In civil disputes — including bankruptcy litigation — it is not uncommon for questions to arise about a client’s potential exposure to criminal liability, whether the client is a party or a witness. Civil litigators must therefore understand the role of the Fifth Amendment privilege against self-incrimination in the civil context.
Let’s say our client is a target or witness in a civil investigation or embroiled in litigation with business partners who have alleged criminal wrongdoing or made threats to contact law enforcement. At some point, the client may need to provide testimony, submit a sworn declaration, or participate in an interview. How do you mitigate the risk that the client will say something self-incriminating, and what are the effects of a client taking the Fifth in a civil lawsuit?
This article — which is based on research that we conducted for a client — discusses five questions relating to the intersection of the Fifth Amendment and civil litigation. In later articles, we will discuss the risk assessment process civil practitioners should undertake when a client is faced with allegations of criminal wrongdoing.
- In civil litigation in federal court, a witness’s invocation of the Fifth Amendment may give rise to an adverse inference “when independent evidence exists of the fact to which the party refuses to answer.”
In the criminal context, no adverse inference is permitted from a witness’s refusal to testify based on the Fifth Amendment. In federal civil litigation, however, an adverse inference may be “drawn when independent evidence exists of the fact to which the party refuses to answer” — meaning that “an adverse inference can be drawn when silence is countered by independent evidence of the fact being questioned, but that same inference cannot be drawn when, for example, silence is the answer to an allegation contained in a complaint.” Doe ex rel. Rudy-Glanzer v. Glanzer, 232 F.3d 1258, 1264 (9th Cir. 2000) (internal citations omitted).
- Washington likewise permits an adverse inference in civil litigation from a witness’s invocation of the Fifth Amendment privilege and does not have the federal “independent evidence” requirement.
“Once a witness in a civil suit has invoked his or her Fifth Amendment privilege against self-incrimination, the trier of fact is entitled to draw an adverse inference from the witness’s refusal to testify.” Chaffee v. Keller Rohrback LLP, 200 Wash.App. 66, 83-84 (2017) (citing King v. Olympic Pipeline Co., 104 Wash.App. 338, 355-56 (2000) and Ikeda v. Curtis, 43 Wash.2d 449, 261 P.2d 684 (1953)).
“In a civil proceeding such an [adverse] inference is permissible, where appropriate, not as a sanction or remedy for any unfairness created by exercise of the privilege but simply because the inference is relevant and outside the scope of the privilege.” Diaz v. Washington State Migrant Council, 156 Wash.App. 59, 85-86 (2011). “Fifth Amendment invocations by corporate employees or principals may also result in an adverse inference drawn against the corporation.” Id. (collecting cases). “Moreover, invocation of the Fifth Amendment privilege may supply an avenue for investigation by prosecutors.” Chaffee, 200 Wash.App. at 84.
In Olympic Pipeline, decided in 2000, the court noted that “Washington courts have not addressed whether the trial court has discretion to limit the adverse inference that follows from invocation of the privilege.” 104 Wash.App. at 356. The Olympic Pipeline court declined to resolve this question (which appears to remain open) but observed that “ER 403 permits the court to exclude relevant evidence where unduly prejudicial,” and that controlling precedent does not “[a]s a logical matter … prohibit the usual analysis under the rules of evidence.” Id.
Although Olympic Pipeline suggests that a trial court might have discretion to exclude under ER 403 evidence that a witness took the Fifth, Washington has not adopted the federal “independent evidence” requirement, meaning the risk of an adverse inference may be greater in Washington state court.
- Oregon, by contrast, does not permit an adverse inference in civil litigation from a witness’s invocation of the Fifth Amendment privilege.
Oregon prohibits an adverse inference from the invocation of the Fifth Amendment privilege, even in civil cases. Under Oregon Rule of Evidence 513 (O.R.S. 40.290(1)), “[n]o inference may be drawn from a claim of privilege.”
In John Deere Co. v. Epstein, 307 Or. 348 (1989), the Oregon Supreme Court considered whether Rule of Evidence 513 permits an adverse inference in a civil proceeding based on a witness’s invocation of the Fifth Amendment right against self-incrimination. The Court’s analysis in John Deere turned on whether invoking this right qualifies as a “claim of privilege” under Rule 513.
The Court found that an adverse inference is barred, even in civil cases, because “claim of privilege” includes federal constitutional privileges — not just privileges under state authority or listed in the Oregon code. Thus, although such an adverse inference is allowed under the U.S. Constitution, it is inconsistent with Rule 513.
