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In re Establishment Inspection of Skil Corp.

decided: May 13, 1988.


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 86 M 263 - Prentice H. Marshall, Judge.

Posner, Flaum, and Easterbrook, Circuit Judges.

Author: Posner

POSNER, Circuit Judge.

The Consumer Product Safety Commission obtained from a federal magistrate a warrant to inspect documents at premises of Skil Corporation. The magistrate refused to quash the warrant. The district court armed this refusal and ordered Skil either to permit the warrant to be executed or to pay a civil contempt penalty. Skil submitted, but appeals. The appeal raises a mare's nest of jurisdictional, procedural, and substantive questions.

The Commission has for years been trying to determine whether the lower blade guard of circular saws manufactured by Skil is defective and, as a result, hazardous to consumers; if so, the Commission could require Skil to give public notice of the hazard, repair the saw or replace it with a nondefective model, or refund the purchase price to consumers. See 15 U.S.C. §§ 2064(a)(2), (c), (d). In June 1986 the Commission, having learned of two injuries to users of a [Ski] circular saw, conducted with Skil's consent a limited inspection of Skil's premises. Later the Commission learned of sixteen additional injuries, two fatal, and this prompted it to conduct a follow-up inspection in September, but this time Skil refused to consent. The Commission then obtained the warrant in issue, which authorizes it to inspect all of Skil's records (including consumer claims and complaints, test reports, and investigative reports) relating to incidents involving Skil circular saws in which the lower blade guard may have failed to shield the blade properly, and all engineering records for circular saws with a lower blade guard. The warrant entitles Skil to withdraw from inspection any documents for which it claims attorney-client privilege or work-product privilege, provided that it gives the Commission a list of these documents.

The statutory basis for the warrant is the second sentence of section 16(b) of the Consumer Product Safety Act, 15 U.S.C. § 2065(b). The section reads in its entirety:

Every person who is a manufacturer, private labeler, or distributor of a consumer product shall establish and maintain such records, make such reports, and provide such information as the Commission may, by rule, reasonably require for the purposes of implementing this [Act], or to determine compliance with rules or orders prescribed under this [Act]. Upon request of an officer or employee duly designated by the Commission, every such manufacturer, private labeler, or distributor shall permit the inspection of appropriate books, records, and papers relevant to determining whether such manufacturer, private labeler, or distributor has acted or is acting in compliance with this [Act] and rules under this [Act].

A regulation promulgated by the Commission provides that "If upon being presented with a notice by an officer or employee duly designated by the Commission, the person or agent-in-charge of the firm being inspected refuses to allow entry or inspection," as Skil had done, "the Commission may then seek a search warrant or take other appropriate legal action." 16 C.F.R. § 1118.2(d).

The magistrate issued the warrant on November 14, 1986. Three days later the Commission's inspectors tried to execute it, but they were refused admission to Skil's premises. The Commission asked the magistrate to certify to the district judge facts demonstrating a civil contempt, see 28 U.S.C. § 636(e), while Skil for its part asked the magistrate to quash the warrant. Inexplicable delay (particularly inexplicable in a matter involving safety) ensued; finally, in August 1987, the magistrate denied the motion to quash the warrant, after modifying the warrant in two minor respects, and certified Skil's contempt to the district judge, who after more delay upheld the magistrate's order in January 1988 and directed Skil either to allow the inspection or to pay $500 a day to the government for every day it refused. After the district judge refused to stay his order pending appeal, Skil allowed the inspection. We also denied a stay, and the inspection began and is continuing intermittently.

Skil told us at argument that the inspection disrupts its business, because the Commission's inspectors insist on searching through Skil's files in situ rather than allowing them to be brought to a conference room on the premises for inspection. The Commission told us that, on the contrary, it is Skil that insists on the inspectors' traipsing about from filing cabinet to filing cabinet. We have no ready method for resolving this factual dispute, nor do we think it important for us to do so.

