Petition — Committee to Elect Lyndon LaRouche v. Federal Election Commission

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H NOV 21 1979 ?

No. 79- -

gO. XUGAK, JR., CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1979

COMMITTEE TO ELECT LYNDON LAROUCHE,

NATIONAL CAUCUS OF LABOR COMMITTEES,

CAMPAIGNER PUBLICATIONS, INC. and NEW

SOLIDARITY INTERNATIONAL PRESS SERVICE,

Petitioners,

FEDERAL ELECTION COMMISSION,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

David S. Heller

304 W. 58th Street

‘ 5th Floor

q New York, New York

Attorney for Petitioners

INDEX

Table of Cases and Authorities .................

Petition for Writ of Certiorari ..................

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Appendix:

FEC’s Order to Show Cause

FEC’s Petition to Enforce

Subpoena of the FEC dated

aw cc ks c ee eens

C. FEC’s Brief in Support of

Petition dated August 23, 1977 ............

Excerpts of Hearing Transcript dated

E. Order Denying Respondents’ Motion

for Stay Pending Appeal dated

. Opinion and Order of the

United States District

Court for the District of Columbia

Gntee Septemuer 20, 1977 .................

. Opinion and Order of the United

States Court of Appeals for the District

of Columbia Circuit dated August 23, 1979. .

34a

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———E —

TABLE OF CASES AND AUTHORITIES

Cases:

FTC v. MacArthur, 532 F.2d 1135

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FTC v. Western General Dairies, Inc.

Qe Fe, SOW. SU Utes Gils CPTI) on ce cee 10

United States v. Morton Salt Co.

is bs ka 0k Oe oye iw os 10,11

Statutes:

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Other Authorities:

Federal Rules of Civil Procedure,

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No. 79-

IN THE

Supreme Court of the Anited States

OCTOBER TERM, 1979

COMMITTEE TO ELECT LYNDON LAROUCHE,

NATIONAL CAUCUS OF LAROR COMMITTEES,

CAMPAIGNER PUBLICATIONS, INC. and NEW

SOLIDARITY INTERNATIONAL PRESS SERVICE,

Petitioners,

FEDERAL ELECTION COMMISSION,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

eS ARR

PETITION FOR WRIT OF CERTIORARI

The Committee to Elect Lyndon LaRouche, the 1976

principal campaign committee of Lyndon LaRouche; the

National Caucus of Labor Committees, a national polit-

ical and educational organization; Campaigner Publica-

tions, Inc., and New Solidarity International Press Service,

Inc., businesses incorporated and doing business in the

state of New York; pray that a writ of certiorari issue to

review the judgment of the United States Court of Appeals

for the District of Columbia Circuit entered in this case

on August 23, 1979.

OPINIONS BELOW

The opinion of the United States District Court is

unreported and is set forth in the Appendix. The opinion

of the United States Circuit Court of Appeals is not yet

reported and is set forth in the Appendix.

JURISDICTION

The judgment of the Court of Appeals was entered on

August 23, 1979. The petition for writ of certiorari was

filed within 90 days of that date. The jurisdiction of this

Court is invoked under 28 U.S.C. section 1254(1).

QUESTIONS PRESENTED

1. Did the Court below err in permitting the FEC to

enforce subpoenas against Appellants in the District

Court for the District of Washington, D.C.?

2. Did the Court below err in refusing to allow the

Appellants and their attorney more than one day to

prepare for the hearing, and in finding an uninten-

tional waiver of their Constitutional rights from the

form of words in which they requested an opportu-

nity to show that the FEC issued the subpoenas

against them from malice and in bad faith?

CONSTITUTIONAL PROVISIONS

The following provisions of the United States Consti-

tution are relevant to the questions presented.

ARTICLE III

Section 2

The Judicial Power shall extend to all Cases, in Law

and Equity, arising under this Constitution, the Laws of

the United States, and Treaties made, under their Au-

thority;—to all Cases affecting Ambassadors, other public

Ministers and Consuls;—to all cases of admiralty and

maritime jurisdiction;—to Controversies between two or

more states;—between a State and Citizens of another

State;—between Citizens of the same State claiming Land

under Grants of different States, and between a State, or

the Citizens thereof, and foreign States, Citizens or Sub-

jects.

AMENDMENT I

Congress shall make no law respecting an establishment

of religion or prohibiting free exercise thereof; or abridg-

ing the freedom of speech, or of the press; or of the right

of the people peaceably to assemble, and to petition the

Government for redress of grievances.

AMENDMENT IV

The right of the people to be secure in their persons,

houses, papers, and effects, against unreasonable searches

and seizures, shall not be violated, and no Warrants shall

issue, but upon probable cause, supported by Oath or

affirmation, and particularly describing the place to be

searched, and the persons or things to be seized.

ee a

AMENDMENT V

No person shall be held to answer for a capital or

Otherwise infamous crime, unless on a presentment or

indictment of a Grand Jury, except in case arising in the

land or naval forces, or in the Militia, when in actual

service in time of War or public danger; nor shall any

person be subject for the same offence to be twice put in

jeopardy of life or limb; nor shall be compelled in any

criminal case to be a witness against himself, nor be

deprived of life, liberty or property, without due process

of law, nor shall private property be taken for public use,

without just compensation.

AMENDMENT VI

In all criminal prosecutions, the accused shall enjoy the

right to a speedy and public trial, by an impartial jury of

the State and district wherein the crime shall have been

committed, which district shall have been previously as-

certained by law and to be informed of the nature and

cause of the accusation; to be confronted with the wit-

nesses against him; to have compulsory .process for ob-

taining witnesses in his favor, and to have the Assistance

of Counsel for his defense.

PROVISIONS OF THE UNITED STATES CODE

The following provisions of the United States Code are

relevant to the questions presented.

2 U.S.C. 437(d). Powers of Commission.

(a) The Commission has the power—

(i) to require, by special or general orders, any

person to submit in writing such reports and answers to

questions as the Commission may prescribe; and such

submission shall be made within such a reasonable period

of time and under oath or otherwise as the Commission

may determine;

(2) to administer oaths or affirmations;

(3) to require by subpoena, signed by the chairman

or the vice chairman, the attendance and testimony of

witnesses and the production of all documentary evidence

relating to the execution of its duties;

(4) in any proceeding or investigation, to order

testimony to be taken by deposition before any person

who is designated by the Commission and has the power

to administer oaths and, in such instances, to compel

testimony and the production of evidence in the same

manner as authorized under paragraph (3) of this subsec-

tion;

(5) to pay witnesses the same fees and mileage as

are paid in like circumstances in the courts of the United

States;

(6) to initiate (through civil actions for injunctive,

declaratory, or other appropriate relief), defend (in the

case of any civil action brought under section 313(a)(9)),

or appeal any civil action in the name of the Commission

for the purpose of enforcing the provisions of this Act

and chapter 95 and chapter 96 of the Internal Revenue

Code of 1954, through its general counsel;

(7) to render advisory opinions under section 312

of this title;

(8) to develop such prescribed forms and to make,

amend, and repeal such rules, pursuant to the provisions

of chapter 5 of Title 5, United States Code, as are

necessary to carry out the provisions of this Act and

chapter 95 and chapter 96 of the Internal Revenue Code

of 1954;

(9) to formulate general policy with respect to the

administration of this Act and chapter 95 and chapter 96

of the Internal Revenue Code of 1954; and

(10) to conduct investigations and hearings expe-

ditiously, to encourage voluntary compliance, and to

report apparent violations to the appropriate law enforce-

ment authorities.

(b) Any United States district court within the jurisdic-

tion of which any inquiry is carried on, may, upon petition

by the Commission, in case of refusal to obey a subpoena

or order of the Commission issued under subsection (a)

of this section, issue an order requiring compliance there-

with. Any failure to obey the order of the court may be

punished by the court as a contempt thereof.

person (other than the Commission or the United States)

for disclosing information at the request of the Commis-

sion.

(d) (1) Whenever the Commission submits any budget

estimate or request to the President of the United States

or the Office of Management and Budget, it shall con-

currently transmit a copy of such estimate or request to

the Congress.

(2) Whenever the Commission submits any legis-

lative recommendations, or testimony, or comments on

legislation, requested by the Congress or by any Member

of the Congress, to the President of the United States or

the Office of Management and Budget, it shall concur-

rently transmit a copy thereof to the Congress or to the

Member requesting the same. No officer or agency of the

United States shall have any authority to require the

Commission to submit its legislative recommendations,

testimony, or comments on legislation, to any office or

agency of the United States for approval, comments, or

review, prior to the submission of such recommendations,

testimony, or comments to the Congress.

