State Fair of Texas v. US CONSUMER, ETC., CA-3-79-1367-G.

Decision Date13 November 1979
Docket NumberNo. CA-3-79-1367-G.,CA-3-79-1367-G.
PartiesThe STATE FAIR OF TEXAS v. UNITED STATES CONSUMER PRODUCTS SAFETY COMMISSION.
CourtU.S. District Court — Northern District of Texas

COPYRIGHT MATERIAL OMITTED

Kelly, Hart & Hallman, Fort Worth, Tex., by E. Glen Johnson, Russell B. Smith, Dallas, Tex., for State Fair of Texas.

Jeffrey S. Lynch, Christopher A. Payne, Vial, Hamilton, Koch, Tubb, Knox & Stradley, Dallas, Tex., for Steck & Stapf Attractions.

Kenneth J. Mighell, U.S. Atty., Fort Worth, Tex., Stafford Hutchinson, Asst. U.S. Atty., Dallas, Tex., John R. Fleder, Asst. Chief, Consumer Affairs Section, Anti-Trust Div., Dept. of Justice, Washington, D.C., for Consumer Products Safety Comn.

MEMORANDUM ORDER

PATRICK E. HIGGINBOTHAM, District Judge.

As anticipated by the court in its memorandum order of November 3, 1979, the substantive issues presented by this case, left undecided by the court's earlier decision, have again come before the court, this time ripe for resolution. In its earlier memorandum order, the court denied the application of plaintiff, The State Fair of Texas ("State Fair") for a preliminary injunction restraining the defendant, United States Consumer Product Safety Commission ("Commission") from conducting an investigation of an accident involving defendant's aerial tramway which occurred on October 21, 1979. In so doing, the court held that State Fair was not threatened with irreparable injury, inasmuch as it could legally refuse permission for an inspection of the tramway and related records, forcing the Commission to obtain an administrative inspection warrant if it wished to inspect. In light of the probability that such a warrant would be sought, the court declined to dismiss the case as unripe, choosing instead to retain jurisdiction of the underlying claim for declaratory relief until events transpired which brought those issues squarely into focus. Such an occasion has now arisen.

On November 5, 1979, the Commission sought and obtained an ex parte administrative inspection warrant from United States Magistrate William F. Sanderson, Jr. That warrant, based upon affidavits from Commission personnel reciting the need for an inspection and stating that permission for a warrantless inspection had been refused, authorized the Commission to enter the premises of State Fair and of its licensee, Steck & Stapf Attractions, Inc. ("S & S"), and to inspect the tramway and its components in a nondestructive manner. The warrant also authorized inspection of nine categories of books and records within the possession, custody, or control of State Fair. The warrant was served on State Fair and S & S officials the same day, and those officials on advice of counsel refused entry pursuant to the warrant. On November 6, the Commission moved before Magistrate Sanderson for an order requiring State Fair and S & S to show cause why they should not be held in contempt. Simultaneously, State Fair moved before the magistrate to quash the warrant, asserting, as it had earlier before this court, that the Commission's jurisdiction to conduct inspections does not extend to products such as the aerial tramway or entities such as State Fair. In the interest of judicial economy, both motions were transferred to this court by the magistrate.1 While these activities were taking place before the magistrate, a separate action was commenced by plaintiff Steck and Stapf Attractions, Inc., the operator of the tramway under a license agreement with State Fair. S & S sought injunctive relief against the Commission's planned inspection insofar as it involved records and tramway components in the possession or under the control of S & S.2 That action, initially assigned to Judge Barefoot Sanders, was transferred to this court and consolidated with the present action by order of Judge Sanders on November 6.3

The basic facts which underlie this action were set forth in the court's memorandum order of November 3. Since that time, the parties have supplemented the record by means of numerous affidavits and stipulations. Such additional and undisputed facts as are required for decision of this case will be set forth in the body of this opinion.

I. Congressional Authorization of Applications for Warrants.

It is necessary at the outset to deal with the contention made by the State Fair that the Consumer Product Safety Act, even if arguably applicable, does not authorize issuance of an administrative inspection warrant.4 In so arguing, State Fair relies heavily on the recent case of Marshall v. Gibson's Products, Inc., 584 F.2d 668 (5th Cir. 1978). That case was an action brought by the Secretary of Labor seeking a mandatory injunction to require an employer to submit to a warrantless inspection under the Occupational Safety and Health Act ("OSHA"). The court of appeals held that 29 U.S.C. § 657(a)(1), which authorizes the Secretary to conduct inspections similar in nature to those which the Commission may conduct under 15 U.S.C. § 2065(a), provided no implicit basis of jurisdiction for the action, and that jurisdiction could not be sustained under the Secretary's regulations or under general statutory grants of jurisdiction.

