Goldberg v. Truck Drivers Local Union No. 299

Decision Date16 August 1961
Docket NumberNo. 14533.,14533.
Citation293 F.2d 807
PartiesArthur J. GOLDBERG, Secretary of Labor, U. S. Dept. of Labor, Petitioner-Appellant v. TRUCK DRIVERS LOCAL UNION NO. 299, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, and General Drivers, Warehousemen, Helpers and Gas Station Attendants Local Union No. 614, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Respondents-Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

Alan S. Rosenthal, Department of Justice, Washington, D. C., William H. Orrick, Jr., Asst. Atty. Gen., Lawrence W. Gubow, U. S. Atty., Detroit, Mich., and W. Harold Bigham, Attys., Department of Justice, Washington, D. C., and Charles Donahue, Sol., Bessie Margolin and James R. Beaird, Asst. Sols., Louis Weiner, Deputy Asst. Sol., Department of Labor, Washington, D. C., on brief, for petitioner-appellant.

Hugh Hafer, Milwaukee, Wis., David Previant, Milwaukee, Wis., and George S. Fitzgerald and Paul B. Mayrand, Detroit, Mich., on brief, for respondent-appellees.

Before CECIL, WEICK and O'SULLIVAN, Circuit Judges.

WEICK, Circuit Judge.

This case involves important questions concerning the right of the Secretary of Labor to secure judicial enforcement of subpoenas duces tecum issued by him and served on union officers in connection with an investigation he was attempting to make under the authority of Section 601 of the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C.A. § 521.

The union officers appeared in response to the subpoenas, challenged the right of the Secretary to make the investigation and refused to produce the records called for in view of legal questions which the unions and their counsel believed were involved including the constitutionality of certain sections of the Act providing for the issuance of the subpoenas. The union officers had custody of the records subpoenaed and there was no claim of any physical inability on their part to produce them.

The Secretary filed a petition in the District Court for enforcement of the subpoenas, which was denied on the ground that the Secretary had made no showing as to necessity for the investigation and because the subpoenas were too broad.

It appeared on the face of the subpoenas that they were issued in connection with "an investigation by the Bureau of Labor-Management Reports1 involving a determination whether any person has violated any provision of the Act." The subpoenas called for the production of the following records:

All records for the period from January 1, 1959 to the present date maintained by you or under your control which contain any basic information or data on matters required to be reported from which the organizational report (Form LM-1), and the financial report (Form LM-2) filed with the Secretary of Labor for Local 614, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America may be verified, explained or clarified and checked for accuracy and completeness, in connection with all items referred to or listed in such report and all items omitted or excluded therefrom which are relevant thereto and are required to be included in said reports, such records to include but not be limited to, vouchers, worksheets, ledgers, audit reports, records of receipt of dues, fees, assessments, fines and work permits, accounts receivable, accounts payable, journals, journal vouchers, check register, payroll register and related records and all books of accounts of Local 614, related to the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, or other local unions affiliated with said International including all bank statements, cancelled checks, check stubs, audit reports, financial reports, records of loans, records of mortgages, records of ownership of property real and personal, deeds, records of trusts, records of investments, and all correspondence and memoranda pertaining to receipts and disbursements.2

No evidence was offered in the District Court. The record consisted of the petition for enforcement, the exhibits attached thereto and the unions' response which admitted the allegations of Paragraphs I to XI of said petition.

In the District Court, the unions contended that it was obligatory on the part of the Secretary to first establish probable cause for the investigation as a condition precedent to obtaining enforcement of the subpoenas by the court.

The District Court, in its opinion denying enforcement, did not expressly use the term "probable cause," but adopted words of like import which imposed a requirement at least as stringent, namely, that the Secretary establish a basis for the investigation. The court said that there must be some "reasonable foundation or valid purpose" rather than merely looking into the records of the union in the hope of turning up something. This, in effect, was a holding that the Secretary had no right merely to investigate, but was required first to establish a probable violation of the Act.

In this Court, the unions contended that as a prerequisite to judicial enforcement of a subpoena duces tecum the Secretary "must show that he has a reasonable belief of necessity i. e., a reasonable basis for the investigation."

