Fleming v. Montgomery Ward & Co., 7213.
| Decision Date | 28 October 1940 |
| Docket Number | No. 7213.,7213. |
| Citation | 114 F.2d 384 |
| Parties | FLEMING, Adm'r of Wage and Hour Div., Dept. of Labor, v. MONTGOMERY WARD & CO., Inc. |
| Court | U.S. Court of Appeals — Seventh Circuit |
John A. Barr, Walker Smith, and Stuart S. Ball, all of Chicago, Ill., for appellant.
Geo. A. McNulty, Gen. Counsel, Wage and Hour Division, Dept. of Labor, and Irving J. Levy, Asst. Gen. Counsel, both of Washington, D. C., Alex Elson, Regional Atty., of Chicago, Ill., Robert S. Erdahl, Atty., of Washington, D. C., Lee K. Beznor, Atty., of Chicago, Ill., David Persinger, Atty., of Washington, D. C., and John
K. Evans, Atty., of Chicago, Ill., for appellee.
Before TREANOR and KERNER, Circuit Judges, and WILKERSON, District Judge.
Writ of Certiorari Denied October 28, 1940. See 61 S.Ct. 71, 85 L.Ed. ___.
This is an appeal from the order of the District Court requiring respondent to comply with a subpœna duces tecum which had been issued by petitioner pursuant to authorization of the Fair Labor Standards Act of 1938.1
Respondent is a corporation engaged in a general merchandising business carried on throughout the United States, and maintains and operates one of its branches in Kansas City, Missouri. This branch consists of a mail order house and a retail store; and at least 80% of the goods received by such mail order house is shipped from sources without the state of Missouri and the mail order house sends, transports and sells merchandise to points outside the state. Respondent's operation of its Kansas City plant brings it within the terms of the Fair Labor Standards Act as an employer of employees engaged in interstate commerce or in the production of goods for interstate commerce.
Petitioner undertook an investigation of the acts and practices of respondent in its Kansas City branch relating to hours of employment, wages paid, classification of employees, and discriminatory acts. By the terms of the Fair Labor Standards Act, which will be referred to hereinafter as the "Act," the petitioner is authorized, as Administrator of the Wage and Hour Division, United States Department of Labor, to conduct investigations of the acts and practices of respondent relating to the foregoing subjects.
In the course of the investigation petitioner issued a subpœna duces tecum which required the respondent to produce (1) the records of a six months period showing wages paid to, and timeclock cards of, employees in the mail order branch at Kansas City, (2) the records showing the number of hours scheduled for each department of the mail order branch for the same period, and (3) the record of the actual number of hours worked by each of the departments during such period. Respondent refused to comply with the subpœna and petitioner thereupon applied to the District Court for an enforcement order.2 As a result of the proceeding in the District Court the respondent was ordered to appear before petitioner and produce the records designated in items one and two of the subpœna.
Respondent does not urge that the Act is unconstitutional, but does urge that the requirements of the subpœna were unreasonable and that its enforcement would operate to deprive respondent of its rights under the Fourth Amendment to the Federal Constitution.3 Respondent further urges that the trial court's refusal to permit it to develop the facts surrounding the issuance of the subpœna duces tecum deprived respondent of its day in court.
Petitioner averred below that he had reasonable grounds to believe that respondent had violated the provisions of Sections 7, 11(c), 15(a) (1), (2), (3), and (5), and certain regulations which had been promulgated under authority of the Act. Respondent answered that petitioner had no reasonable cause to suspect the existence of violations of the Act. And on appeal respondent urges as one ground of error by the District Court that respondent was not permitted to introduce evidence for the purpose of showing that the petitioner had no reasonable cause to believe that respondent was violating the Act. And in conjunction with the foregoing respondent argues that, in the absence of a showing of reasonable cause to believe that respondent was violating the Act, the issuance and enforcement of the subpœna duces tecum would constitute an unreasonable search and seizure.
We shall consider first petitioner's claim that he may inspect respondent's records relating to matters regulated and controlled by the Act without showing reasonable grounds to believe that a violation of the Act has occurred.
Respondent is a corporation and as such is not protected by immunity against self-incrimination which is guaranteed by the Fifth Amendment.4 Hence, the forced production of the records cannot be said to be unreasonable because it might deprive respondent of the benefit of immunity against self-incrimination. A corporation is entitled, however, to the protection of the Fourth Amendment against unreasonable searches and seizures of its papers.5
The scope and purpose of the Act, the proper exercise of the authority conferred upon the Administrator, and the effective performance of his duties, are inconsistent with an intention to limit inspections of books and records to cases in which the Administrator has reasonable cause to believe an employer is violating the provisions of the Act.
Section 2 of the Act sets out a legislative finding and declaration of policy which constitute the legislative justification of the Act as a regulation of commerce. Congress declares, as a finding of fact, that the existence in industries engaged in interstate commerce or in the production of goods for such commerce, of labor conditions detrimental to the maintenance of a minimum standard of living necessary for health, efficiency, and well-being of workers affect interstate commerce; and Congress declares that the policy of Congress is to eliminate such conditions. Section 4 creates a Wage and Hour Division (in the Department of Labor) which is placed under the direction of an Administrator. The Administrator is required to make an annual report to Congress of his activities, such report to include "such information, data, and recommendations for further legislation in connection with the matters covered by (the) Act this chapter as he may find advisable." Section 5 requires the Administrator to appoint an "industry committee" for each industry, and Sections 6 and 7 fix a minimum wage standard and a maximum hour standard, respectively. Section 8, in conjunction with Section 6(a) (3) and (4) provides for the investigation of industry conditions by the industry committee and for a recommendation of minimum wage rates and classifications within the industry. The Administrator is required to approve or disapprove of such recommendations. Section 11(a) authorizes the Administrator to "investigate and gather data regarding the wages, hours, and other conditions and practices of employment * * *, and to enter and inspect such places and such records * * * and investigate such facts, conditions, practices, or matters as he may deem necessary or appropriate to determine whether any person has violated any provision of (the) Act this chapter, or which may aid in the enforcement of the provisions of (the) Act this chapter." Section 11(c) requires employers to make and keep records of wages, hours and other conditions of employment and to make reports therefrom, as prescribed by regulations of the Administrator "as necessary or appropriate for the enforcement of the provisions of (the) Act this chapter * * *." And in conformity with the foregoing the respondent has made certain regulations regarding the making and keeping of records.
It is apparent from this cursory analysis of pertinent provisions of the Act that Congress has conferred upon the Administrator of the Wage and Hour Division 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 duties of the Administrator go far beyond the relatively simple task of instituting punitive actions against employers for occasional violations of the Act. 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. Section 4(d) requires the Administrator to make an annual report to Congress which shall include "information, data, and recommendations for further legislation in connection with the matters covered by (the) Act this chapter * * *." The Administrator, in conjunction with the industry committee, enjoys a wide discretion in fixing minimum wage rates and maximum hours. The Administrator is required to submit to the committee "from time to time such data as he may have available on the matters referred to it." Section 11(c) empowers the Administrator to prescribe by regulation the making and keeping of records of "wages, hours, and other conditions and practices of employment."
We are of the opinion that the terms of the Act necessarily indicate a legislative intent that the exercise of the investigatory powers of the Administrator be in no degree conditioned upon the existence of reasonable cause for the Administrator to believe that the industry, which is the subject of investigation, is violating the Act.
Respondent insists that "no case has upheld a search and seizure in the absence of probable cause * * * except when the search and seizure has been directed against a public utility, common carrier, or the like." But even if we assume the accuracy of...
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