(e) xcept as provided in section 313(a)(9), the power

of the Commission to initiate civil actions under subsec-

tion (a)(6) shall be the exclusive civil remedy for the

enforcement of the provisions of this Act.

15 U.S.C. Section 49. Documentary evidence, depositions;

witnesses

For the purposes of this Act, the commission, or its

duly authorized agent or agents, shall at all reasonable

times have access to, for the purpose of examination, and

the right to copy any documentary evidence of any person,

partnership, or corporation being investigated or pro-

ceeded against; and the commission shall have the power

to require by subpoena the attendance and testimony of

witnesses and the production of all such documentary

evidence relating to any matter under investigation. Any

member of the commission may sign subpoenas, and

members and examiners of the commission may admin-

ister oaths and affirmations, examine witnesses, and re-

ceive evidence.

Such attendance of witnesses and the production of

such documentary evidence, may be required from any

place in the United States, at any designated place of

hearing. And in case of disobedience to a subpoena the

commission may invoke the aid of any court of the United

States in requiring the attendance and testimony of wit-

nesses and the production of documentary evidence.

Any of the district courts of the United States within

the jurisdiction of which such inquiry is carried on may,

in case of contumacy or refusal to obey a subpoena issued

to any person, partnership or corporation, issue an order

requiring such person, partnership, or corporation to

appear before the commission, or to produce documentary

evidence if so ordered, or to give evidence touching the

matter in question, and any failure to obey such order of

the court may be punished by such court as contempt

thereof.

STATEMENT OF THE CASE

This is a Petition for Certiorari, taken from an Opinion

and Order of the United States Circuit Court of Appeals

for the District of Columbia, dated August 23, 1979,

affirming the order of the District Court directing Peti-

tioners to comply with subpoenas served on them by the

Federal Election Commission (hereinafter ““FEC’’).

The Petitioners are the Committee to Elect Lyndon

LaRouche (“CTEL”’), a principal campaign committee

registered with the FEC with offices in New York, New

York; the National Caucus of Labor Committees

(““NCLC’), an unincorporated political and educational

Organization with national headquarters in New York,

New York; Campaigner Publications, Inc. (*‘Cam-

paigner’”’), a publishing company incorporated and doing

business in New York, New York; and New Solidarity

International Press Service, Inc. (““NSIPS’’), which is

incorporated and doing business in New York, New

York.

CTEL was formed in October, 1975 to support the bid

of Lyndon LaRouche for the Presidential nomination of

the U.S. Labor Party for the 1976 election. It registered

with the FEC at that time and filed regular reports as

required by law. During the period October 1975 through

October 1976 CTEL engaged in various business trans-

actions with Campaigner and NSIPS in connection with

its campaign activities. CTEL, during the same period,

also engaged in certain business transactions with NCLC.

Neither Campaigner nor NSIPS had any dealings with

CTEL outside the state of New York. Campaigner,

NSIPS, and NCLC had no connection with the FEC

whatsoever during the entire period.

On August 23, 1977, the FEC petitioned the United

States District Court for the District of Columbia for

enforcement, under 2 U.S.C. section 437d(b), of sub-

poenas which it had issued to Petitioners. That statute

authorizes any United States District Court “within the

jurisdiction of which any inquiry is carried on” to order

compliance with an FEC subpoena. September 8, 1977

was set as the date for oral argument. The order was not

served on any of the Petitioners until September 7, 1977,

one day before the hearing. On that same day, September

7, 1977, counsel for Respondents filed a motion to dismiss

for lack of jurisdiction, failure to serve one of the Peti-

tioners, and inadequate time to prepare a defense.

At the hearing on September 8, 1977, counsel for

Petitioners urged that the subpoenas were issued improp-

erly because they constituted harassment and retaliation

for two pending lawsuits filed by CTEL against the FEC.

Counsel for Petitioners twice requested the Court’s per-

mission to file a written memorandum. The Court refused,

stating he would probably rule on the papers before him,

but that he would let counsel know.

On September 26, 1977 the District Court issued a

Memorandum Order, without permitting counsel to file

any additional papers, directing Petitioners to comply

with the FEC’s subpoenas.

On September 28, 1977, Petitioners filed a notice of

appeal, and on September 29, 1977, a motion for a stay

pending appeal. The District Court denied the motion for

a tay pending appeal on October 18, 1977.

On November 3, 1977, Petitioners filed a motion for a

stay pending appeal in the Court of Appeals. The Court

of Appeals denied the motion for a stay pending appeal

on November 8, 1977. Thereafter, on November 14, and

for several days following, Petitioners produced to the

FEC materials requested in the subpoenas.

ARGUMENT

THE COURT COMMITTED PLAIN ERROR IN

HOLDING THAT THE SUBPOENAS WERE

PROPERLY ENFORCED IN WASHINGTON, D.C.

Ever since the Declaration of Independence, which

listed as one of the outstanding grievances which the

colonists held against the British Crown, that it held court

in inconvenient places, one element of due process has

been that the forum of civil proceedings be one which

visits no inequity upon the defendant. This is even more

the case when the government is the party Plaintiff. The

Court below recognized this in the abstract, and in the

statutory form in which it has become embodied. Slip

Opinion at 8 ef seq. Yet, the court utilized specious

reasoning to lend its imprimatur to a situation where the

Defendants are forced to contest a subpoena in a district

where they have no office, no records, no presence, and

at present, no attorney. The reasoning was as follows.

First the Court analogized the investigation at bar to

several investigations undertaken by the Federal Trade

Commission (“FTC”). Even in such cases, the Court

adduced authority to the effect that the FTC is bound by

a rule of reason. Slip Opinion at 11. The Court then

~ aga

discussed a series of cases involving investigations of

multi-million dollar corporations, and multi-hundred mil-

lion dollar corporations, and decreed, by analogy, that

since such corporations could be made to answer sub-

poenas in Washington, so could the CTEL, and the

several small businesses that extended it credit, none of

which were much larger than the proverbial ““Mom and

Pop”’ stores. This blithe comparison of elephants and

rabbits, whatever else it is, is not coherent with a rule of

reason.

The Court then adduced another reason why the FEC’s

inquiry was properly enforced in Washington. The reason

in stark terms, is because the FEC is in Washington. See

Slip Opinion at 15-16. That the FEC would make deter-

minations in Washington is not surprising. Why that fact

should make the FEC’s offices the center of the inquiry

in question does not appear, save by mere assertion. This

is the method that the Court below utilizes. The Court

applied this rule of law mechanically, without the slightest

sensitivity that it was dealing with, not a multi-national

corporation, but the smallest, least well-financed political

committees over which FEC has ever exercised jurisdic-

tion, and a handful of tiny businesses. When the Court

recalls that this case does not involve economic regulation,

but rather an inquiry which was directed at a political

association, and the few businesses willing to extend it

credit to field a third-party candidate the unfairness of

the Circuit Court’s mechanistic application of cases in-

volving the FTC appears in stark relief. The bureaucratic

insensitivity of the FEC was adopted wholeheartedly by

the Court below. While such blind acceptance of the

dictates of an administrative agency is unfortunate in any

case, where that agency attempts to extend its reach into

the areas of the First Amendment, such a ruling is itself

improper and must be reversed.

The Court of Appeals makes much of its assertion that

the FEC’s choice of Washington, D.C. as its forum was

within the “bound of reasonableness.” Slip Opinion at ll.

However, its reliance on the cases cited is quite misplaced.

In FTC v. MacArthur, 532 F. 2d 1135 (7th Cir. 1976) the

question of the “bound of reasonableness” concerned

whether or not the place in which enforcement of sub-

poenas was sought had a reasonable relationship to the

subject matter of the investigation. Since the headquarters

of the corporation in question was in Chicago, and the

FTC’s inquiry was being conducted there, the court held

that enforcement of subpoenas in the Northern District

of Illinois met the test of reasonableness—even though

some of the documents and witnesses sought were located

in Florida. In the case at bar all documents and all

witnesses are physically located in New York, and the

production of documents and witnesses was requested and

took place in New York; reasonably the enforcement

action should have been brought there as well.

The only reason for locating the enforcement action in

Washington was for the convenience of the FEC. How-

ever, convenience of the agency is not sufficient grounds

to locate a judicial enforcement action in a particular

district. FTC v. Western General Dairies, Inc., 432 F.

