Source: https://law.justia.com/cases/federal/appellate-courts/F2/542/394/25411/
Timestamp: 2019-08-20 03:15:36
Document Index: 404548458

Matched Legal Cases: ['§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 407', '§ 407', '§ 407', 'art 3', '§ 407', '§ 407', '§ 407', '§ 403', '§ 1373', '§ 407', 'art 3', '§ 407', '§ 1004', '§ 1484', '§ 407', 'art 3']

Civil Aeronautics Board, Plaintiff-appellant, v. United Airlines, Inc., Defendant-appellee, 542 F.2d 394 (7th Cir. 1976) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Seventh Circuit › 1976 › Civil Aeronautics Board, Plaintiff-appellant, v. United Airlines, Inc., Defendant-appellee
Civil Aeronautics Board, Plaintiff-appellant, v. United Airlines, Inc., Defendant-appellee, 542 F.2d 394 (7th Cir. 1976)
US Court of Appeals for the Seventh Circuit - 542 F.2d 394 (7th Cir. 1976)
Argued April 14, 1976. Decided Sept. 23, 1976
The District Court's holding is supported by Burlington Northern, Inc. v. Interstate Commerce Commission, 149 U.S.App.D.C. 176, 462 F.2d 280, 287-288, rehearing en banc denied by an equally divided court, cert. denied, 409 U.S. 891, 93 S. Ct. 120, 34 L. Ed. 2d 148 (1972). The narrow issue before the court in that case was whether the Commission could inspect the carrier's earnings forecasts. These documents were demanded by the Commission in connection with a request made to it by a Senate Subcommittee for financial forecasts of railroads that were "marginal and losing money" and thus candidates for loan guarantees. Although the Burlington Northern was not claimed to be "marginal" or "losing money," the panel did not rest its decision on the ground that the inquiry was not relevant to the investigative purpose, but on a narrow interpretation of the governing statute, § 20(5) of the Interstate Commerce Act, as amended, 49 U.S.C. § 20(5), which served as the model for the provisions of the Federal Aviation Act now before us. This interpretation was based upon the history of § 20, particularly its interpretation by the Supreme Court in United States v. Louisville & Nashville R.R., 236 U.S. 318, 35 S. Ct. 363, 59 L. Ed. 598 (1915). In the Louisville & Nashville case the Court held that the grant to the Interstate Commerce Commission of authority to inspect accounts, records, and memoranda did not include the right to inspect correspondence. The right to inspection, reasoned the Court, was related to the purpose of § 20, which was to establish a uniform and reliable system of accounting. Id. at 335, 35 S. Ct. 363. If Congress had intended to authorize inspection of correspondence, it would have "used language adequate to that purpose" and would have excepted "some lines of correspondence," particularly that between the carrier and its attorneys. Id. at 336, 35 S. Ct. at 369. In Burlington Northern, the court pointed out that although Congress amended § 20 in 1920, ch. 91, 41 Stat. 456, 493, to include "correspondence" and other "documents" and "papers," thereby abrogating the specific holding of the Louisville & Nashville case,
Judge Leventhal's statement, for himself and three other judges, of why they would have ordered rehearing en banc in Burlington Northern, observed first that the interpretation of § 20 in Louisville & Nashville served to avoid a constitutional problem (concerning the extent of the protection afforded corporate documents by the Fourth Amendment) since laid to rest in United States v. Morton Salt Co., 338 U.S. 632, 70 S. Ct. 357, 94 L. Ed. 401 (1950). He then argued that Congress' rejection of the Louisville & Nashville interpretation of § 20 in the 1920 amendments was broader in scope than the panel opinion indicated. Those amendments, he said, not only expressly include "all documents, papers, and correspondence" but, by the words "kept or required to be kept," made it clear that "s 20 governs documents that are 'kept.' " 462 F.2d at 289.
