U.S. v. Nour Halal Meat Distributor, Inc.
| Citation | 505 F.Supp.2d 275 |
| Decision Date | 23 August 2007 |
| Docket Number | Civil Action No. 3:06-182. |
| Parties | UNITED STATES of America, Plaintiff, v. NOUR HALAL MEAT DISTRIBUTOR, INC., d/b/a Nour Halal Meats, Noura Halal Meats, Inc., Hamdy Farag, and Gehad M. Magoub, Defendants. |
| Court | U.S. District Court — Western District of Pennsylvania |
Paul E. Skirtich, United States Attorney's Office, Pittsburgh, PA, for Plaintiff.
A. Thomas Farrell, Altoona, PA, for Defendants.
Now before the Court is Plaintiff United States' Motion for Assessment of Forfeitures. Document No. 18. This matter arose after Defendants failed to timely provide a special report that the Secretary of Agriculture ordered, in violation of Section 6 of the Federal Trade Commission Act (hereinafter "FTC Act"), 15 U.S.C. § 46. Defendants also failed to comply with an administrative subpoena duces tecum duly issued and served under the provisions of the Packers and Stockyards Act of 1921 (hereinafter "P&S Act"), as amended, 7 U.S.C. § 181 et seq. This Court has jurisdiction pursuant to Section 9 of the FTC Act, 15 U.S.C. § 49, which is made applicable to this action by Section 402 of the P&S Act, 7 U.S.C. § 222.
Pursuant to Section 6 of the FTC Act, 15 U.S.C. § 46, the Grain Inspection, Packers and Stockyards Administration (hereinafter "GIPSA") of the United States Department of Agriculture conducted a study in order to provide information for the use of Congress.1 The study sought to collect data regarding marketing practices in the livestock and meat industries. Document No. 1-3, p. 2. In accordance with that objective, the Secretary of Agriculture (hereinafter "Secretary"), through his GIPSA representative, issued special orders requiring various businesses, including lamb packers, to furnish information concerning livestock and meat purchases made between October 6, 2002 and March 31, 2005. Id. at 7. Federal law required subject entities to maintain proper records of the information sought in the GIPSA study. See 7 U.S.C. § 221 ().
On April 3, 2003, Defendant Hamdy Farag purchased the entire stock of Nour Halal, a Pennsylvania business engaged in buying livestock, manufacturing and preparing meat, and selling the same in interstate commerce. Document No. 16, p. 3; Document No. 1-6, p. 5-6. Defendant Gehad Magoub, the wife of Hamdy Farag, is a vice-president and co-owner of Nour Halal. Document No. 1-6, p. 6. As a meat packer, Nour Halal is subject to the requirements of both the P&S Act and the Department of Agriculture's study. Id. GIPSA Administrator James Link (hereinafter "Link") issued Defendants' special order on February 15, 2006, which gave Defendants until April 14, 2006, to comply. Document No. 1-3.
After Defendants failed to meet that deadline, Link issued a notice of default and subpoena duces tecum (hereinafter "the Subpoena") on May 10, 2006. Document No. 1-4. The notice and Subpoena were sent via Federal Express and certified mail and required Defendants to file its special report by May 18, 2006. Id. Delivery of both the notice and Subpoena was made to Defendants' business on May 11, 2006. Document No. 1-5. After Defendants failed to comply with the Subpoena, the Government filed on August 17, 2006, a Petition for Order to Show Cause Why its Administrative Subpoena Duces Tecum Should Not Be Enforced. Document No. 1.
At an October 23, 2006, hearing on the Petition, the Parties represented to the Court that efforts to amicably resolve this issue were ongoing and that Defendants had submitted records indicating some good-faith effort to comply with the Subponea. The Government therefore agreed to toll the period during which any civil penalties were accruing as of that day, and the Court granted the Parties additional time to review those records Defendants had provided. Document No. 9, pp. 7-8. During a February 1, 2007, Status Conference, the Government indicated that the parties had not achieved compliance with the Subpoena and requested that the Court reconvene the Show Cause Hearing in March. Document No. 11. The Government stated that it would accept inability as a complete defense, but requested the opportunity to pursue civil penalties in that event. Id. When the show cause hearing reconvened on March 16, 2007, the Government accepted that Defendants could not possibly produce records which were created prior to the April 2003 purchase of Nour Halal. Document No. 16, p. 4. The Government also accepted for review additional records that Defendants brought to the hearing. Id. at 3-4. The Court therefor granted the Government ten days to provide notice whether or not the Subpoena had been fully complied with. Id. at 11. The Court further ordered the Government to file a brief within thirty days as to the matter of civil penalties. Id. Defendants were granted thirty days beyond the filing of the Government's brief to submit their response.
