Tuesday, September 15, 2020

Second Circuit Applies the Foregone Conclusion Doctrine to Overcome the Fifth Amendment's Act of Production Doctrine (9/15/20)

In United States v. Fridman, 974 F.3d 163 (2d Cir. 2020) (2d Cir. 2020), CA2 here and GS here, the Court held that the Government had overcome Fridman’s claim of Fifth Amendment privilege (via Act of Production doctrine) under the foregone conclusion doctrine which requires “the Government must establish with reasonable particularity its knowledge as to (1) existence of the documents, (2) the taxpayer's possession or control of the documents and (3) the authenticity of the documents.” Fridman, Slip Op. 13.  The Court also held that a “traditional trust” is a collective entity that could not assert a Fifth Amendment privilege.

I focus here on the Act of Production Doctrine under which production can be testimonial and the exception known as the foregone conclusion doctrine.  The Court discusses and applies these concepts at Slip Op. 13-29.  Readers can study the opinion for the particular application of the law to the facts.  I thought that it would be most helpful to most readers to excerpt the general discussion of the applicable law.  I do caution that the Court calls it the Act of Production Privilege; the privilege involved is the Fifth Amendment privilege; Act of Production is is not a separate privilege but a doctrine as to a particular application of the Fifth Amendment privilege.   In this excerpt, I have substantially cleaned up for easier readability (footnotes omitted):

The Fifth Amendment provides that no person shall be compelled in a criminal case to be a witness against himself. U.S. Const. amend. V. In Fisher v. United States, 425 U.S. 391, 409-11 (1976), the Supreme Court defined the contours of the Fifth Amendment as it applies to document requests. The Court held that documents voluntarily prepared prior to the issuance of a summons were not compelled testimony, so there was no Fifth Amendment protection for the contents of these records. At the same time, however, the Court recognized a narrow privilege against the act of production. Because producing documents tacitly concedes the existence of the papers demanded and their possession or control by the taxpayer as well as the taxpayer's belief that the papers are those described in the subpoena, the Court concluded that the act of production could, in some cases, communicate incriminatory statements and thus may fall under the Fifth Amendment's protection against self-incrimination; but the Court hinted that such a determination would be conditioned on the facts and circumstances of particular cases. Similarly, when a defendant must make extensive use of the contents of his own mind in identifying the hundreds of documents responsive to the requests in the subpoena, he or she contributes to a "link in the chain" of their prosecution in violation of the Fifth Amendment privilege. United States v. Hubbell, 530 U.S. 27, 42-43 (2000).

The act-of-production privilege is not an absolute one. Fridman challenges the district court's ruling that two exceptions to the act-of-production privilege permitted enforcement of the requests at issue in this case.

I. The Foregone Conclusion Doctrine

Under one exception, when the existence and location of the papers are a foregone conclusion and the taxpayer adds little or nothing to the sum total of the Government's information by conceding that he in fact has the papers, production does not run afoul of the Fifth Amendment. This principle has been aptly called the foregone conclusion doctrine.

As referenced above, our Circuit most recently addressed the foregone conclusion doctrine in United States v. Greenfield, 831 F.3d 106, 110 (2d Cir. 2016). There too, we dealt with a summons related to tax evasion. In Greenfield, we explained that for the foregone conclusion exception to apply, the Government must establish "with reasonable particularity" its knowledge as to (1) existence of the documents, (2) the taxpayer's possession or control of the documents and (3) the authenticity of the documents.n3  
   n3 We acknowledged that both our court and our sister circuits have struggled with the extent of Government knowledge necessary for a foregone-conclusion rationale to apply. Indeed, in Greenfield, we wrestled with enunciating the requisite level of knowledge of each specific responsive document covered by the Summons.  On the other hand, the Government must know, and not merely infer, that the sought documents exist, that they are under the control of defendant, and that they are authentic. The "sweet spot" for the Government's level of knowledge is somewhere between perfect knowledge and a mere inference. Determining whether the foregone conclusion doctrine applies requires a fact-intensive, case-by-case analysis. 

To meet the existence requirement, the Government is not required to have actual knowledge of the existence and location of each and every responsive document. When a summons seeks customary account documents related to financial accounts that [the Government] knew existed, the documents' existence is a foregone conclusion. 

Although we did not explicitly define "control" in the context of the foregone conclusion doctrine in Greenfield, we start from the premise that a taxpayer's possession or control of the requested documents is one of the "communicative elements" protected by the Fifth Amendment. The Government may therefore satisfy the control requirement by establishing its knowledge of the physical possession of the requested documents by the subpoenaed individual, or the subpoenaed individual's control over the requested documents.  An individual's ability or authority to receive the requested documents is an essential part of being able to control the documents.  Both a general power of attorney and the power to give instructions would suffice to provide the individual with control over the requested documents. The test for the production of documents is control, not location; "control" is to exercise power or influence over. Thus, if the Government can prove it knows that an individual controls the disposition of assets in an account, it follows that that individual controls the requested documents associated with that account—given the Government has satisfied the existence requirement.

With respect to the authenticity requirement, documents may be implicitly authenticated if an individual complies with a summons demanding production of documents, and the Government establishes that those documents are in fact what they purport to be and the taxpayer was not forced to use his discretion in selecting the responsive documents. Additionally, the Government can independently establish authenticity in several ways: a) through the testimony of third parties familiar with that type of document, b) by comparison to a prior version of the document, or c) by comparison to other related documents.

There is a critical temporal requirement as well. The Government must prove its knowledge at the time the summons was issued. Relevant to this inquiry is whether the Government can demonstrate that the documents ever existed. In many circumstances, the Government's ability to establish existence and control as of an earlier date does permit an inference of existence and control as of the date of the Summons. When considering whether such an inference of continued existence and control is available,  we have applied a balancing test that examines: (1) the nature of the documents, (2) the nature of the business to which the documents pertained, (3) the absence of any indication that the documents were transferred to someone else or were destroyed, and (4) the relatively short time period between the date as of which possession was shown and the date of the ensuing IRS summons.

Greenfield provides a bifurcated approach to the foregone conclusion analysis when the "inference" of continued existence and control is at play. First, we examine whether the Government can establish the existence, control, and authenticity of each category of sought documents at some point prior to the issuance of the summons. For those documents for which the Government's evidence suffices, we then examine whether it is a foregone conclusion that these documents remained in the individual's control through the issuance of the Summons Only if that retention is a foregone conclusion will the issuance of the Summons not violate the Fifth Amendment privilege.

JAT Comments:

1. The foregone conclusion doctrine has been troubling to me.  The Fifth Amendment right to not be compelled to testify is unconditional.  So, if the act of production is testimonial, what difference does or should it make that the testimonial aspects of the act of production are a foregone conclusion?  Isn’t there a necessary inconsistency between the Fifth Amendment and the foregone conclusion doctrine?  Is this just an instance where some inconsistency is tolerated.

2. Given the requirements for the foregone conclusions, particularly the “reasonable particularity” requirement, I wonder whether the inconsistency might be tolerable because otherwise the Government might have to obtain and execute search warrant(s).  In order to obtain a search warrant, the Government must make a similar reasonable particularity showing.  One author has said that the reasonable particularity requirement for avoiding the act of production doctrine “will differ little from the Fourth Amendment particularity requirement for obtaining a search warrant.” Lance Cole, The Fifth Amendment and Compelled Production of Personal Documents After United States v. Hubbell, 29 Am. J. Crim. L. 123, 189 (2002).

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