Supp. 31 (N.D. Cal. 1977). The Court of Appeals herein

held that “inasmuch as the instant case involves a nation-

wide investigation, Western General is inapposite.”” How-

ever, to argue this the Court below had to transform the

FEC’s investigation of Petitioners into a ‘“‘nationwide”’

investigation. Yet all of the organizations and individuals

subpoenaed were located in New York, as were all the

documents. Not a single witness or document which is

er “gate of the instant subpoenas is outside of New

ork.

It is most telling, however, to actually review the leading

case on which the “‘bound of reasonableness” test is based.

This is United States v. Morton Salt Co., 338 U.S. 632,

652-653, 70 S. Ct. 357, 368-369, 94 L.Ed. 401, 415-416

(1949). (This is the citation which is omitted in the

quotation from FTC v. MacArthur, supra, Slip Opinion at

11.) The reference in MacArthur is to Morton Salt’s

discussion of constitutional rights as applied to corpora-

tions which are the subject of government regulation.

Briefly, what was at issue in the Morton Salt case was

whether the government could compel corporations which

were the subject of a cease-and-desist order to file com-

pliance reports with the FTC. The question was whether

disclosure was reasonable or unreasonable—that is, was

the information sought by the FTC within the scope of a

regulatory investigation? In its discussion of the 4th and

5th Amendment rights of a large corporation, the Morton

Salt court argued that corporations which are the recipi-

ents of favors from the government, “can, claim no

equality with individuals in the enjoyment of a right to

privacy.” Jbid. at 652. This was the context in which the

test of reasonableness was formulated. The distinctions

between a large corporation subject to FTC regulation,

and political entities and small businesses which have

already alleged major invasion of their First Amendment

rights and electoral campaign by the regulatory agency

involved, the FEC, are striking. In this light, the alleged

“reasonableness” of the FEC’s choice of a Washington,

D.C. forum to enforce its subpoenas against New York

individuals and organizations quickly fades away.

The most elementary elements of due process are notice

and hearing. It ought to go without saying that the notice

must be reasonable, that is, of the sort calculated to give

the party affected a fair opportunity to participate in the

hearing, and the hearing itself must afford the party at

least a minimal opportunity to participate therein. It is

uncontested, and the Court below acknowledged, that the

parties were only served a few short days before the

hearing, and the attorney retained the day before. The

court makes much of “‘actual notice,” Slip Opinion at 29,

footnote 20. Such notice is meaningless. That a party has

knowledge of a proceeding against it, without counsel,

without the papers which are to be used against it or

knowledge of the grounds relied upon by its adversary, is

meaningless knowledge. That is the reason why the FRCP

has a Rule 4, which does not permit a Court to proceed

on actual notice as opposed to proper service. That a

party had this philosopher’s stone of actual notice does

not transfer all of that party’s knowledge to an attorney,

who also has not had the advantage of seeing the govern-

ment’s papers, and the time to respond to them. Yet, the

Court below permitted and affirmed that the District

Court go ahead with a hearing, although the government

was not at all prejudiced by a slight delay to allow

Defendants’ lawyer to prepare.

The Court below then proceeded to infer a waiver of all

the Defendants’ legal rights from the fact that their

attorney, on one day’s preparation, only requested the

right to make a further submission to show bad faith on

the part of the FEC, but did not chant the formula-words

of “evidentiary” showing. The Court below knows well

that the law is loathe to imply a waiver of basic Consti-

tutional rights. Cf. Slip Opinion at 28 and 30, footnote

21. Yet, in this ludicrous hearing, conducted by an un-

prepared attorney, who barely had time to confer with his

clients, but who was alert enough to the issues, nonethe-

less, to call the Court’s attention specifically to the matter

that he wanted to prepare and demonstrate, Slip Opinion

at 28-29, the court caps the climax by holding, as a matter

of law that the attorney’s request was no request (Slip

Opinion at 30); that his charges were unsubstantiated

(because he was denied any opportunity to substantiate

them, however true they were and are in fact); and that

therefore, his clients, hundreds of miles away, served with

papers one day before, never having conferred at length

with their attorney, had waived their most basic Constitu-

tional rights: those of due process and equal protection of

the laws. On what reasoned basis was this precedent-

setting, and unparalleled reversal of every concept of

Constitutional law set by this Court for the past one

hundred years and more, undertaken? A mere Ipse Dixit

and nothing more. See Slip Opinion at 30-31. With all

due respect to the Court below, this proceeding had the

characteristics of the Star Chamber. A !awyer’s plain

request for time to prepare and demonstrate prejudice

against his clients by a runaway, politically motivated

agency was denied, where his request at a hearing was

labeled a waiver because he did not say “‘discovery” and

“evidentiary” when he asked to supplement the record.

His client’s rights, thus waived for them (and was there

ever a less “intelligent and informed” waiver allowed

since the salad days of the Spanish Inquisition?) were then

dismissed as “‘unsubstantiated,” and their papers sum-

marily opened to the agency. Especially considering that

the Petitioners before this Court are—with the exception

of CTEL—not political organizations, but merely small

businesses whose uttermost offense was to do business

with a candidate that the FEC wanted to destroy, the

ruling of the Court below returns us to the days of the

General Warrant, and nullifies the effect of the Consti-

tution for these parties. This Court should note the effect

of such a precedent upon the FEC and other administra-

tive agencies. The question is whether the Court will be

faced with reversing this precedent at another’s instiga-

tion, thus doing a deep injustice to the Petitioners at bar,

or enforcing these colonial measures against persons and

businesses of whatever political persuasion, who fall afoul

of a politically-motivated and malevolent agency such as

the FEC has demonstrated itself to be in the case of

petitioners.

CONCLUSION

The Court should grant Certiorari, and reverse the

decision of the Courts below.

Respectfully Submitted,

David S. Heller

Attorney for Petitioners

304 West 58th Street

New York, New York

10019

(212) 247-7488

APPENDIX

ORDER TO SHOW CAUSE

UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF COLUMBIA

FEDERAL ELECTION COMMISSION,

Petitioner,

v. MISC. NO. 77-0190

COMMITTEE TO ELECT LYNDON LaROUCHE,

UNITED STATES LABOR PARTY, NATIONAL

CAUCUS OF LABOR COMMITTEES, NEW SOLI-

DARITY INTERNATIONAL PRESS SERVICE,

INC., and CAMPAIGNER PUBLICATIONS, INC.

Respondents.

ORDER TO SHOW CAUSE

The Federal Election Commission has filed an appli-

cation for an Order requiring respondents, Committee to

Elect Lyndon LaRouche by and through their agents

including but not limited to Lyndon LaRouche, Lawrence

Hecht, Marcia Merry Pepper, and Richard Welsh; United

States Labor Party by and through their agents including

but not limited to Richard Welsh and Lyndon LaRouche;

National Caucus of Labor Committees by and through

their agents including but not limited to Ellen Berg,

Marjorie Mazel, and Nancy Spannaus; Campaigner Pub-

lications, Inc., by and through their agents including but

not limited to $tephen Pepper, Ed Spannaus, and Nancy

l4a

Spannaus, to Show ‘Cause why the subpoenas requiring

respondents to answer certain questions and produce

evidence should not be enforced. The subpoenas were

served on the respondents on June 26 and June 27, 1977,

pursuant to the Commission’s authority under 2 U.S.C.

437d (a) (3).The respondents did not comply with the

subpoenas and the Commission, therefore, on good cause,

applied hereto.

IT IS HEREBY ORDERED:

That respondents appear before in Motions Court, U.S.

Courthouse, 3rd and Constitution Avenue, N.W., Washing-

ton, D.C. with the records specified in said subpoenas on

the 8th day of September, 1977 at 10:00 a.m. Counsel may

be heard and show cause why this court should not issue

an Order directing the respondents to comply with the

Commission’s subpoenas. .

FURTHER ORDERED that this Order shall be served

upon respondents by the United States Marshal.

ORDERED this 23rd day of August, 1977.

/s/U.S.D.J.

UNITED STATES

DISTRICT JUDGE

lSa

UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF COLUMBIA

FEDERAL ELECTION COMMISSION

Petitioner

v. Civil Action No.

COMMITTEE TO ELECT LYNDON LA ROUCHE,

UNITED STATES LABOR PARTY, NATIONAL

CAUCUS OF LABOR COMMITTEES, NEW SOLI-

DARITY INTERNATIONAL PRESS SERVICE,

INC., AND CAMPAIGNER PUBLICATIONS, INC.

Respondents

PETITION TO ENFORCE SUBPOENA OF THE FED-

ERAL ELECTION COMMISSION

1. This is an action for enforcement of a subpoena,

issued pursuant to 2 U.S.C. §437(a) (3).

2. Jurisdiction is conferred upon this court by 2 U.S.C.

§437d(b).