"Of course a governmental investigation into corporate matters may be of such a sweeping nature and so unrelated to the matter properly under inquiry as to exceed the investigatory power. Federal Trade Comm'n v. American Tobacco Co. (264 U.S. 298, 44 S. Ct. 336, 68 L. Ed. 696 (1924).) But it is sufficient if the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant. 'The gist of the protection is in the requirement, expressed in terms, that the disclosure sought shall not be unreasonable.' Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 208 (66 S. Ct. 494, 90 L. Ed. 614)." 338 U.S. at 652-653, 70 S. Ct. at 369.
In Oklahoma Press Publishing Co. v. Walling, Mr. Justice Rutledge, speaking for the Court, recognized the need for some legitimate investigative purpose to which the production demand must be reasonably relevant and for reasonable definiteness in the demand. In harmonizing that holding with earlier decisions, he spoke of subpoenas that were so broad or indefinite as "to approach in this respect the character of a general warrant or writ of assistance, odious in both English and American history." 327 U.S. at 207, 66 S. Ct. at 505. Speaking of Mr. Justice Holmes' opinion in Federal Trade Commission v. American Tobacco Co., 264 U.S. 298, 44 S. Ct. 336, 68 L. Ed. 696 (1924), Mr. Justice Rutledge said that "the aggravating circumstance . . . seems to have been the Commission's claim of 'an unlimited right of access to the respondents' papers with reference to the possible existence of practices in violation of section 5.' " (The inner quotation is from 264 U.S. at 305, 44 S. Ct. 336.) 327 U.S. at 207 n. 40, 66 S. Ct. at 505. The Oklahoma Press opinion also quotes the condemnation in American Tobacco, 264 U.S. at 306, 44 S. Ct. at 337, of a demand to "search through all the respondents' records, relevant or irrelevant, in the hope that something will turn up." Id. The demand in American Tobacco was also cited by the Court in Morton Salt, as an illustration of a demand so "sweeping" and so "unrelated to the matter properly under inquiry as to exceed the investigatory power." 338 U.S. at 652, 70 S. Ct. at 369. The Board's demand in the case at bar is virtually identical to that condemned in American Tobacco.
Also relevant is California Bankers Association v. Shultz, 416 U.S. 21, 94 S. Ct. 1494, 39 L. Ed. 2d 812 (1974), in which the Court carefully pointed out that the challenged regulations "do not authorize indiscriminate rummaging among the records of the plaintiff," id. at 62, 94 S. Ct. at 1518, and that the information required to be reported "is sufficiently described and limited in nature . . . so as to withstand the Fourth Amendment challenge made by the bank plaintiffs." Id. at 67, 94 S. Ct. at 1520.
The recognition in Morton Salt and Oklahoma Press of a requirement that an inspection demand be reasonably definite and reasonably relevant to a proper investigative purpose was not based on the Fourth Amendment. The question of whether that amendment applied to corporations was reserved.3 Later decisions establish that it does. California Bankers Association v. Shultz, supra, 416 U.S. at 60-63, 66-67, 94 S. Ct. 1494; Colonnade Catering Corp. v. United States, 397 U.S. 72, 77, 90 S. Ct. 774, 25 L. Ed. 2d 60 (1970). Compare Burlington Northern, supra, 462 F.2d at 289 (separate opinion of Leventhal, J.). The Board does not contend otherwise. Its position is that the Fourth Amendment protects one's expectation of privacy, Katz v. United States, 389 U.S. 347, 361, 88 S. Ct. 507, 19 L. Ed. 2d 576 (1967) (Harlan, J., concurring), that a corporation has less expectation of privacy than an individual, United States v. Morton Salt Co., supra, 338 U.S. at 652, 70 S. Ct. 357, and that a regulated carrier has even less; therefore, argues the Board, it is not unreasonable for the Board to have unlimited power to inspect carrier records. The Board reasons that the carrier is in the same position as a regulated liquor dealer, Colonnade Catering Corp. v. United States, 397 U.S. 72, 90 S. Ct. 774, 25 L. Ed. 2d 60 (1970), or gun dealer, United States v. Biswell, 406 U.S. 311, 92 S. Ct. 1593, 32 L. Ed. 2d 87 (1972).
