State ex rel. Shriver v. Leech

• Court: Tennessee Supreme Court
• Writing for the Court: COOPER; BROCK, C. J., FONES and HARBISON, JJ., and CANTRELL
• Citation: State ex rel. Shriver v. Leech, 612 S.W.2d 454 (Tenn. 1981)
• Decision Date: 02 February 1981
• Parties: 1980-81 Trade Cases P 63,785 STATE of Tennessee, ex rel., Thomas H. SHRIVER, District Attorney General and Norman M. Lipman, President Wine & Spirits Wholesalers of Tennessee, Inc., Plaintiffs-Appellants, v. William M. LEECH, Jr., Attorney General and Reporter, Defendant-Appellee.

Page 454

612 S.W.2d 454

1980-81 Trade Cases P 63,785

STATE of Tennessee, ex rel., Thomas H. SHRIVER, District Attorney General and Norman M. Lipman, President Wine & Spirits Wholesalers of Tennessee Inc., Plaintiffs-Appellants, v. William M. LEECH, Jr., Attorney General and Reporter Defendant-Appellee.

Supreme Court of Tennessee.

Feb. 2, 1981.

Thomas H. Shriver, Dist. Atty. Gen., Waddey, Lundin & Newport, Keith M. Lundin, King & Ballow, Daniel C. Kaufman, Nashville, for plaintiffs-appellants.

William J. Haynes, Jr., Deputy Atty. Gen., William M. Leech, Jr., Atty. Gen., Nashville, for defendant-appellee.

OPINION

COOPER, Justice.

This action in the nature of quo warranto and for declaratory and injunctive relief was filed in the Chancery Court of Davidson County challenging the authority and action of the Attorney General and Reporter of the State of Tennessee in issuing a "Civil Investigative Demand" directed to Norman M. Lipman, President, Wine & Spirits Wholesalers of Tennessee. ¹ On considering a motion to dismiss, which was treated as a motion for summary judgment since it was predicated in part on affidavits, the chancellor dismissed the quo warranto phase of the case. In the other phase the chancellor declared the Civil Investigative Demand statutes ² to be constitutional and dismissed the complaint generally.

The Court of Appeals affirmed the chancellor's decree dismissing the action in the nature of quo warranto. As to the other phase, the Court of Appeals concluded that the Tennessee Civil Investigative Demand Statute violated the due process, equal protection and search and seizure provisions of the Tennessee and United States Constitutions. The court also concluded that even if the CID statute were constitutional, the CID issued in this case was invalid in that it failed in material ways to comply with the requirements of the statute. The Court of Appeals then reversed that part of the chancellor's decree which dismissed the complaint generally and remanded the cause to the trial court for further action.

We agree with the Court of Appeals that the CID served on Mr. Lipman is invalid, not on the basis that the statute granting authority to the Attorney General and Reporter to issue a CID is unconstitutional, but rather on the basis that the CID was not issued by the proper party. Neither does it set forth with sufficient particularity the matter under investigation nor identify the parties to the inquiry.

The Attorney General and Reporter of the State of Tennessee, in performing the duties of his office, is empowered to issue civil investigative demands requiring the attendance of witnesses or the submission of documents, or both, in matters "where the State of Tennessee is a party litigant or there is reasonable cause to indicate it will be a party litigant." T.C.A. §§ 8-6-401 and 402. The form and content of the CID is set forth in T.C.A. § 8-6-402. That section states that testimony and documents may be required "in the case or matter therein stated" and that "the parties to the inquiry" shall be identified.

The CID served on Mr. Lipman was not issued by the attorney general and reporter, but was issued over the signature of William J. Haynes, Deputy Attorney General, in furtherance of "The Antitrust Division's (of the attorney general's office) Investigation of the Tennessee Liquor Industry." The parties to the inquiry were not identified in the CID, except insofar as Mr. Lipman was directed to appear at the office of the attorney general and reporter and bring with him certain documents from the files of the Wine & Spirits Wholesalers of Tennessee, Inc.

By letter, counsel for the Wine and Spirits Wholesalers of Tennessee, Inc., requested that the attorney general and reporter identify the parties under investigation and describe the conduct and the alleged violations of law under investigation. The attorney general and reporter, through Deputy Attorney General Haynes, refused both requests, standing on the efficacy of the CID as issued.