In contrast with the relief sought in Gibson's, the relief sought by the Commission in this case takes the form of an administrative inspection warrant rather than a mandatory injunction. In the case of Marshall v. Shellcast Corp., 592 F.2d 1369 (5th Cir. 1979), which extended the Gibson's holding to an action seeking an injunction requiring compliance with an administrative inspection warrant, the court expressly noted that "the provision or preclusion of jurisdiction for the issuance of search warrants is quite a different matter from the provision or preclusion of jurisdiction for an injunction." 592 F.2d at 1371 n.3. The court cited Congressional concern over the constitutionality of OSHA, together with the Supreme Court's decision in Marshall v. Barlow's, Inc., 436 U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305 (1978) (nonconsensual warrantless searches under OSHA are unconstitutional), as "arguing strongly for the position that federal courts do have jurisdiction to issue OSHA search warrants." 592 F.2d at 1370-71 n.3. Indeed, this court has expressly so held with respect to OSHA warrants. Marshall v. Huffhines Steel Co., 478 F.Supp. 986 (N.D.Tex., 1979) (order denying motion to dismiss). It must be presumed that Congress possessed similar concerns over the constitutionality of the Consumer Product Safety Act, and hence that Act must be regarded as an implied basis of jurisdiction for actions seeking warrants under the Act. A contrary holding would render 15 U.S.C. § 2065 a nullity, since the Commission would be unable to obtain a warrant and yet could not inspect without a warrant by virtue of Barlow's.

A further basis for the decision in Gibson's was provided by the language of OSHA itself. Although several sections of OSHA gave the district courts jurisdiction in specific instances, that Act contained no grant of general authority to the Secretary of Labor to bring suit under its provisions. While the Solicitor of Labor was authorized to appear on behalf of the Secretary "in any civil litigation brought under OSHA," see 29 U.S.C. § 663, the court held that this provision did not expand the category of suits which the Secretary could bring. It accordingly failed to find jurisdiction of the suit under 28 U.S.C. § 1345 as a civil action commenced by an officer or agency of the United States "expressly authorized to sue by Act of Congress." 584 F.2d at 676-77.

The provisions of OSHA, authorizing suit only in specific instances, stand in stark contrast to those of the Consumer Product Safety Act. 15 U.S.C. § 2076(b)(7) authorizes the Commission "to initiate, prosecute, defend, or appeal . . ., through its own legal representative and in the name of the Commission, any civil action . . . for the purpose of enforcing the laws subject to its jurisdiction," if the Attorney General does not assume responsibility for conducting the action in the Commission's behalf (emphasis supplied).5 Hence the Commission fits squarely within the language of 28 U.S.C. § 1345 as an agency "expressly authorized" to bring suit.6 Accordingly, State Fair's arguments concerning this court's lack of jurisdiction to issue a warrant must be rejected.

II. Scope of This Court's Review.

The Commission argues at some length that the scope of this court's review of its decision to investigate a particular product or entity must necessarily be limited. In so arguing, it analogizes this proceeding to an action for enforcement of an administrative subpoena duces tecum, and points to that line of cases, discussed more fully below, which holds that a district court may not inquire into an agency's jurisdiction so long as the material sought by subpoena is not "plainly incompetent or irrelevant to any lawful purpose" of an agency. See Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509, 63 S.Ct. 339, 343, 87 L.Ed. 424 (1943). This doctrine, while not strictly one of exhaustion of administrative remedies, stems from concerns over the effects of premature judicial interference with administrative processes similar to those which have prompted the exhaustion doctrine. In the exhaustion area, the law is clear that a litigant may bypass available administrative procedures only where there is a readily observable usurpation of power not granted to the agency by Congress. Leedom v. Kyne, 358 U.S. 184, 79 S.Ct. 180, 3 L.Ed.2d 210 (1958). American General Insurance Co. v. F.T.C., 496 F.2d 197, 200 (5th Cir. 1974); United States v. Feaster, 410 F.2d 1354, 1366-68 (5th Cir.), cert. denied, 396 U.S. 962, 90 S.Ct. 427, 24 L.Ed.2d 426 (1969).

In Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614 (1946), the Court was faced with the question of the scope of review of the jurisdiction of the Wage and...

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