In re Morganroth

In re Morganroth

Opinion

 [*163]  Kennedy, Circuit Judge.

Petitioner Morganroth seeks review of an order directing him to answer deposition questions to which he asserted his fifth amendment right to remain silent on the ground that his answers might tend to subject him to criminal liability.

In 1975 the Central States, Southeast & Southwest Areas Pension Fund made a loan to Indico Corporation of $ 7,000,000. Morganroth was president of Indico Corporation at that time. Subsequently, Indico defaulted on the loan and as a result the Pension Fund suffered significant losses on its investment. Morganroth has since been involved in a number of lawsuits. He was indicted by a federal grand jury on conspiracy and mail and wire fraud charges arising out of this loan transaction with the Pension Fund. On October 20, 1979, subsequent to his indictment,  [**3]  Morganroth was deposed in a civil action, Trustees of Central States, Southeast & Southwest Areas Pension Fund v. Indico Corp., then pending in Florida state court. This civil case was a foreclosure proceeding in connection with the same loan. At that deposition Morganroth appeared voluntarily and answered all questions put to him. Morganroth is himself an attorney. In March 1980, Morganroth was acquitted of the federal criminal charges. It appears that after his acquittal, Morganroth was subpoenaed to appear before a New York federal grand jury and was asked the same set of questions which he voluntarily answered in the Florida state foreclosure proceeding. Morganroth asserted his fifth amendment privilege to these same questions. Immunity was conferred upon Morganroth, his testimony given, and thereafter he was advised by one of the prosecutors that his testimony was in serious conflict with that of others appearing before the grand jury.

Subsequent to his acquittal and the immunized testimony before the New York federal grand jury, the Secretary of Labor subpoenaed Morganroth to appear for a deposition as a non-party witness in this civil action pending in the United [**4]  States  [*164]  District Court for the Eastern District of Illinois. In this action, the Secretary of Labor has alleged that defendants, who are former trustees and officials of the Central States, Southeast & Southwest Areas Pension Fund, imprudently made, administered and monitored certain investments on behalf of the Fund in violation of their fiduciary obligations under the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq. Morganroth's deposition was scheduled for June 29, 1981 in Detroit, Michigan pursuant to Fed. R. Civ. P. 45(d)(2). At the deposition, Morganroth was represented by counsel. He answered questions under oath. After providing information as to his name, address and occupation, Morganroth individually refused to answer each question propounded to him by counsel for the Secretary of Labor on the ground that each answer might tend to incriminate him, without elaborating further. The questions he refused to answer at this latter deposition covered the same aspects of the Indico loan transaction with the Central States, Southeast & Southwest Areas Pension Fund about which he had previously given deposition answers voluntarily [**5]  in the Florida state foreclosure proceeding on October 20, 1979 and pursuant to the grant of immunity in the New York federal grand jury proceeding. As a result, the Secretary of Labor moved the United States District Court for the Eastern District of Michigan that same day for an order pursuant to Fed. R. Civ. P. 37(a) compelling Morganroth to answer these questions on the grounds that he waived any fifth amendment right he had with respect to these questions by answering virtually identical questions in the Florida state foreclosure proceeding and that he had no legitimate fifth amendment right to assert because there was no reasonable likelihood of criminal prosecution, given his acquittal in March 1980, that would flow from the answers requested. The District Court ordered Morganroth to testify at the deposition on the ground that he had waived his fifth amendment rights by testifying in the earlier, separate Florida foreclosure proceeding and that he would suffer no additional legal detriment from testifying. The District Court did, however, confine the Secretary of Labor to asking only the identical questions asked at the prior deposition.

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