Fleming v. Lowell Sun Co., 976.

• Decision Date: 22 November 1940
• Docket Number: No. 976.,976.
• Citation: 36 F. Supp. 320
• Parties: FLEMING, Administrator of Wage and Hour Division, v. LOWELL SUN CO.
• Court: U.S. District Court — District of Massachusetts

36 F. Supp. 320

FLEMING, Administrator of Wage and Hour Division, v. LOWELL SUN CO.

No. 976.

District Court, D. Massachusetts.

November 22, 1940.

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Gerard D. Reilly, Solicitor of Labor, and Irving J. Levy, Asst. Solicitor, both of Washington, D. C., and John J. Cooney, Regional Atty., and Vernon C. Stoneman, Senior Atty., both of Boston, Mass., Wage and Hour Division U. S. Dept. of Labor, for plaintiff.

Elisha Hanson, of Washington, D. C., William R. Cook and Johnson, Clapp, Ives & Knight, all of Boston, Mass., and Frank Goldman, of Lowell, Mass., for defendant.

FORD, District Judge.

An application has been filed by Philip B. Fleming, Administrator of the Wage and Hour Division, United States Department of Labor, against the Lowell Sun Company, the respondent, praying that an order be issued directing the respondent to show cause why it should not be required to appear before the petitioner, or his authorized representative, and produce the books, records, documents, and papers, and give evidence as required by a subpoena duces tecum issued by Charles R. Hersum, Acting Regional Director of the Wage and Hour Division, under authority conferred on him by the Administrator, and duly served upon the respondent in connection with an investigation of the respondent, pursuant to Sections 9 and 11(a) of the Fair Labor Standards Act of 1938 (hereinafter called the Act) 29 U.S.C.A. § 201 et seq., of complaints of violation by the respondent of Sections 6, 7(a), 11(c), 15 (a) (1), 15(a) (2), and 15(a) (5) of the Act.

The investigation was instituted by the Administrator for the purpose of obtaining access to the wage and hour and shipping records of the respondent and he seeks to examine these records as a necessary incident to an investigation of the respondent now being conducted by his representatives. The subpoena directing the respondent to produce said records for inspection was issued by the Administrator's representative and the respondent refused to comply with the terms of the subpoena and it was for this reason that the Administrator commenced this summary proceeding.

The subpoena required the production at a time and place named therein, of books, records, shipping receipts, cancelled pay checks, and other documents showing the wages paid to and hours worked by employees of the respondent company for a certain definite period (except in a particular case which will be dealt with later).

The petitioner averred in his complaint that he had reasonable grounds to believe that the respondent company had violated and was violating the provisions of Sections 6, 7, 11(c) of the Act and certain regulations pursuant thereto.

The respondent filed an answer to the application of the Administrator setting out the grounds upon which it relies in asking this court to vacate the order to show cause and dismiss these proceedings.

The respondent at the outset raises three questions, (1) whether this court has jurisdiction in the premises; (2) whether the Administrator had jurisdiction to pursue this action; and (3) whether the subpoena was a nullity in that it was not issued by a person authorized by the statute to issue a subpoena.

Section 9 of the Act, for the purpose of any hearing or investigation provided for in the Act, makes applicable the provisions of Sections 9 and 10 (relating to the attendance of witnesses and the production of books, papers, and documents) of the Federal Trade Commission Act of September 16, 1914, as amended, U.S.C.A. Title 15, Sections 49, 50, to the jurisdiction, powers, and duties of the Administrator.

Section 9 of the Federal Trade Commission Act provides: "Any of the district Courts of the United States within the jurisdiction of which such inquiry is carried on may, in case of * * * refusal to obey a subpoena * * * issue an order requiring such corporation or other person to appear before the commission, or to produce documentary evidence * * *, or to give evidence touching the matter in question."

It is plain from the language of these provisions that this court has jurisdiction of the present proceeding and that the Administrator has jurisdiction to pursue it.