3. Petitioner is the agency of the Federal Government

charged with the administration and enforcement of the

Federal Election Campaign Act of 1971, as amended (P.L.

94-283). The Federal Election Commission is mandated

to investigate possible violations of election laws (2 U.S.C.

§431 through 2 U.S.C. §455) and to verify and certify

eligibility to receive Presidential Election Campaign

Funds (26 U.S.C. §9001 through 26 U.S.C. §9012) and

Presidential Primary Matching Payments (26 U.S.C. §9031

through 26 U.S.C. §9042).

16a

4. Respondents are corporations and unincorporated

associations having headquarters in the state of New York

and having offices in the city of New York. Both corpo-

rations are chartered in New York.

5. Pursuant to 2 U.S.C. §437g(a)(2) and on the basis of

information ascertained in the normal course of carrying

out its supervisory responsibilities over Chapter 96 of the

Internal Revenue Code of 1954 (26 U.S.C. § 9031 through

26 U.S.C. §9042), the petitioner on May 12, 1977, found

Reason to Believe that violations of the following statutes

had been committed by respondents, as set out:

a. National Caucus of Labor has violated:

(1) 2 U.S.C. §434 by failing to register and report with

the Commission.

(2) 2 U.S.C. §441a by making excessive contributions

in-kind to the Committee to Elect Lyndon LaRouche

(hereinafter, CTEL) and the United States Labor Party

(hereinafter, USLP).

(3) 2 U.S.C. §433(b) (2) by not registering as an

affiliated committee with USLP and CTEL.

b. New Solidarity International Press Service, Inc.,

violated:

(1) 2 U.S.C. §441b by making illegal corporate con-

tributions in-kind to USLP, CTEL, and the National

Caucus of Labor Committees (hereinafter, NCLC), on

behalf of the LaRouche Presidential campaign.

c. Campaigner Publications, Inc., has violated:

(1) 2 U.S.C. §441b by making illegal corporate con-

tributions in-kind to USLP, CTEL, and NCLC on behalf

of the LaRouche Presidential campaign.

d. Committee to Elect Lyndon LaRouche has vio-

lated:

(1) 26 U.S.C. §9042 by making false and misleading

Statements in reports and certifications and on audit

reports.

(2) 2 U.S.C. §433(b) (2) by failing to report affiliation

with USLP and NCLC.

e. U.S. Labor Party has violated:

(1) 2 U.S.C. §433(b)(2) by not reporting its affiliation

with CTEL and NCLC.

17a

6. Notification of the petitioner’s determination was

sent to respondents on May 13, 1977.

7. When no response was received from respondenis,

the petitioner sent follow-up letters to the respondents on

June 9, 1977.

8. On June 26, and June 27, 1977, the petitioner served

on the respondents subpoenas.

9. Respondents did not petition the Commission for

a Motion to Quash or modify the subpoena pursuant to

Commission Regulation §111.13(a) (11 CFR 111.13).

10. Respondents have not complied with the sub-

poenas of the Commission.

11. No prior applications have been made for the

relief sought herein.

WHEREFORE, the Federal Election Commission

prays:

(1) That an Order to Show Cause issue forthwith

directing respondents to appear before this court on

August 31, 1977, and to show cause, if there be any, why

an Order should not be issued directing the respondents

to comply with the subpoenas of the Federal Election

Commission. |

(2) That this court issue an order directing the respond-

ents to comply with the subpoenas of the Federal Election

Commission.

(3) The Federal Election Commission be granted such

further relief as may be necessary and appropriate.

Respectfully submitted,

/s/William C. Oldaker

WILLIAM C. OLDAKER

General Counsel

/s/Charles N. Steele

18a

CHARLES N. STEELE

Associate General Counsel

/s/Lester Scall

LESTER SCALL

Assistant General Counsel

/s/Barbara Van Gelder

BARBARA VAN

GELDER

Attorney

Attorneys for the

Federal Election

Commission

1325 K Street, N.W.

Washington, D.C. 20463

202-523-4524

19a

MEMORANDUM IN SUPPORT OF ORDER TO

SHOW CAUSE

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

FEDERAL ELECTION COMMISSION,

Petitioner

v. Civil Action No.

COMMITTEE TO ELECT LYNDON LA ROUCHE,

UNITED STATES LABOR PARTY, NATIONAL

CAUCUS OF LABOR COMMITTEES, NEW SOLI-

DARITY INTERNATIONAL PRESS SERVICE,

INC., AND CAMPAIGNER PUBLICATIONS, INC.

Respondents

BRIEF IN SUPPORT OF PETITION TO ENFORCE

SUBPOENA OF THE FEDERAL ELECTION

COMMISSION

STATEMENT OF CASE

This case is before the court on petition to enforce

subpoenas of the Federal Election Commission. Jurisdic-

tion of this court is invoked pursuant to 2 U.S.C. §437d(b).

The subpoenas were issued in connection with an en-

forcement investigation of the above-named parties based

upon an. analysis of information “‘ascertained in the nor-

mal course of carrying out [the Commission’s] supervisory

responsibilities” of verifying required reports submitted

20a

to the Commission under Title 2 of the United States

Code, or matching fund submissions under Chapter 26 of

the United States Code. 2 U.S.C. §437g(a)(2).

Our analysis of the reports of Committee to Elect

Lyndon LaRouche and the United States Labor Party

Suggests the need for further investigation of the factual

issues arising from .the apparent coordination of the

respondents’ activities with the presidential campaign of

Lyndon LaRouche.

On October 14, 1976, Lyndon LaRouche, the presiden-

tial candidate of the United States Labor Party, submitted

a request for presidential primary matching funds with

the Federal Election Commission pursuant to 26 U.S.C.

§9033. On October 28, 1976, Mr. LaRouche and his

principal campaign committee, the Committee to Elect

Lyndon LaRouche, (hereinafter referred to as CTEL) filed

Suit in this court for an Order directing the Federal

Election Commission (hereinafter referred to as “FEC”

or “the Commission’’) to immediately certify Mr. La-

Rouche’s eligibility to the United States Treasury. In

January 1977, the court denied the requested relief and

dismissed the action without prejudice. Committee to Elect

Lyndon LaRouche, et al., v. Federal Election Commission,

U.S.D.C. D.C., Civil Action No. 76-2010.

Even at the time of dismissal of the initial action, the

Commission had not received copies of instruments or

other written verification of contributions to meet the

threshold requirements of the statute. (26 U.S.C. § 9033).

In expectation that such written documentation would be

received, the Commission approved audit and contribu-

tion verification procedures.

On the basis of the audit and field investigations

conducted by the Commission pursuant to 26 U.S.C.

§9038, the Commission determined on February 10, 1977,

that CTEL had not reached the matching fund threshold

in verifiable contributions. No further audit work on the

records of CTEL and the other organizations was per-

formed pursuant to 26 U.S.C. §9038, counsel having

advised the FEC that CTEL would not make the records

2la

available and that the other organizations had indicated

they would not consent. }

On February 14, 1977, Lyndon LaRouche, CTEL and

LeRoy Jones (a coniributor), filed a petition for review of

the Commission’s denial of matching funds certification

in the Court of Appeals. Committee to Elect Lyndon

LaRouche, et al., v. Federal Election Commission,

U.S.C.A., D.C. Cir., No. 77-1184, pursuant to 26 U.S.C.

§9041 which enables that court to review any agency

action made under the provisions of Chapter 26. On April

28, 1977, the same plaintiffs filed a damage suit for redress

of alleged unconstitutional harassment and actions by

agents of the Federal Election Commission in connection

with the verification of the matching fund submission.

This action is currently before the court. Jones v. Unknown

Agents of the Federal Election Commission, U.S.D.C.,

D.C., Civil Action No. 77-0732.

On the basis of the information received during the

audit and field investigation, the Commission found rea-

son to believe that the Committee to Elect Lyndon La-

Rouche may have violated the Federal Election Campaign

Act of 1971, as amended (hereinafter referred to as “the

Act’’). Letters of notification by certified mail were sent

to the five (5) respondents on May 13, 1977. (See Attach-

ment #1.) Respondents were afforded ‘‘a reasonable op-

portunity to demonstrate that no action should be taken

against such person(s) by the Commission under this

Act.” 2 U.S.C. §437g(a)(2) and (4).

When respondents failed to respond, follow-up letters

were sent to the respondents on June 9, 1977.' (See

Attachment #2.).

