Donovan v. National Bank of Alaska

• Decision Date: 10 January 1983
• Docket Number: No. 81-3562,81-3562
• Citation: 696 F.2d 678
• Parties: 3 Employee Benefits Ca 2513 Raymond J. DONOVAN, Secretary of the United States Department of Labor, Plaintiff-Appellant, v. NATIONAL BANK OF ALASKA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 678

696 F.2d 678

3 Employee Benefits Ca 2513

Raymond J. DONOVAN, Secretary of the United States

Department of Labor, Plaintiff-Appellant, v. NATIONAL BANK OF ALASKA, Defendant-Appellee.

No. 81-3562.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 9, 1982.

Decided Jan. 10, 1983.

Sherwin Kaplan, Washington, D.C., for plaintiff-appellant.

Eugene J. Metzger, Washington, D.C., for defendant-appellee; Charles Dunnagan, Jermain, Dunnagan & Owens, Anchorage, Alaska, Merzger, Shadyac & Schwarz, Washington, D.C., on brief.

Appeal from the United States District Court for the District of Alaska.

Before HUG, SKOPIL, and FLETCHER, Circuit Judges.

FLETCHER, Circuit Judge:

The sole issue raised in this case is whether the Secretary of the United States Department of Labor is entitled to enforcement of a subpoena requesting information pertaining to the bank's ERISA accounts. The district court quashed the subpoena and dismissed the action. We note jurisdiction under 28 U.S.C. Sec. 1291 (1976) and reverse.

I FACTS

The United States Department of Labor is conducting an investigation of the National Bank of Alaska to determine whether any individual is violating or has violated any provision of Title I of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Sec. 1001 et seq. (1976). In the course of its investigation, an administrative subpoena duces tecum was served on the bank.

The subpoena has two parts. The first part requires the bank to produce general information, e.g., the names of all employee benefit plans whose assets are held by the bank along with the name and address of the plan sponsor and the total amount of plan assets held. The subpoena then goes on to state that upon receipt of the above information, the Department of Labor will select 25 plans for more thorough examination. With respect to these 25 plans, the subpoena requires the following:

[A]ll documents maintained by the bank relating to transactions or dealings with, for or on behalf of the employee benefit plans selected, including but not limited to: any correspondence; memorandum After the bank refused to comply with the subpoena, this action was filed.

notes; agreements; drafts of agreements; contracts; draft minutes or records of telephone conversations; meetings or conferences; books; diaries; logs; calendar notations; financial statements; balance sheets; computer printouts; ledgers and journals and supporting documents; bank statements, cancelled checks, check stubs; deposit slips, remittance records of all checks deposited or cashed and amounts withdrawn through other banks and agencies; loan, real estate, and credit files; bills; books of account; [etc.]

The trial court entered an order dismissing the Secretary's petition for enforcement of the subpoena and granting the bank's motion to quash. The only reason stated in the trial court's decision was that "the Secretary of Labor has not authorized the investigation as to which the subpoena dated January 23, 1981 was issued." The Secretary appeals from that order, seeking both reversal and an order directing the district court, on remand, to issue an order enforcing the subpoena in its entirety.

II ANALYSIS

A. Does the Secretary of Labor have authority to delegate his investigative powers?

In quashing the subpoena, the district court apparently relied solely on the ground that Secretary Donovan did not personally sign the subpoena or authorize the investigation. The Bank contends that this ruling should be sustained on appeal for any one of three reasons. We disagree.

The Bank's first argument on this issue rests primarily on two Supreme Court cases: Cudahy Packing Co. v. Holland, 315 U.S. 357, 62 S.Ct. 651, 86 L.Ed. 895 (1942) and United States v. Giordano, 416 U.S. 505, 94 S.Ct. 1820, 40 L.Ed.2d 341 (1974). Neither of these decisions, which stand for the proposition that courts will not assume authority on the part of the head of a federal agency to subdelegate in the face of clear legislative prohibitions against such delegations, provides a basis for quashing the subpoena in this case.

In Fleming v. Mohawk Wrecking & Lumber Co., 331 U.S. 111, 67 S.Ct. 1129, 91 L.Ed. 1375 (1947), the Supreme Court retreated from the broad language in Cudahy by confining that case to its facts, including the fact that the legislative history of the statute involved in Cudahy indicated that a specific provision granting authority to delegate had been removed in conference. The erosion of Cudahy, commenced in Fleming, was completed by the Reorganization Act of 1949, ch. 226, Sec. 2 et seq., 63 Stat. 203 (current version at 5 U.S.C. Sec. 901 et seq. (1976)), and the various reorganization plans prepared and promulgated thereunder. The Act explicitly authorizes the President to issue reorganization plans that provide for "the authorization of an officer to delegate any of his functions." 5 U.S.C. Sec. 903(a)(5). Pursuant to the Act, President Truman promulgated Reorganization Plan No. 6 of 1950, which in pertinent part states:

The Secretary of Labor may from time to time make such provisions as he shall deem appropriate authorizing the performance by any other officer, or by any agency or employee, of the Department of Labor of any function of the Secretary....

