United States v. Bell

• Decision Date: 11 October 1977
• Docket Number: No. 5-24.,5-24.
• Parties: UNITED STATES of America and Robert H. Burch, Federal Energy Investigator, Plaintiffs-Appellees, v. Louis K. BELL, President, Bell Oil Company, Respondent-Appellant.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

564 F.2d 953

UNITED STATES of America and Robert H. Burch, Federal Energy Investigator, Plaintiffs-Appellees, v. Louis K. BELL, President, Bell Oil Company, Respondent-Appellant.

No. 5-24.

Temporary Emergency Court of Appeals of the United States.

Argued September 23, 1977.

Decided October 11, 1977.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

William J. Cooney, Augusta, Ga., was on the brief for appellant.

Daniella Sapriel, Dept. of Justice, Washington, D. C., with whom Barbara Allen Babcock, Asst. Atty. Gen., and Stanley D. Rose,^* Washington, D. C., were on the brief for appellees.

Before CHRISTENSEN, INGRAHAM and ESTES, Judges.

ESTES, Judge.

Respondent-appellant, Louis K. Bell, President, Bell Oil Company, appeals from an April 4, 1977 order of the District Court granting enforcement of a Federal Energy Administration (FEA) subpoena served on appellant on July 24, 1975. The subpoena of "The Federal Energy Administrator" was addressed to "Mr. Louis K. Bell, President, d/b/a Bell Oil Company"; was explicitly "issued . . . under authority of Section 206 of the Economic Stabilization Act of 1970, as amended, incorporated by Section 5(a)(1) of the Emergency Petroleum Allocation Act of 1973, as amended, and Section 13(e)(1) of the Federal Energy Administration Act of 1974, and 10 C.F.R. Sections 205.8 and 205.200";¹ was signed by Frederic Johnson, "Regional Administrator"; and bore the seal of the Federal Energy Administration. The Certificate of Service on the reverse of the subpoena also bears the seal of the FEA and certifies to the handing of an "attested copy of the subpoena to the person to whom it was directed."

The subpoena, which requires both testimony and production of documents, sought cost and pricing data relating to the purchase and sale of petroleum products by Bell Oil Company, a wholesale purchaser-reseller (10 C.F.R. § 211.51), to determine compliance with the mandatory allocation and pricing regulations of the FEA.²

Appellant's brief states:

"The issues presented for review by the court are:

"1. Whether Bell Oil Company was properly made a party to this action?

"2. Whether the subpoena sought to be enforced was issued for an improper purpose, in bad faith, for the purpose to harass the respondent to penalize respondent for having exercised his constitutional right of free speech and his right to petition the Government for redress of grievances as guaranteed by the First Amendment, to obtain records already in possession of the Federal Energy Administration and to obtain records pertaining to the retailing of gasoline?

"3. Whether 10 C.F.R. §§ 205.200, 205.202 and 210.92 are valid?" (Br. 1)

Plaintiff-appellees' brief states the issue as follows:

"1. Did the District Court err in finding that a subpoena issued by the Federal Energy Administration (FEA) requiring appellant Louis K. Bell to produce records of Bell Oil Company necessary for a full price audit of that Company by the FEA should be judicially enforced in that it called for documents relevant to the jurisdiction of the FEA, was reasonable in scope and as to place and time of production, was not issued solely for harassment, did not constitute an unreasonable search and seizure, would not deprive appellant of property without due process of law, and called for documents the production of which would not appreciably interfere with the operation of appellant's business?" (Br. 1, 2)

Appellant argues that Bell Oil Company (also herein referred to as Bell Oil) is not a proper party to this action; that the subpoena was issued for an improper purpose, in bad faith for the purpose of harassment; and that the regulations governing the FEA investigations, 10 C.F.R. §§ 205.200, 205.202, and 210.92, are invalid. Appellant requests this court to reverse the order and judgment of the trial court enforcing the subpoena, to "dismiss Bell Oil Company as a party to this action, to quash enforcement of the subpoena," and "to rule that the cited regulations are invalid." Appellant's Brief (Apt.'s Brf.) 19-20

In the early part of 1974, the FEA predecessor, the FEO, received complaints regarding appellant's compliance with the pricing and allocation regulations. On April 16, 1974, IRS Agent Whaley^2a contacted Mr. Bell by telephone regarding an alleged violation of the "rent, price, and allocation" regulations. (R. 133, T. 169). FEA Investigator Caton, in closing a spot check investigation based on the same complaint, reported that "Without any specific reference to a particular customer by the complainant, the tie-in allegation could not be fully investigated without a comprehensive audit of Bell Oil Company and Bell Auto Supply Company books. Even then, a complete audit might not reveal any such tie-in, if it was present. . . ." (R. 138). Investigator Metts' April 1975 report to the South Carolina area manager regarding another pricing complaint recommended that "a complete audit of Bell Oil Company records be conducted. . . ." (R. 65-67).