On June 24, 1977, local counsel for respondents filed a

Motion for a Temporary Restraining Order in this court

in conjunction with Jones v. Unknown Agents of the

Federal Election Commission, supra. Respondents’ motion

included the following request:

1. The National Caucus of Labor Committees’ follow-up letter

was returned due to an incorrect address.

22a

Plaintiffs further move that FEC and its agents be

prevented from harassing, investigating, or contact-

ing plaintiffs and auditing their books and records.

On June 28, 1977, at oral argument, Judge Robinson

denied the Motion for a Temporary Restraining Order.’

On the same day as the Commission was served with

the Motion for a Temporary Restraining Order, the

Commission sent out subpoenas to produce documents

and compel testimony pursuant to 2 U.S.C. §437d(a)(3).

(See Attachment #3.) In deference to the claimed indigency

of respondents, the Commission made the subpoenas

returnable at the offices of CTEL in New York City, on

July 8, 1977, for the production of documents and July 14

and 15, 1977, for the deposition.

Respondents applied to the Commission, through local

counsel, for an extension of time in which to comply with

the subpoenas in order to accumulate the materials and

to retain counsel in New York City. (See Attachment #4.)

On July 7, 1977, the Commission denied the request

and immediately notified the respondents by telephone

and telegram of the denial, but rescheduled the compliance

date for July 11, 1977. (See Attachment #5.)

The Commission then sent three (3) auditors and an

attorney to New York City on July 11, 1977, to review

the requested documents. At that time, New York counsel,

Gregory Perrin, stated that the documents were not

available for review at that time, but would be substan-

tially ready for review in ten days’ time. Counsel for the

petitioner and respondents then stipulated to an extension

of time until July 20, 1977. (See Attachment #6.)

On July 19, 1977, Mr. Perrin telephonically notified the

Commission that his clients had decided not to comply

with the subpoenas or honor the stipulation.

On July 20, 1977, the Commission received formal

2. In spite of this denial, respondents have raised the same issue as

their rationale for refusal to comply with the FEC subpoenas. (See

Attachment #7, discussed infra.)

23a

notification of the respondents’ breach of the stipulation.

(See Attachment #7.)

ARGUMENT

THE COMMISSION HAS AUTHORITY TO ISSUE

THE SUBPOENAS AND THE COURT HAS THE

POWER AND JUSTIFICATION TO ENFORCE IT

The Federal Election Commission has broad authority

to administer the Federal Election Campaign Act of 1971,

as amended. The Commission’s powers include the power

to formulate general policy with respect to the admini-

stration of the Act (2 U.S.C. §437d(a)(9)), the power to

make rules to carry out the provisions of the Act (2

U.S.C. §437d(a)(8), and the power to initiate civil actions

to enforce the provisions of the Act (2 U.S.C. §437d(a)(6)).

The Commission is given exclusive primary jurisdiction

with respect to civil enforcement of the Act. 2 U.S.C.

§437c(b)(1), §437d(e), and §437g.

Pursuant to its enforcement process, the Commission

has specific statutory authority to conduct investigations

to determine if candidates for federal office, among others,

are committing violations of the federal election laws.

Section 437g of Title 2, United States Code, provides in

relevant part:

(a) (2) The Commission upon receiving any com-

plaint under paragraph (1), and if it has reason to

believe that any person has committed a violation of

this Act, or of Chapter 95 or Chapter 96 of the

Internal Revenue Code of 1954, or, if the Commis-

sion, on the basis of information ascertained in the

normal course of carrying out its supervisory respon-

sibilities, has reason to believe that such a violation

has occurred, shall notify the person involved of such

alleged violation and shall make an investigation of

such alleged violation in accordance with the provi-

sions of this section. (Emphasis added.)

24a

The Commission, therefore, clearly has the authority to

investigate information ascertained during its matching

fund verification process which would give the Commis-

sion reason to believe the respondents may have violated

federal election laws.

To support the Commission’s investigatory power,? the

Act authorizes the Commission to issue subpoenas to

compel the submission of reports and answers to ques-

tions. Section 437d(a) of Title 2, United States Code,

states that: |

The Commission has the power—

(3) to require by subpoena, signed by the chairman

or the vice chairman, the attendance and testimony

of witnesses and the production of all documentary

evidence relating to the execution of its duties.

The Supreme Court has held that orders and subpoenas

of administrative agencies may be enforced where the

investigation is within the authority of the agency, the

order or subpoena is not too indefinite, and the infor-

mation sought 1s reasonably relevant. United States v.

Morton Salt Co., 338 U.S. 632, 652 (1950). See also,

EEOC v. University of New Mexico, Albuquerque, New

Mexico, 504 F.2d 1296 (10th Cir. 1976); 1 Davis, Admin-

istrative Law Treatise, §3.04-3.12 (West 1958 and Supp.

1970). Provided that the subpoena describes with sufficient

specificity the evidence sought and is not framed in

oppressive terms, it is entitled to enforcement, subject

only to requirements that the agency is acting within ‘he

statutory authority of a general class of proceeding which

it is empowered to conduct, that the agency’s action is

not arbitrary, and that the information sought is not

“plainly incompetent or irrelevant to any lawful purpose.”

3. The Commission’s order power is analogous to that of the

Federal Trade Commission as set forth in 15 U.S.C. §§45 and 46, and

this power has been broadly construed by the courts. See United

States v. Morton Salt, 338 U.S. 632 (1950).

25a

Endicott Johnson Corp. v. Perkins. 317 U.S. 501, 509

(1942); SEC v. Vacuum Can Co., 157 ¥.2d 530 (7th Cir.

1946), cert. denied, 330 U.S. 820 (1947).

The subpoena in the present matter seeks information

which is necessary and relevant to the Commission’s

investigation of the following issues: (1) affiliation be-

tween the Committee to Elect Lyndon LaRouche, the

United States Labor Party, and National Caucus of Labor

Committees; (2) corporate contributions from New Soli-

darity International Press, Inc., and Campaigner Publi-

cations, Inc.; and (3) false statements or material misre-

presentations on the matching fund submissions of the

Committee to Elect Lyndon LaRouche.

Respondents were notified of the purpose of the inves-

tigation several months prior to the issuance of the

Commission’s subpoena. The notification letters, as al-

ready noted, set forth the statutory provisions on which

the Commission investigation is based and the general

scope of the investigation, including a summary of the

allegation. The information sought pursuant to the sub-

poena, as already noted, is relevant to determining

whether respondents have, in fact, committed violations

of the statutory provisions which they have been advised

are in issue. Thus, the issuance of the subpoena is a

reasonable and appropriate exercise of the Commission’s

statutory authority. See, /sbrandsten-Moller Co., v. United

States, 300 U.S. 139 (1937); Far East Conference v. Federal

Maritime Commission, 337 F.2d 146 (D.C. Cir. 1964), cert.

denied, 379 U.S. 991 (1965).

In the event of a Commission decision to issue a

subpoena, the respondents are allowed five (5) days after

the date of the service to apply to the Commission to

quash or modify the subpoena. (11 C.F.R. 111.13.)

Respondents did petition the Commission for an exten-

sion of time in which to comply with the subpoena. (See

Attachment #4.) Although the request came within five

days of receipt of the subpoenas, the Washington counsel

who requested the extension specifically preserved all

rights the respondents may have, which newly appointed

26a

counsel may wish to exercise. Accordingly, the Commis-

sion did not review the request of respondents as a formal

motion to quash the subpoenas pursuant to Commission

Regulation 111.13, supra.

Since the Commission received no further motions from

respondents within five days (or any time) of receipt of

the subpoenas, respondents have waived their administra-

tive remedy and this court may now enforce the subpoenas

pursuant to 2 U.S.C. §437d(b).

Subpoena enforcement proceedings of the nature before

the court are summary in nature. Donaldson v. United

States, 400 U.S. 517, 528, (1971). As long as the rights of

the parties summoned are protected and an adversary

hearing made available, if requested, the court need not

require the filing of a complaint followed by an answer

and discovery under the Federal Rules of Civil Procedure.

Donaldson, supra, 400 U.S. at 529; United States v. Mc-

Carthy, 514 F.2d 368, 373, 377 (3rd Cir. 1975). Therefore,

the Commission’s proper relief is to petition this court for

an Order to Show Cause at a date and time certain why

an order enforcing its subpoenas should not be issued.

CONCLUSION

The Commission is proceeding within its congression-

ally mandated authority in its investigation of the Com-

mittee to Elect Lyndon LaRouche, United States Labor

Party, National Caucus of Labor Committees, New Soli-

darity International Press Service, Inc., and Campaigner

Publications, Inc. The subpoenas issued by the Commis-

sion are clearly authorized and seek, within well estab-

lished bounds, to compel the production of evidence and

testimony in support of the investigation. The court has

jurisdiction to enforce the subpoenas and may issue an

Order to Show Cause why the subpoenas should not be

enforced.

