Ken over at Popehat has been chronicling the implosion of Prenda Law, a law firm that, on paper, represented copyright holders (particularly of adult films) suing individuals who had shared the films online. I would not dare try to summarize Ken’s comprehensive coverage, nor claim any direct knowledge of the facts, other than to point out the handful of allegations against the firm — and their tactical response — that prompted this post. Allegedly, Prenda Law’s “clients” were merely shells for the lawyers themselves (a fraud on the court), and the firm allegedly forged someone’s signature on corporate documents to create the appearance of a legitimate attorney–client relationship. The federal judge overseeing a number of lawsuits caught wind of this and held a sanctions hearing yesterday, in which essentially everyone associated with Prenda Law asserted their Fifth Amendment right against self-incrimination, and so did not testify.
That’s the issue I wanted to pick up for this post: the ramifications of asserting the Fifth Amendment right against self-incrimination in civil litigation. As a bonus, we’ll discuss what an adversary can do to maximize the negative impact of that assertion on their opponent. The issue comes up more often than you’d think; we see it frequently in egregious wrongful death cases (where the defendant is trying to avoid a manslaughter prosecution), drunk driving cases, and (obviously) fraud cases. I have a handful of civil cases now where the opposing party has either already asserted the Fifth or is expected to do so.
The Fifth Amendment says that “No person. . . shall be compelled in any criminal case to be a witness against himself.” As the Supreme Court has long held, “The privilege afforded not only extends to answers that would in themselves support a conviction under a federal criminal statute but likewise embraces those which would furnish a link in the chain of evidence needed to prosecute the claimant for a federal crime.” Hoffman v. United States, 341 U.S. 479, 486-487 (1951). There are rare circumstances in which a judge can deny the privilege and then compel the testimony, but that’s highly unusual. Once you assert it, your refusal to testify cannot be used against you in criminal proceedings.
But two problems remain for civil cases.
First, the privilege isn’t boundless, and it doesn’t prevent prosecutors (or adversaries in civil litigation) from finding the same evidence elsewhere. “A party is privileged from producing the evidence, but not from its production.” Justice Holmes, Johnson v. United States, 228 U.S. 457 (1913). The first place to look: corporate records. The right against self-incrimination is a personal privilege that does not extend to a corporation or its records. Bellis v. United States, 417 U.S. 85, 89-91 (1974)(Bellis, it should be noted, held that a lawyer couldn’t withhold his law firm’s documents, even if those documents would tend to incriminate him). Further, a corporate record custodian may not resist a subpoena on the grounds that the contents of the documents would be personally incriminating. See Braswell v. United States, 487 U.S. 99, 110 (1988)(there remains, however, an open question where the “custodian” is also the sole employee and officer of the corporation).
So all those entities ‘affiliated’ in one way or another with Prenda Law can expect some subpoenas coming their way, perhaps as part of the discovery by some of the people they sued into whether they violated Federal Rule of Civil Procedure 11 with their alleged misrepresentations.
Second, although in a criminal procedure, the court must instruct the jury that it cannot draw an inference of guilt from a defendant’s failure to testify about facts relevant to his case, Griffin v. California, 380 U.S. 609 (1965), in civil cases, “the Fifth Amendment does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them.” Baxter v. Palmigiano, 425 U.S. 308, 318 (1976).
The rule under Baxter is akin to Cicero’s maxim, “Though silence is not necessarily an admission, it is not a denial, either.” That is to say, an opposing party can’t simply point to the silence and claim victory in their civil case, but a court is entitled to draw adverse inferences against the party that “pleads the Fifth.” (Justice Brandeis said: “Silence is often evidence of the most persuasive character.” United States ex rel. Bilokumsky v. Tod, 263 U.S. 149 (1923)). Thus, pleading the Fifth in a civil case in federal court is never helpful, is rarely harmless, and is typically very damaging — indeed, it’s often fatal to the party’s claims or defenses.
There’s an interesting split among the federal Courts of Appeal as to when and how a party may use the silence in their favor. For example:
One interesting point of particular relevance to Prenda Law: As Ken notes in his post summarizing the available sanctions, when a judge notices misconduct in their court, one tool they have available is the ability to refer matters to the attorney’s state bar association. Can the silence be used against them in a disciplinary proceeding? Well, there’s a case on that in the First Circuit, involving an attorney who fraudulently concealed property during a bankruptcy, then asserted her right against self-incrimination: “While refusal to waive the Fifth Amendment might increase the risk that she would be disbarred, disbarment would not result automatically and without more. Hence, she was not threatened with a penalty within the meaning of [Garrity v. New Jersey, 385 U.S. 493 (1967)] for invoking her Fifth Amendment privilege.”
