Withdrawal of Assertion of Fifth Amendment in Civil Case Permissible Absent Prejudice to Opponents — Stage of Proceedings and Motivation to Game the System Key Considerations

Davis-Lynch, Inc. v. Moreno, 2012 U.S. App. LEXIS 549 (5th Cir. Jan. 10, 2012):

This court has not ruled on whether and under what circumstances a party may withdraw its invocation of the Fifth Amendment privilege against self incrimination in a civil case. Multiple Circuits, however, have addressed this issue, noting that it is dependent on the particular facts and circumstances of each case. [Footnote 10 See Evans v. City of Chicago, 513 F.3d 735, 743 (7th Cir. 2008); United States v. Certain Real Prop. and Premises Known as: 4003-4005 5th Ave., Brooklyn, N.Y., 55 F.3d 78, 85 (2d Cir. 1995); Edmond v. Consumer Prot. Div., 934 F.2d 1304, 1309-10 (4th Cir. 1991); United States v. Parcels of Land, 903 F.2d 36 (1st Cir. 1990); SEC v. Graystone Nash, Inc., 25 F.3d 187, 191 (1st Cir. 1989).] ***

Generally, "[t]he court should be especially inclined to permit withdrawal of the privilege if there are no grounds for believing that opposing parties suffered undue prejudice from the litigant's later-regretted decision to invoke the Fifth Amendment." ). [United States v. Certain Real Prop. and Premises Known as 4003-4005 5th Ave., Brooklyn, N.Y., 55 F.3d 78, 85 (2d Cir. 1995)] Conversely, withdrawal is not permitted if the litigant is trying to "abuse, manipulate or gain an unfair strategic advantage over opposing parties." [Id.]7 The timing and circumstances under which a litigant withdraws the privilege are relevant factors in considering whether a litigant is attempting to abuse or gain some unfair advantage.

For example, some Circuits have not allowed a litigant to withdraw the privilege when he invoked the privilege throughout discovery and then sought to withdraw the privilege either to support or defend against a motion for summary judgment. [Footnote 18 United States v. Certain Real Prop. and Premises Known as: 4003-4005 5th Ave.,Brooklyn, N.Y., 55 F.3d 78, 85 (2d Cir. 1995) (affirming district court's holding that defendant who invoked Fifth Amendment privilege throughout discovery could not withdraw privilege and respond to government's motion for summary judgement); Edmond v. Consumer Prot. Div., 934 F.2d 1304, 1308-09 (4th Cir. 1991) (affirming district court's striking of summary judgment affidavit offered in support of summary judgment motion when movant had invoked Fifth Amendment privilege during discovery deposition); United States v. Parcels of Land, 903 F.2d 36, 44-45 (1st Cir. 1990) (affirming decision of district court to strike affidavit offered in opposition of government's motion for summary judgment when non-movant invoked Fifth Amendment privilege at deposition).] In denying a litigant's attempt to withdraw the privilege under these circumstances, the Circuit Courts indicated concern that the litigant appeared to be using the privilege to gain an unfair advantage. Generally, withdrawing the Fifth Amendment privilege at a late stage places the opposing party at a significant disadvantage because of increased costs, delays, and the need for a new investigation. [Footnote 19 Certain Real Prop., 55 F.3d at 86; see also SEC v. Graystone Nash, Inc., 25 F.3d 187, 191 (1st Cir. 1989) (describing disadvantages when a party withdraws previous assertion of Fifth Amendment privilege on the eve of trial.)] Furthermore, a litigant who provides previously withheld information at summary judgment places the opposing party at a significant disadvantage in responding to such information. [Footnote 20 Certain Real Prop., 55 F.3d at 86 (noting that the defendant withdrew privilege to defend against summary judgment motion); Edmond, 934 F.2d at 1308 (observing that, in withdrawing assertion of Fifth Amendment privilege at summary judgment, the plaintiff "attempted to insure that his unquestioned, unverified affidavit would be the only version."); Parcels of Land, 903 F.2d at 45 (stating that the defendant's "sudden change of mind" seemed to be instigated by his "realization that the court was not going to consider his affidavit in light of his refusal to answer deposition questions").]

On the other hand, a party may withdraw its assertion of the Fifth Amendment privilege, even at a late stage in litigation, if circumstances indicate that (1) the litigant was not using the privilege in a tactical, abusive manner, and (2) the opposing party would not experience undue prejudice as a result. [Footnote 21 Graystone Nash, 25 F.3d at 193.] In one case, the Third Circuit reversed a district court's order for summary judgment when the district court had precluded defendants from defending against the motion by withdrawing their assertion of the Fifth Amendment privilege. [Id.] In reaching its conclusion that the defendants had not used the privilege in an abusive manner and that the SEC was not unduly prejudiced by withdrawal of the privilege, the court noted that the defendants were pro se and were unaware of the consequences of asserting the privilege. The court also noted that the SEC had collected a great deal of evidence during discovery, including 30,000 documents that one defendant had provided.

Similarly, the Seventh Circuit upheld a district court's decision to allow defendants who had previously invoked the Fifth Amendment privilege during discovery to withdraw the privilege and testify at trial. In reaching its decision, the appellate court noted that it "does not appear to us that the defendants were gaming the system" because they sought to withdraw their invocation of the privilege around the time that the prosecutor "was wrapping up his probe" in the criminal case. [Evans,513 F.3d at 746.] Therefore, a party may withdraw its invocation of the Fifth Amendment privilege, even at a late stage in the process, when circumstances indicate that there is no intent to abuse the process or gain an unfair advantage, and there is no unnecessary prejudice to the other side.

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