Reorg. Plan No. 6 of 1950, Sec. 2, 15 Fed.Reg. 3174 (1950), reprinted in 5 U.S.C.A. app. at 234 (1975), and in 64 Stat. 1263. Consequently, the Cudahy prohibition on subdelegation of authority is entirely inapplicable here, since the relevant legislative directive does not ban or remain silent on the question of subdelegation by the Secretary. Rather, it explicitly authorizes a subdelegation of authority by the Secretary of Labor. Cf. United States v. Marshall Durbin & Co., 363 F.2d 1 (5th Cir.1966); FTC v. Gibson, 460 F.2d 605 (5th Cir.1972) (per curiam).

The Supreme Court's 1974 opinion in United States v. Giordano, 416 U.S. 505, 94 S.Ct. 1820, 40 L.Ed.2d 341, did not resurrect the broad language used in Cudahy. As this court has recognized The Court in Giordano held that Title III did not permit the Attorney General to delegate to any subordinate, other than a specially designated Assistant Attorney General, the power to authorize application for intercept orders. This prohibition of a delegation proper in other instances was intended by Congress to centralize in "a publicly responsible official subject to the political process the formulation of law enforcement policy on the use of electronic surveillance techniques" ...

United States v. Turner, 528 F.2d 143, 151 (9th Cir.) (quoting S.Rep. No. 1097, 90th Cong., 2d Sess. 96-97 (1968)), cert. denied, 423 U.S. 996, 96 S.Ct. 426, 45 L.Ed.2d 371 (1975); see also Tabor v. Joint Board for Enrollment of Actuaries, 566 F.2d 705, 708 n. 5 (D.C.Cir.1977). Congress has evidenced no such intent with respect to the Secretary of Labor's subpoena powers. There are no restrictions placed on the Secretary's right to delegate investigative authority and, with regard to issuing subpoenas, ERISA Sec. 504, 29 U.S.C. Sec. 1134(c) (1976), expressly makes available to the Secretary "or any officers designated by him" those provisions of the Federal Trade Commission Act relating to the attendance of witnesses and the production of documents. The Secretary exercised that authority in two Department of Labor directives concerning enforcement of pension and welfare benefit programs.

Acceptance of the bank's argument would paralyze the Department's enforcement program with regard to ERISA and, perhaps, any other departmental enforcement efforts. Cf. SEC v. Arthur Young & Co., 584 F.2d 1018, 1026 (D.C.Cir.1978) (requirement of detailed subpoenas would frustrate SEC investigations), cert. denied, 439 U.S. 1071, 99 S.Ct. 841, 59 L.Ed.2d 37 (1979); Penfield Co. v. SEC, 143 F.2d 746, 750 (9th Cir.) (contention that authority to determine what matters are material to investigation cannot be delegated to regional administrator would require all proceedings to be conducted by SEC itself), cert. denied, 323 U.S. 768, 65 S.Ct. 121, 89 L.Ed. 614 (1944).

The Bank next argues that even if the Secretary has power to delegate authority to conduct investigations, he can properly delegate authority to investigate national banks only to appropriate federal banking officials. The second sentence of 29 U.S.C. Sec. 1134(c) provides that "the Secretary may delegate his investigative functions ... with respect to insured banks acting as fiduciaries of employee benefit plans to the appropriate federal banking agency." 29 U.S.C. Sec. 1134(c) (1976) (emphasis added). However, the immediately preceding sentence of Sec. 1134(c) provides that subpoena powers are "hereby made applicable ... to the jurisdiction, powers, and duties of the Secretary or any officers designated by him." 29 U.S.C. Sec. 1134(c) (emphasis added).

The legislative history of the statute makes clear that the Secretary's power to delegate investigative functions to federal banking officials under the second sentence of Sec. 1134(c) was legislated "in addition" to his power to delegate subpoena powers to Labor Department officials under the first sentence of Sec. 1134(c). See H.Rep. No. 93-1280, 93d Cong., 2d Sess. 329, reprinted in III Legislative History of the Employee Retirement Income Security Act of 1974, at 4596 (1976). The second sentence of Sec. 1134(c) was intended to expand the Secretary's power to delegate his investigative functions beyond his own subordinates in the Department of Labor to federal banking officials and not to confine the Secretary's delegational power to those outside officials.

Finally, the Bank appears to argue that any purported delegation of authority to initiate this investigation is invalid because the delegation of authority had been undertaken not by Secretary Donovan, but by former Secretary Marshall and former Secretary Marshall's subordinates. We disagree. As the Fourth...