We think that "the evils at hand," Colonnade Catering Corp. v. United States, supra, 397 U.S. at 76, 90 S. Ct. 774, in the liquor and gun trades are not sufficiently analogous to the problems which are likely to arise in a public transportation industry to justify reliance here on cases dealing with those trades. And, while the expectation of privacy of a regulated carrier is limited, it nevertheless exists. As Judge Leventhal said in the passage quoted above, there are internal corporate papers "that stand at the heart of management effort, and so long as our carrier operations are rooted in private enterprise there is a strong element of privacy in such items (which is) a reason for limiting the occasion of (their) production . . . ." Burlington Northern, supra, 462 F.2d at 288. We need not define the limitations the Fourth Amendment places on investigatory power in order to decide this case, but Judge McLaren's observation that "a court should not construe a statute in such a manner as to raise a serious constitutional issue," 399 F. Supp. at 1328, is not irrelevant.
The Board relies on the "plain meaning" of § 407(e) and argues that the word "all" should not be construed to mean "some." Compare Train v. Colorado Public Interest Research Group, Inc., --- U.S. ----, 96 S. Ct. 1938, 1942, 48 L. Ed. 2d 434 (1976). United, on the other hand, urges that we consider § 407(e) in light of the statute as a whole and its legislative history. Although we differ with United in the conclusions reached, we think this is the proper approach. The Supreme Court has recently said:
"When 'interpreting a statute, the court will not look merely to a particular clause in which general words may be used, but will take in connection with it the whole statute (or statutes on the same subject) and the objects and policy of the law, as indicated by its various provisions, and give to it such a construction as will carry into execution the will of the Legislature. . . .' " Kokoszka v. Belford, 417 U.S. 642, 650, 94 S. Ct. 2431, 2436, 41 L. Ed. 2d 374 (1974), quoting Brown v. Duchesne, 19 How. (60 U.S.) 183, 194, 15 L. Ed. 595 (1857).
See also Philbrook v. Glodgett, 421 U.S. 707, 713, 95 S. Ct. 1893, 44 L. Ed. 2d 525 (1975); United States v. American Trucking Associations, Inc., 310 U.S. 534, 542-544, 60 S. Ct. 1059, 84 L. Ed. 1345 (1940). The purpose of § 407(e), situated as it is in the midst of an enumeration of CAB's economic regulatory powers, appears to be to allow the Board to obtain information on which to base the exercise of its broad, though not unlimited, powers. In view of this apparent purpose and the considerations discussed in Part 3, supra, we are not inclined to accept the Board's interpretation of the statute as conferring the authority of a general warrant in the absence of legislative history showing that Congress intended that result or a showing that such authority is essential to the exercise of the Board's regulatory functions.
The Board also contends that a 1975 amendment to § 407(e) "reaffirms" Congress' intent that the Board have plenary access to carrier files. That amendment added to the Board's existing authority over domestic carriers under § 407(e) its present authority over foreign air carriers and ticket agents. International Air Transportation Fair Competitive Practices Act of 1974, Pub. L. No. 93-623, 88 Stat. 2102, 2105. Because § 407 nowhere authorizes the Board to require that records be kept by foreign air carriers or ticket agents, United's argument that inspections should be limited to required and related records is significantly weakened. An examination of the purpose of the amendment does not, however, lead us to accept the Board's position. That purpose was to provide the Board with a means to detect illegal rebates and charges by ticket agents at other than the posted tariff rate. See H.R.Rep. No. 93-1475, 93d Cong., 2d Sess., 1974 U.S.Code Cong. & Admin.News pp. 7461, 7466-7467. Corresponding changes were made in § 403(b), 49 U.S.C. § 1373(b) (Supp. V, 1975), which regulates the observance of tariffs and granting of rebates. These changes are consistent with the view that the purpose of § 407(e) was to give the agency access to all documents and materials which further a valid regulatory function. They do not suggest that a general-warrant power was intended.
