533 F.2d 455 (9th Cir. 1976), 74-2059, Midwest Growers Co-op. Corp. v. Kirkemo

Docket Nº:74-2059, 74-2885 and 74-2926.
Citation:533 F.2d 455
Party Name:MIDWEST GROWERS COOPERATIVE CORPORATION, Plaintiff-Appellant, v. John H. KIRKEMO et al., Defendants-Appellees. MIDWEST GROWERS COOPERATIVE CORPORATION, Plaintiff-Appellee, v. John H. KIRKEMO et al., Defendants-Appellants. MIDWEST GROWERS COOPERATIVE CORPORATION, Plaintiff, Cross-Appellant, v. John H. KIRKEMO et al., Defendants, Cross-Appellees.
Case Date:March 26, 1976
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 455

533 F.2d 455 (9th Cir. 1976)

MIDWEST GROWERS COOPERATIVE CORPORATION, Plaintiff-Appellant,

v.

John H. KIRKEMO et al., Defendants-Appellees.

MIDWEST GROWERS COOPERATIVE CORPORATION, Plaintiff-Appellee,

v.

John H. KIRKEMO et al., Defendants-Appellants.

MIDWEST GROWERS COOPERATIVE CORPORATION, Plaintiff, Cross-Appellant,

v.

John H. KIRKEMO et al., Defendants, Cross-Appellees.

Nos. 74-2059, 74-2885 and 74-2926.

United States Court of Appeals, Ninth Circuit

March 26, 1976

        Rehearing and Rehearing En Banc Denied May 19, 1976.

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[Copyrighted Material Omitted]

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        William S. Scully (argued), of Hill, Farrer & Burrill, Los Angeles, Cal., for appellant, cross-appellant.

        Dzintra Janavs, Asst. U. S. Atty. (argued), Los Angeles, Cal., for appellee, cross-appellee.

        OPINION

        Before GOODWIN and SNEED, Circuit Judges, and JAMESON, [*] District Judge.

        JAMESON, District Judge:

        Midwest Growers Cooperative Corporation brought this action seeking damages and injunctive relief against the Interstate Commerce Commission, the United States of America, various individuals as agents and employees of the Commission, and the United States Attorney and two Assistant Attorneys for the Central District of California, employees of the Department of Justice. The district court by summary judgment dismissed the causes of action for damages against all defendants and the action

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in its entirety against the Interstate Commerce Commission. The court also entered a permanent injunction against the use of materials seized pursuant to an administrative inspection search warrant, which the court found illegal, and ordered the return of the materials to Midwest. The court inserted in the injunction by interlineation the words "without prejudice to the Government's pursuit of any lawful proceedings". Midwest has appealed from the judgment of dismissal. The defendants have appealed from the order granting the permanent injunction, and Midwest has cross-appealed from that portion of the injunction inserted by interlineation.

Factual Background

        Midwest is an agricultural cooperative association and operates trucks which make interstate shipments. Pursuant to 49 U.S.C. § 303(b)(5), it is exempt from regulation by the Interstate Commerce Commission. This section, as amended in 1968, restricts the availability of the agricultural cooperative exemption and requires those associations which haul goods for non-members within the scope of the exemption to file notice with the Commission. 1 The 1968 amendment also added § 320(g), 2 which gives the Commission authority to inspect the books and records of those cooperative associations required to file notice under § 303(b)(5).

        In compliance with § 303(b)(5) Midwest in 1969 filed a notice with the Commission of its intent to perform exempt interstate transportation for non-members. The Commission received reports that Midwest was exceeding the terms of its exemption and thus subject to penalty under 49 U.S.C. § 322(a). 3 An investigation resulted in a civil action against Midwest for injunction and forfeiture. This suit was settled in 1972, Midwest and its president agreeing to pay $20,000 and $10,000 respectively to the Government, without admitting liability for the alleged violations. 4

        The Commission continued to receive reports of allegedly improper shipments by Midwest. A new investigation was initiated by the defendant Kirkemo, a transportation specialist for the I.C.C. On February

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21, 1973 Kirkemo visited Midwest's office and requested to inspect its books and records pursuant to § 320(g). Kirkemo's request was refused by Midwest's secretary, who referred Kirkemo to the association's attorneys. Kirkemo met with the attorneys the same day and again on March 1, when he was told that Midwest would not permit inspection of its records on the basis of the decision of the United States District Court in Interstate Commerce Commission v. Big Valley Growers Co-op., (Civil No. 72-2163), which held that the I.C.C.'s statutory right of inspection could not be enforced through injunction proceedings. 5 Kirkemo and defendant Nance, officer-in-charge of the local I.C.C. field office, made a second attempt to inspect Midwest's records on May 23, 1973. After again being refused access to the records, Kirkemo notified Midwest by letter that its action would "be deemed a knowing and wilful violation of (49 U.S.C. § 320(g)) on each normal work day of the year that such refusal continues." 6

