Com. by Packel v. Shults

Decision Date17 August 1976
Citation26 Pa.Cmwlth. 129,362 A.2d 1129
PartiesCOMMONWEALTH of Pennsylvania Acting By Attorney General Israel PACKEL v. Edward C. SHULTS, President, Active TV Service of America, Inc., Appellant.
CourtPennsylvania Commonwealth Court

Argued April 5, 1976.

Gilbert B. Abramson, Jeffrey M. Freedman Eilberg, Corson, Getson & Abramson, Philadelphia, for appellant.

Robert B. Nicholas, John Kelly, Philadelphia, Joel Weisberg, Asst Atty. Gen., Dept. of Justice, Harrisburg, for appellee.

Before BOWMAN, President Judge, and CRUMLISH Jr., KRAMER, WILKINSON, MENCER, ROGERS and BLATT, JJ.

BOWMAN, President Judge.

This is an appeal from an order of the Philadelphia County Court of Common Pleas finding Edward C. Shults, President, Active TV Service of America, Inc. (appellant), in contempt of court for willful violation of the court's prior order directing him to comply with a subpoena issued and served by the Pennsylvania Bureau of Consumer Protection (Bureau) under authority of the Attorney General.

On September 6, 1974, the Bureau issued a subpoena pursuant to Section 919 of The Administrative Code of 1929 [1] (Code), directing appellant to appear at a private hearing and to bring documentary materials relating to certain enumerated aspects of his television repair business which had been under investigation by the Bureau for several months. After appellant refused to appear, the Commonwealth sought and obtained in the court below, an order, dated January 2, 1975 to compel compliance with the subpoena.

An appeal (No. 80 C.D.1975) and a petition for supersedeas to this Court followed. By Order of January 30, 1975, Judge Rogers granted a supersedeas of the order of the lower court with regard to oral testimony but denied the same with regard to the production of documentary materials. After appellant again refused to produce the subpoenaed materials, the Commonwealth initiated contempt proceedings which resulted in the order from which the present appeal was taken. [2]

Since the appellant admits refusal to obey the initial compliance order of the court below, the issue here becomes the validity of that order, or more precisely, the validity of the underlying subpoena. The scope of judicial inquiry in a subpoena enforcement action is whether 'the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant.' United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 369, 94 L.Ed. 401 (1950); See also Pennsylvania Crime Commission v. Nacrelli, 5 Pa.Cmwlth. 551, 577 (1972).

The thrust of appellant's attack on the subpoena is based on the first leg of the three-legged test developed in Morton Salt Co., supra, that the investigation is not within the authority of the Bureau. Appellant argues that the subpoena was issued for the purpose of preparing for litigation, specifically an injunctive action pursuant to Section 4 of the Unfair Trade Practices and Consumer Protection Law [3] (hereinafter UTPCPL), and that a subpoena issued for such purpose is not authorized by Section 919 of the Code. As evidence that the Bureau's investigation had shifted from an ostensibly authorized purpose to that of preparing for litigation, appellant cites a letter received from a Bureau attorney on July 2, 1974, prior to the issuance of the subpoena. The letter states:

'Pursuant to the policy of the Attorney General, this is to advise you that after an extensive investigation, this office intends to initiate action against the above captioned business (Active TV Service of America, Inc.) and its officers. This action will be taken under the Unfair Trade Practices and Consumer Protection Law. (73 P.S. § 201--1)

'If you wish to discuss this matter prior to filing of suit, either you or your attorney should contact me.' [4]

Appellant asserts that the Bureau, having decided to bring suit, is now attempting through the subpoena to engage in a 'fishing expedition' under the guise of its investigatory powers, thus, in effect, bootstrapping itself into the suit, as well as achieving pre-trial discovery without the limitations and mutuality provided by the Pennsylvania Rules of Civil Procedure. [5]

The Commonwealth responds first that litigation pursuant to Section 4 of the UTPCPL Is one of the Bureau's functions under the Code so that even if preparation for such litigation was the purpose of the subpoena, it would nevertheless be valid. However, the Commonwealth argues such was not the purpose, and the letter of July 2, 1974, was not meant to indicate that the investigation had terminated. Rather it was designed to advise appellant of the possibility of litigation and to elicit his cooperation in the Bureau's investigation and/or resolution of the matter. Further, the Commonwealth asserts that the Bureau can move beyond its investigatory phase only by the actual filing of suit and that any expression of intent by a staff attorney is, in any event, irrelevant to the validity of the subpoena.