While the Board's inspection powers are not plenary, we believe they are not limited, as United contends and the District Court concluded, to the inspection of records required to be kept and records related to those required to be kept. Judicial views of the proper scope of the administrative visitorial function have changed and developed since the Supreme Court's decision in the Louisville & Nashville case, as evidenced by Morton Salt and Oklahoma Press, discussed in Part 3, above, and Mr. Justice Clark's recent opinion for this court in American International Trading Co. v. Bagley, 536 F.2d 1196 (7th Cir. 1976). Cf. also, Judge Leventhal's opinion favoring rehearing en banc in Burlington Northern, supra, 462 F.2d at 289. We believe that, in adopting § 407(e), Congress intended to give the Board power to investigate any subject properly within its jurisdiction and to inspect any carrier records reasonably relevant to such an investigation.9 There are no doubts based on the Fourth Amendment that would justify construing the statute to deny the power. See, e. g., Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 216-217, 66 S. Ct. 494, 90 L. Ed. 614 (1946); Equal Employment Opportunity Commission v. University of New Mexico, 504 F.2d 1296, 1299-1300, 1302-1303 (10th Cir. 1974); see also United States v. Morton Salt Co., 338 U.S. 632, 641-643, 70 S. Ct. 357, 94 L. Ed. 401 (1950). While, as United argues, a subpoena under § 1004(b) of the Act, 49 U.S.C. § 1484(b), and the regulations issued pursuant to that subsection,10 would be available in aid of an investigation, relegating the Board to that procedure would result in delay and some loss of flexibility. The Board's interpretation of the statute and its own regulations are entitled to deference, American Meat Institute v. EPA, 526 F.2d 442, 449-452 (7th Cir. 1975); see Northern Indiana Public Service Co. v. Porter County Chapter of Izaak Walton League of America, 423 U.S. 12, 14-15, 96 S. Ct. 172, 46 L. Ed. 2d 156 (1975), and we conclude that if a carrier's records are reasonably relevant to an investigation the Board is empowered to make, they may be inspected under § 407(e).
Determining the relevancy of the documents sought is the agency's responsibility in the first instance. Oklahoma Press Publishing Co. v. Walling, supra, 327 U.S. at 214-216, 66 S. Ct. 494. Given the requirement that a demand be reasonably relevant to a proper investigative purpose, the Board must of course have such a purpose to make the necessary determination of relevance itself. Further, the Board must disclose its purpose to enable a court to make a determination of relevance. Otherwise no inquiry "into the underlying reasons for the examination", United States v. Powell, 379 U.S. 48, 58, 85 S. Ct. 248, 255, 13 L. Ed. 2d 112 (1964), is possible. This obligation is of course not satisfied by the recital that the purpose of the investigation is to determine compliance with the law. The same could be said for any general warrant. Cf. Oklahoma Press Publishing Co. v. Walling, supra, 327 U.S. at 207, n. 40, 66 S. Ct. 494.
Documents relating to national security affairs were claimed to be privileged by United in the District Court but were not the subject of argument before us. The District Court held that only the government could assert such a claim and that if national security claims were made the interested government agencies should resolve the issues raised. See 399 F. Supp. at 1326 n. 8
But cf. Silverthorne Lumber Co. v. United States, 251 U.S. 385, 392, 40 S. Ct. 182, 64 L. Ed. 319 (1920), cited in Oklahoma Press, 327 U.S. at 206, n. 35, 66 S. Ct. 494
For further light on the reasonably-relevant standard, see, in addition to the authorities discussed in Part 3, supra, United States v. Powell, 379 U.S. 48, 57-58, 85 S. Ct. 248, 255, 13 L. Ed. 2d 112 (1964) (holding that the Commissioner of Internal Revenue Service could enforce an administrative summons to produce tax records, upon a showing before the district court "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. . . ."); Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509, 63 S. Ct. 339, 87 L. Ed. 424 (1943); SEC v. Brigadoon Scotch Distributing Co., 480 F.2d 1047, 1052-1055 (2d Cir. 1973), cert. denied, 415 U.S. 915, 94 S. Ct. 1410, 39 L. Ed. 2d 469 (1974); see also Federal Maritime Commission v. Port of Seattle, 521 F.2d 431, 433-436 (9th Cir. 1975); cf. Fed. R. Civ. P. 26(b) (1)