Gershow, Ellen R.

English

University of Miami School of Law

University of Miami Law SchoolInstitutional RepositoryUniversity of Miami Law Review1-1-1975IRS Prevented from Seizing Documents: AttorneyAsserts Client's Fifth Amendment PrivilegeEllen R. GershowFollow this and additional works at: http://repository.law.miami.edu/umlrThis Case Noted is brought to you for free and open access by Institutional Repository. It has been accepted for inclusion in University of Miami LawReview by an authorized administrator of Institutional Repository. For more information, please contact library@law.miami.edu.Recommended CitationEllen R. Gershow, IRS Prevented from Seizing Documents: Attorney Asserts Client's Fifth Amendment Privilege, 29 U. Miami L. Rev. 372(1975)Available at: http://repository.law.miami.edu/umlr/vol29/iss2/11UNIVERSITY OF MIAMI LAW REVIEW [Vol. XXIXharm must be proved in court before any compensatory damages canbe recovered, a task traditionally recognized as difficult.4 3Yet a constitutional decision such as this was not made withoutreason. 44 Despite the burdens for a particular plaintiff, he now has amuch better chance of "stinging" the media with a lawsuit. With theprivilege of publishers and broadcasters removed, a private citizen canquite easily get a jury trial because the direction of recent cases hasbeen to view all libel as actionable per se. 45 Even if he doesn't recoverthe damages allowed under the new standard and vindicate himself inthe process, he is still able to harass the defendant with a trial. 4 6More importantly, Gertz reverses an attitude. The lower courts,4 7plaintiff's attorneys, 4 8 law review commentators, 4 9 and even theAmerican Law Institute5 ° have assumed that the New York Timesprivilege pre-empted the field of defamation except in the rarest ofcases. The decision will encourage potential plaintiffs and their attor-neys to be bold, with the likely result that many more publishers andbroadcasters will find themselves defendants in libel actions in theyears ahead.BRADFORD SWINGIRS PREVENTED FROM SEIZING DOCUMENTS:ATTORNEY ASSERTS CLIENT'S FIFTHAMENDMENT PRIVILEGEDr. Mason, a taxpayer, was visited by Special Agents of theInternal Revenue Service, who informed him that his tax returns wereunder investigation. He immediately called his accountant, defendantCandy, who advised Dr. Mason not to show any of his records to theagents. Defendant Candy then called defendant Kasmir, an attorney,43. W. PROSSER, THE LAW OF TORTS § 112, at 765 (4th ed. 1971).44. Justice Blackmun suggested that it was to resolve the "uncertainty" of a "sadly fraction-ated" Court in Rosenbloom. 94 S. Ct. at 3014.45. RESTATEMENT (SECOND) OF TORTS, Explanatory Notes § 569, at 59 (Tent. Draft No.20, 1974). It is interesting to note that the Supreme Court's decision to prohibit imposition ofstrict liability has removed the basis for the per se/per quod controversy, and thus has ended thematter. Id.46. Note that the burden of proving truth lies with the defendant once a per se case of libelis established.47. For a list of decisions by lower courts assuming the Rosenbloom plurality opinion tohave become the established law, see Note, Misinterpreting the Supreme Court: An Analysis ofHow the Constitutional Privilege to Defame Has Been Incorrectly Expanded, 10 IDAHO L. REV.213, 217 (1974).48. On the attitude of attorneys, see id.49. One commentator expressed support of the standard ultimately adopted in Gertz, butseemed resigned to the inevitability of the Rosenbloom, or even of Justice Black's, standard.Note, The Supreme Court, 1970 Term, 85 HARV. L. REV. 38, 227-28 (1971).50. RESTATEMENT (SECOND) OF TORTS, Chapter 24A, at 133-45 (Tent. Draft No. 20, 1974).CASES NOTEDwho, at Candy's request, contacted Dr. Mason. Mason retained Kas-mir as his attorney. The next day, Dr. Mason received from Candy anassortment of records and documents. Within minutes, Dr. Masonturned them over to his attorney. The following day, summons wereserved upon Kasmir and Candy ordering Kasmir to give up the docu-ments and Candy to testify about them. Both men refused to complywith the summons, and the government sought enforcement in thedistrict court. The district court granted the government's petition, butstayed its order pending appeal. The Court of Appeals for the FifthCircuit held, reversed: The constitutional privilege against compulsoryself-incrimination may be invoked on behalf of a taxpayer by hisattorney to prevent the production of documents which the taxpayerhas turned over to his attorney. United States v. Kasmir, 499 F.2d 444(5th Cir. 1974).'In resolving the issues presented by the instant case, the courtsought guidance from the decision of the United States Supreme Courtin Couch v. United States, 2 and from its own pronouncements inUnited States v. White. 3 In Couch, the taxpayer had hired an inde-pendent accountant to whom she had regularly delivered various busi-ness and tax records. The IRS sought to enforce its summons to viewthese records which had remained in the accountant's possession formany years. The Supreme Court held that the taxpayer was notentitled to assert her privilege against self-incrimination to preventproduction of the records which she had turned over to heraccountant. 