Westside Ford v. United States, 13392.

• Decision Date: 27 July 1953
• Docket Number: No. 13392.,13392.
• Citation: 206 F.2d 627
• Parties: WESTSIDE FORD, Inc. v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

206 F.2d 627 (1953)

WESTSIDE FORD, Inc. v. UNITED STATES.

No. 13392.

United States Court of Appeals Ninth Circuit.

July 27, 1953.

COPYRIGHT MATERIAL OMITTED

Bogle, Bogle & Gates, Robert W. Graham, Seattle, Wash., for appellants.

J. Charles Dennis, U. S. Atty., John H. Binns, Asst. U. S. Atty., Frederick P. Holbrook, Jr., Howard F. Frye, Attorneys, O.P.S., Seattle, Wash., for appellee.

Before HEALY, BONE and POPE, Circuit Judges.

BONE, Circuit Judge.

In March of 1952 the Seattle District Office of Price Stabilization conducted an investigation of the business records of appellant, a corporation engaged in selling new and used automobiles in Seattle, Washington. On March 25, 1952, after agents had examined appellant's records for a period of about 10 days, the O.P.S. suggested that the records be microfilmed. Appellant, through its attorney, refused to permit this or any other further inspection of its records. The District Enforcement Director on March 26 issued a subpoena commanding the president of appellant to appear at the O.P.S. office and bring with him the documents relating to all sales of new automobiles and services performed thereon from December 19, 1950 to March 25, 1952. The subpoena was not obeyed. Appellee thereupon moved the district court for enforcement. After a hearing upon affidavits and oral argument the court entered an order requiring production of the desired records on appellant's premises for inspection, copying or photographing thereof. The corporation has appealed from this order.

The issues presented by appellant's many specifications of error may be broadly summarized as follows: (1) Did the O.P.S. officials comply with the requirements of statute and regulations in issuing the subpoena? (2) Was the order of the court too broad in scope or too indefinite in its demands? (3) Did the court err in authorizing inspection of documents on appellant's premises, when appellee had moved for enforcement of a subpoena demanding off-premises production of the documents? (4) Did the court have power to order production of records for copying or photographing thereof? (5) Has there been such harassment of appellant, or such an excess of administrative improprieties in the conduct of the investigation and issuance of the subpoena, as would warrant a denial of enforcement of the subpoena?

Compliance By O.P.S. With Statute And Regulations

Appellant first contends that the administrative subpoena was void for failure of the O.P.S. to first serve upon appellant an "inspection authorization." We think not. A subpoena and an inspection authorization are two wholly separate and independent means of obtaining information. One need not be availed of before resorting to the other. The President, (or his appointees) is given express authority to issue subpoenas, enforceable by the district courts, by § 705(a) of the Defense Production Act of 1950, as amended, 50 U.S.C.A.Appendix, § 2155(a). Under that section a subpoena may require a person "to appear and give testimony or to appear and produce documents, or both".

The instrument known as an inspection authorization is a creature of regulations issued to implement so much of § 2155(a) as empowers the President "by regulation" to "make such inspection of the books, records, and other writings, premises or property of * * * any person as may be necessary or appropriate, in his discretion, to the enforcement or the administration of this Act and the regulations or orders issued thereunder." Under Delegation of Authority 4, Supplement 1, 16 F.R. 3595 and Enforcement Procedure Regulation 1, 16 F.R. 2496, the District Enforcement Directors were authorized to sign and issue inspection authorizations requiring any person to permit O.P.S. representatives to inspect documents in the possession of said person at the place where they are usually kept, and to inspect the premises or property of said person. The power of the courts to enforce an inspection authorization stems from § 706(b) of the Defense Production Act of 1950, as amended, 50 U.S.C.A.Appendix, § 2156(b) which confers on the district courts jurisdiction to "enforce any liability or duty created by, or to enjoin any violation of, this Act or any rule, regulation, order, or subpoena thereunder." Cf. G. H. Love, Inc., v. Fleming, 9 Cir., 161 F.2d 726, certiorari denied 332 U.S. 790, 68 S.Ct. 98, 92 L.Ed. 372; Porter v. Gantner & Mattern Co., 9 Cir., 156 F.2d 886; Dossett v. Porter, 6 Cir., 161 F.2d 839, certiorari denied 332 U.S. 771, 68 S.Ct. 85, 92 L.Ed. 356.

