“You have the right to remain silent. Anything you say can and will be used against you in a court of law.” We’ve all heard those words a thousand times in crime dramas, as the cops handcuff the bad guy and haul him away. Most lawyers recognize that as part of the Miranda warning, uttered by police in criminal cases to avoid violating the suspect’s rights under the Fifth Amendment to the U.S. Constitution.
What many don’t know, especially here in Asia, is the Fifth Amendment may also provide a valid excuse – even for foreign citizens – to avoid testifying in a U.S. civil lawsuit. On its face, the Fifth Amendment appears to be limited to criminal cases. It states that no person “shall be compelled in any criminal case to be a witness against himself.” However, courts have long held that the Fifth Amendment privilege “can be asserted in any proceeding, civil or criminal, administrative or judicial, investigatory or adjudicatory.” Kastigar v. United States, 406 U.S. 441, 445 (1972).
Consequently, it is not uncommon for witnesses in civil lawsuits to refuse to answer deposition questions based on that privilege, so long as the testimony could possibly lead to criminal liability. At first, the tactic may seem an easy way out for the witness. However, there are serious risks to invoking – or not invoking – the privilege, so anyone for whom the subject may be relevant should consult with experienced Fifth Amendment counsel.
Who may assert the privilege?
The Fifth Amendment privilege is purely a personal right. Only natural persons may refuse to testify on that basis; corporations and other organizations may not. Braswell v. United States, 108 S. Ct. 2179, 2182 (1988). While corporate officers, directors, agents and employees may all invoke the privilege, they may do so only on their own behalf and not on behalf of any other person or entity.
When may one assert the privilege?
To assert the Fifth Amendment privilege, a witness must have “reasonable cause to apprehend a real danger of incrimination.” Hoffman v. United States, 341 U.S. 479, 486 (1951). Incrimination refers to the possibility of criminal prosecution in the United States, but not in foreign jurisdictions. United States v. Balsys, 524 U.S. 666 (1998). For example, depending on the case, testimony in a civil action could lead to reasonable fear of incrimination relating to crimes of fraud, economic espionage, price-fixing, anti-trust or securities violations and even perjury.
One may not make a blanket assertion of the privilege, such as refusing to attend a deposition or asserting the privilege in advance with respect to all potential questions. Instead, one must invoke it on a question-by-question basis and courts will determine the propriety of the assertions on the same basis. North River Insurance Co. v. Stefanou, 831 F.2d 484 (4th Cir. 1987).
Courts construe the privilege broadly: criminal charges need not be pending and most courts do not require criminal prosecution to be probable, but only possible. In re Folding Carton Antitrust Litigation, 609 F.2d 867 (7th Cir. 1979); In re Master Key Litigation, 507 F.2d 292, 293 (9th Cir. 1974). However, there must be a real possibility of criminal prosecution; the risk cannot be imaginary, remote or speculative. United States v. Apfelbaum, 445 U.S. 115, 128 (1980).
The Supreme Court has described two categories of questions that might lead to a reasonable fear of incrimination: (1) where the risk in answering a question is patent, such as where the answer calls for admission of a crime, and (2) where the question, on its face, appears to call for an innocent answer, but is dangerous in light of other facts already developed. Hoffman, supra 341 U.S. at 487. Courts also recognize a third category that may give rise to the privilege: (3) where the witness asserts the privilege, but the court lacks sufficient facts to determine the risk of incrimination. In re Morganroth, 718 F.2d 161, 168 (6th Cir. 1983). In any event, if another party challenges an assertion of the privilege, the witness must present sufficient evidence for the court to conclude the fear of prosecution is warranted. Id. at 169 – 170.
What are the risks of asserting the privilege?
While the potential benefits of invoking the Fifth Amendment privilege are obvious – to avoid disclosing information that could lead to criminal liability – there are risks. Namely, (a) the witness may be prohibited from testifying at trial concerning the questions to which the privilege was asserted, and (b) the court may permit the trier of fact to draw adverse inferences from the invocation of the privilege.
Regarding that first point, one may not use the Fifth Amendment as both a shield and a sword, relying on the privilege to avoid disclosing information during discovery, then testifying on the subject at trial. In fact, courts often state the same in discovery orders, such as the following provision from an Order Regarding Deposition Protocol filed on 10/22/2013 in In re Fresh and Process Potatoes Antitrust Litigation, Case No. 4:10-MD-2186-BLW (Dist. Idaho):
Any person who at a deposition asserts his or her right under the Fifth Amendment of the United States Constitution not to testify will be bound by that assertion of the privilege and shall not be permitted to testify otherwise unless, not later than 60 days prior to the date set for the close of fact discovery, notice is provided in writing of the intent to revoke the assertion . . . and the willingness of the person to testify.