For. reasons expressed herein, it is submitted that the

Commission’s petition to enforce the Federal Election

27a

Commission’s subpoenas should be granted, and an Order ; TRANSCRIPT OF HEARING

to Show Cause should be issued by the court.

IN THE UNITED STATES DISTRICT COURT FOR

Respectfully submitted, THE DISTRICT OF COLUMBIA

/s/William C. Oldaket

WILLIAM C. OLDAKER

GENERAL COUNSEL UNITED STATES OF AMERICA

> Petitioner,

/s/Charles N. Steele

CHARLES N. STEELE v. 77-0190

ASSOCIATE GERERAL COMMITTEE TO ELECT LYNDON LA ROUCHE,

COUNSEL UNITED STATES LABOR PARTY, NATIONAL

CAUCUS OF LABOR COMMITTEES, NEW SOLI-

DARITY INTERNATIONAL PRESS SERVICE,

/s/Lester Scall INC., AND CAMPAIGNER PUBLICATIONS, INC.

LESTER SCALL

ASSISTANT GENERAL Respondents.

COUNSEL

TRANSCRIPT OF PROCEEDINGS

Washington, D.C.

September 8, 1977

The above-entitled matter came on for hearing in open

court at 10:00 o’clock, A.M., before:

THE HONORABLE OLIVER GASCH

United States District Judge

APPEARANCES:

Counsel for the Petitioner:

BARBARA VAN GELDER, ESQ.

LESTER SCALL, ESQ.

Ba 29a

Counsel for the Respondents:

JOEL JOSEPH, ESQ.

REGIS GRIFFY

OFFICIAL COURT REPORTER

[Tr. pp. 83-86]

THE COURT: Why didn’t your people comply with

the subpoenas when they were given the subpoenas in

New York?

MR. JOSEPH: They didn’t comply, Your Honor, for

several reasons.

First of all, they felt the subpoenas were invalid as a

matter of law.

THE COURT: Tell me why.

MR. JOSEPH: Okay. As stated in the petition, letters

were sent to respondents stating that they had reason to

believe that the violations of the law were taking place.

They did not put in their petition that responses were

forthcoming. I have in front of me, which I can submit to

the Court, a letter that I submitted on behalf of two of

the respondents. At that time I was not representing all

of the respondents. A letter dated June 13th, 1977, and it

states among other things: “‘This is to the General Con-

sulate, the Federal Election Commission. You claim that

CTEL, the Committee to Elect Lyndon La Rouche, made

false and misleading statements.” It was a very general

Statement. We requested additional specificity. We re-

quested this charge be explained in detail and made more

specific. The respondents had notice of what statements

they were talking about, what was under investigation.

We asked the Commission: What statements are you

referring to? Please state all of the reasons that the

Commission believes that these statements were either

false or misleading.

The Commission never responded to this letter. The

30a

respondents had no specificity of the charges. They didn’t

know what they were accused of. Concerning some of the

other respondents, the United States Labor Party, the

Committee to Elect Lyndon La Rouche, and the National

Caucus of Labor Committees, the Commission claimed

that they are affiliated, the Commission has intricate

regulations and affiliations, and counsel queried the Com-

mission: What section of the regulation or statute does

the Commission believe had been breached? No response

was forthcoming to the letter, so respondents had no

means of knowing what sections of the regulations, or the

statute that the Federal Election Commission was refer-

ring to, and before the Commission starts issuing sub-

poenas, the respondents are entitled to show that, their

reason to believe their violations are unfounded. The

matter could have ended there if the Commission would

have specified the charges. Further, we feel that the

subpoenas were taken, the action, to subpoena the mate-

rial was taken in retaliation for the lawsuits brought by

two of the Committees, the United States Labor Party

and the Committee to Elect Lyndon LaRouche.

In fact, counsel for the Federal Election Commission

has stated as such that if we hadn’t brought those actions

that they wouldn’t have taken actions against the United

States Labor Party and the Committee to Elect Lyndon

LaRouche. In fact, in their own papers they state that the

12 subpoenas, only five of which are returned enforced,

today, were served the same day they got service of a

temporary restraining order to stop them from investi-

gating, and the Court has not been notified that the

preliminary injunction in that matter is still under consid-

eration. This matter could have been referred to Judge

Robinson, but instead they filed it and did not claim that

it was a related case, which we feel that it may be.

I would like to continue on why we feel that the

subpoenas are illegal. We rely in the main on the case of

Pollard v. Roberts, a three-judge Court, 283 F.Sup., 248.

It was affirmed by the United States Supreme Court in

393 U.S., 410.

3la

We also rely heavily on the case of Doe v. Martin of

this Circuit.

THE COURT: What are the facts in the Pollard case?

MR. JOSEPH: The facts are exceedingly close to this,

The Republican party in a Southern state, I believe it

was,—Arkansas I’m sorry, was being investigated by the

State Attorney General. Now, the Republican Party in

that State is a very minor party, was considered so in the

opinion. Many subpoenas were filed on the party and on

groups allegedly related to the party. It was an affirmative

action to stop the subpoenaes because they considered it

harassing. The Court granted both the T.R.O. and a

permanent injunction against the subpoenas. I would like

to quote—

THE COURT: What about the preliminary in that

case?

MR. JOSEPH: I believe the preliminary was considered

with the permanent injunction in that case.

THE COURT: In the Pollard case was there any effort

on the part of the Commission to seek the information as

they have sought to seek it here, according to counsel?

MR. JOSEPH: In that case it wasn’t a Federal Election

Commission, it was the State Attorney General who was

seeking the information. I do not know the specific

administrative steps he took. I believe that he did take

some. That case was quoted in the case of Doe v. Martin,

which was written by Judge Leventhal, which was also a

three-judge Court, 404 F.Supp. 753, a 1975 case.

32a

ORDER OF OCTOBER 18, 1977

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Miscellaneous No. 77-0190

FEDERAL ELECTION COMMISSION,

Petitioner,

COMMITTEE TO ELECT

LYNDON LA ROUCHE, ET-AL.,

Respondents.

ORDER

Upon consideration of respondents’ motion for a stay

pending appeal of the Court’s Order of September 26,

1977, compelling compliance with subpoenas of the peti-

tioner FEC, and the memoranda filed in support and

opposition thereto, and the Court having concluded that

respondents have failed to show a substantial likelihood

of success on the merits of their appeal, see Blankenship

v. Boyle, 447 F.2d 1280 (D.C. Cir. 1971), it is by the Court

this 18th day of October, 1977,

ORDERED that respondents’ motion for a stay pend-

ing appeal of the Court’s Order of September 26, 1977,

should be, and hereby is, denied.

/s/Oliver Gasch

Judge

33a

ORDER OF SEPTEMBER 26, 1977

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

FEDERAL ELECTION COMMISSION

Petitioner,

v. Misc. No. 77-0190

COMMITTEE TO ELECT LYNDON LA ROUCHE,

et al.,

Respondents

MEMORANDUM-ORDER

The Federal Election Commission (‘“‘FEC’’) seeks an

order directing each of five respondents to comply with

subpoenas issued by the FEC. The respondents are the

Committee to Elect Lyndon LaRouche (“CTEL’’); the

United States Labor Party (“‘USLP’’); the National Cau-

cus of Labor Committees (““NCLC”); New Solidarity

International Press Service, Inc. (“‘NSIPS’’); and Cam-

paigner Publications, Inc. (““CP’’). Counsel for petitioner

and respondents appeared at a show cause hearing in

open Court on September 8, 1977 to argue the matter.

For the reasons set forth briefly below, the Court has

decided to order respondents, except the United States

Labor Party, to comply with the subpoenas.

The subpoenas at issue are connected with an FEC

investigation into suspected violations of campaign laws

34a

during the 1976 presidential campaign of Lyndon La-

Rouche, candidate of the United States Labor Party. In

October, 1976, LaRouche applied to the FEC for presi-

dential primary matching funds pursuant to 26 U.S.C.

