Wilson Corp. v. State ex rel. Udall

• Decision Date: 19 March 1996
• Docket Number: No. 16484,16484
• Citation: 1996 NMCA 49,121 N.M. 677,916 P.2d 1344
• Parties: , 1996-1 Trade Cases P 71,389 The WILSON CORPORATION, et al., Petitioners-Appellants, v. STATE of New Mexico, ex rel. Tom UDALL, Attorney General, Respondent-Appellee. Tom UDALL, Attorney General of the State of New Mexico, Petitioner-Appellee, v. The WILSON CORPORATION, et al., Respondents-Appellants, and Berridge Distributing Co., Inc., et al., Intervenors/Cross-Petitioners-Appellants.
• Court: Court of Appeals of New Mexico

Page 1344

916 P.2d 1344

121 N.M. 677, 1996-1 Trade Cases P 71,389

The WILSON CORPORATION, et al., Petitioners-Appellants, v. STATE of New Mexico, ex rel. Tom UDALL, Attorney General,

Respondent-Appellee.

Tom UDALL, Attorney General of the State of New Mexico, Petitioner-Appellee, v. The WILSON CORPORATION, et al., Respondents-Appellants, and Berridge Distributing Co., Inc., et al.,

Intervenors/Cross-Petitioners-Appellants.

No. 16484.

Court of Appeals of New Mexico.

March 19, 1996.

Certiorari Denied May 2, 1996.

[121 N.M. 680] F. Edwin Hallman, Jr., David C. Moss, Decker & Hallman, Atlanta, Paul Bardacke, Peter S. Kierst, Kerry Kiernan, Eaves, Bardacke & Baugh, P.A., Albuquerque, for Appellants The Wilson Corporation, et al.

Tom Udall, Attorney General, Jerome Marshak, Assistant Attorney General, Santa Fe, Susan G. White, Assistant Attorney General, Albuquerque, for Appellee State of New Mexico.

OPINION

HARTZ, Judge.

1. Pursuant to the New Mexico Antitrust Act, NMSA 1978, §§ 57-1-1 to -15 (Repl.Pamp.1995), the Attorney General obtained approval from the Santa Fe County District Court for civil investigative demands (CIDs) directed to a number of companies for information regarding the pricing and marketing of gasoline in New Mexico. The requests for the CIDs were granted ex parte. See § 57-1-5(A). After service of the CIDs, some recipients raised challenges in various courts around the state. This is the second appeal to arise from those challenges.

2. The first appeal concerned a district court summary judgment quashing five of the CIDs. See Brewer Oil Co. v. State of New Mexico ex rel. Attorney General, 121 N.M. 106, 908 P.2d 799 (Ct.App.), cert. denied, 120 N.M. 828, 907 P.2d 1009 (1995). The district court had ruled that the Attorney General had an improper purpose in seeking the CIDs. We reversed, holding that (1) the CIDs could be quashed only if the sole purpose of the Attorney General was an improper one and (2) the undisputed facts before the district court did not compel the inference that the sole purpose of the Attorney General was improper. Id. at 108-10, 908 P.2d at 801-03. In the course of the opinion we stated that the Attorney General could obtain enforcement of a CID without producing evidence of a violation of the Antitrust Act; all that was necessary was "that the Attorney General be conducting a civil investigation to determine whether the Antitrust Act has been violated and that there be reasonable cause to believe that the recipient of the CID has information or materials relevant to the investigation." Id. at 107, 908 P.2d at 800.

3. This appeal involves a different district court and different companies. Proceedings from several judicial districts were consolidated in the Colfax County District Court. Some of the proceedings had been initiated by motions to quash filed by recipients of the CIDs (the Marketers). Others apparently had been initiated by petitions filed by the Attorney General seeking orders compelling compliance with CIDs.¹ See § 57-1-5(B). After an evidentiary hearing the district court ordered the Marketers to comply with the CIDs. The Marketers raise the following contentions on appeal: (1) the Antitrust Act and the New Mexico Constitution require the Attorney General to establish reasonable cause that a violation of the Act has occurred or is occurring before a CID may be enforced; (2) on the record before the district court the Attorney General failed to establish the propriety of the CIDs and the Marketers demonstrated that the CIDs were issued for improper purposes; and (3) the district court improperly denied the Marketers an opportunity to obtain discovery from the Attorney General. We affirm.