The statute required the unions to maintain the records which were subpoenaed. It provided:

"Every person required to file any report under this subchapter shall maintain records on the matters required to be reported which will provide in sufficient detail the necessary basic information and data from which the documents filed with the Secretary may be verified, explained or clarified, and checked for accuracy and completeness, and shall include vouchers, worksheets, receipts, and applicable resolutions, and shall keep such records available for examination for a period of not less than five years after the filing of the documents based on the information which they contain." 29 U.S.C.A. § 436.

Power was granted to the Secretary to make an investigation by the following language:

"Investigations by Secretary;
applicability of other laws
"(a) The Secretary shall have power when he believes it necessary in order to determine whether any person has violated or is about to violate any provision of this chapter (except subchapter II of this chapter) to make an investigation and in connection therewith he may enter such places and inspect such records and accounts and question such persons as he may deem necessary to enable him to determine the facts relative thereto. The Secretary may report to interested persons or officials concerning the facts required to be shown in any report required by this chapter and concerning the reasons for failure or refusal to file such a report or any other matter which he deems to be appropriate as a result of such an investigation.
"(b) For the purpose of any investigation provided for in this chapter, the provisions of sections 49 and 50 of Title 15 (relating to the attendance of witnesses and the production of books, papers, and documents), are made applicable to the jurisdiction, powers, and duties of the Secretary or any officers designated by him." 29 U.S.C.A. § 521(a, b).

The pertinent provisions of Section 9 and Section 10 of the Federal Trade Commission Act which were made applicable are set forth in footnote3.

The legislative history of the Labor-Management Reporting and Disclosure Act reveals that the original bills introduced in the House4 and Senate5 each granted power to the Secretary to make an investigation only when he had probable cause to believe that any person or labor organization had violated any provision of the Act. The probable cause requirement, however, was eliminated from the Act as it was finally passed. The reason for deleting the probable cause requirement is set forth in the minority amendments adopted by the Senate Committee on Labor and Public Welfare. It is as follows:

"Section 106(c): The Secretary shall have the power and is directed when he believes it necessary in order to determine whether anyone has violated or is about to violate a provision of this bill to make investigations.
"As originally worded, this section would have given the Secretary the authority to investigate the books and records of persons reporting under the act only when he had probable cause to believe that a person had violated provisions of the act. On the surface, the term `probable cause\' would appear to give the Secretary all the investigatory power that he needed. But the words `probable cause\' would throw a monkey wrench into the Secretary\'s investigatory machinery. Probable cause means more than mere suspicion that the act has been violated. To have probable cause, a person must have such evidence as would lead the ordinary prudent man to believe that the act has been violated. Consequently, every time he commenced an investigation the Secretary could be dragged into court until the question of probable cause had been decided. Under nearly every statute requiring the filing of reports, such as the Internal Revenue Act and the Fair Labor Standards Act, the Administrator can conduct `spot check\' investigations unhampered by the `probable cause\' requirement. Our amendment rewrites this section to give the Secretary investigatory power when he believes it necessary in order to determine whether a violation has occurred or is about to occur." U. S. Code Congressional & Administrative News — 86th Congress, 1st Session 1959, pp. 2395, 2396.

After the bill had passed the Senate, it was sent to a Conference Committee which reported:

"Section 601 — Investigations
"The Senate bill contains a provision which directs the Secretary to conduct an investigation when he believes it necessary in order to determine whether any person has, or is about to, violate the act, or any rule or regulation authorized by the act.
"The House amendment directs the
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    ...a demand has been made by an administrative agency does not establish the demand as reasonable." In Goldberg v. Truck Drivers Local Union No. 299, 6th Cir., 1961, 293 F.2d 807, at Page 814, the Court "In our opinion, it was not unreasonable to compel production of records which the law requ......
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    ...494, 500-501 & n. 24, 90 L.Ed. 614 (1946); Donovan v. Mehlenbacher, 652 F.2d 228, 230 (2d Cir.1981); Goldberg v. Truck Drivers Local Union No. 299, 293 F.2d 807, 810 & n. 3 (6th Cir.), cert. denied, 368 U.S. 938, 82 S.Ct. 379, 7 L.Ed.2d 337 (1961); see also Cudahy Packing Co. v. Holland, 31......
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