Citation Codes

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Motions

Motion to quash : Denied

Motion to compel : Granted

Attorney(S)

Andrew Reich, Asst. U.S. Atty., Miami, Fla., for the Government. Roy Black, Miami, Fla., for defendants.

Judges

Eugene P. Spellman

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Smart Summary

Memorandum Opinion and Order — Summary

Factual and Procedural Background

This matter arises from the United States' Motion to Compel production of documents before a grand jury pursuant to a subpoena duces tecum served on respondents Hiram Martinez, Mercedes Martinez, and Hiram Martinez, Jr. Respondent Hiram Martinez, Jr. moved to quash the subpoena duces tecum. The Court held a hearing on August 9, 1990, and the Court issued this memorandum opinion and order on August 13, 1990. The Court considered memoranda and oral argument submitted by both the Government (represented by Andrew Reich, Assistant U.S. Attorney) and respondents (represented by Roy Black for the defendants).

Respondent Martinez, Jr. contended that the subpoena was issued to him as corporate records custodian of Zenitron Development, Inc., but that he is not the records custodian and therefore cannot be compelled to produce the documents. He submitted exhibits suggesting other persons (Francisco and Leticia Avila) were the logical custodians. The Government moved to compel, arguing that custody or control — not formal title — governs the duty to comply.

Legal Issues Presented

Whether respondents can be considered records custodians of Zenitron Development, Inc., such that they can be compelled to produce corporate documents pursuant to a subpoena duces tecum.
Whether the respondents' formal titles determine their obligation to comply with a subpoena duces tecum for corporate records (i.e., whether possession or custody, rather than corporate title, controls).

Arguments of the Parties

Respondent(s)' Arguments

Respondent Hiram Martinez, Jr. argued he is not the records custodian of Zenitron Development, Inc., and therefore cannot be compelled to produce documents under a subpoena issued to the corporation.
Respondent presented fifteen exhibits (corporate documents and correspondence) showing Francisco and Leticia Avila as signatories or recipients, arguing they are the logical records custodians.
Respondent asserted that if personally subpoenaed, he would be required to respond and then might raise a Fifth Amendment privilege; however, no Fifth Amendment claim had been asserted at the time of the hearing.

Government's Arguments

The Government argued that compliance does not turn on formal titles but on the theory that any person who obtains possession or custody of corporate records by virtue of functions performed on behalf of the corporation is the corporation's agent and holds the records in a representative capacity.
The Government maintained that having custody makes one a custodian and thus subject to a subpoena duces tecum for corporate records.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Grant v. United States, 227 U.S. 74, 33 S.Ct. 190, 57 L.Ed. 423 (1913)	Sole shareholder's attorney who received corporate documents must produce although not corporate representative.	The Court relied on this precedent to support the proposition that possession or custody of corporate records, even by someone not formally designated as a corporate representative, can impose a duty to produce.
In re Sealed Case, 877 F.2d 83, 86 (D.C. Cir. 1989)	"Custodian" encompasses any agent of the corporation who under ordinary principals of corporate law has custody or control over corporate documents.	The Court cited this authority in holding that a voluntary, de facto custodian may be compelled and that "custodian" includes agents with custody or control.
Wilson v. U.S., 221 U.S. 361, 380, 31 S.Ct. 538, 544, 55 L.Ed. 771 (1911)	Authority supporting the custodial/possession principle for production of corporate documents.	The Court referenced Wilson as additional support for treating persons with custody as records custodians subject to subpoena duces tecum.

Court's Reasoning and Analysis

The Court framed the issue narrowly as whether respondents could be considered records custodians of Zenitron Development, Inc. The Court began by presuming respondents had possession or control of the subpoenaed documents; without that presumption, the motion to quash on technical-custodian grounds would have been futile.

The Court agreed with the Government's theory that the obligation to comply depends on custody and agency rather than formal corporate title. The Court cited Grant v. United States to show that an individual in possession of corporate documents may be required to produce them even if not formally designated as a corporate representative. The Court further adopted the view expressed in In re Sealed Case that "custodian" encompasses any agent of the corporation who, under ordinary principles of corporate law, has custody or control of corporate documents, and also cited Wilson v. U.S. for similar support.

The Court concluded there is no meaningful distinction between an official records custodian and a voluntary, de facto custodian; any person with custody over corporate records is a records custodian for purposes of a subpoena duces tecum. The Court noted respondents had received target letters informing them they were targets of the grand jury investigation but observed that no Fifth Amendment privilege had been asserted before the Court; respondents remained free to raise that privilege at the grand jury hearing and have the issue presented to the Court at that time.

The Court also noted the Government's statement at the hearing that Zenitron corporation is defunct, but found no evidence of that and did not consider the assertion in ruling on the motion.

Holding and Implications

Holding: The Court's dispositive ruling was as follows: The Motion to Compel is GRANTED; Respondent's Motion to Quash is DENIED.