The fast question is our appellate jurisdiction. The fact that the order was entered in a proceeding for civil contempt does not determine its appealability, since "an order of civil contempt is appealable if and only if it is either final for purposes of section 1291 or appealable under a statute allowing the appeal of interlocutory orders." Szabo v. U.S. Marine Corp., 819 F.2d 714, 716 (7th Cir. 1987). The order in issue is basically a discovery order, which normally would not be appealable unless the person against whom it ran cared enough to disobey the order and incur a contempt sanction, see, e.g., Cobbledick v. United States, 309 U.S. 323, 328, 84 L. Ed. 783, 60 S. Ct. 540 (1940); Illinois v. F.E. Moran, Inc., 740 F.2d 533, 536 (7th Cir. 1984)--which Skil does not. But discovery orders issued in the course of an ongoing lawsuit are unappealable because interlocutory, and the district judge's order upholding the inspection warrant and ordering Skil to comply (or else) is not interlocutory, at least in the usual sense of an order issued before the end of the lawsuit. It is the last order contemplated in the district court proceeding, and no other proceeding is pending either in a court or before the Consumer Product Safety Commission.

The last order in a proceeding is a final decision appealable under 28 U.S.C. § 1291. It is appealable even if it is ancillary to a proceeding in another forum--even if it kicks off the proceeding in the other forum. Ellis v. ICC, 237 U.S. 434, 442, 35 S. Ct. 645, 59 L. Ed. 2d 1036 (1915). For example, if a party to an arbitration agreement brings an action in federal district court under the federal arbitration code, and the only relief he seeks is an order directing the other party to arbitrate their dispute, and the district court issues the order, it is a final, appealable judgment. University Life Ins. Co. v. Unimarc Ltd., 699 F.2d 846, 848 (7th Cir. 1983); Graphic Communications Union v. Chicago Tribune Co., 779 F.2d 13 (7th Cir. 1985); In re Chicago, Milwaukee, St. Paul & Pac. R.R., 784 F.2d 831, 833 (7th Cir. 1986); County of Durham v. Richards & Associates, Inc., 742 F.2d 811, 813 (4th Cir. 1984). Yet it does not resolve the dispute; it merely channels it into another forum for resolution--the arbitration tribunal selected in accordance with the parties' agreement. Other examples include orders to disclose grand jury testimony and orders dismissing cases because the forum is inconvenient (in the expectation that the case will be refiled in the convenient forum). See In re Petition of Moore, 776 F.2d 136, 138-39 (7th Cir. 1985). Another example is an order of abstention pursuant to Railroad Comm'n v. Pullman Co., 312 U.S. 496, 85 L. Ed. 971, 61 S. Ct. 643 (1941). Whether or not it results in dismissal of the plaintiff's federal case, such an order does not resolve the parties' dispute but merely requires the plaintiff to commence proceedings in state court. Yet certainly when it involves an outright dismissal of the federal action and (in most circuits) even when it merely stays the federal court action, the order of abstention is appealable. Mazanec v. North Judson-San Pierre School Corp., 750 F.2d 625 (7th Cir. 1984). "The fact that the matter is being pursued before another tribunal is irrelevant." Id. at 627.

The inspection warrant issued in this case is a part of the Commission's investigation, and the investigation may eventually blossom into a formal administrative proceeding against Skil. But the proceeding in the district court is purely ancillary to the Commission's investigation, and the district court's order is the last act in that ancillary proceeding. A similar order was held appealable on this ground in Babcock & Wilcox Co. v. Marshall, 610 F.2d 1128, 1133 (3d Cir. 1979). The Commission argues, however, that since it is almost certain to be back before the magistrate at some subsequent stage of its investigation, appeal should be deferred to the end. But when will that be? The Commission seems really to be arguing that the results of the current inspection may lead it to seek additional inspection warrants; the breadth of the warrant makes the argument speculative, and the warrant questionable, as we shall see.

But if Skil continues to be obdurate, or raises unreasonable claims of privilege, the Commission may seek supplementary relief. And if, as Skil argues, the Commission is being unduly disruptive in its manner of conducting the inspection, Skil can go back to the magistrate and ask for an appropriate modification of the warrant (Skil pretends to us that it can't do this, that the magistrate has somehow lost jurisdiction of the matter, but that is nonsense); or it can ask the district judge to modify his order. Although retention of jurisdiction to mete out supplementary relief if the court's order is riot obeyed or has to be modified because of changed circumstances does not destroy finality, University Life Ins. Co. v. Unimarc Ltd., supra, ...

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