communication" is compelled, it is by DeMato and not Colucci.

Therefore, we conclude that under the standard announced in Fisher, Colucci's right not to be compelled to give incriminating testimony was not violated either by the order or the Subpoena duces tecum served on DeMato.

C

For the reasons which we have discussed, Fisher requires that we reverse the district court's order quashing the order and Subpoena served on DeMato, Unless the employment relationship between the person subpoenaed (DeMato) and the person asserting the privilege (Colucci) presents circumstances or considerations not involved in Fisher. Colucci contends that, as DeMato's employer, he should be regarded as possessing the records which DeMato prepared and held for him as his employee.

Colucci's ownership of the records does not by itself give rise to constitutional protection against disclosure if the records are in the possession of another person. The Supreme Court has several times declared that possession, not ownership, is determinative of who may exercise a Fifth Amendment privilege with respect to subpoenaed documents.*fn26 It is the holder of the papers, rather than the owner, who is subjected to governmental compulsion by a Subpoena duces tecum, and therefore only the holder of the papers may assert that the Subpoena violates his right under the Fifth Amendment.

A more difficult question is presented by Colucci's contention that he is in "constructive possession" of all documents held by his employee acting as an employee. In Couch, the Supreme Court stated in dictum that the owner of papers in the possession of another person might in some circumstances have "constructive possession" of his documents.*fn27 The cases cited by the Supreme Court, however, involved individuals whose Personal papers were stored on the premises of a corporation; the employees of the corporation had not prepared the papers and had no access to them.*fn28 In United States v. Guterma, for example, an individual placed his "personal" records in a safe in the office of a corporation where he was employed. The court held that he could raise Fifth Amendment objections to a Subpoena, finding it "most significant" that he was the only person who knew the combination to the safe and who thus had access to the papers.*fn29 Here, by contrast, DeMato not only had full access to the papers but prepared many of them herself; furthermore, we are dealing with the records of a business and not papers pertaining to Colucci's personal affairs.

When the Supreme Court concluded in Couch that the taxpayer did Not have constructive possession of his accountant's workpapers, one factor which it considered was that the accountant was not the taxpayer's employee nor did he work in the taxpayer's office.*fn30 DeMato is certainly Colucci's employee and does work in his offices. While we might find Colucci's "constructive possession" argument of more interest if Couch was the Supreme Court's definitive decision regarding this concept, we observe that the discussion in Couch was dictum, and the Supreme Court formulated no standard for bringing "constructive possession" within the Fifth Amendment privilege.*fn31 Subsequently in Fisher, the court did not refer to the absence of an employment relationship between the owner of the records and the person who was subpoenaed. Instead, it relied on its literal interpretation of the scope of the constitutional protection of personal papers; the court rejected the taxpayer's Fifth Amendment claim with respect to records held by his attorney because "the documents sought were obtainable without personal compulsion on the accused".*fn32 Furthermore, the Supreme Court expressly rejected the argument that the existence of an "agency" relationship enabled the taxpayer to make a Fifth Amendment claim with respect to papers in his attorney's possession:*fn33

The fact that the attorneys are agents of the taxpayers does not change this result. Couch held as much, since the accountant there was also the taxpayer's agent, and in this respect reflected a long-standing view. In Hale v. Henkel, 201 U.S. 43, 69-70, 26 S. Ct. 370, 377, 50 L. Ed. 652, 663 (1906), the Court said that the privilege "was never intended to permit (a person) to plead the fact that some third person might be incriminated by his testimony, even though he were the agent of such person . . . . (T)he Amendment is limited to a person who shall be compelled in any criminal case to be a witness against Himself." (Emphasis in original.) "It is extortion of information from the accused himself that offends our sense of justice." Couch v. United States, supra, at 328, 93 S. Ct. 611. Agent or not, the lawyer is not the taxpayer. The taxpayer is the "accused," and nothing is being extorted from him.*fn34

Therefore, under the analysis adopted by the Supreme Court in Fisher, the existence of an employment relationship between Colucci and DeMato is a relevant consideration only if the Subpoena served on the employee will compel the employer to make a "testimonial communication". See In re Witness Before a Grand Jury, 546 F.2d 825, 827 n. 2 (9th Cir. 1976).

On the record before us, we can only conclude that this is not our situation. DeMato testified before the grand jury on the very day that she was ordered to produce the records. She stated that she assembled the papers which she prepared or received pertaining to a particular project in a job file, and that she kept the files in a closet in her office. She also testified that she kept in her office a billings file for each year, recording the bills which she had prepared and the payments received. In addition, she testified that Colucci was seldom present at CET's offices, working instead at the job sites. Her testimony was that he operates the business from his car, using a two-way radio to communicate with the office, and delegates management of the office to DeMato.

Colucci offered no affidavits or other evidence disputing DeMato's testimony with respect to her responsibility, preparation or maintenance of the subpoenaed records, nor did he attempt to contradict DeMato's testimony in his brief. On this record, we must assume that it was DeMato who was responsible for and who had possession of the job files and billings folders. Therefore, no affirmative act by Colucci let alone a "testimonial communication" was required in order for DeMato to comply with the Subpoena.

Quite simply, an employer's rights under the Fifth Amendment are not compromised by a Subpoena duces tecum served on his employee to whom he has delegated exclusive responsibility for preparation and custody of business records. The Fifth Amendment is a personal right, and may be exercised only under the conditions specified in Fisher, which have not been satisfied here.

