Court Opinion

ID: 159517
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:26:42+00
Date Added: 2024-06-11T09:42:35.582452
License: Public Domain

F I L E D
                                                                       United States Court of Appeals
                                                                               Tenth Circuit
                        UNITED STATES COURT OF APPEALS
                                                                              APR 17 2000
                                 TENTH CIRCUIT
                       _____________________________________              PATRICK FISHER
                                                                                   Clerk

 FEDERAL TRADE COMMISSION,

          Petitioner-Appellee,

 v.                                                         No. 99-4099
                                                         (District of Utah)
 MT. OLYMPUS FINANCIAL, L.L.C.,                       (D.C. No. 98-CV-783-B)
 DAN HORMAN and ANNETTE
 HORMAN,

          Respondents-Appellants.
                        _________________________________

                              ORDER AND JUDGMENT*
                          _________________________________

Before EBEL and KELLY, Circuit Judges, and ELLISON, Senior District Judge.**
                   _________________________________

      Mt. Olympus Financial, L.L.C., Ron Horman and Annette Horman (hereinafter jointly

referred to as “Mt. Olympus”), appeal from an Order of the District Court compelling

compliance with civil investigative demands (“CIDs”) issued by the Federal Trade

Commission (“FTC”).

      *
        This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir.R. 36.3.
      **
          The Honorable James O. Ellison, Senior United States District Judge, Northern
District of Oklahoma, sitting by designation.
       Mt. Olympus is a subprime lender extending credit to higher risk borrowers. The

Hormans are the corporation’s principals. On July 6, 1998, the FTC, in connection with an

investigation into the lending practices of Mt. Olympus Financial issued CIDs requesting

certain of its files, books, correspondence and documents. The inquiry was made to

determine whether Olympus was in violation of the Truth-in-Lending Act, 15 U.S.C. §§160

et seq. (the TILA), including the Home Ownership and Equity Protection Act of 1994, 15

U.S.C. §§1639 (the HOEPA). Authority to investigate such possible violations is vested in

the commission by virtue of 15 U.S.C. §46(a); authority to issue CIDs is granted by 15

U.S.C. §57b-1.

       Each CID contained thirteen specifications which sought documents relating to the

loans made by Mt. Olympus. They requested documents showing the total number of loans

made, dates and amounts of the loans, interest rates, and payment status of the loans together

with information regarding any foreclosure proceedings. The CIDs were limited to

documents pertaining to loans secured by the borrower’s dwelling.

       Mt. Olympus took the position that the CIDs were improper, on the grounds that Mt.

Olympus issued only business loans which they alleged were exempt from the coverage of

the TILA and the HOEPA. Mt. Olympus filed a timely Petition to Quash the CIDs, urging

that the information sought was not within the scope of the FTC’s investigation, that the

information sought was not relevant to the matters under investigation, and that the requests

were vague, overly broad and unduly burdensome. The FTC denied the Petition to Quash

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and the respondents refused to comply with the CIDs without a court order.

       The FTC commenced proceedings in the United States District Court for the District

of Utah, Central Division, to enforce the CIDs. Olympus argued to the Magistrate Judge to

whom the case had been referred, that the FTC was conducting a “fishing expedition”, that

the investigation was “unreasonable” under the Fourth Amendment to the United States

Constitution, that the CIDs exceed the scope of the investigation authorized by the

Commissioners, and that the loans, being business loans, are outside the scope of the

investigation. The Magistrate Judge, by order dated February 12, 1999, required Olympus

to comply with the CIDs.

       Olympus objected to the order which was then reviewed de novo by the district court.

The district court, by order entered May 11, 1999, determined that the purpose of the FTC

in issuing the CIDs was properly within the authority of the agency; that the CIDs were

reasonably relevant to, and within the proper scope of, the FTC’s investigation; that the

material sought was not privileged; that the FTC did not already possess the materials; and

that the production of the documents was not unduly burdensome. Olympus complied with

the ruling of the district court and then appealed from its order. We note that the production

of the documents does not moot the appeal. See Church of Scientology v. United States, 506

U.S. 9, 13 n.6, 113 S.Ct. 447, 121 L.Ed.2d 313 (1992).

       We review for clear error the district court’s findings that each of the constitutional

requirements for enforcement of the CIDs was satisfied.

                                             -3-
       The initial inquiry is whether the FTC issued the CIDs for a lawful investigative

purpose. The investigation was to determine whether Mt. Olympus had violated the TILA

or the HOEPA by issuing personal, family or household loans not in compliance with their

requirements.1 The documents requested were reasonably relevant to an inquiry clearly

within the authority of the FTC.   See Security and Exchange Commission v. Blackfoot

Bituminous, Inc., 622 F.2d 512, 514 (l0th Cir.), cert denied, 449 U.S. 955 (l980); Equal

Employment Opportunity Commission v. University of New Mexico, 504 F.2d 1296, 1303

(l0th Cir. 1974).

       Moreover, the CIDs requested documents that were clearly relevant to the

investigation. They could confirm or disprove specific allegations of wrongdoing by Mt.

Olympus as reported by some of its borrowers. The FTC should be allowed to ascertain the

facts. See Amateur Softball Ass’n of America v. United States, 467 F.2d 312, 315 n.3 (l0th

Cir. 1972).

       The requests were not overly broad or unduly burdensome. The FTC narrowed the

requested documentation to loans that were secured by the borrower’s dwelling. It could

have asked for much more. See Phillips Petroleum Co. v. Lujan, 951 F.2d 257, 260 (10th Cir.

1991)(citing United States v. Morton Salt Co., 338 U.S. 632, 642-43, 70 S.Ct. 357, 363-64,

       1
          The FTC asserts that it has been informed by a number of borrowers of Mt.
Olympus that Mt. Olympus instructed them to falsify their loan applications to indicate
that their loans were for business purposes when the loans were actually primarily for
personal, family, or household purposes.

                                            -4-
94 L.Ed. 401 (l950)).

      We have reviewed all additional arguments tendered by Appellant and find them not

persuasive. As found by the District Court all requirements for enforcement were met. The

Judgment of the District Court is AFFIRMED.

                                         Entered for the Court

                                         James O. Ellison
                                         Senior United States District Judge

                                           -5-