4 The Court determined that "possession bears the closestrelationship to the personal compulsion forbidden by the FifthAmendment,"5 and found that the taxpayer's "divestment of posses-sion was of such a character as to disqualify her entirely as an object ofany impermissible Fifth Amendment compulsion. ' 6 The Court alsodecided that there could be no expectation of privacy when recordswere turned over to an accountant for disclosure in an income taxreturn. 7 The Couch Court was careful to point out that it was notestablishing a per se rule as to the necessity of possession in order toassert the fifth amendment privilege; the Court acknowledged thatsituations might arise "where constructive possession is so clear . . . as1. The Court held that the Internal Revenue Service was entitled to enforce the summonsserved upon accountant Candy if it believed this would be of benefit to the government.2. 409 U.S. 322 (1973) [hereinafter referred to as Couch].3. 477 F.2d 757, aff'd on rehearing en banc, 487 F.2d 1335 (5th Cir. 1973) [hereinafterreferred to as White].4. This decision has received much criticism as sanctioning "yet another tool of the ever-widening governmental invasion and oversight of our private lives." Couch v. United States, 409U.S. 322, 338 (1973) (Douglas, J., dissenting). See, e.g., Comment, 1973, UTAH L. REV. 106; 48TUL. L. REV. 160 (1973); 26 U. FLA. L. REV. 142 (1973).5. Couch v. United States, 409 U.S. 322, 331 (1973).6. Id. at 334-35.7. Id. at 335. The Court noted that, although not in itself a controlling factor, noconfidential accountant-client privilege exists under federal law.1975]UNIVERSITY OF MIAMI LAW REVIEW [Vol. XXIXto leave the personal compulsions upon the accused substantiallyintact. "8The Court of Appeals for the Fifth Circuit had its first opportu-nity to apply the Couch decision in United States v. White. 9 Thetaxpayer in White, upon learning that he was the subject of anInternal Revenue Service investigation, retained White as counsel.White immediately contacted the taxpayer's accountant and obtainedall worksheets used in preparing the taxpayer's returns. Summons wasserved upon White for production of those documents. White refusedto comply, asserting his client's fifth amendment privilege. Two issuesfaced the court: 1) whether an attorney has standing in an InternalRevenue proceeding to assert a privilege on behalf of his client, and 2)whether the fifth amendment shields a client from compulsory produc-tion of work papers owned and prepared by an accountant and in thepossession of the taxpayer's attorney, but never in the actual posses-sion of the taxpayer. The court assumed, without actually deciding theissue, that attorney White did have standing to assert any privilege hisclient might have. However, the court then held that the privilege,under the circumstances, did not exist. It reasoned that because thetaxpayer was not in possession of the documents, the necessary ele-ment of personal compulsion, as prescribed in Couch, was missing.The court rejected the taxpayer's claim of constructive possession, assuggested in Couch, maintaining that an attorney could not be inconstructive possession of the papers for his client when the clientnever had actual possession of them.' 0Confronted with the White decision, attorney Kasmir successfullydistinguished the instant case. His client, unlike the taxpayer in White,had obtained actual possession of the worksheets and had personallytransferred the documents to Kasmir pursuant to an attorney-clientrelationship. The court correctly held that under these facts, the tax-payer was entitled to assert his privilege against self-incrimination toprevent production of the documents. It found that the taxpayer had alegitimate expectation of privacy based on the nature of the attorney-client relationship," which is guaranteed by the sixth amendmentright to counsel, the attorney-client evidentiary privilege, 12 and ethicalrestraints on the attorney. 3 The court also determined that under8. Id. at 333.9. 477 F.2d 757, qffd on rehearing en banc, 487 F.2d 1335 (5th Cir. 1973).10. Contra, United States v. White, 487 F.2d 1335, 1339-40, aff'd en banc, 477 F.2d 757 (5thCir. 1973) (Ainsworth, J., dissenting).11. The attorney-client relationship as distinguished from the attorney-client privilege.12. But note that the attorney-client privilege is not available to prevent production ofdocuments created prior to the attorney-client relationship. 8 J. WIGMORE, EVIDENCE § 2307(McNaughton rev. 1961). See Comment, 74 YALE L.J. 539 (1965) for recommendations that incases such as this, the court look to expansion of the attorney-client privilege for a non-constitutional rationale.13. The attorney has a strict ethical obligation to prevent disclosure. This ethical obligationis broader than, and independent of, the attorney-client privilege. 499 F.2d at 453.CASES NOTEDthese circumstances, the attorney was in constructive possession of thepapers for his client.In its analysis, the court recognized that unless a taxpayer retainshis fifth amendment privilege to prevent production of documentswhich he has transferred to his attorney, his rights are effectivelydecreased by the transfer. 14 Since taxpayers are often dependent upontheir attorneys to decipher today's complex tax laws, and thereforemust deliver their records to them, the practical effect of denial of theprivilege would be virtual elimination of the protection against self-incrimination in criminal tax investigations. 