On a more fundamental plane, our holding reflects our conclusion that the grand jury order and Subpoena served on DeMato do not implicate the basic concerns of the Fifth Amendment. The Fifth Amendment has traditionally shielded only "private papers."*fn35 Although the Supreme Court has declined to hold that the Fifth Amendment guarantees against "any invasion of privacy,"*fn36 the Court in Fisher left open the question of whether a different result might have been reached if the government had subpoenaed the taxpayer's "private papers".*fn37

But even this observation can be of little assistance to Colucci. As we have earlier noted, the record reveals that the documents at issue here were records of a "business" rather than a "personal" nature, which were neither prepared by Colucci, nor limited to his personal use.*fn38

In such circumstances, it is evident that the subpoenaed records were not Colucci's "private papers," and the Subpoena did not invade a "private enclave" which Colucci had created and as to which he had a reasonable expectation of privacy. Bellis, supra at 91.*fn39 It is undisputed that Colucci had given access to these records to at least one other person,*fn40 DeMato. Indeed, her duties involved the preparation, custody, and use of these documents. At the least, it can be said that Colucci had no expectation of privacy Vis a vis DeMato, an individual who was under no enforceable obligation of confidentiality. See Matter of Witness Before the Grand Jury, 546 F.2d 825, 827 (9th Cir. 1976). In this situation Colucci could have had no expectation of privacy which would warrant our holding that he had constructive possession of the documents held by DeMato.

D

Colucci's final contention is that DeMato cannot comply with the grand jury order and the Subpoena because he, Colucci, had "sole and exclusive possession" of the subpoenaed documents "at the time (the district court judge) heard the motion to quash." Br. for Appellee at 5, 6. The record, however, shows that on the same day that DeMato was ordered by the grand jury to produce these records, she testified that the records were in her desk and in a closet in her office. Colucci presented no evidence to contradict this testimony. Nor does he deny the truth of her testimony. Instead, Colucci merely asserted in his brief that he had exclusive possession of the records at a later time: when the district court heard the motion to quash.

Accepting Colucci's assertion in his brief as true,*fn41 it represents no more than a statement that Colucci had removed the papers from DeMato's possession After she was ordered by the grand jury to produce them. The question then is whether an employer may take affirmative steps to prevent his employee from complying with a Subpoena. We conclude that he may not.

Once the grand jury's order and Subpoena duces tecum were served on DeMato, she was under a duty to produce the papers for the government. Therefore, once that official compulsion had been placed on DeMato, Colucci could not rightfully take possession of the records for the purpose of preventing the performance of DeMato's duty called for by the Subpoena.

This conclusion follows from the principle that "possession" is determined as of the time that governmental compulsion is exerted to produce the documents, rather than at the time that the compulsion is contested in the courts. In Couch v. United States, 409 U.S. 322, 329 n. 9, 93 S. Ct. 611, 616 n. 9, 34 L. Ed. 2d 548 (1973), the Supreme Court declined to consider whether the taxpayer's transfer of his papers from his accountant to his attorney improved his Fifth Amendment claim:

Technically the order to produce the records was directed to petitioner's attorney since, after the summons was served upon the accountant, he ignored it and surrendered the records to the attorney. But constitutional rights obviously cannot be enlarged by this kind of action. The rights and obligations of the parties became fixed when the summons was served, and the transfer did not alter them. See United States v. Zakutansky, 401 F.2d 68, 72 (CA7 1968), cert. denied, 393 U.S. 1021, 89 S. Ct. 628, 21 L. Ed. 2d 565 (1969); United States v. Lyons, 442 F.2d 1144 (CA1 1971).

(emphasis supplied). See also In re Grand Jury Impaneled January 21, 1975, 541 F.2d 373, 376 n. 1 (3d Cir. 1976).

The authorities cited by the Supreme Court explain the application of this principle. In United States v. Zakutansky,*fn42 a Subpoena duces tecum was served on Zakutansky, an accountant, seeking papers which he had prepared for his client, Johnson. Zakutansky transferred the papers to Johnson, who was then served with a Subpoena. The situation then was that "Zakutansky was unable to comply because he no longer had the papers and Mr. Johnson refused to comply under a claim of the Fifth Amendment privilege."*fn43 The Court of Appeals for the Seventh Circuit affirmed an order enforcing the Subpoena, finding that "the transfer of the papers was a mere attempt to thwart the government investigation."*fn44

We are confronted with a similar situation. At the time that DeMato was ordered to produce the records, she could produce them without violating Colucci's right under the Fifth Amendment. But Colucci apparently took steps thereafter to thwart DeMato's compliance with the order by removing the papers which had theretofore been continuously in her possession. Colucci would have us hold that this action entitles him to exercise a Fifth Amendment right which he could not otherwise have exercised. But under Couch, the relevant consideration is whether the Fifth Amendment afforded Colucci any protection As of the time when DeMato was first ordered to produce the papers. We have previously concluded that at that time the grand jury order and Subpoena served on DeMato did not compel any testimonial communication by Colucci. That being so, no right of Colucci's under the Fifth Amendment was violated.

IV

The order quashing the grand jury's order and Subpoena duces tecum served on DeMato will be reversed. The order quashing the Subpoena duces tecum served on Colucci will be reversed insofar as it pertains to documents which were in DeMato's possession on Or after June 27, 1978, the date of the grand jury order.*fn45


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