Checkn Go of Florida, Inc. v. State, 5D00-3055.

• Decision Date: 11 May 2001
• Docket Number: No. 5D00-3055.,5D00-3055.
• Citation: 790 So.2d 454
• Parties: CHECK `N GO OF FLORIDA, INC., Appellant, v. STATE of Florida, etc., Appellee.
• Court: Florida District Court of Appeals

790 So.2d 454

CHECK `N GO OF FLORIDA, INC., Appellant, v. STATE of Florida, etc., Appellee.

No. 5D00-3055.

District Court of Appeal of Florida, Fifth District.

May 11, 2001.

Rehearing Denied July 20, 2001.

Jerome W. Hoffman, Susan L. Kelsey and Merideth Nagel of Holland & Knight LLP, Tallahassee, for Appellant.

Robert A. Butterworth, Attorney General, Roger B. Handberg, Cecilia Bradley and Lisa M. Raleigh, Tallahassee, and Jacqueline H. Dowd, Orlando, Assistant Attorney Generals, for Appellee.

MONACO, D., Associate Judge.

This case presents questions concerning the scope of the investigatory powers of the Attorney General.

The State of Florida, Office of the Attorney General issued an investigatory subpoena duces tecum to the appellant, Check `n Go of Florida, Inc., pursuant to section 895.06(2), Florida Statutes (2000), seeking documents concerning certain "consecutive" or "rollover" transactions between Check `n Go and its customers. When Check `n Go declined to comply, the Attorney General moved to compel compliance in circuit court. The circuit court rendered a final order granting in part and denying in part the Attorney General's motion, and Check `n Go appealed.

Check `n Go is a Florida corporation, registered under chapter 560, Florida Statutes (2000), as a check-cashing company. Typically, a customer would write a personal check which Check `n Go would hold for an agreed upon time (normally until the customer's next payday), before cashing. In return, Check `n Go would provide cash equal to the face amount of the check, less a fee. "Payday loans" of this sort are governed by chapter 560.

Prior to May 5, 1998, it was common for payday lenders to allow customers to renew or "rollover" their transactions for an additional fee, without presenting any new payment instrument, and without receiving any new cash. On May 5, 1998, the Office of the Comptroller, Division of Banking and Finance, issued a letter to all "check cashers" in Florida regarding its position on certain practices of the check cashing industry, specifically addressing rollovers. The letter concluded that the additional fees paid by the customer for a rollover transaction might constitute interest, and transactions in this form would be considered to be an extension of credit subject to the usury laws of the state. Check `n Go asserts that upon receiving the letter, it immediately changed its policy in Florida to prohibit rollovers. Subsequent to May 5, 1998, Check `n Go alleges that it has since required the termination of one transaction by payoff prior to the initiation of a new transaction for new cash and fees. Check `n Go describes this procedure as a "consecutive transaction."

Perhaps in response to this Court's opinion in FastFunding The Co. v. Betts, 758 So.2d 1143 (Fla. 5th DCA 2000), the Comptroller asked the Attorney General for an advisory opinion regarding the application of the state's usury laws to payday loans. The Attorney General opined on May 1, 2000, that payday loans are subject to the laws prohibiting usurious rates of interest, and that:

A company registered under Chapter 560, Florida Statutes, may cash personal checks for the fees prescribed in that chapter without violating the usury laws only if such transactions are concluded and are not extended, renewed or continued in any manner with the imposition of additional fees.

Op. Atty. Gen.2000-26.

A few weeks after issuing its opinion, the Office of the Attorney General served Check `n Go with a subpoena duces tecum pursuant to its powers under the Florida RICO Act.<sup>1</sup> The subpoena required production of "each and every written, recorded, or graphic matter of any kind, type, nature, or description that is or has been in the possession, custody, or control of Check `n Go, or of which Check `n Go has knowledge" relating to twenty-two separate categories. The subpoena purported to require production of documents from January 1, 1994, to the present, even though Check `n Go did not come into existence until 1996, and potentially included documents concerning transactions and activities outside of Florida. Check `n Go objected to the subpoena, and eventually the Office of the Attorney General filed its motion to compel in the circuit court to seek compliance. Check `n Go moved to quash the subpoena on constitutional grounds. The trial court, in granting in part and denying in part each party's motion, eliminated three categories of materials required of Check `n Go, and required production of the remainder. Check `n Go thereafter appealed.