The court below held that appellant's contention that injunctive proceedings might be initiated in the future was mere speculation in the absence of the actual filing of suit, and that such contention could not affect the validity of the subpoena. We affirm, but on somewhat different grounds requiring some elaboration because of the importance of the issues raised with respect to the Bureau's authority under the Code.

At the onset, we reject the Commonwealth's view that the bringing of actions to enjoin unlawful acts and practices under the UTPCPL is one of the Bureau's functions under the Code. Section 918 of the Code, 71 P.S. § 307--2, provides:

'The Bureau of Consumer Protection shall have the power and its duties shall be:

'(1) To investigate commercial and trade practices in the distribution, financing and furnishing of goods and services to or for the use of consumers in order to determine if such practices are detrimental to the public interest, and to conduct studies, investigations and research in matters affecting consumer interest, advise the executive and legislative branches on matters affecting consumer interest, assist in developing executive policies and develop, draft and propose legislative programs to protect the consumer.

'(2) To investigate fraud, misrepresentation and deception in the sale, servicing and financing of consumer goods and products. To promote consumer education and to publicize matters relating to consumer frauds, deception and misrepresentation.

'(3) To do such other acts as may be incidental to the exercise of its powers and functions.'

We note that the operative verbs in this delegation of authority are 'investigate', 'advise', 'propose', and 'promote'. There is no language indicating any authority in the Bureau to 'enforce', 'restrain', 'bring an action', etc., and certainly no reference to the UTPCPL per se.

Nonetheless, the Commonwealth offers three arguments for construing the Code provisions as implicitly authorizing the Bureau to bring such actions. First, the Commonwealth argues that the purpose in having the Bureau determine whether commercial and trade practices are 'detrimental to the public interest' (Section 918(1) of the Code) is none other than to facilitate litigation under Section 4 of the UTPCPL, which provides, in pertinent part:

'Whenever the Attorney General or a District Attorney has reason to believe that any person is using or is about to use any method, act or practice declared . . . to be unlawful, And that proceedings would be in the public interest, he may bring an action . . . to restrain by temporary or permanent injunction the use of such method, act or practice.' (Emphasis added.)

To suggest that these two references to the 'public interest' somehow contemplate or create a power In the Bureau to do what is clearly delegated to the Attorney General or a district attorney is to tortue the principles of statutory construction beyond rationality. We recognize that the Bureau, as part of the Department of Justice, may be delegated authority by the Attorney General and apparently has been delegated the authority to bring this type of action. However, that fact does not alter the Source from which such authority is derived, and, in this case, it is derived from Section 4 of the UTPCPL itself and not from the Code.

We are similarly unconvinced by the Commonwealth's argument that the power to bring injunctive actions under the UTPCPL is conferred on the Bureau in Section 918(3) of the Code as 'incidental to the exercise of its powers and functions'. This clause grants authority to do incidental Acts but does not expand the powers and functions beyond those granted in the first two clauses. We cannot believe that the legislature, having clearly delegated a specific power to the Attorney General and to district attorneys under the UTPCPL, then intended to confer the exact same power as 'incidental' to the Bureau's functions under the Code.

We also reject the Commonwealth's third argument that Section 919(b) of the Code contemplates the routine use of materials subpoenaed during a Bureau investigation in subsequent litigation brought under the UTPCPL. The Commonwealth relies on the following provision of that section:

'The Attorney General or any attorney designated by him may use such documentary material or copies thereof as he determines necessary in the enforcement of This act, including presentation before any court: . . ..' (Emphasis added.)

The words 'this act' clearly refer to the provisions of the Code (Sections 919--22, 71 P.S. §§ 307--3 to --6) relating to the establishment and functioning of the Bureau and most certainly do not refer to the UTPCPL. Further except for the above provision and...

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