CRAIB v. BULMASH (1988)

On October 22, 1985, respondent, a deputy labor commissioner, issued a subpoena requiring appellant to appear before respondent on November 14, 1985, concerning failure to pay overtime wages.   Appellant was addressed as trustee of a trust for his sister.   He was ordered to bring all time and payroll records of persons employed from November 1, 1982, to the date of the subpoena.   The subpoena bore the identification, “13–14649–Cr.”   Appellant appeared as directed, but respondent was out of town.

On February 11, 1986, respondent issued another subpoena bearing the same identification number except that the “Cr” was omitted.   It required appellant to appear at the same office on March 13, 1986, to testify in the investigation of appellant as trustee of the trust for his sister and bring time and payroll records of persons employed from March 1, 1983, to date.   It also required production of “[n]ames and last known address of all persons employed from 3–1–83.”   This subpoena, unlike the first one, was supported by a declaration.   It alleged, under penalty of perjury, that appellant had possession or control of the requested documents and that they were material to the issues “for the following reasons:  [¶] To verify wages and compute unpaid overtime pay for private household employees covered under Industrial Welfare Commission Order 15–80 and employed by Jay S. Bulmash as Trustee for Serna B. Gluck.”

Respondent subsequently filed an unverified petition with the Santa Barbara Superior Court alleging noncompliance with the latter subpoena and seeking an order compelling compliance.¹  The petition alleged that appellant is trustee of a trust for his sister;  that in that capacity he employed people;  that he possesses or controls documents that pertain to pay, time worked and working conditions of employees;  that a former employee complained of his failure to pay overtime wages;  that appellant is probably in violation of certain sections (unspecified) of the Labor Code;  and that appellant failed to appear pursuant to the 1986 subpoena.

A response to the petition raised no issue of fact, and the requested order to comply with the subpoena was granted.   Appellant filed a notice of appeal from that order.   He now asks that we pass on the validity of the order, preferably on appeal, or if it be determined that the order is not appealable, then by way of treating the notice of appeal as an application for a writ of mandate.   We find the order to be appealable, but improvidently issued.

Appealability

 The Code of Civil Procedure authorizes appeals from superior court judgments (with certain exceptions not here applicable).  (Code Civ.Proc., §§ 904;  904.1, subd. (a).)  It is almost uniformly recognized that final orders in special proceedings are appealable as final judgments unless appeal is prohibited by legislation.  (In re De La O (1963) 59 Cal.2d 128, 156, 28 Cal.Rptr. 489, 378 P.2d 793;  Knoll v. Davidson (1974) 12 Cal.3d 335, 343, 116 Cal.Rptr. 97, 525 P.2d 1273;  see Franchise Tax Board v. Barnhart (1980) 105 Cal.App.3d 274, 277, 164 Cal.Rptr. 331;  contra Barnes v. Molino (1980) 103 Cal.App.3d 46, 51, 162 Cal.Rptr. 786.)   Here the proceeding was brought under section 11187 of the Government Code, which authorizes a petition to the superior court to require a witness to obey an administrative subpoena.   Appeal is not prohibited.   We find the order to be appealable.

Unlawful Search

The United States Supreme Court has determined that the Fourth Amendment prohibition against unreasonable searches applies to “warrantless intrusions during civil as well as criminal investigations.”  (Marshall v. Barlow's Inc. (1978) 436 U.S. 307, 312, 313, 98 S.Ct. 1816, 1820, 56 L.Ed.2d 305.)   What constitutes probable cause depends on whether the material involved is sought as a matter of civil investigation or as evidence of crime.   In the former case it is required only “that the inquiry be one which the agency demanding production is authorized to make, that the demand be not too indefinite, and that the information sought be reasonably relevant.  [Citations.]”  (Brovelli v. Superior Court (1961) 56 Cal.2d 524, 529, 15 Cal.Rptr. 630, 364 P.2d 462.)

 Where the material is sought as evidence of suspected crime, different requirements are involved.   The petition to the superior court for an enforcement order is analogous to presentation to a magistrate of an affidavit for a search warrant.   Probable cause in the criminal sense is required.   (Salwasser Manufacturing Co. v. Municipal Court (1979) 94 Cal.App.3d 223, 156 Cal.Rptr. 292.)   In the Salwasser case a representative of the Division of Industrial Safety obtained a warrant authorizing a nonconsensual safety inspection pursuant to the California Occupational Safety and Health Act (Cal/OSHA).  (Lab.Code, §§ 6300–6708.)   The application lacked allegations of fact to establish cause to believe that safety violation existed.   Violation of the OSHA requirements was a misdemeanor.   It was held that issuance of the warrant called for an unreasonable search in violation of the Fourth Amendment.   The same conclusion was reached in Rush v. Obledo (N.D.Cal.1981) 517 F.Supp. 905, 916, 917, a case that involved nonconsensual inspection of family day-care homes pursuant to a statute that imposed criminal penalties for violations of prescribed standards.

The Labor Code makes it a misdemeanor to violate many of its provisions, including failure to pay wages (Lab. Code, § 216);  failure to pay a required wage scale (Lab. Code, § 225);  failure to comply with mandatory provisions relating to hours of overtime (Lab. Code, § 553);  failure to pay wages on time (Lab. Code, § 215);  and failure to comply with any order of the commission (Lab. Code, § 1199).

 The record indicates that respondent was engaged in more than a general civil inquiry.   He was seeking evidence of suspected crime.   The petition to the superior court alleges that a former employee of appellant complained of his failure to pay overtime wages pursuant to an order of the commission and that appellant is probably in violation of certain, but unspecified, sections of the Labor Code.   Respondent's memorandum of points and authorities to the superior court alleges than an investigation revealed probable cause to suspect violation of Welfare Order 15–80 involving failure to pay overtime wages.   The 1985 subpoena alleges failure to pay overtime wages in violation of order 15–80.

