First Tennessee Bank National Association v. Service Foods, Inc. et al

Filing 361

OPINION AND ORDER ADOPTING the Special Master's 332 and 333 Report and Recommendations. Non-party Michael Cohen's 354 Objection is hereby DISMISSED, and his request for an in camera hearing is DENIED. Signed by Judge Charles A. Pannell, Jr on 2/7/2018. (sap)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
FIRST TENNESSEE BANK
NATIONAL ASSOCIATION,
Plaintiff,

CIVIL ACTION NO.

v.

1:15-CV-2940-CAP

SERVICE FOODS, INC., SERVICE
FOODS SOUTHERN DIVISION,
LLC, H-SON FINANCIAL, INC.,
HAROLD T. POUNDERS and
KEITH KANTOR,
Defendants.
ORDER
This matter is before the court on two of the special master’s the
reports and recommendations [Doc. Nos. 332, 333], which the court will refer
to as “R&R 332” [Doc. No 332] and “R&R 333” [Doc. No. 333].
I.

R&R 332
No objections have been filed as to R&R 332.

After carefully

considering R&R 332 and finding no error, the court receives it with approval
and adopts R&R 332 [Doc. No. 332] as the opinion of this court.
II.

R&R 333
As to R&R 333, non-party Michael Cohen has filed a limited objection

and request for in camera hearing [Doc. No. 354].

R&R 333 makes a

recommendation on the plaintiff’s motion to compel Cohen to answer
questions in a continued deposition [Doc. No. 234]. Throughout his initial
deposition, Cohen refused to answer questions, claiming the Fifth
Amendment privilege against self-incrimination.

The special master

conducted an in camera hearing with Cohen and his counsel pursuant to the
procedures articulated in United States v. Goodwin, 625 F.2d 693 (5th Cir.
1980), to determine if Cohen properly claimed the privilege. He then found
that Cohen did not establish a reasonable fear of incrimination to justify his
Fifth Amendment invocations, and recommended that the court grant the
plaintiff’s motion to compel [Doc. No. 234]. Cohen now objects to R&R 333
and requests an in camera hearing with this court.
A.

Standard

Generally, the court must review a special master’s R&R de novo if a
party has filed objections. Fed. R. Civ. P. 53(f)(3). The federal rules also
state that the court must give the parties “an opportunity to be heard” when
ruling on a special master’s R&R. Fed. R. Civ. P. 53(f)(1). However, the
advisory committee’s notes clarify that this requirement “can be satisfied by
taking written submissions when the court acts on the report without taking
live testimony.” Fed. R. Civ. P. 53 advisory committee’s note. Accordingly,

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the court may rule on R&R 333 on the pleadings and without conducting a
hearing.
As to Cohen’s privilege claim, the Fifth Amendment to the United
States

Constitution

affords

individuals

the

privilege

against

self-

incrimination: “No person shall be . . . compelled in any criminal case to be a
witness against himself.” U.S. Const. amend. V. The privilege “applies alike
to civil and criminal proceedings, wherever the answer might tend to subject
to criminal responsibility him who gives it.” McCarthy v. Arndstein, 266 U.S.
34, 40 (1924).

A witness cannot establish the privilege based on bald

assertions or “hypothetical offerings.”

Goodwin, 625 F.2d at 700–01. He

must provide enough information to show “real possibilities” that his answer
could form the basis for criminal liability. Id. at 701.
Under Goodwin, a court “must make a proper inquiry into the
legitimacy and scope of the witness’ assertion of his Fifth Amendment
privilege.” Id. at 701. When a court “conducts an in camera hearing into the
witness’ Fifth Amendment privilege it must make ‘a particularized inquiry,
deciding, in connection with each specific area that the questioning party
wishes to explore, whether or not the privilege is well-founded.’” Id. (quoting

United States v. Melchor Moreno, 536 F.2d 1042, 1049 (5th Cir. 1976)).
Ultimately, the court must determine whether the person invoking the
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privilege has a “reasonable cause to apprehend danger from a direct answer.”

Hoffman v. United States, 341 U.S. 479, 486 (1951).
B.

Discussion

Although R&R 333 makes findings on Cohen’s Fifth Amendment
assertion on 19 different categories of questions, Cohen does not specify
which of these findings he is objecting to.

Cohen merely states that his

objection “is limited in scope,” and that he “does not object to the vast
majority of the Special Master’s findings” [Doc. No. 354 at 3]. He instead
points out that after R&R 333 was issued, Cohen and others associated with
Service Foods—a defendant in this action1—were subpoenaed and questioned
by the United States Postal Service and the Federal Bureau of Investigation.
And R&R 333 notes that, at the time, “Cohen has not been questioned by any
criminal authorities in connection with his involvement in Service Foods.”
R&R 333 at 13. Cohen argues that the special master therefore relied on that
fact to make his findings and, because he has now been questioned by
criminal authorities, some “limited” but unspecified portion of the special

The plaintiff brought a claim for enforcement of guaranty agreement
against Service Foods, which was also allegedly used by defendants Kantor
and Pounders to conduct fraud and conversion. Service Foods has not filed
any pleadings or participated in this case, and the clerk issued an entry of
default against it on October 27, 2015.
1

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master’s findings should be modified or rejected. Cohen then asks the court
to conduct its own in camera review pursuant to Goodwin.
Cohen’s objections are not persuasive.

First, although the special

master noted that Cohen had not then been questioned by criminal
authorities, his conclusion did not rely on that fact.

Rather, the special

master concluded that Cohen did not have a reasonable fear of incrimination
from the questions “[i]n light of Cohen’s role in Service Foods,2 the lack of
specific allegations of misconduct against Cohen, and the absence of facts
demonstrating reasonable probability of Cohen’s criminal liability.” R&R 333
at 39.

Second, the court agrees with the special master’s findings.

The

transcript of Cohen’s in camera hearing shows that Cohen did not provide
facts that support a reasonable fear of incrimination. He generally based his
invocation of the privilege on bald conclusions and remote speculations.
Finally, the court finds that Cohen’s failure to do so is not altered by the
subsequent grand jury subpoena and questioning on July 10, 2017. Cohen
does not say that charges have since been filed against him, or otherwise
identify any basis for the court to find that he can now—as opposed to at his
previous in camera hearing—provide a factual basis for fear of incrimination.
Cohen was not involved in the accounting side of operations or in the
presentation of the receivable made to the plaintiff, and instead served as a
marketing consultant. R&R 333 at 11.
2

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Accordingly, the court finds that its review of the in camera hearing
transcript and the record is sufficient to satisfy Goodwin. That is, the court
has conducted a “proper inquiry into the legitimacy and scope of the witness’
assertion of his Fifth Amendment privilege.”

Goodwin, 625 F.2d at 701.

Cohen’s objection is DISMISSED, and his request for an in camera hearing is
DENIED.
III.

Conclusion
Accordingly, the court receives the special master’s reports and

recommendations [Doc. Nos. 332, 333] with approval and ADOPTS them as
the opinions of this court.
SO ORDERED this 7th day of February, 2018.
/s/CHARLES A. PANNELL, JR.
CHARLES A. PANNELL, JR.
United States District Judge

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