State ex rel. Palumbo v. Graley's Body Shop, Inc.

• Decision Date: 14 December 1992
• Docket Number: No. 21301,21301
• Court: West Virginia Supreme Court
• Parties: , 1993-1 Trade Cases P 70,107 STATE of West Virginia ex rel. Mario J. PALUMBO, Attorney General, Plaintiff Below, Appellant, v. GRALEY'S BODY SHOP, INC., an Ohio Corporation; Geer Brothers Body Shop, Inc., a West Virginia Corporation; Keaton's Body Shop, Inc., a West Virginia Corporation; Huntington Chrysler-Plymouth, Inc., a West Virginia Corporation; Galigher Ford, Inc., a West Virginia Corporation; Olen L. Doddridge, dba East End Body Shop; Jimmie Graley; Donald R. Graley; David Lynn Geer; Royce Dale Geer; Rick L. Keaton; Frank Horney; Jacob C. Rardin, IV; and other persons whose names and identities are not yet known to the plaintiff, Defendants Below, Appellees.

Page 177

425 S.E.2d 177

188 W.Va. 501, 1993-1 Trade Cases P 70,107

STATE of West Virginia ex rel. Mario J. PALUMBO, Attorney General, Plaintiff Below, Appellant, v. GRALEY'S BODY SHOP, INC., an Ohio Corporation; Geer Brothers Body Shop, Inc., a West Virginia Corporation Keaton's Body Shop, Inc., a West Virginia Corporation Huntington Chrysler-Plymouth, Inc., a West Virginia Corporation; Galigher Ford, Inc., a West Virginia Corporation; Olen L. Doddridge, dba East End Body Shop Jimmie Graley; Donald R. Graley; David Lynn Geer; Royce Dale Geer; Rick L. Keaton; Frank Horney; Jacob C. Rardin IV; and other persons whose names and identities are not yet known to the plaintiff, Defendants Below, Appellees.

No. 21301.

Supreme Court of Appeals of West Virginia.

Submitted Oct. 6, 1992.

Decided Dec. 14, 1992.

Syllabus by the Court

1. The question of whether a particular statutorily defined penalty is civil or criminal is a matter of statutory construction, and requires the application of a two-level inquiry adopted by the United States Supreme Court in United States v. Ward, 448 U.S. 242, 100 S.Ct. 2636, 65 L.Ed.2d 742 (1980). First, courts must determine whether the legislature indicated, either expressly or impliedly, a preference for labelling the statute civil or criminal. Second, if the legislature indicates an intention to establish a civil remedy, courts must consider whether the legislature, irrespective of its intent to create a civil remedy, provided for sanctions so punitive as to transform the civil remedy into a criminal penalty. As part of the second level of the inquiry, courts should be guided by the following factors identified by the United States Supreme Court in Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168-69, 83 S.Ct. 554, 567-68, 9 L.Ed.2d 644, 661 (1963): "Whether the sanction involves an affirmative disability or restraint, whether it has historically been regarded as a punishment, whether it comes into play only on a finding of scienter, whether its operation will promote the traditional aims of punishment--retribution and deterrence, whether the behavior to which it applies is already a crime, whether an alternative purpose to which it may rationally be connected is assignable for it, and whether it appears excessive in relation to the alternative purpose assigned[.]"

2. The proceedings conducted and the monetary penalties imposed under the West Virginia Antitrust Act, W.Va.Code, 47-18-1 to 47-18-23, as amended, are civil, and not quasi-criminal in nature, and therefore, suspected violators of the Antitrust Act do not have the right to be informed that they are targets of an investigation nor do they have the right to be informed that they may have counsel present at oral deposition. In subpoenas issued pursuant to an investigation under the Antitrust Act, the Attorney General should adequately inform suspected violators of the conduct constituting a violation of the Antitrust Act.

Mario J. Palumbo, Donald Darling, Donna S. Quesenberry, Office of the Atty. Gen., Charleston, for appellant.

David Lockwood, Lockwood, Egnor, Gardner & Cyrus, Huntington, for Graley's Body Shop, Inc., appellee.

William D. Levine, St. Clair & Levine, Huntington, for Geer Brothers Body Shop, Inc., appellee.

Lafe Chafin, Barrett, Chafin & Lowery, Huntington, for Keaton's Body Shop, Inc., appellee.

Helen M. Morris, Baer, Colburn & Morris, Huntington, for Huntington Chrysler-Plymouth, Inc., appellee.

James Allan Colburn, Baer, Colburn & Morris, Huntington, for Olen L. Doddridge, appellee.

Fred B. Westfall, Jr., Huddleston, Bolen, Beatty, Porter & Copen, Huntington, for Galigher Ford, Inc., appellee.

McHUGH, Chief Justice:

The Attorney General, Mario J. Palumbo, on behalf of the State of West Virginia, seeks review of an order of the Circuit Court of Cabell County which dismissed, with prejudice, a complaint filed by the Attorney General against the appellees, Graley's Body Shop, Inc., et al., alleging that they violated the West Virginia Antitrust Act (Antitrust Act), W.Va.Code, 47-18-1 to 47-18-23, as amended, by participating in a price-fixing scheme. Upon review of the case before us, we conclude that the order of the circuit court should be reversed.