The respondent argues that the investigation herein was not based upon any complaint or charge of violation of law on its part and to be compelled to respond to the subpoena would violate its rights under the Fourth Amendment. This point was raised in the case of Fleming v. Montgomery Ward & Co., Inc., 7 Cir., 114 F.2d 384, certiorari denied October 28, 1940, 61 S.Ct. 71, 85 L.Ed. ___, and was found to be without merit. The court in that case stated, 114 F.2d at page 387: "It is apparent from this cursory analysis of pertinent provisions of the Act that Congress has conferred upon the Administrator * * * broad powers of regulation and supervision which are accompanied, for the purpose of giving effect thereto, by investigatory duties and powers which are designed especially to enable the Administrator to have available at all times detailed information respecting the conditions and practices of employment, including information respecting wages and hours of labor. * * * The Administrator is authorized to inspect in order `to determine whether any person has violated the Act,' not merely to corroborate a previously formed belief of violation; and he is authorized to make inspections `which may aid in the enforcement' of the Act."

And further, the court stated, 114 F.2d at page 390: "When Congress, acting in the public interest, has the power to regulate and supervise the conduct of any particular business under the commerce clause, an administrative agency may be authorized to inspect books and records and to require disclosure of information regardless of whether the business is a public utility and regardless of whether there is any pre-existing probable cause for believing that there has been a violation of the law. Neither of the foregoing elements enters into the question of the reasonableness of the investigation".

The court further said (114 F.2d at page 391), in discussing the decision in Federal Trade Commission v. American Tobacco Co., 264 U.S. 298, 44 S.Ct. 336, 68 L.Ed. 696, 32 A.L.R. 786: "The decision is limited to the proposition that the United States Government may demand only records and papers which are relevant to a lawful inquiry, or stated negatively, the Government may not demand unlimited access to all the corporation records, whether relevant or irrelevant to the subject of inquiry or investigation."

The relevancy of the records called for by the subpoena is clearly apparent in that the records asked for contained information as to the wages paid to employees and the hours worked by them; they are sufficiently and clearly described (Essgee Company of China v. United States, 262 U.S. 151, 43 S.Ct. 514, 67 L.Ed. 917) and the scope of the subpoena is sufficiently limited in time, except as to those records called for in paragraphs 5 and 6 of the subpoena. The respondent should be compelled to produce only those called for by these paragraphs of the subpoena for a period of time beginning October 24, 1938, and ending on or about July 13, 1940. That is reasonable. Fleming v. Montgomery Ward & Co., Inc., supra.

It is also urged by the respondent that under Section 4(b) of the Act, 29 U.S.C.A. § 204 (b), the Attorney General of the United States should have joined in or be in control of the present proceeding. This section provides in part that: "Attorneys appointed under this section may appear for and represent the Administrator in any litigation, but all such litigation shall be subject to the direction and control of the Attorney General." It does not appear that the language of this section compels a proceeding of this type to be conducted personally by the Attorney General. The Administrator attached to his petition herein a letter of the Attorney General to the then Administrator of the Wage and Hour Division, dated January 18, 1939, which disclosed an arrangement by which the Wage and Hour Division of the Department of Labor, and the Department of Justice, were to proceed to the enforcement of the Act. The Attorney General designated the legal staff of the Wage and Hour Division to handle legal work, including litigation in the courts of a civil character.

The legislative history of this section supports the conclusion that the Congress did not intend that these proceedings should be conducted personally by the Attorney General. The bill (S. 2475) providing for this legislation, as originally passed by the Senate, had no provisions comparable to Section 4 (b), but the Committee which reported this bill to the House (Rept. 1452, 75th Congress, 1st Session) added a provision that all litigation "shall be" conducted by the Attorney General. This language was thereafter changed, as is evidenced by the present language of Section 4 (b), and from this it is apparent that the Attorney General had his choice whether or not personally to conduct proceedings under the Act. The Attorney General in the arrangement described in the letter of January 18, 1939, did expressly point out that in the Circuit Court of Appeals and in a state court of last resort he "will take such part in the conduct of such cases as he deems to be in the interest of the United States." The arrangement further pointed out that United States Attorneys would presecute criminal cases with assistance from the Wage and Hour Division staff. The Attorney General retained control over any civil litigation carried to the Supreme Court of the United States.

There does not seem to be any merit in this point raised by the respondent. Cf. Securities & Exchange Commission v. Robert Collier & Co., Inc., et al., 2 Cir., 76 F.2d 939.

The respondent further argues that the fourth paragraph of Section 9 of the Federal Trade Commission Act limits the authority of the Administrator to...