USA. v. AM. Target Advertising

Decision Date04 December 2000
Docket NumberNo. 00-1384,00-1384
Citation257 F.3d 348
Parties(4th Cir. 2001) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. AMERICAN TARGET ADVERTISING,INCORPORATED; VIGUERIE AND ASSOCIATES, INCORPORATED; THE VIGUERIE COMPANY, Defendants-Appellants. Argued:
CourtU.S. Court of Appeals — Fourth Circuit

Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Gerald Bruce Lee, District Judge. [Copyrighted Material Omitted] COUNSEL ARGUED: Mark J. Fitzgibbons, Manassas, Virginia, for Appellants. Colette Gianna Matzzie, Appellate Staff, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: William J. Olson, John S. Miles, WILLIAM J. OLSON, P.C., McLean, Virginia, for Appellants. David W. Ogden, Acting Assistant Attorney General, Mark B. Stern, Appellate Staff, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.

Before WILKINS and KING, Circuit Judges, and William L. GARWOOD, Senior Circuit Judge of the United States Court of Appeals for the Fifth Circuit, sitting by designation.

Affirmed by published opinion. Judge King wrote the opinion, in which Judge Wilkins and Senior Judge Garwood joined.

OPINION

KING, Circuit Judge:

On January 9, 1998, under the authority of the Inspector General Act of 1978, the United States Postal Inspection Service issued subpoenas for certain records and documents in the possession of American Target Advertising, Inc., and Viguerie and Associates, Inc., direct-mail companies with a common base of operations in Manassas, Virginia. Shortly thereafter, on February 2, 1998, a third subpoena was served on yet another entity, The Viguerie Company, which is also engaged in the direct-mail business and operates from the same premises. The three companies (hereinafter referred to collectively as "American Target") are united by the common ownership of Richard A. Viguerie, self-described as "a well-known, politicallyconservative businessman and political spokesman." Br. of Appellants, at 5. On their face, the subpoenas were issued for the purpose of investigating "[a] possible fraud against the Postal Service."

After American Target declined to produce the requested materials, the Government petitioned the district court for summary enforcement of the subpoenas. Following a hearing, the court granted the Government's petition and directed American Target to comply with the subpoenas within thirty days of the August 16, 1999 Order memorializing its decision. American Target moved to alter or amend the ruling, but that motion was ultimately denied by the district court by its Order of February 14, 2000. American Target timely filed a notice of appeal from both dispositive Orders, and it moved the district court to stay those Orders pending appeal. The court below denied the stay motion on April 14, 2000, prompting American Target to seek similar relief before us. See Fed. R. App. P. 8(a)(2). On April 19, 2000, a panel of this Court denied a stay, and American Target complied with the subpoenas.1

Having now had the benefit of briefing and oral argument, we proceed to consider the merits of this appeal. The question before us is whether the district court, constrained by its limited scope of review in such matters, clearly erred in summarily enforcing the subpoenas without -at the very least -permitting American Target discovery into what it contends is a politically motivated abuse of the administrative process. We conclude that the court committed no clear error, inasmuch as (1) the reasons proffered by the Postal Inspection Service for issuing the subpoenas withstand the appropriately narrow level of judicial scrutiny; and (2) American Target has not made a sufficient showing of abuse to vindicate its non-compliance with the subpoenas, or even to justify discovery of the catalyst behind the investigation. Hence, as outlined below, we affirm the Orders on appeal.

I.

We have previously recognized that, in most cases,"a district court's role in enforcing administrative subpoenas is sharply limited." EEOC v. Lockheed Martin Corp., Aero & Naval Systems, 116 F.3d 110, 113 (4th Cir. 1997) (citation and internal quotation marks omitted). The court below, in granting the Government's petition for enforcement, need only have discerned that (1) the Postal Inspection Service was authorized to undertake such an investigation; (2) the applicable statutory requirements of due process had been met; and (3) the materials requested were relevant. See id. (citing, inter alia, Oklahoma Press Publ'g Co. v. Walling, 327 U.S. 186, 216-17 (1946)). American Target attacks the district court's ruling as it pertains to the first of these three requirements, that of authorization. The lower court's decision in this regard is reviewed for clear error. Id.

(citing Reich v. National Eng'g & Contracting Co., 13 F.3d 93, 98 (4th Cir. 1993)).