I

The Attorney General represents that, in early 1991, he received information that certain auto body repair shops in the Huntington, West Virginia area were engaged in price-fixing activities. After evaluating this information, the Attorney General concluded that there was probable cause to believe that the Antitrust Act had been violated, and initiated an investigation under the provisions of W.Va.Code, 47-18-6 [1978] and 47-18-7 [1978].

Pursuant to the investigation, the Attorney General caused subpoenas containing requests for production of documents and written interrogatories, and subpoenas for oral testimony to be issued to the appellees. After taking the statements of the individual appellees and reviewing the results of the investigation, the Attorney General filed a complaint against the appellees alleging price-fixing, refusing to deal, and unfair methods of competition.

On April 1, 1992, one of the appellees, Olen L. Doddridge, d/b/a East End Body Shop, filed a motion to dismiss the complaint on the grounds that the State had failed to fully advise him of his rights and had breached its duty to deal with individuals with the "utmost good faith." The other appellees later joined in the motion to dismiss, and raised other grounds which they alleged warranted dismissal of the complaint.

A hearing on the motions to dismiss was held on May 15, 1992. After hearing the parties' arguments, the circuit court ultimately found that: (1) the Antitrust Act was quasi-criminal in nature; (2) the appellees had the right to know they were the target of an investigation, the right to know the nature of the allegations against them and the right to know they could have counsel; (3) the State did not afford the appellees their rights; and (4) the State did not conduct itself in accordance with its duties, and its actions in this case were "disgraceful, outrageous and not consistent with the standards of that office[.]" The circuit court dismissed the complaint with prejudice. The Attorney General appeals that order on behalf of the State.

II

The State first contends that the trial court erred in finding that the Antitrust Act is quasi-criminal in nature. ¹ In support of its assertion that the Antitrust Act is not quasi-criminal in nature, the State relies on a test adopted by the United States Supreme Court in United States v. Ward, 448 U.S. 242, 100 S.Ct. 2636, 65 L.Ed.2d 742 (1980). The appellees, however, maintain that the trial court correctly concluded that the Antitrust Act was quasi-criminal in nature.

In the Ward case, the United States appealed a decision of the United States Court of Appeals for the Tenth Circuit which held that a proceeding for a civil penalty under the Federal Water Pollution Control Act is a criminal case within the meaning of the Fifth Amendment's guarantee against compulsory self-incrimination. In reversing that decision, the Supreme Court pointed out that the question of whether a particular statutorily defined penalty is civil or criminal in nature is a matter of statutory construction. 448 U.S. at 248-49, 100 S.Ct. at 2641, 65 L.Ed.2d at 749. The Court then followed a two-level inquiry:

First, we have set out to determine whether Congress, in establishing the penalizing mechanism, indicated either expressly or impliedly a preference for one label or the other. See One Lot Emerald Cut Stones v. United States, supra, [409 U.S. 232,] at 236-237, 93 S.Ct. [489,] at 492-493 . Second, where Congress has indicated an intention to establish a civil penalty, we have inquired further whether the statutory scheme was so punitive either in purpose or effect as to negate that intention.

As part of the second level of the inquiry, the Supreme Court tested the statutory scheme against the following standards set forth in Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168-69, 83 S.Ct. 554, 567-68, 9 L.Ed.2d 644, 661 (1963), a case involving the issue of whether statutes which imposed automatic forfeiture of citizenship were penal in character:

Whether the sanction involves an affirmative disability or restraint, whether it has historically been regarded as a punishment, whether it comes into play only on a finding of scienter, whether its operation will promote the traditional aims of punishment--retribution and deterrence, whether the behavior to which it applies is already a crime, whether an alternative purpose to which it may rationally be connected is assignable for it, and whether it appears excessive in relation to the alternative purpose assigned[.]

Applying the first inquiry of the Ward test in the present case, we believe that the provisions of the Antitrust Act clearly reflect an intent by the legislature to have the Act serve as a civil remedy. To begin with, the legislature did not label either the investigation or the proceedings under the Antitrust Act as criminal. Although W.Va.Code, 47-18-7(a) [1978], ² which sets forth the Attorney General's authority under the Antitrust Act, does not refer to the proceedings as criminal or civil, other provisions, specifically W.Va.Code, 47-18-10 [1978] ³ and W.Va.Code, 47-18-12 [1978], ⁴ refer to the State's action under the Antitrust Act as a civil proceeding. Moreover, other sections of the Antitrust Act are clearly civil in nature, such as the provisions for: (1) injunctive relief, W.Va.Code, 47-18-8 [1978]; (2) damages, attorney's fees and treble damages, ⁵ W.Va.Code, 47-18-9 [1978]; (3) the four-year statute of limitations for bringing actions, W.Va.Code, 47-18-11 [1978]; and (4) the antitrust enforcement fund, W.Va.Code, 47-18-18 [1978] and 47-18-19 [1978]. Thus, we find that the Antitrust Act is comprised of provisions which clearly show the legislature's intention...