Thus, under federal law, a bar association can use the assertion of the Fifth Amendment against an attorney in a disciplinary action, so long as disbarment isn’t automatic, but some state laws preclude their state courts from drawing negative inferences against a party who asserts a privilege and refuses to testify. As two corporate defense lawyers at Gibson Dunn noted back in 2010, several states have statutes or rules of evidence that forbid courts from drawing adverse inferences after a party asserts a testimonial privilege. See, e.g., Alaska R. Evid. 512(c); Ark. R. Evid. 512; Cal. Evid. Code § 913(a); Del. R. Evid. 512; Haw. Rev. Stat. § 626-1, R. 513; Idaho R. Evid. 512; Ky. R. Evid. 511; N.D. R. Evid. 512; Nev. Rev. Stat. § 27-513; Nev. Rev. Stat 49.405; N.J. R. Evid. 532; N.M. R. Evid. 11-513; Okla. Stat. Ann. §2513; Or. Rev. Stat. § 40.290; Vt. R. Evid. 512. In those states, the court has to tell the jury to not use the silence against the party. I’m sure Cicero wouldn’t approve, but those are issues for another day, and they’re state-specific.
Yet another interesting question is when the adverse inference may be used to break through attorney–client privilege by way of the crime–fraud exception, and force an attorney to disclose communications with the client, over the client’s objection. The Southern District of New York tore through that one back in February: “Stern invoked his privilege against self-incrimination in response to nearly every question asked of him during his deposition. By refusing to answer any questions, Stern obstructed the discovery process, which justifies drawing an inference that any answers he gave in response to the questions would have been unfavorable to him. … Accordingly, plaintiff will be permitted to draw adverse inferences against Stern to support its efforts to invoke the crime/fraud exception.” The Court then used those negative inferences to find the crime–fraud exception likely applied.
Now, the question for a lawyer is, when an opposing party asserts their right against self-incrimination, what do you do? You can move on to another subject, but that’s not the right way to do it. When a party asserts the Fifth, you make them dig as deep and as wide a hole as you can, asking as many specific questions as possible to prompt the assertion of the privilege. That way, you can both (a) examine the contours of the asserted privilege, to see if it is being asserted improperly and (b) develop a thorough record on every issue upon which you are seeking an adverse inference. The more “I plead the Fifth” answers you get, the better.
If you’re curious for more background on the right against self-incrimination and its relationship to civil cases, see this thorough article by Andrew Schulman. (Edit: link removed because the article went missing, although it’s good if you can find it. Here’s a different article from the ABA.)
This post was written in 2013. In the case at issue, an adverse inference was eventually drawn. Lightspeed Media Corp. v. Smith, 761 F.3d 699, 705 (7th Cir. 2014) (“The Fifth Amendment, however, ‘does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence.’ Quoting Baxter and citing LaSalle Bank Lake View v. Seguban, 54 F.3d 387, 390 (7th Cir.1995)).
Other courts continue to apply Baxter:
“The prevailing rule [is] that the Fifth Amendment does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them[.]” Baxter v. Palmigiano, 425 U.S. 308, 318, 96 S.Ct. 1551, 47 L.Ed.2d 810 (1976). See also Hoxie v. Drug Enforcement Admin., 419 F.3d 477, 483 (6th Cir.2005). The same negative inference can, in certain circumstances, be offered against an invoking witness’s current or former employer. See, e.g., Coquina Inv. v. TD Bank, N.A., 760 F.3d 1300, 1311 (11th Cir.2014); Cerro Gordo Charity v. Fireman’s Fund Am. Life Ins., 819 F.2d 1471, 1481 (8th Cir.1987).
In re Polyurethane Foam Antitrust Litig., 152 F. Supp. 3d 968, 993 (N.D. Ohio 2015). As In re Polyurethane Foam reiterates, the use of an adverse inference is fact-specific:
Regardless of the invoking individual’s employment status, “the overarching concern is fundamentally whether the adverse inference is trustworthy under all of the circumstances and will advance the search for the truth.” LiButti v. United States,107 F.3d 110, 124 (2d Cir.1997). “In most circumstances silence is so ambiguous that it is of little probative force…. Silence gains more probative weight where it persists in the face of accusation, since it is assumed in such circumstances that the accused would be more likely than not to dispute an untrue accusation.” United States v. Hale,422 U.S. 171, 176, 95 S.Ct. 2133, 45 L.Ed.2d 99 (1975).