II.
A.

At the outset, American Target contests the Postal Inspection Service's authority to issue subpoenas at all, suggesting that the agency's subpoena power instead resides exclusively in the Inspector General. From 1988, at least until the office of Inspector General was established within the Postal Service in 1996, see 39 U.S.C. S 202(e), the Postal Inspection Service was "responsible for exercising the authority, and carrying out the duties, functions, and responsibilities assigned to the Office of the Inspector General by the Inspector General Act." 39 C.F.R. S 224.3(c). And, to be sure, the referenced Act empowers the various Inspectors General "to require by subpena the production of all information, documents, reports, answers, records, accounts, papers, and other data and documentary evidence necessary in the performance of the functions assigned . . .[.]" 5 U.S.C. app. 3 S 6(a)(4). Although it seems clear that, in the absence of an Inspector General, the subpoena authority reposed therein by statute was legitimately exercised by the Postal Inspection Service, American Target maintains that such authority was necessarily divested once Congress created the office.

Whatever the merits of this argument, we decline to address them, as American Target failed to preserve the point by presenting it to the district court for consideration in the first instance. See Karpel v. Inova Health Sys. Servs., 134 F.3d 1222, 1227 (4th Cir. 1998). Karpel states our settled rule that "issues raised for the first time on appeal generally will not be considered" except in the narrowest of circumstances, where, for example, plain error or a fundamental miscarriage of justice would otherwise result. Id. (citing, inter alia, Nat'l Wildlife Fed'n v. Hanson, 859 F.2d 313, 318 (4th Cir. 1988)). The present case is not the exceptional one contemplated by Karpel and Hanson.2

B.
1.

American Target nonetheless asserts that, even if the general subpoena authority of the Postal Inspection Service is assumed, no such authority existed in this specific instance. The Government, not surprisingly, maintains to the contrary. A proper examination of the matter initially requires that we set forth the pertinent facts.

The purpose of the subpoenas, according to the Government's petition, was "to obtain books and records of the target companies in order to determine whether they violated the `Cooperative Mailing' eligibility requirements for use of the Nonprofit Standard Rate." J.A. 11. Organizations and groups eligible for the Nonprofit Standard Rate are permitted to mail letters and other materials for about forty-three percent less than the rate paid by businesses operated for profit.

Problems can arise, however, when a nonprofit organization enters into "cooperative mailing agreements" with outside entities to conduct mailings at the reduced rate. See United States Postal Serv. v. Univ. Publ'g Co., 835 F. Supp. 489, 491 (S.D. Ind. 1993) (accepting as reasonable the Postal Service's definition of cooperative mailing as "a mailing in which one or more parties cooperate with an authorized nonprofit mailer to share the cost, risk, and benefits of the mailing"). The Postal Service takes the position that such arrangements involving commercial enterprises are illegal because they"permit the forprofit party to bear financial risk and exert excessive financial and administrative control for direct mailing programs undertaken by the non-profit party." J.A. 29 (Declaration of Postal Inspector Mark P. Hines).

The Domestic Mail Manual ("DMM"), a Postal Service publication incorporated into the agency's regulations, see 39 C.F.R. SS 111.1, 211.2(a)(2), provides that

Cooperative mailings may be made at the special bulk rates only when each of the cooperating organizations is individually authorized to mail at the special bulk rates at the post office where the mailing is deposited. Cooperative mailings involving the mailing of any matter on behalf of or produced for an organization not itself authorized to mail at the special bulk rates at the post office where the mailing is deposited must be paid at the applicable regular rates. . . .

DMM S 625.521. This "Cooperative Mail Rule" embodied within the postal regulations effectively "restricts Nonprofit Standard Mail mailings to the authorized organizations' own mail." United States Postal Service Publication 417, Nonprofit Standard Mail Eligibility (1996), at 19 [hereinafter Publication 417].3

The records and documents sought by the subpoenas presumably disclose the nature of American Target's business relationships with a trio of nonprofit groups: The 60/Plus Association; United Seniors Association, Inc.; and Taxpayers Education Lobby/Seniors. Each of these organizations purports to function as a political advocate on behalf of senior citizens, and all have retained American Target to assist them in soliciting funds through the mails from their putative constituency. If the current investigation were to reveal that...

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