The subpoena and the inspection authorization have only one element in common: they both are means of gaining access to documents. The subpoena may require the documents to be produced at any place, and may also compel the giving of testimony. The inspection authorization, which bears some resemblance to an ordinary search warrant, can only make documents available to investigators at the place where they are usually kept, but may also authorize inspection of premises and property. In considering a comparable investigative scheme, we have said that a subpoena and an "inspection requirement," to which the inspection authorization here under consideration is similar, were "alternative methods of seeking an order to inspect documents." Porter v. Gantner & Mattern Co., supra, 156 F.2d at page 890.

Appellant next contends that the subpoena was void because the O.P.S. failed to define the scope and purpose of the investigation before the subpoena was issued. Under 50 U.S.C.A.Appendix, § 2155(a) the President is required to insure that the powers of investigation granted by that section shall be exercised "only after the scope and purpose of the investigation, inspection, or inquiry to be made have been defined by competent authority". Enforcement Procedure Regulation 2, § 2, 16 F.R. 2496, and Delegation of Authority 4, Supplement 1, supra, required that the District Enforcement Directors define the scope and purpose of the inquiry before issuing subpoenas.

The record reveals that on March 10, 1951, a day before the investigation was commenced and 16 days before the subpoena was issued, John Binns, the District Enforcement Director, filled out O.P.S. Form No. 228, entitled "Investigation, Inspection or Inquiry, Purpose and Scope," which stated in substance that the purpose of the inquiry was to determine whether appellant was complying with "Para 3 of SR 5 of GCPR and CPR 83," and that the inquiry would include the examining and copying of documents required to be kept by the Act or regulations, the interviewing of persons believed to have pertinent information, the inspection of the premises and property of such persons, and such further investigation as the Director might deem necessary and appropriate.

It is urged that the Director's statement was so sweeping as to be no definition at all, since the expressed purpose was to determine all conceivable questions of violation of ceiling price regulations, and the stated scope comprehended investigation of any and all transactions of appellant relating to new automobiles. The breadth of the Director's definition of scope and purpose is substantially as appellant asserts. Section 3 of SR 5 (General Ceiling Price Regulation, Supplemental Regulation 5, 16 F.R. 1769) laid down a rather complex formula for determining the retail ceiling prices of new automobiles. It provided that the ceiling price should consist of the "manufacturers' suggested list price" plus several charges to cover specified services, special equipment and items of cost. CPR 83 (Ceiling Price Regulation 83, 16 F.R. 10594) superseded SR 5 on October 15, 1951, and was similar to SR 5 in its ceiling price provisions, except that a defined "basic price" was substituted for the manufacturers' suggested list price. The two regulations exhausted the field of ceiling price regulations for retail sales of new automobiles during the effective periods of each.

We are of the opinion, however, that the Director's statement of scope and purpose was a sufficient compliance with the Act. The powers of investigation of the O.P.S. under 50 U.S.C.A.Appendix, § 2155 (a) are sufficiently broad to authorize an investigation of the scope outlined by the Director. A wide range in investigation is necessary where, as here, the ceiling price regulations are exceedingly complex and the possibilities of violation or evasion so unlimited that the precise manner of violation cannot ordinarily be known or even suspected in advance. In such a case, there is no impossible requirement of meticulous pinpointing of narrow objectives and subjects of investigation.

It is further contended that the subpoena was void for failure of the O.P.S. to serve the definition of scope and purpose upon appellant prior to issuance of the subpoena. The answer to this is simply that the Act and regulations do not require such a service. But, says appellant, the only conceivable purpose of the requirement is to inform the person whose documents are to be investigated as to what is desired by the Director. Appellant is mistaken. If this is the purpose, then the requirement is unnecessary and duplicitous, for it is the subpoena itself that tells what documents are required. Doubtless the purpose of the requirement was to induce restraint in the exercise of the agency's very extensive investigative powers and prevent dissipation of time and effort in aimless investigations by compelling a responsible official to make articulate the objective and extent of each projected inquiry. Intra-agency procedures designed for such purposes have been previously considered by this court. See National Labor Relations Board v. J. I. Case Co., 9 Cir., 201 F.2d 597.

Was The Order Too Vague Or Too Broad?

We turn now to the questions whether the order of the court meets the tests of specificity and relevancy.¹ An order to produce documents may constitute a constructive "unreasonable search and...