On March 29, 2007, the Government indicated to the Court that Defendants had failed to fully comply with the Subpoena and that the United States would "not seek any further action to compel compliance" but would "petition this Court by a subsequent filing to assess daily forfeitures." Document No. 17. On May 17, 2007, the Government again noticed the Court of Defendants' `noncompliance and filed the motion sub judice seeking $14,850.00 in forfeitures. Document Nos. 17 & 18. Accordingly, Defendants had until June 18, 2007, to respond to the motion for forfeitures; to date no such response has been filed.
Under 15 U.S.C. § 49 and 7 U.S.C. § 222, this Court has the power and authority to enforce administrative subpoenas in the event of a failure to comply. "Judicial review of an administrative subpoena is limited and is to be handled summarily and with dispatch." In re Office of Inspector Gen., 933 F.2d 276, 277 (5th Cir.1991). See also F.T.C. v. Scientific Living, Inc., 150 F.Supp. 495, 498 (M.D.Pa.1957) (). Nonetheless, the United States is not entitled to enforcement; Plaintiff must first make the prima facie showing set forth in United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964).
According to the United States, the Powell showing is made if the Government demonstrates that the Subpoena meets "a three part test: (1) the agency has the authority to inquire into this issue; (2) the subpoenaed information is not indefinite; and (3) the information sought is reasonably relevant to the investigation which the agency has authority to conduct." Document No. 2, p. 7 (citations omitted). The Court finds that applicable precedent is not so clear, however. The Government's proposed test was initially formulated to ensure that an administrative subpoena comports with the Fourth Amendment's prohibition on illegal seizures. See, e.g., United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 94 L.Ed. 401 (1950). In Powell, however, the Court had before it only a matter of statutory interpretation and held that the Internal Revenue Service was entitled to enforcement of its administrative subpoenas upon a showing that the "investigation will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the purpose, that the information sought is not already within the Commissioner's possession, and that the administrative steps required by the [internal Revenue] Code have been followed." Powell, 379 U.S. at 57-58, 85 S.Ct. 248. Although Justice Harlan's formulation of the prima facie showing was originally tailored for the Internal Revenue Code, lower courts have subsequently fit the test to other agencies.2 See, e.g., Univ. of Med. & Dentistry v. Corrigan, 347 F.3d 57, 64 (3d Cir.2003) ( ); In re Admin. Subpoena, 253 F.3d 256, 263 (6th Cir.2001) (Department of Justice); FDIC v. Wentz, 55 F.3d 905, 908 (3d Cir.1995) (Federal Deposit Insurance Corporation); United States v. Westinghouse Electric Corp., 638 F.2d 570 (3d Cir.1980) (National Institute for Occupational Safety and Health). The federal judiciary is not unanimous, however, and some courts apply the Morton Salt test in the absence of any Fourth Amendment objection. See, e.g., Chao v. Koresko, ___ Fed.Appx. ___, ___, 2005 WL 2521886, at *1, 2005 U.S.App. LEXIS 22025, at *4 (3d Cir.2005) (nonprecedential opinion); FTC v. Jim Walter Corp., 651 F.2d 251, 258 (5th Cir. 1981).
In light of this ambiguity, the Court will analyze the United States' petition under both standards. If the United States meets its obligation, the burden then shifts to Defendants to show that the Subpoena is overly broad, burdensome, or that its enforcement would constitute an abuse of the court's process. United States v. Westinghouse Elec. Corp., 788 F.2d 164, 166-67 (3d Cir.1986); SEC v. Wheeling-Pittsburgh Steel Corp., 648 F.2d 118, 128 (3d Cir.1981). An abuse of process would be issuing an administrative subpoena "`for an improper purpose, such as to harass the respondent or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the particular investigation.'" Chao, ___ Fed.Appx. at ___ - ___, 2005 WL 2521886, at *1, 2005 U.S.App. LEXIS 22025, at **4-5 (nonprecedential opinion) (quoting Powell, 379 U.S. at 58, 85 S.Ct. 248).
Defendants' burden is a heavy one, for they must United States v. Balanced Fin. Management, Inc., 769 F.2d 1440, 1444 (10th Cir.1985). See also Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 218, 66 S.Ct. 494, 90 L.Ed. 614 (1946) (); Wheeler v. United States, 459...
To continue reading
Request your trial