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MARSHALL v. AMALGAMATED INS. AGENCY SERVICES

September 18, 1981

RAY MARSHALL, SECRETARY OF LABOR OF THE UNITED STATES, PETITIONER,
v.
AMALGAMATED INSURANCE AGENCY SERVICES, INC., ET AL., RESPONDENTS.



The opinion of the court was delivered by: Bua, District Judge.

ORDER

Respondents,*fn1 Amalgamated Insurance Agency Services, Inc., Federal Computer Systems, Inc., Southwest Insurance Agency of Illinois, Inc., American and Overseas, Inc., Health Plan Consultants, Inc., Union Insurance Agency of Illinois, Dental Health Inc., Magna Charta Investments, Inc., Dover Insurance Agency, Ltd., Conference Insurance Consultants, and Federal Services Co. have moved pursuant to Rule 59, Fed.R.Civ.P.,*fn2 for the entry of an order granting a new trial. The court previously granted the respondents' motion for a stay of its order enforcing the subpoenas and the petitioner has moved to dissolve that stay. The court has been presented with memoranda in support of and in opposition to the pending motions, has heard lengthy oral argument on the motions, and has considered additional exhibits submitted at oral argument, as well as the additional memoranda of the parties relating to Securities and Exchange Commission v. McGoff, 647 F.2d 185 (D.C.Cir. 1981). This court finds no reason to vacate the order granting enforcement or continue the stay in this case pending appeal.

A motion for a new trial is addressed to the discretion of the trial court. Schybinger v. Interlake Steamship Company, 273 F.2d 307, 812 (7th Cir. 1952). There are three grounds for granting new trials in court-tried actions under Rule 59(a)(2); (1) manifest error of law; (2) manifest error of fact; and (3) newly discovered evidence. Brown v. Wright, 588 F.2d 708, 710 (9th Cir. 1978); 6A Moore's Federal Practice ¶ 59.07 at 59-94.

  A new trial in a court action will not lie merely to
  relitigate old matters, nor will a new trial normally
  be granted to enable the movant to present his case
  under a different theory than he adopted at the former
  trial.

6A Moore's Federal Practice ¶ 59.07 at 59-93. See also Evans, Inc. v. Tiffany & Co., 416 F. Supp. 224, 244 (N.D.Ill. 1976).

The respondents first claim that "the court erred in finding, contrary to United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964) and United States v. Lenon, 579 F.2d 420 (7th Cir. 1978), that at the hearing on enforcement, the respondents had the initial burden of going forward with the evidence, and that the Department of Labor was not required to make a prima facie showing that it is conducting an investigation pursuant to a legitimate purpose, and that the subpoenaed documents are relevant to the investigation." Motion for a New Trial and Other Relief, p. 2, ¶ 1.

In United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.2d.2d 112 (1964), the Supreme Court stated that in order to obtain enforcement of an investigative subpoena issued pursuant to 26 U.S.C. § 7602 (a), the Internal Revenue Service must

  show 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 Code
  have been followed.

Id. at 57-58, 85 S.Ct. at 255. Once this prima facie showing has been made, the burden rests on the respondent to show why the subpoena should not be enforced. It is clear that in this Circuit, the government's prima facie showing may be made by way of affidavits. Once the government makes its prima facie showing, it is entitled to the issuance of a rule to show cause why the subpoenas should not be enforced. It is then left to the respondent to show compelling reasons why the subpoenas should not be enforced or should be enforced only in a modified form. See United States v. Moll, 602 F.2d 134, 138 (7th Cir. 1979); United States v. Lenon, 579 F.2d 420, 421-422 (7th Cir. 1978).

The respondents again maintain that the government's affidavits, filed in support of the issuance of the rule to show cause in this case, failed to make a prima facie showing of enforceability. They have contended that there is no way that this court could determine whether the materials subpoenaed were "relevant to a legitimate investigation." This court disagrees. The question presented is whether materials "may be relevant to the purpose" of the investigation. Powell does not require a showing that the documents sought are directly related to a specific area of inquiry. The Powell standard incorporates a standard of relevance akin to the standard of discovery in civil actions. Cf. Rule 26, Fed.R.Civ.P.

The respondents cite In re Grand Jury Proceedings [In re Schofield], 486 F.2d 85 (3d Cir. 1973), for the proposition that "DOL must explain how each item in the subpoena is reasonably calculated to lead to information that may be relevant to its investigation." Respondents' Memorandum in Support of their Motion for Rehearing and Other Relief, p. 10. In that case, a grand jury subpoena was served on Mrs. Schofield requiring her to appear before the grand jury and allow handwriting exemplars and a "mug shot" to be taken. When she refused to comply, the government filed a motion to compel reciting simply that she had been served with a subpoena and that she had "no right or privilege under the fourth or fifth amendment to refuse to comply . . ." Id. at 87. Although this statement was found insufficient to justify enforcement, Schofield requires only

  that the government be required to make some
  preliminary showing by affidavit that each item is at
  least relevant to an investigation being conducted by
  the grand jury and properly within its jurisdiction
  and is not sought primarily for another purpose.
  This court believes that the DOL affidavits filed in this case suffice for this preliminary showing. Under oath in this case two DOL agents stated that DOL is investigating the operation of Central States, Southeast and Southwest Areas Health and Welfare Fund for the purpose of determining whether the fund business was being conducted in conformity with the requirements of ERISA. To require a more specific recital of the purposes for which this investigation is being conducted in order to determine whether the materials sought by the subpoena may be relevant to the investigation would, in practical effect, force the DOL to reveal its investigative plan. Nothing in the Constitution, ERISA, or the case law requires that DOL investigators afford respondents the specific right of apprisal which they demand, see Hannah v. Larche, 363 U.S. 420, 80 S.Ct. 1502, 4 L.Ed.2d 1307 (1960), or limit the areas of investigation to specific ERISA violations.

In addition, the respondents again rely on Civil Aeronautics Board v. United Airlines, 542 F.2d 394 (7th Cir. 1976). In that case, the Seventh Circuit required disclosure of the specific purpose of the investigation. This court failed to discuss United Airlines in its previous opinion because that case does not appear to be relevant to the issues raised by a challenge to enforcement of a subpoena duces tecum. United Airlines involved a warrantless search of all records located on the premises of United's corporate office. It seems apparent that the holding in that case rested on the fact that the statute purported to authorize a warrantless search of premises. No such intrusion is present in this case. All that the subpoena asks for in this case is production of certain categories of documents if they exist. It is left to the responsible officials of the respondents to determine whether these documents exist and to produce those requested at DOL's office. This court believes that the distinction between on site administrative searches which require warrant procedures and/or probable cause to justify them, see e. g. Marshall v. Barlow's, Inc., 436 U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305 (1978); Camara v. Municipal Court, 387 U.S. 523, 87 S.Ct. 1727, 18 L.Ed.2d 930 (1967); See v. City of Seattle, 387 U.S. 541, 87 S.Ct. 1737, 18 L.Ed.2d 943 (1967), and subpoena enforcement proceedings which require neither warrant procedures nor a finding of probable cause in the usual sense, see e. g. United States v. Morton Salt Co., 338 U.S. 632, 70 S.Ct. 357, 94 L.Ed. 401 (1950), is well established in the law. Therefore, the court does not believe that United Airlines is controlling precedent in this case. United Airlines has no applicability to the enforcement of a subpoena which merely seeks an ...


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