John Deere is over 30 years old but has only been cited in a handful of subsequent cases, none of which appears to address the adverse inference question as applied to civil cases. It has not been reversed or limited, and the current language of Rule 513 is materially identical to the language in effect in 1989 (“[n]o inference may be drawn from a claim of privilege”). John Deere thus appears to be good law.
As illustrated by the differences between federal court and the state courts of Washington and Oregon, the rule regarding an adverse inference in civil cases varies by jurisdiction. In the case that prompted this research, our client was deposed in Washington, but the subject of the client’s deposition was also at issue in a civil suit by Washington regulators, an SEC investigation, and a federal criminal investigation in Oregon. Because it is hard to predict where a client may be sued, it is safest to assume an adverse inference may be allowed.
- The Fifth Amendment privilege is waived for the matters to which a witness voluntarily testifies, but the scope of waiver depends on the facts.
Can a witness testify as to certain transactions or events but assert the Fifth as to others? Answering this question is difficult and highly fact-dependent.
“When a party testifies voluntarily, and therefore controls the extent of disclosure, ‘[t]he privilege is waived for the matters to which the witness testifies.’” OSRecovery, Inc. v. One Groupe Int'l, Inc., 262 F.Supp.2d 302, 307–08 (S.D.N.Y. 2003) (quoting Brown v. United States, 356 U.S. 148, 154–55 (1958)).
Thus, the privilege has already been waived if a party “testifies to certain transactions and then refuses to testify further because the disclosure of a fact waives the privilege as to its details.” In re Enron Corp. Securities, Derivative & ERISA Litig., 762 F.Supp.2d 942, 961 (S.D. Tx. 2010) (citing cases); State v. Huizenga, 198 Wash.App. 1031 (2017) (unpublished). The breadth of such a waiver “is determined by the scope of relevant cross-examination.” Brown, 356 U.S. at 154-55; see also McGautha v. California, 402 U.S. 183, 215 (1971) (“[a] defendant who takes the stand in his own behalf cannot then claim the privilege against cross-examination on matters reasonably related to the subject matter of his direct examination”).
As suggested above, this standard is inherently vague, and it is difficult to predict in advance where a court might draw the line. It is generally safest to assume the court will construe any waiver broadly.
- Any waiver of the Fifth Amendment privilege is limited to the particular proceeding in which it occurs — but a witness’s testimony in one case waiving the privilege may still be introduced in a subsequent proceeding.
“It is settled that a waiver of the Fifth Amendment privilege is limited to the particular proceeding in which the waiver occurs.” U.S. v. Licavoli, 604 F.2d 613, 623 (9th Cir. 1979) (emphasis added) (citations omitted) (voluntary testimony before grand jury does not waive privilege at trial); see also U.S. v. Trejo–Zambrano, 582 F.2d 460, 464 (9th Cir. 1978) (“[a] waiver of the Fifth Amendment privilege at one stage of a proceeding is not a waiver … for other stages”); 8 J. Wigmore, Evidence § 2276, at 470-72 (a witness’s “voluntary testimony … [in a] preliminary and separate proceeding, e.g. in bankruptcy, is … not a waiver for the main trial,” and [n]or is his testimony at a first trial a waiver for a later trial”).
For these purposes, the term “proceeding” is defined narrowly. Even if they arise from the same events, a civil action and criminal case would certainly be separate proceedings. The Washington Supreme Court has also held that a witness’s waiver in testifying at an inquest did not extend to a subsequent wrongful death lawsuit, which the Court described as “[an] unrelated legal proceeding[ ].” Stone v. State, 85 Wash.2d 342, 344 (1975). Indeed, in Mitchell v. U.S., 526 U.S. 314, 325 (1999), the Supreme Court held that a guilty plea and statements made during a plea colloquy did not function as waiver at sentencing.
To be clear, however, this does not mean that a witness can invoke the Fifth Amendment to bar the admission of self-incriminating sworn statements made during an earlier proceeding. The witness’s waiver of the privilege is limited to a single proceeding, but the government can introduce in a criminal trial a transcript of the defendant’s prior testimony in a civil deposition in which he had waived the privilege. See, e.g., KST Data, Inc. v. DXC Technology Co., 344 F.Supp.3d 1132, 1134-35 (C.D. Cal. 2018) (citing Licavoli, 604 F.2d at 623).
The issues addressed in this brief article are just some of those to consider when advising a client on whether to assert the Fifth Amendment privilege in the civil context. If you encounter such a situation, please do not hesitate to contact the Investigations, Compliance & White Collar Team for additional guidance.
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