§9033. Following an audit and contribution verification

investigation,' the FEC determined on February 10, 1977,

that LaRouche failed to meet the matching fund threshold

in verifiable contributions.2 The FEC also concluded,

based on information obtained during the audit and field

investigation, that the five respondents may have violated

the Federal Election Campaign Act of 1971, as amended

(the “‘Act’’). Accordingly, the FEC notified the respond-

dents on May 13, 1977, that it was initiating an investi-

gation into these suspected violations.? On June 24, after

respondents failed to respond to the FEC’s notice, the

FEC served the subpoenas at issue by mail, returnable in

New York City on July 8 for the production of documents

and on July 14 and 15 for depositions.* After an extension

of the return date until July 20, the respondents informed

the FEC on July 19 that they would not comply with the

subpoenas. The FEC initiated court proceedings to en-

force the subpoenas by obtaining an order to show cause

against the respondents on August 23, 1977.

MERITS

A. Subject Matter Jurisdiction.

Respondents have moved to dismiss the FEC petition

contending that the Court lacks subject matter jurisdiction

1. The Federal Election Campaign Act of 1971, as amended

specifically authorizes the FEC to make audit and field

investigations for the purpose of verifying matching fund

submissions. 2 U.S.C. §438 (Supp. V 1975); 26 U.S.C. §9038 (Supp.

V 1975).

2. Brief in Support of Petition to Enforce Subpoena of the

Federal Election Commission (Brief of Petitioner) at 2.

3. See Brief of Petitioner, Attachment #1.

4. See id., Attachment #3.

35a

to enforce the subpoenas. The Act provides that any

district court “within the jurisdiction of which any inquiry

is carried on’ may order compliance with an FEC sub-

poena. 2 U.S.C. §437d(b) (Supp. V 1975). Respondents

argue that the situs of the FEC inquiry is New York City

and not the District of Columbia; they emphasize that the

subpoenas were returnable in New York, the documents

sought presumably are located in New York, and the

parties reside or have their principal places of business in

New York.

Although no courts have interpreted this jurisdictional

provision for district court enforcement of FEC sub-

poenas, several courts have broadly construed an identical

jurisdictional grant relating to Federal Trade Commission

subpoenas.® See, e.g., FTC v. Browning, 435 F.2d 96 (D.C.

Cir. 1970). In determining the place or places where an

“inquiry is being carried on,” these courts have not looked

solely to the respondent’s place of residence and the

location of documents and witnesses. They also have

given due weight to the convenience of the investigating

agency and the power of the agency to decide where to

conduct an inquiry. See FTC v. MacArthur, 532 F.2d

1135, 1140-41 (7th Cir. 1976). In the case at bar, although

the documents sought and the respondents’ offices are in

New York, the FEC investigation is being carried out by

staff in its office in Washington, D.C.’ Unlike larger

agencies, the FEC has a single office, located in Washing-

5. Statement of Points and Authorities in Support of

Respondents’ Motion to Dismiss at 1.

6. See 15 U.S.C. §49 (1970).

7. The determination that respondents may have violated

campaign laws was made by the FEC in Washington, D.C. and

presumably was based on an examination of LaRouche’s matching

fund submission by staff in the FEC’s Washington office, which is

the Commission’s only true office. Moreover, all correspondence by

the FEC with the respondents concerning the investigation

emanated from the FEC’s Washington office. See Brief of

Petitioner, Attachments #1 and #2.

36a

ton, D.C. and does not have regional offices in New York

or elsewhere. The FEC, which made the subpoenas re-

turnable in New York solely for the convenience of the

respondents,*® intended to send staff from Washington to

New York to conduct depositions and examine docu-

ments. :

In urging that the situs of the FEC inquiry is New

York, respondents overlook that the inquiry might rea-

sonably be viewed as being carried on in both Washingtc

and New York. Whatever the basis for saying that the

inquiry is being carried on in New York, however, the

Court concludes that the participation of the FEC’s

Washington office in this inquiry is sufficient to confer

jurisdiction on the court to enforce the subpoenas.

B. Personal Jurisdiction.

In their motion to dismiss, respondents also contend

that the Court lacks personal jurisdiction over them

because of improper service on three respondents of the

show cause order and inadequate notice to all of the

respondents of the show cause hearing.'® Service of the

show cause order was made on two individuals in New

York on September 7, one day before the show cause

hearing.

Despite the later service, respondents cannot reasonably

argue that they lacked adequate time to prepare their

defense for the hearing. Respondents were served with the

subpoenas in late June and have had ample opportunity

to voice their objections to the subpoenas. More impor-

tantly, counsel for respondents conceded at the show

cause hearing that he notified respondents of the show

cause order when he was served with it on August 23.!!

8. Brief of Petitioner at 3-4.

9. See FTC v. MacArthur, 532 F.2d at 1141.

10. Statement of Points and Authorities in Support of

Respondents’ Motion to Dismiss at 2.

11. The fact that respondents did not decide until September 7 to

retain Washngton counsel to represent them at the show cause

hearing does not detract from the fact that they had actual notice of

the hearing on August 23.

37a

The issue of proper service of the show cause order

raises more substantial questions. Respondents admit that

the service on the two individuals, Mr. Spannaus and Ms.

Berg, was sufficient to place respondents NSIPS and CP

within the Court’s jurisdiction. Respondents appear to

argue, however, that Mr. Spannaus and Ms. Berg could

not be served for USLP, NCLC, or CTEL because they

are not “officers” or “managing or general agents” of

those organizations. Rule 4(d)(3) of the Federal Rules of

Civil Procedure provides that service on unincorporated

associations is effectuated by serving an “officer” or

‘managing or general agent”’ of the association. The FEC

has taken the position, therefore, that effective service was

made on NCLC and CTEL because Mr Spannaus is on

the Board of Directors of NCLC and Ms. Berg is the

press officer of CTEL. The Court concludes that sufficient

service of the show cause order was made upon NCLC

and CTEL to bring them within the Court’s jurisdiction.

Although Mr. Spannaus and Ms. Berg technically might

not be considered “officers” or “‘managing or general

agents” of NCLC and CTEL, their positions within those

organizations indicate that they have sufficient authority

and responsibility so that service on them satisfied the

purpose behind Rule 4(d)(3).'2 Moreover, it is now well-

settled that strict compliance with the Federal Rules of

Civil Procedure is not required for summary proceedings

such as the subpoena enforcement action in this case.

Rather, the Court merely must ensure that the rights of

the respondents to an adversary hearing are protected.

Donaldson v. United States, 400 U.S. 517, 529 (1971); FTC

v. Browning, 435 F.2d 96, 104 (D.C. Cir. 1970):

There has been no indication, however, that responsible

authorities of respondent USLP were served with the

show cause order. The Court therefore concludes that

USLP is not within the jurisdiction of the Court and

cannot be compelled by an order from this Court to

comply with the subpoena directed at it.

12. See State of Georgia v. National Democratic Party, 447 F.2d

1271, 1273 n.2 (D.C. Cir. 1971).

38a

C. Respondents’ Claim of Harassment.

The subpoenas at issue essentially seek records of

expenditures of, contributions to, and lease and loan

agreements between the various respondents. The FEC

claims that these subpoenas are related to its investigation

into three areas: the alleged failure of CTEL, USLP, and

NCLC to register as “‘affiliated’’ committees; the alleged

illegal corporate contributions by CP and NSIPS; and the

alleged false statements by CTEL on matching fund

submissions. After examining the subpoenas closely, the

Court concludes that they are sufficiently definite and

reasonably relevant to the matters under investigation.

United States v. Morton Salt, Inc., 338 U.S. 632, 652

(1950); FTC v. Browning, supra at 102.

Respondents urge the Court not to enforce the sub-

poenas because they are allegedly part of an FEC effort

to harass the respondents.'? Respondents rely on two

decisions recognizing the right of minor parties to be

protected from harassing subpoenas and campaign disclo-

sure requirements.'* Those cases concerned specific alle-

gations of government efforts to obtain the names of

contributors to, and members of, minor parties. In the

case at bar, however, the respondents are required by

federal law to publicly disclose names of contributors,

and respondents do not challenge the application of this

disclosure requirement to them. The information sought

by the FEC relates to an investigation into specific cam-

paign law violations ihat resulted from a proper FEC

13. The respondents and several LaRouche contributors filed a

suit in April seeking damages for alleged unconstitutional

harassment by FEC agents in connection with the verification audit

and field investigations. Jones v. Unknown Agents of the Federal

Election Commission, U.S.D.C., D.C., Civil Action No. 77-0732. In

conjunction with this suit, respondents’ motion for a temporary

order restraining the FEC from continuing its investigations of

respondents was denied on June 28, 1977.

14. Doe v. Martin, 404 F. Supp. 752 (D.D.C. 1975); Pollard v.

Roberts, 283 F. Supp. 248 (E.D. Ark. 1968).

39a

review of matching funds submissions. The information

is not being requested for the purpose of public disclo-

sure,'> and there is no i:.dication that these subpoenas are

part of a scheme to harass respondents.