        When Midwest gave no indication that it would acquiesce in the Commission's demand for inspection of records, the Government considered other options to enforce compliance with § 320(g). Defendant Griswold, I.C.C. Regional Counsel, 7 referred the matter to the Department of Justice for possible criminal prosecution. The case was assigned to defendant Bird, Assistant United States Attorney, who consulted with Griswold, Kirkemo, and United States Attorney Keller regarding the possibility of using an inspection warrant. In October, 1973 it was decided to apply for a warrant. Kirkemo made a final demand for access to Midwest's records, which was refused. Soon thereafter Bird prepared an affidavit for an "inspection warrant for an administrative search", which Kirkemo signed, a memorandum of legal points and authorities supporting the issuance of a warrant, 8 and the form for the warrant listing in detail the materials which were to be inspected. 9 On October 19, 1973 these materials

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were presented to a United States magistrate in an ex parte proceeding. 10

        The warrant was signed by the magistrate and executed on the same morning. Kirkemo, accompanied by defendants Mann and Herrick and a deputy United States marshal, presented the warrant to Midwest's secretary. Kirkemo again was referred to the association's attorneys. Kirkemo advised the attorneys in a telephone conversation that the inspection of the records would proceed without further delay. 11 The agents then handed Midwest's employees documents advising them that any effort to impede the search could result in imprisonment, and began accumulating the necessary records to accomplish the inspection. The inspection proceeded until the close of Midwest's business day. The agents returned the next day and throughout the following week, accompanied by defendant Rodders, another I.C.C. agent, and inspected the records and books of the cooperative, making copies and taking notes. The search was concluded on October 26, 1973, when the agents departed after returning the originals of documents they had inspected but retaining the copies for the Commission's further use.

Proceedings in District Court

        Midwest's complaint seeking injunctive relief and damages was filed on November 21, 1973. On March 25, 1974 the court granted Midwest's application for a preliminary injunction and defendants' motion for summary judgment. The motion was based on the pleadings, including affidavits of Midwest's secretary and attorneys attached to the complaint as exhibits, affidavits of two bookkeepers employed by Midwest, and affidavits of each of the individual defendants.

        In granting defendants' motion for summary judgment and dismissing all causes of action against the Interstate Commerce Commission and all causes of action for damages against the remaining defendants, the court entered findings of fact and conclusions of law. The court found, inter alia, that:

"Defendants Keller, Nobles, Bird and Griswold were at all times acting within the course and scope of their duties as attorneys for the United States and/or Interstate Commerce Commission and did not participate in any inspection . . .

"Defendants Kirkemo, Mann, Herrick, Nance and Rodders . . . acted within the course and scope of their duties and employment in good faith and reasonably believing their actions to be legally valid and proper."

        The court concluded as a matter of law that (1) the Interstate Commerce Commission "is not a suable entity"; (2) the United States had not consented to be sued for damages; and (3) the doctrine of official immunity precluded a suit for damages against the individual defendants.

        On June 3, 1974 the court granted Midwest's application for a permanent injunction, concluding that the defendants had "unlawfully entered plaintiff's premises and seized and otherwise copied personal property belonging to plaintiff, including its books and records, in violation of plaintiff's Fourth Amendment right guaranteed by the United States Constitution". The court, however, modified Midwest's proposed order by interlineation to provide that the injunction was "without prejudice to the Government's pursuit of any lawful proceedings". The trial judge explained that this change in wording was required to leave "open to the government . . . an opportunity to proceed by way of injunction rather than by way of a search warrant . . . " to obtain Midwest's business records. 12

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Issues on Appeal

        This consolidated appeal presents the following issues:

        (1) whether the administrative inspection search warrant was valid;

        (2) if not, whether the court properly held as a matter of law that the individual defendants were immune from liability for damages;

        (3) whether the court properly dismissed the claims against the United States and the Interstate Commerce Commission; and

        (4) whether Midwest was entitled to injunctive relief, and if so, whether the relief granted was proper.

Validity of the Warrant of Inspection

        It is a common practice in investigations by administrative agencies to use subpoenas duces tecum issued pursuant to specific statutory authority. The validity of such subpoenas is well established and agencies in utilizing...

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