The petition to the superior court does not meet the requirements of an affidavit for a search warrant to discover evidence of crime.   The Fourth Amendment to the United States Constitution provides that “no Warrants shall issue, but upon probable cause, supported by Oath or Affirmation․”   Here the only verified declaration makes no factual allegation.   It simply states that the documents sought are material “[t]o verify wages and compute unpaid overtime pay․”   It does not meet the requirement that the declarant has personal knowledge of relevant facts or that he received such information from a reliable source.  (People v. Campa (1984) 36 Cal.3d 870, 206 Cal.Rptr. 114, 686 P.2d 634.)

 Respondent argues that the statement under penalty of perjury was buttressed by the petition to the superior court.   That petition, however, was not verified.  Section 446 of the Code of Civil Procedure makes verification of a pleading by a state officer unnecessary.   But it does not confer upon unverified pleadings the status of affidavits or sworn declarations required by the Fourth Amendment.

Self-Incrimination

Appellant also contends that compliance with the subpoena would have required self-incrimination in violation of the Fifth Amendment to the United States Constitution.²  This contention involves the consideration of three sub-issues.

 Criminality.   For self-incrimination to be involved, the evidence sought must tend to incriminate.   Here, as previously indicated, the record shows that respondent suspected criminal activity.   Compliance with the subpoena would have provided evidence that appellant employed the persons whose names he furnished.   This would constitute a link in the chain of elements of various misdemeanors.   The requirement of a tendency to incriminate is present.

 Testimonial Incrimination.   The United States Supreme Court has reiterated as late as 1984 that the Fifth Amendment right against self-incrimination applies to the production of documents where that production has testimonial aspects and an incriminating effect.  (United States v. Doe (1984) 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552.)   The court stated that although “the contents of a document may not be privileged, the act of producing the document may be.”  (Id., at p. 612, 104 S.Ct. at p. 1242.)   It quoted from Fisher v. United States (1976) 425 U.S. 391, 410, 96 S.Ct. 1569, 1581, 48 L.Ed.2d 39:  “ ‘Compliance with the subpoena tacitly concedes the existence of the papers demanded and their possession or control by [the person served].   It also would indicate the ․ belief that the papers are those described in the subpoena․’ ”  (United States v. Doe, supra, 465 U.S. at p. 613, 104 S.Ct. at p. 1242.)   The court accepted the findings of the district court and the circuit court of appeal that the testimonial compulsion would occur if the subpoena were enforced, and remanded for determination as to whether the administrative agency desired to compel production at the cost of use immunity.   To the same effect is Goldsmith v. Superior Court (1984) 152 Cal.App.3d 76, 199 Cal.Rptr. 366, where it was held that compulsory production of a weapon allegedly used in a charged crime would require testimonial incrimination.   The implied statement involved in producing the weapon would authenticate the weapon as an evidentiary item.³

 Personal Incrimination.   Respondent contends that the privilege against self-incrimination is not involved because appellant was acting as a trustee instead of on his own behalf.   It has long been held that the privilege does not extend to a corporate officer with respect to a subpoena directed to the corporation.  (Wilson v. United States (1911) 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771.)   In Bellis v. United States (1974) 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678, this concept was applied to a partner of a three person law partnership.   The court treated the partnership as “an organized collective entity.”  (Id., at p. 92, 94 S.Ct. at p. 2185.)   The opinion indicates that a different result might apply to a small family partnership, or if there were “some other preexisting relationship of confidentiality․”  (Id., at p. 101, 94 S.Ct. at p. 2189.)

 Respondent's argument is dependent on his premise that a trust is an entity.   This premise is incorrect.   Appellant is trustee of a trust for his sister.   As such he holds legal title to property in which she has an equitable interest, and may hire employees to care for her.   But a trust is not an entity.  (Powers v. Ashton (1975) 45 Cal.App.3d 783, 787, 119 Cal.Rptr. 729;  cf. Lazar v. Estate of Lazar (1962) 208 Cal.App.2d 554, 25 Cal.Rptr. 354 [a probate estate is not an entity].)  The employees were not hired by appellant as an agent of a “trust.”   They were hired by appellant in his capacity as a trustee.   If criminal activity was involved, it was chargeable to appellant, not to a “trust.”

In addition, the situation presents a family arrangement between brother and sister for the care and protection of the sister and her property.   It is the type of arrangement which Bellis took pains to exclude from the general rule relating to partnership entities.

In view of the fact that personal incrimination was a viable possibility, appellant was entitled to the privilege even though he was acting as trustee for his sister.

The order is reversed.   Appellant is entitled to costs on appeal.

FOOTNOTES

FOOTNOTE.  

1.   A procedure authorized by Government Code section 11187.

2.   Although this issue is addressed by both parties, the record does not show that it was presented to or considered by the trial court.   Ordinarily it would not be considered on appeal.   However, it may arise in connection with further proceedings in the trial court, and for that reason we address it.

3.   In Fielder v. Berkeley Properties Co. (1972) 23 Cal.App.3d 30, 99 Cal.Rptr. 791, it was held that the privilege against self-incrimination may be claimed with respect to material sought by an administrative subpoena only after the witness has produced the material and is questioned about it.   This is inconsistent with United States v. Doe, supra, which we deem controlling.

WILLARD, Associate Justice.* FN* Retired judge of the superior court sitting under assignment by the Chairperson of the Judicial Council.

GILBERT, Acting P.J., and ABBE, J., concur.