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Federal Trade Commission v. Shaffner

decided: July 14, 1980.

FEDERAL TRADE COMMISSION, PLAINTIFF-APPELLANT,
v.
MILTON SHAFFNER, DEFENDANT-APPELLEE



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 79 C 2981 -- J. Sam Perry, Judge.

Before Swygert, Circuit Judge, Kilkenny, Senior Circuit Judge,*fn* and Wood, Circuit Judge.

Author: Kilkenny

STATEMENT OF THE CASE

The Federal Trade Commission (the FTC), pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. and the Federal Trade Commission Act, 15 U.S.C. §§ 46, 49, and 50 is investigating debt collection practices. As part of its investigation, the FTC issued a subpoena duces tecum to appellee, an Illinois attorney who admittedly devotes most of his practice to collecting debts. Appellee refused to comply with the subpoena, and the FTC petitioned the district court for enforcement. The district court enforced the subpoena in part and denied enforcement in part. The FTC appeals. We affirm in part and reverse in part.

PROCEEDINGS BELOW

On August 29, 1978, the FTC promulgated a resolution directing the use of compulsory process to investigate debt collection practices. The resolution recited the authority to conduct the investigation and the statutes giving the FTC the authority to issue compulsory process in aid of its investigations. On February 1, 1980, the FTC issued a subpoena duces tecum containing eleven specifications directed to appellee.

Appellee moved the FTC to quash the subpoena. The motion was denied. Subsequently, he agreed to comply with nine of the eleven subpoena specifications, but refused to produce any material under two of the specifications.*fn1 His primary objection was that the FTC was requiring him to disclose privileged communications between his clients and himself. He also objected to the FTC's jurisdiction and to the scope of the subpoena. In any event, no documents were produced.

Thereafter, the FTC petitioned the district court for enforcement of its subpoena in its entirety. The district court granted the petition, but excluded specifications seven and ten from the enforcement order. Although the district court's order does not state the specific grounds for refusing to enforce the subpoena in its entirety, it is apparent that the court was not prepared to issue an order it considered would open an attorney's files.*fn2 Appellee has since responded to all the specifications, save numbers seven and ten.

ISSUES

I. Whether the FTC's investigation of appellee's business is beyond the scope of its statutory authority.

II. Whether enforcement of specifications seven and ten would violate privileged communications or other protected interests.

III. Whether enforcement of specifications seven and ten is unduly burdensome.

I.

Finding "abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors," contributing to bankruptcies, marital instability, loss of jobs, and invasions of privacy, Congress passed the Fair Debt Collection Practices Act to remedy the abusive practices.*fn3 15 U.S.C. § 1692. Although Congress intended the Act to be enforced primarily by consumers, Senate Report No. 95-382, 95th Cong., 1st Sess. 5, reprinted in (1977) U.S.Code Cong. & Admin.News, pp. 1695, 1699, it also authorized the FTC to consider violations of the Act unfair and deceptive practices under the Federal Trade ...


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