15 The Fifth Circuit Courtof Appeals, in Kasmir, rejected the government's contentions whichwould have led to such consequences.16Having determined that a taxpayer retains his privilege to preventthe production of documents in his attorney's possession, the courtanswered in the affirmative the question left unanswered in White:whether the attorney has standing to assert his client's claim ofprivilege. The court recognized that the "realities of tax litigationrequire that the attorney be allowed to press his client's claim wherethe client could successfully do so.' 17The decision in Kasmir clarified the position taken by the FifthCircuit in White, and considerably limited that decision. Many com-mentators expressed fears that after the White decision a taxpayerwould automatically lose his fifth amendment privilege in documentswhen his attorney took possession of them. 18 It is now clear that if theproper procedure is followed, no such loss of privilege will result.Unfortunately, by distinguishing White rather than overruling it, theKasmir court makes itappear as if the applicability of the privilege is more amatter of the form of the transfer than the substance behindthe privilege since the most important difference between thiscase and White is taxpayer's fleeting actual possession be-tween that of the accountant and that of the attorney. 19The court rationalized its decision by asserting that it was merelypermitting the taxpayer in Kasmir to retain his privilege while thetaxpayer in White, never having had possession of the documents, hadno privilege to retain.20 Such contrived reasoning is unpersuasive. Itleaves a constitutional guarantee dependent upon the ritualistic touch-ing of the documents by the taxpayer. The decision is therefore con-14. "The government would have us hold that the taxpayer walked into his attorney's officeunquestionably shielded with the amendment's protection, and walked out with something less."499 F.2d at 452 n.5, quoting United States v. Judson, 322 F.2d 460, 466 (1963).15. Couch v. United States, 409 U.S. 322, 342 (1973) (Douglas, J., dissenting).16. 499 F.2d at 452.17. Id. at 454.18. See, e.g., 1973 DUKE L.J. 1080.19. 499 F.2d at 451.20. Id. at 453-54.376 UNIVERSITY OF MIAMI LAW REVIEW [Vol. XXIXtrary to the policy that the privilege against self-incrimination is to beliberally construed and applied. 2 I Regardless of the manner in whichan attorney obtains possession of tax records and documents, it shouldbe recognized that he possesses them constructively for his client inorder to prepare his client's defense.Of course, it must be noted, the court was not forced to overruleWhite in order to reach a proper and just decision in Kasmir. Hope-fully, when the Fifth Circuit is again faced with a situation in whichthe taxpayer has not actually touched the documents en route to hisattorney, it will acknowledge that such a slight distinction from Kas-mir does not justify denial of the taxpayer's privilege. Today, a carefulattorney can insure that his client's privilege will not be jeopardized byinvolving the taxpayer in any transfer of documents to him.The Kasmir decision is an important one, 22 necessary to thesafeguard of constitutional guarantees and protection of the attorney-client relationship. The Fifth Circuit has recognized that the SupremeCourt's pronouncements in Couch do not defeat the taxpayer's claim ofprivilege with respect to documents in his attorney's possession, butrather, serve to strengthen that claim.2 3 It is to be hoped that othercircuits will follow the Kasmir court in its protection of the rights oftaxpayers.ELLEN R. GERSHOWDISCLOSURE OF CLIENT CONFIDENCES BY SECURITIESATTORNEY NAMED AS A DEFENDANT IN A CIVILACTION DOES NOT VIOLATE CODE OFPROFESSIONAL RESPONSIBILITYCan an attorney, who is named as a defendant in a civil actionalong with his former corporate client, reveal client confidences toplaintiffs' counsel? Should plaintiffs' counsel be disqualified from par-ticipating in the suit on the grounds that he has received such21. Hoffman v. United States, 341 U.S. 479, 486 (1951); Counselman v. Hitchcock, 142U.S. 547, 562 (1892).22. The field of taxation represents probably the greatest single area of contact betweenindividuals and the force of the state. A slight invasion of the right against self-incrimination in this field has as great and baleful consequences upon the relationsbetween the individual and the state as does an invasion of that right in the moredramatic areas of public life.Application of House, 144 F. Supp. 95, 103 (N.D. Cal. 1956).23. But cf. United States v. Fisher, 500 F.2d 683 (3d Cir. 1974), a post-Couch decisioninvolving the same fact pattern as Kasmir but dealing with a non-criminal investigation. Caseswhich dealt with this issue prior to Couch include United States v. Judson, 322 F.2d 460 (9th Cir.1963); Bouschor v. United States, 316 F.2d 451 (8th Cir. 1963); In re Fahey, 300 F.2d 383 (6thCir. 1961); United States v. Boccuto, 175 F. Supp. 886 (D.N.J. 1959), appeal dismissed, 274 F.2d860 (3d Cir. 1959); Application of House, 144 F. Supp. 95 (N.D. Cal. 1956).

IRS Prevented from Seizing Documents: Attorney Asserts Client\u27s Fifth Amendment Privilege

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IRS Prevented from Seizing Documents: Attorney Asserts Client\u27s Fifth Amendment Privilege

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