Implications:

Respondents (Hiram Martinez, Mercedes Martinez, and Hiram Martinez, Jr.) are ordered to produce the subpoenaed corporate documents pursuant to the Government's subpoena duces tecum, on the basis that any person in custody of corporate records is a records custodian for subpoena purposes.
The Court did not decide any Fifth Amendment privilege issue; no Fifth Amendment claim had been asserted at the time of this ruling. Respondents may raise any such privilege at the grand jury hearing, at which time the Court indicated it would consider the issue if properly presented.
The opinion applies established precedent to the facts before the Court; the decision enforces production under existing principles rather than announcing a new legal rule beyond the authorities cited.

Judge: Spellman, District Judge. Date of Opinion: August 13, 1990.

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In the Matter of GRAND JURY PROCEEDINGS 89-8.

MEMORANDUM OPINION ORDER COMPELLING PRODUCTION OF DOCUMENTS PURSUANT TO THE GOVERNMENT'S SUBPOENA DUCES TECUM

SPELLMAN, District Judge.

THIS CAUSE comes before the Court upon the Motion of the United States to Compel production of documents before a grand jury pursuant to its subpoena duces tecum served upon respondents HIRAM MARTINEZ, MERCEDES MARTINEZ, and HIRAM MARTINEZ, JR. and upon Respondent, HIRAM MARTINEZ, JR.'s Motion to Quash the subpoena duces tecum. The Court held a hearing on this issue on the morning of August 9, 1990. Both the Government and the Respondent, HIRAM MARTINEZ, JR., and the other respondents through joinder in Mr. MARTINEZ, JR.'s memorandum and oral argument, filed memoranda with the Court and presented oral argument on their respective positions.

Respondent MARTINEZ, JR.'s position is that because the subpoena was issued to him as corporate records custodian of Zenitron Development, Inc., and he is not the records custodian of Zenitron, he cannot be compelled to produce any of the documents under this subpoena. Respondent filed fifteen exhibits purporting to show that the logical records custodians of the Zenitron company are other parties, namely Francisco and Leticia Avila, the directors of the corporation. Indeed, the exhibits presented to the Court were various corporate documents and correspondence of Zenitron in which the Avilas are the signatories or recipients. Respondent argues that there is no showing that he is an officer, director, employee, corporate representative or designated records custodian of Zenitron, and accordingly, cannot be compelled to produce documents under a subpoena of Zenitron.

Respondent insists that if he were personally subpoenaed duces tecum then he would be required to respond, and there would be another issue before the Court, presumably, his privilege against self-incrimination. At this time, no assertion has been made by respondent claiming a fifth amendment privilege which would be violated by the act of production pursuant to the subpoena. The Court sees its role as deciding the very narrow question of whether respondents can be considered records custodians of Zenitron Development, Inc.

In dealing with this narrow issue the Court presumes that Respondents have possession or control of the subpoenaed documents; otherwise the motion to quash the subpoena duces tecum on the grounds that Respondents are not the "technical" custodians of these records would have been a useless gesture. The Government urges that Respondents' duty to comply with the subpoena does not turn on their titles, but rather on the theory that any person who obtains possession or custody of corporate records by virtue of functions performed on behalf of the corporation is its agent, and therefore, holds the records in a representative capacity. Having custody makes one a custodian. Grant v. United States, 227 U.S. 74, 33 S.Ct. 190, 57 L.Ed. 423 (1913) (Sole shareholder's attorney who received corporate documents must produce although not corporate representative.) The Court agrees.

A voluntary, de facto, custodian, that is one who has voluntary custody of corporate documents, may be compelled to produce those documents pursuant to a subpoena duces tecum just the same as if he were an official records custodian so designated by the corporation. The Court sees no distinction between the former and the latter type of custodian. In essence the Court holds that any person with custody over corporate records is a records custodian. The Court is mindful of the fact that these respondents have received "target" letters informing them that they are now targets of the grand jury investigation. However, the Court reiterates its position that no fifth amendment issue has been raised by the parties and is yet an issue to be decided by this Court. Respondents are still in the position that they may raise the fifth amendment privilege at the grand jury hearing and then frame the issue for consideration by this Court. Accordingly and upon careful review of the record, it is hereby

The Court notes that the Government stated at the hearing that the Zenitron corporation is defunct. There is no evidence before the Court that this is the case, and Respondents professed no knowledge of this fact. Accordingly, it was not considered by the Court in ruling on this motion.

See In re Sealed Case, 877 F.2d 83, 86 (D.C. Cir. 1989) ("custodian" encompasses any agent of the corporation who under ordinary principals of corporate law has custody or control over corporate documents); see also Wilson v. U.S., 221 U.S. 361, 380, 31 S.Ct. 538, 544, 55 L.Ed. 771 (1911).

ORDERED AND ADJUDGED that the Motion to Compel is GRANTED. Respondent's Motion to Quash is DENIED.

DONE AND ORDERED.

GRAND JURY PROCEEDINGS 89-8., (S.D.Fla. 1990)