Brelvis Consulting, Llc v. State Of Washington
430 P.3d 685 (2018)
Sections
Rule of Law:
Artificial entities, such as limited liability companies, do not possess a Fifth Amendment privilege against self-incrimination, nor do their business records constitute "private affairs" protected by Article I, Section 7 of the Washington Constitution.
Facts:
- Bruce Mesnekoff owned and operated Brelvis Consulting LLC, which conducted business under the name 'Student Loan Help Center.'
- The Better Business Bureau (BBB) reported a pattern of complaints alleging the business collected initial fees but failed to consolidate consumer loans or respond to refund requests.
- The Washington Attorney General's Office (AGO) received a consumer complaint referencing the BBB reports and initiated an investigation into potential unfair or deceptive business practices.
- The AGO served a Civil Investigative Demand (CID) on Brelvis, directed to the care of Mesnekoff, seeking business records, advertisements, and answers to interrogatories.
- Brelvis's legal counsel communicated multiple times with the AGO to request extensions for the response deadline.
- Despite the extensions, Brelvis failed to produce the requested documents or answer the interrogatories.
- The AGO sought to compel production of the documents to further its investigation under the Consumer Protection Act.
Procedural Posture:
- The Attorney General's Office filed a petition to enforce the Civil Investigative Demand in the superior court.
- The superior court granted the petition and ordered Brelvis to comply with the demand.
- Brelvis filed a motion for reconsideration of the enforcement order.
- The superior court denied the motion for reconsideration.
- Brelvis appealed the superior court's orders to the Washington Court of Appeals.
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Issue:
Does a limited liability company have the constitutional right to refuse compliance with a state civil investigative demand by invoking the Fifth Amendment privilege against self-incrimination or state constitutional privacy protections regarding its business records?
Opinions:
Majority - Bjorgen
No, the court held that corporate entities cannot claim a privilege against self-incrimination to withhold records, nor do business records quality for heightened state privacy protections. The court reasoned that under the collective entity doctrine established in Braswell v. United States, artificial entities like LLCs have no Fifth Amendment privilege, and a custodian cannot resist a subpoena for corporate records on those grounds. Furthermore, regarding Article I, Section 7 of the Washington Constitution, the court determined that business records do not reveal the type of sensitive personal information (like domestic life or reading habits) that constitutes a protected 'private affair.' Finally, the court found the demand satisfied the Fourth Amendment because the agency had statutory authority, the demand was definite, and the information sought was relevant to the investigation.
Analysis:
This decision reinforces the distinction between natural persons and artificial entities (corporations/LLCs) regarding constitutional rights in Washington. By affirming that the Fifth Amendment 'act of production' privilege does not apply to corporate custodians regarding corporate records, the court prevents business owners from shielding their companies' documents from regulatory scrutiny. Additionally, the ruling clarifies that Washington's robust Article I, Section 7 privacy protections—which are generally stronger than the federal Fourth Amendment—do not extend to ordinary business records, as they lack the requisite personal sensitivity. This establishes a clear path for state agencies to enforce Civil Investigative Demands against business entities.
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