Regarding the second point, in a civil proceeding, a court may, but is not required to, draw a negative inference from a witness’ invocation of the Fifth Amendment. Baxter v. Palmigiano, 425 U.S. 308, 318 (1976). The court’s decision whether to allow an adverse inference is discretionary and generally involves a balancing of the witness’ Fifth Amendment interests, the opposing party’s right to a fair trial, and the availability of other evidence relating to the point sought to be established by inference.
It’s one thing for courts to allow a negative inference to be drawn against a witness/party who refuses to testify. It’s another thing to allow such an inference against a third-party, because the witness who refuses to testify is related to that party (for example, allowing a negative inference against a company because its employee asserts the Fifth Amendment). However, courts may allow such a third-party imputation of a witness’ Fifth Amendment invocation if the facts show a relationship of loyalty between the two parties. See LiButti v. United States, 107 F.3d 110, 123-124 (2d Cir. 1997).
How does one assert the privilege?
The Fifth Amendment privilege is not self-executing; if one fails to assert it one loses the corresponding rights. Garner v. United States, 424 U.S. 648 (1976). However, no particular wording is required to invoke it. Often a witness will say something like “Based on the advice of counsel, I assert my Fifth Amendment rights under the United States Constitution and decline to answer.” But other wording may be acceptable, such as this shorthand version (“I refuse to answer. Fifth Amendment.”) employed by a murder suspect in the below video:
In any event, one thing is clear: If one decides to invoke the Fifth Amendment one should do so for virtually every question, rather than seeking to selectively assert the privilege. IRS official Lois Lerner learned that lesson the hard way in May 2013, when she was called to testify before Congress about suspected wrongdoing and she made a brief statement (“I have not done anything wrong. I have not broken any laws…”) before invoking her Fifth Amendment rights. While her statement was extremely brief, everyone from Harvard Law professor Alan Dershowitz to the Congressional House Oversight Committee agreed that her remarks constituted a waiver of her Fifth Amendment rights, as explained below by one Congressman.
Courts generally hold that a waiver of the privilege is limited to only the proceeding in which the waiver occurred (i.e., pleadings, depositions, trial, appeal, etc.) and the topics being addressed when it occurred. Thus, a witness who inadvertently waives the privilege may often invoke it later with respect to different topics or in subsequent proceedings. United States v. Doe, 628 F. 2d 694 (1st Cir. 1980). However, there’s a huge risk in waiving the privilege, so most Fifth Amendment counsel will advise a witness who wishes to invoke the privilege, as a practical matter, to answer his or her name and nothing more, to avoid waiving the privilege.
Finally, once the threat of criminal prosecution is gone, due to expiration of statutes of limitation, granting of immunity, acquittal, conviction and sentencing, or other causes, the witness may be entitled to revoke the Fifth Amendment assertion, so adverse inferences will not be allowed and there will no longer be any restriction on the witness testifying on the subject at trial. See In re Urethane Antitrust Litigation, Case No. 04-MD-1616-JWL, Order dated 09/30/2013 (Dist. Kansas). However, upon revoking the assertion, the witness must agree to respond to questioning on the subjects that were previously rejected and “withdrawal is not permitted if the litigant is trying to abuse, manipulate or gain an unfair advantage over opposing parties.” S.E.C. v. Smart, 678 F.3d 850, 855 (10th Cir. 2012).
Aside from the risks described above, civil cases with potential criminal implications often give rise to complex ethical considerations that could have a serious legal impact on the client or counsel.
For example, if counsel is retained to defend a company in a civil fraud proceeding and an employee of the company is noticed for deposition, the company and employee may have conflicting interests that make it difficult for counsel to either advise the employee to assert his Fifth Amendment rights, or advise the employee to waive those rights and testify. Counsel has a duty to zealously represent his client (the company), but may not divulge the client’s confidential information to third-parties (the employee), there may be ethical concerns about instructing a non-client (the employee) to waive his constitutional rights, and it may be a felony (witness tampering or obstruction of justice) for counsel to encourage a non-client not to testify. See United States v. Cintolo, 818 F. 2d 980 (1st Cir. 1987); United States v. Cioffi, 493 F.2d 1111 (2d Cir. 1974).
Consequently, corporate counsel in such cases will usually recommend that witnesses who are required to testify should retain separate counsel (generally paid for by the company), to avoid the complications that arise when one firm tries to represent everyone. Moreover, witnesses who are represented by experienced Fifth Amendment counsel may take comfort that their critical interests are truly being represented.
If you require assistance with depositions in Asia, whether they may involve Fifth Amendment issues or not, please contact our experienced Asia deposition counsel.