As pointed out by counsel for Mr. Lipman, "There is a due process right to refuse unreasonable and irrelevant investigative demands. Oklahoma Press v. Walling, 327 U.S. 186, 208-209, 66 S.Ct. 494, 505-506, 90 L.Ed. 614 (1946); In re Gold Bond Stamp Co., 221 F.Supp. 391 (D.Minn.1963), aff'd 325 F.2d 1018 (8th Cir. 1964); Lewandowski v. Danforth, 547 S.W.2d 470, 472-483 (Mo.1977). To exercise this right, the recipient of a CID must be sufficiently informed of the conduct under investigation to allow a determination of the reasonableness and relevancy of demands for inspection. See Gold Bond, supra, 221 F.Supp. at 397, T.C.A. § 8-6-402 makes explicit the requirement of specification implied under due process principles. Pursuant to the statute, the attorney general must state in the CID the 'case' that is pending or the 'matter' under investigation...." The statute also requires that the CID identify the parties to the "case" or "investigation." None of these statutory requirements are met in the CID as issued.

Further, T.C.A. §§ 8-6-401 and 402 speak in terms of the attorney general and reporter issuing the CID. The debate in the House of Representatives on passage of the CID statute demonstrates that the legislators recognized the awesome power inherent in the use of a CID and that, if unbridled, the power could be abused. See Debate on House Bill 1728, February 25, 1976, House Tape # 62. ³ The legislature limited the use of a CID to matters where the state is a party litigant or there is reasonable cause to indicate that the state will be a party litigant. The latter base of authority for the issuance of a CID the determination of reasonable cause requires the exercise of considered judgment which the legislature was content to permit the attorney general and reporter to exercise. As pointed out by the Court of Appeals, the power granted by the CID statute is of a quasi-judicial nature which should not be delegated absent express authority to do so.

The attorney general and reporter has cited us to T.C.A. § 8-6-103 for a general grant of authority to his deputies and assistants to exercise authority entrusted to the attorney general and reporter in the performance of his duties. From this, he argues that his deputy has authority to issue a CID. We cannot accept this premise. First, it is contra to the language of the CID statute which grants the power to issue a CID to the attorney general and reporter. The same statute makes a grant of authority of a "designee" of the attorney general and reporter but limits it to the administering of "all necessary oaths." If the legislature had intended the general grant of authority under T.C.A. § 8-6-103 to control actions under the CID statute, the grant of authority to a "designee" would be superfluous. Then too, there is the legislative history where one of the sponsors of the CID statute indicated the grant of authority to issue a CID was to one man the attorney general and reporter. Finally, the power that rests in the hands of the person authorized to issue a CID and its potential for abuse if not used properly demands that the CID be issued only by the person named in the statute, the attorney general, and not the multitude of deputies and assistants employed by him in the performance of the duties of his office. Cf. United States v. Giordano, 416 U.S. 505, 94 S.Ct. 1820, 40 L.Ed.2d 341 (1974); State v. Farha, 218 Kan. 394, 544 P.2d 341 (1975), cert. denied, 426 U.S. 949, 96 S.Ct. 3170, 49 L.Ed.2d 1186 (1976).

Normally a holding that the CID is invalid because of statutory deficiencies would terminate an action challenging the efficacy of the CID. However, since a CID that meets the material requirements of the CID statutes could be issued, we deem it necessary to consider appellee's challenge to the basic authority of the attorney general to investigate possible violations of the antitrust laws of the State of Tennessee, and the challenge to the constitutionality of the CID statutes.

Both the chancellor and Court of Appeals concluded the attorney general has the authority to investigate possible violations of the antitrust laws of the state. We agree. Title 69, Chapter 1, T.C.A. forbids trusts, unlawful restraint of trade and discrimination. T.C.A. § 69-104 provides for forfeiture of charters and franchises of corporations violating T.C.A. §§ 61-101 and 103 and states:

It is made the duty of the attorney general to enforce these provisions.

The duty to investigate possible antitrust violations has not been delegated to any other individual or agency of state government. It logically follows that the statutorily created responsibility imposed on the attorney general to enforce the antitrust laws includes the authority to investigate possible violations.

The Court of Appeals held that the statutes authorizing the issuance of a Civil Investigative Demand are violative of the due process and equal protection provisions of the state and federal constitutions in that they "create a special advantage to the State as a litigant in the courts by granting to the attorney for the State an unlimited power of pre trial discovery which power is not granted to the adversaries of the State in its litigation..." citing Wardius v. Oregon, 412 U.S. 470, 93 S.Ct. 2208, 37 L.Ed.2d 82 (1973). Wardius was an adjudicatory proceeding a trial of a criminal offense. The defendant was required by statute to give notice of his intent to rely on an alibi defense and to reveal the names of witnesses to be called to establish the alibi, on penalty of being denied the privilege of asserting the defense. The state was not required to reciprocate by giving the defendant the names of witnesses it intended to call to rebut the alibi evidence. The court held that reciprocal discovery is required by fundamental fairness; and, in the absence of fair notice that the defendant would have an opportunity to discover the state's...