Following a series of intra-FEA communications, the South Carolina area manager contacted Mr. Bell, on June 18, 1975, and scheduled an appointment for July 7 for two of the investigators to inspect Bell Oil Company records. (R. 63, 74). The appointment was postponed at the written request of Bell's attorney, Cooney (R. 75). After numerous communications between Cooney and the FEA, Cooney requested a subpoena from the FEA on July 2, 1975. On July 17, 1975, he again wrote the FEA and requested a subpoena in the matter of ". . . Louis K. Bell, Bell Oil Company, # 460-L-60131." (R. 87). The subpoena was issued on July 24, 1975.

On August 2, 1975, appellant's attorney, Cooney, filed an appeal application with the Administrator, Federal Energy Administration, captioned "In re: Louis K. Bell, President, Bell Oil Company," requesting that the subpoena be quashed or, in the alternative, modified by making it returnable at 2034½ Savannah Road, Augusta, Georgia (the principal place of business of Bell Oil Company), "on the grounds that to comply with the subpoena in its present form would work an extreme hardship upon Bell Oil Company." (R. 12-13). On August 26, 1975, the Regional Administrator issued an order upholding the subpoena but granting appellant's alternative request for modification and ordered the subpoena returnable at Bell Oil's office in Augusta, Georgia, on September 8, 1975 (R. 14-15).

After appellant failed to honor the subpoena on the appointed date, the FEA filed a petition for enforcement against "Louis K. Bell, President, Bell Oil Company" in the United States District Court for the Southern District of Georgia, on November 4, 1975 (R. 1). After a full hearing on the petition for enforcement of the subpoena, the trial court entered the enforcement order in controversy on April 4, 1977.

The opinion of this court in United States v. Empire Gas Corporation, 547 F.2d 1147 (Em.App.1976), cert. denied, 430 U.S. 915, 97 S.Ct. 1326, 57 L.Ed.2d 592 (March 7, 1977), establishes the authority of the FEA to issue the subpoena involved in this case to compel the appearances of witnesses and the production of documents and records relating to the cost, pricing, and allocation of petroleum products.

Appellant's first argument, that "Bell Oil Company is not a proper party to this action," is grounded on the contention that Bell Oil was not properly named or served as a party in the subpoena nor in this action. Although appellant's attorney argued in the trial court that the subpoena issued to "Mr. Louis K. Bell, President, d/b/a Bell Oil Company" required an individual to produce corporate records of Bell Oil Company and that "the subpoena properly drawn . . . would have been directed to Louis K. Bell as President of Bell Oil Company to produce Bell Oil Company records" (T.F.F.C.L. 8a),³ the trial judge stated:

Well, my finding is that as president of this corporation, if he still is president, I would find that the documents are sufficiently within his dominion and control to produce them if he otherwise is required to produce them. T.F.F.C.L. 8a

As the trial judge noted, appellant's response had been that Bell had refused to produce the records, not that he did not have them. Bell was also treasurer of Bell Oil and admittedly had custody of the records.⁴

The evidence in the record clearly shows that Bell Oil Company had notice of and participated through its president and counsel in the subpoena proceedings in the FEA and in the courts and that it received a favorable ruling on the modification of the subpoena making it returnable at the company's place of business. Indeed, in the certificate required by TECA Rule 21(c), appellant's attorney certified that Louis K. Bell and Bell Oil Company constituted a full and complete list of the parties in the action. Also, appellant's attorney signed the brief as "Counsel of Record for Louis K. Bell and Bell Oil Company." (Apt's. Brf. i-ii)

Under all the circumstances in this case, Bell Oil Company is bound by the subpoena and the order of the District Court enforcing it. Bros, Inc. v. W. E. Grace Mfg. Co., 261 F.2d 428 (5th Cir. 1958). It would be elevating "form over substance" (T.F.F.C.L. 8a), see Infotronics Corporation v. Varian Associates Corp., 45 F.R.D. 91, 92 (S.D.Tex.1968), citing Conley v. Gibson, 355 U.S. 41, 48, 78 S.Ct. 99, 2 L.Ed. 80 (1957), and see McCarthy v. Langston, 23 F.R.D. 249 (N.D.Fla.1959), to invalidate the subpoena served on Bell Oil's president, treasurer, and director.

Appellant's second argument, that the subpoena was issued for an improper purpose and that its enforcement would constitute an abuse of the court's process, is without merit. The burden is on appellant to demonstrate any such abuse. United States v. Powell, 379 U.S. 48, 55, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964); Donaldson v. United States, 400 U.S. 517, 527, 91 S.Ct. 534, 540, 27 L.Ed.2d 580 (1971); United States v. McCarthy, 514 F.2d 368, 372 (3d Cir. 1975...