Third Circuit Steadfast In Fifth Amendment’s Unavailability To Corporate Custodians

Posted On Thursday, June 4, 2015

In May, the Third Circuit affirmed a New Jersey district court’s finding that even a one-person corporation cannot assert a Fifth Amendment privilege regarding corporate documents. The ruling agrees with established precedent indicating that neither corporations nor their custodians of record are entitled to invoke the Fifth Amendment’s privilege against self-incrimination.

The appellant, a medical doctor identified as “John Doe, D.O.,” organized his medical practice as a “professional association,” a type of corporation doctors are permitted to form under the laws of New Jersey. Doe was the sole medical practitioner and proprietor of his medical practice.

The government alleged that between 2006 and 2013, Doe was referring his patients to a blood-testing service in exchange for monetary kickbacks. The district court held Doe’s medical practice in civil contempt for his refusal to produce documents pursuant to a grand jury subpoena, which directed Doe – as the medical practice’s custodian of records – to produce documents relating to the government’s allegations.

On appeal, Doe argued that as the sole owner and only employee of his practice he was entitled to invoke his Fifth Amendment rights against self-incrimination and refuse compliance with the subpoena. The three-judge panel disagreed, relying on Supreme Court, Third Circuit, and other circuit court holdings that individuals or corporate record custodians who produce documents in response to a subpoena of a corporation are acting on behalf of the corporate entity, no matter how small the corporation may be. Accordingly, these individuals cannot rely on the Fifth Amendment to avoid producing corporate records in their possession as corporate representatives, even if the records may also personally incriminate the individuals.

The Court remained “steadfast in its conclusion that the Fifth Amendment privilege against self-incrimination is unavailable to corporate custodians.” The Court reasoned that “[h]aving taken advantage of the benefits of incorporation for over forty years, Doe may not discard the corporate form simply because he now finds it desirable to do so.”

The appeal is In Re: The Matter Of The Grand Jury, No. 15-1264 (3d Cir. 2015).