I. REASONABLE CAUSE

4. The Marketers contend that a court can enforce a CID only if the Attorney General can show reasonable cause to believe that the Antitrust Act has been or is being violated. We disagree. Such a requirement would substantially thwart the purpose of CIDs. After all, the objects of our consideration are civil investigative demands. When the Attorney General is investigating whether the Antitrust Act has been violated, the answer to the inquiry is still unknown. If the Attorney General were reasonably satisfied that a violation had occurred or was occurring, he could bring a civil action under the Antitrust Act and obtain relevant records and other information through ordinary civil discovery. See §§ 57-1-7 (attorney general may bring an action for civil penalties), 57-1-8 (attorney general may seek injunctive relief); SCRA 1986, 1-011 (Repl.1992) (pleading should not be filed without belief that there is good ground to support it). CIDs enable the Attorney General to obtain information without first accusing anyone of violating the Antitrust Act. This power is hardly unique to our Attorney General. The United States Supreme Court recognized almost 50 years ago that agencies "charged with seeing that the laws are enforced may ... have and exercise powers of original inquiry." United States v. Morton Salt Co., 338 U.S. 632, 642, 70 S.Ct. 357, 364, 94 L.Ed. 401 (1950) (FTC). Such power, which the Court analogized to the grand jury's power of inquisition, enables the agency to "investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not." Id. at 642-43, 70 S.Ct. at 364; see In re Gold Bond Stamp Co., 221 F.Supp. 391 (D.Minn.1963) (power of United States Attorney General to obtain CIDs for antitrust investigation), aff'd, 325 F.2d 1018 (8th Cir.1964).

5. In any event, the language of the statute is clear. The pertinent portion of Section 57-1-5(A) states:

If the attorney general has reasonable cause to believe that a person has information or may be in possession, custody or control of any document or other tangible object relevant to a civil investigation for violation of Section 57-1-1 or 57-1-2 NMSA 1978, he may, before bringing any action, apply to the district court of Santa Fe county for approval of a civil investigative demand, demanding, in writing, such person to appear and be examined under oath, to answer written interrogatories under oath, or to produce the document or object for inspection and copying.

The statute is satisfied if the Attorney General is conducting a civil investigation to determine whether the Antitrust Act has been or is being violated, the information or items sought would be relevant to the investigation, and there is reasonable cause to believe that the recipient of the CID possesses the information or item. This construction of Section 57-1-5 follows the unambiguous language of the statute and comports with the interpretation of similar statutes by other courts. See Brewer Oil, 121 N.M. at 107, 908 P.2d at 800 (citing federal cases). The Attorney General may have a great deal of evidence of antitrust violations when he seeks a CID. But he need not have such evidence, and he need not disclose what he has, to obtain enforcement of a CID.

6. Nor do constitutional restrictions on government searches and seizures impose a requirement that CIDs issue only upon a showing of reasonable cause to believe that the Antitrust Act has been or is being violated. The United States Supreme Court has long held that the Fourth Amendment to the United States Constitution does not require the government to show a likelihood of a violation of law before it can obtain compulsory process. Addressing the subpoena authority of the Administrator of the Wage and Hour Division of the United States Department of Labor under the Fair Labor Standards Act of 1938, the Court stated, "The gist of the protection [provided by the Fourth Amendment] is in the requirement, expressed in terms, that the disclosure sought shall not be unreasonable." Oklahoma Press Pub. Co. v. Walling, 327 U.S. 186, 208, 66 S.Ct. 494, 505, 90 L.Ed. 614 (1946). It then explained:

Congress has made no requirements in terms of any showing of "probable cause"; and ... any possible constitutional requirement of that sort was satisfied by the Administrator's showing in this case, including not only the allegations concerning coverage [under the Fair Labor Standards Act], but also that he was proceeding with his investigation in accordance with the mandate of Congress and that the records sought were relevant to that purpose....

[H]is investigative function, in searching out violations with a view to securing enforcement of the Act, is essentially the same as the grand jury's, or the court's in issuing other pretrial orders for the discovery of evidence, and is governed by the same limitations. These are that he shall not act arbitrarily or in excess of his statutory authority, but this does not mean that his inquiry must be "limited by for[e]casts of the probable result of the investigation."

Id. at 215-16, 66 S.Ct. at 508-09 (internal quotation marks, ellipses, and footnotes omitted; emphasis added); see Morton Salt, 338 U.S. at 651-54, 70 S.Ct. at 368-69; see also United States v. Powell, 379 U.S. 48, 57, 85 S.Ct. 248, 255, 13 L.Ed.2d 112 (1964) (probable cause not necessary for IRS summons); see generally 1 Kenneth C. Davis, Administrative Law Treatise § 4:1 (3d ed. 1994). The New Mexico Supreme Court summarized the law in In re Investigation No. 2 of the Governor's Organized Crime Prevention Commission, 91 N.M. 516, 517-18, 577 P.2d 414, 415-16 (1978). It stated that for the issuance of an administrative subpoena the United States Constitution ordinarily requires only that "(a) the inquiry must be within the authority of the agency; (b) the demand must not be too indefinite; and (c) the information must be reasonably relevant to the purpose of the investigation." Id. at 517, 577 P.2d at 415.

7. We are not persuaded that Article II, Section 10 of the New Mexico Constitution would require a "probability" showing that the federal Constitution does not. We are aware of no jurisdiction that imposes such a...