A. The authority of the Attorney General to issue the subpoena.

The Attorney General's office issued the subpoena duces tecum in question pursuant to its investigatory authority under section 895.06, Florida Statutes (2000), which reads in part:

If, pursuant to the civil enforcement provisions of s. 895.05, an investigative agency [including the Attorney General] has reason to believe that a person or other enterprise has engaged in, or is engaging in, activity in violation of [the Florida RICO Act], the investigative agency may administer oaths or affirmations, subpoena witnesses or material, and collect evidence.

(Emphasis added).

Crimes chargeable under chapter 687, Florida Statutes (2000), relating to usurious practices are included among the RICO violations contemplated by the grant of investigative authority, and the subpoena of the Attorney General in this case was issued as part of an investigation into whether Check `n Go violated state usury laws. Check `n Go, however, asserts that the challenged subpoena is invalid because the Attorney General did not have "reason to believe" that Check `n Go had violated or was violating the law.

No case law in Florida defines the "reason to believe" standard in the context of section 895.06. There is, nevertheless, significant guidance to be found in the definition of this term in other contexts, and in cases discussing the purpose of investigatory subpoenas in general.

The purpose of the subpoena power under section 895.06 is to allow an investigative agency to investigate, collect evidence and determine if a RICO violation has occurred. The level of proof required of the investigative agency must suggest something more than a fishing expedition, and something less than probable cause. Because the purpose of an administrative investigation is to discover and procure evidence, and not to prove a pending charge or complaint, its function is distinct from an adjudication, and, accordingly, more latitude is allowed in considering the foundation for the subpoena. See Ezell v. Smith, 446 So.2d 253, 255 (Fla. 5th DCA 1984); see also Genuine Parts Co. v. Fed. Trade Comm'n, 445 F.2d 1382, 1388 (5th Cir.1971); Fla. Dep't of Ins. & Treasurer v. Bankers Ins. Co., 694 So.2d 70, 72 (Fla. 1st DCA 1997). An investigation, in short, does not determine guilt or innocence. Ezell, 446 So.2d at 255; see also Dep't of Legal Affairs v. Jackson, 576 So.2d 864, 865 (Fla. 3d DCA 1991).

The term "reason to believe" has also been used to describe the level of information required of a law enforcement officer who wishes to frisk a detained citizen. In a Terry² stop, a law enforcement officer must have reason to believe that a detainee is armed before the officer is permitted to frisk that person. The Terry court held that:

[T]here must be a narrowly drawn authority to permit a reasonable search for weapons for the protection of the police officer, where he has reason to believe that he is dealing with an armed and dangerous individual, regardless of whether he has probable cause to arrest the individual for a crime. The officer need not be absolutely certain that the individual is armed; the issue is whether a reasonably prudent man in the circumstances would be warranted in the belief that his safety or that of others is in danger. And in determining whether the officer acted reasonably in such circumstances, due weight must be given, not to his inchoate and unparticularized suspicion or `hunch,' but to specific reasonable inferences which he is entitled to draw from the facts in light of his experience.

Terry, 392 U.S. at 27, 88 S.Ct. 1868 (citations omitted) (emphasis added); see also Lester v. State, 754 So.2d 746 (Fla. 1st DCA 2000); State v. Burns, 698 So.2d 1282, 1284 (Fla. 5th DCA 1997).

The Terry court fashioned an objective or reasonably prudent person standard for the term "reason to believe," which appears to translate well in the context we are now considering. We conclude, therefore, that the test to be applied in determining whether the Attorney General is authorized to issue an investigatory subpoena under section 895.06(2), is whether under the circumstances a reasonably prudent person would be warranted in the belief that a person or other enterprise who is the subject of the subpoena has engaged in, or is engaging in, activity in violation of the Florida RICO Act.

At the time that the subpoena was issued, the Attorney General knew or had available at least the following information:

1. Check `n Go admitted that it had routinely engaged in rollovers prior to the May 1998 letter, and that it had engaged in additional rollovers until at least August of 1998, three months after the issuance of the Comptroller's letter.

2. Check `n Go said that after May 1998, it began using consecutive transactions, which it felt were permitted by the usury statutes.

3. A previous Check `n Go customer alleged in an affidavit that he engaged in rollover transactions with Check `n Go.

4. An investigative log from the Pinellas County Department of Consumer Protection detailed the filing and resolution of a complaint by a former Check `n Go customer showing possible rollover transactions as late as April of 1999.

5. A survey taken in the summer of 1999, indicating that Check `n Go allowed rollovers in its St. Petersburg office at that time.

The materials available to the Attorney General reflect...