Wherefore, the Court having considered petitioner’s

request for an order enforcing its subpoenas served on

respondents on June 26 and 27, and respondents’ motion

to dismiss the petition for lack of jurisdiction, and upon

hearing in open Court on September 8, 1977, it is by the

Court this 26th day of September, 1977,

ORDERED that respondents’ motion to dismiss should

be, and hereby is, denied as to all respondents except the

United States Labor Party; and it is further

ORDERED that respondents the Committee to Elect

Lyndon LaRouche, the National Caucus of Labor Com-

mittees, New Solidarity International Press Service, Inc.,

and Campaigner Publications, Inc., by and through their

agents, comply forthwith with the subpoenas served on

them by the Federal Election Commission on June 26 and

27, 1977.

/s/Oliver Gasch —

Judge

15. In Doe v. Martin, supra at 761, the court emphasized that

minor parties alleging harassment are still subject to government

investigations into campaign practices.

40a

Notice: This opinion is subject to formal revision before publication

in the Federal Reporter or U.S.App.D.C. Reports. Users are requested

to notify the Clerk of any formal errors in order that corrections may be

made before the bound volumes go to press.

Yuited States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 77-1987

FEDERAL ELECTION COMMISSION, APPELLEE

Vv.

COMMITTEE TO ELECT LYNDON LA ROUCHE, ET AL.,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(D.C. Civil Action No. 77-0190)

Argued September 27, 1978

Decided August 23, 1979

David S. Heller, a member of the bar of the Supreme

Court of Wisconsin, pro hac vice, by special leave of the

court, with whom Joel D. Joseph was on the brief, for

appellants.

Bills of costs must be filed within 14 days after entry of judgment. The

court looks with disfavor upon motions to file bills of costs out of time.

4la

Charles N. Steele, Associate General Counsel and Bar-

bara Van Gelder, Attorney, Federal Election Commission,

with whom William C. Oldaker, General Counsel, Lester

N. Scall, Assistant General Counsel, Federal Election

Commission, were on the brief, for appellee.

Also Paul D. Kamenar entered an appearance for ap-

pellants in this case.

Before MCGOWAN and TAMM, Circuit Judges, and

JUNE L. GREEN,* District Judge.

Opinion for the court filed by Circuit Judge MCGOWAN.

McGowaN, Circuit Judge: This is an appeal from an

order of the District Court enforcing subpoenas issued

by the Federal Election Commission (Commission) dur-

ing an investigation into possible violations-of the federal

election laws in connection with the campaign of Lyndon

La Rouche for the 1976 Presidential nomination of the

United States Labor Party (USLP).' Appellants, the

Committee to Elect Lyndon La Rouche (CTEL), the

National Caucus of Labor Committees (NCLC), the

New Solidarity International Press Service, Inc. (New

Solidarity), and Campaigner Publications, Inc. (Cam-

paigner), challenge the decision under review on the

grounds that the District Court lacked subject matter

jurisdiction to entertain the suit, that appellants were

not subject to extraterritorial service of process, and

that the District Court erred in not permitting appellants

to demonstrate that the subpoenas were issued for an

* Of the United States District Court for the District of

Columbia, sitting by designation pursuant to 28 U.S.C. § 292

(a) (1976).

1 This appeal was consolidated for purposes of oral argu-

ment with Committee to Elect Lyndon La Rouche v. Federal

Election Commission, No. 77-1184, and Jones v. Federal

Election Commission, No. 77-2093, both decided this date.

42a

improper purpose. For reasons hereinafter appearing,

we affirm the decision under review.

The events culminating in the issuance of the Commis-

sion’s subpoenas began on October 14, 1976, when Lyndon

La Rouche applied to the Commission for primary match-

ing funds under the Presidential Primary Matching Pay-

ment Account Act, 26 U.S.C. §§ 9031-9042 (1976). To

qualify for such funds, a candidate must certify, inter

alia, that he has received in excess of $5,000 in contri-

butions of $250 or less in each of at least 20 states. Jd.

§ 9033 (b) (3)-(4). In support of his application, La

Rouche submitted a notarized statement that he had

raised the threshold amount. But neither La Rouche nor

CTEL, his principal campaign committee, provided ap-

propriate documentation of the contributions.

On November 4, 1976, the Commission authorized its

staff to conduct a field audit in order to verify La

Rouche’s eligibility for matching funds. That audit, which

took place shortly thereafter at CTEL’s headquarters in

New York City, uncovered many instances where contri-

butions made by money order or cashier’s check raised

substantial questions as to whether the contributions were

made by residents of the states indicated. In addition to

these irregularities, the audit revealed a pattern of heavy

last-minute contributions from persons listing their occu-

pation as that of “volunteer coordinator” for NCLC, an

organization that, during the last two weeks of the eligi-

bility period, received payments from CTEL of more than

$310,000. It further indicated that CTEL shared office

space and common personnel with NCLC and three other

organizations (New Solidarity, Campaigner, and the

USLP) and that those organizations accounted for 78%

of CTEL’s expenditures and 97% of its debt. These find-

ings seemed particularly significant in light of the fact

43a

that CTEL had surpassed the $5,000 threshold by only a

narrow margin in at least several states.

In response to these findings, the Commission both

expanded the audit to include the four organizations

closely related to CTEL and authorized the Commission

staff to interview CTEL contributors in order to verify

their contributions. During the week of January 26,

1977, agents of the Commission either did, or attempted

to, interview listed contributors in three states, Delaware,

Massachusetts, and Wisconsin. The results of the field

interviews revealed that in neither Delaware nor Wis-

consin had La Rouche raised the threshold amount. Ac-

cordingly, on February 10, 1977, the Commission rejected

La Rouche’s application for matching funds. We today

affirm that decision in No. 77-1184. Committee to Elect

Lyndon La Rouche v. Federal Election Commission, No.

77-1184 (D.C.Cir. August 23, 1979).

On April 28, 1977, the USLP, CTEL, and ten indivi-

duals who contributed to CTEL in 1976 filed suit in the

District Court, seeking damages and injunctive relief

against the Commission and various members of its staff.

The principal allegations were that the field interviews of

CTEL contributors were unauthorized by statute and

violative of the first and fourth amendments. On Octo-

ber 25, 1977, the District Court granted defendants’ mo-

tion for summary judgment, concluding that “nothing in

the record . . . supports or . . . could support any alleged

violation of Plaintiffs’ . . . statutory or constitutional

rights.” In No. 77-2093, we today affirm that decision in

part, and reverse in part. Jones v. Federal Election Com-

mission, No. 77-2093, (D.C.Cir. August 28, 1979).

While the Jones case was pending in the District Court,

the Commission, upon reviewing both the results of the

inquiry into La Rouche’s eligibility for matching funds

and various reports of contributions and expenditures re-

quired to be filed with the Commission pursuant to 2

44a

—

U.S.C. § 484, determined that there was reason to believe

that the USLP, CTEL, NCLC, New Solidarity, and Cam-

paigner (the five organizations) had violated certain pro-

visions of the federal elections laws. By letters dated

May 13, 1977, the Commission notified each of the five

organizations that they were under investigation and, in

each case, detailed the nature of the suspected statutory

violations. Thus, the letter to NCLC indicated that there

was reason to believe that NCLC was a political commit-

tee and, as such, had violated 2 U.S.C. sections 433 and

434 by failing to register and file reports with the Com-

mission; that there was reason to believe that NCLC had

violated 2 U.S.C. section 441a by making excessive in-kind

contributions to CTEL and the USLP; and that there was

reason to believe that NCLC had violated 2 U.S.C. section

483(b) (2) by not registering as an affiliated committee

with CTEL and the USLP. —

The letters to New Solidarity and Campaigner notified

them that they might be in violation of 2 U.S.C. section

441b(a) for making illegal in-kind corporate contribu-

tions to CTEL and the USLP by extending to those

organizations long-term credit on behalf of the La Rouche

campaign. The Commission notified the USLP that there

was reason to believe that, in contravention of 2 U.S.C.

section -433(b) (2), it had failed to report its affiliation

with CTEL and NCLC. Finally, the Commission notified

CTEL that not only had it failed to report its apparent

affiliation with NCLC and the USLP, but also that there

was reason to believe that CTEL had made false or mis-

leading statements in its submissions for matching funds.*

On June 9, 1977, the Commission, having yet to receive

a response to its letters of May 13, sent follow-up letters

to the five organizations. By letters of June 11, 1977, and

June 13, 1977, local Washington counsel notified the Com-

2 This letter also notified CTEL that the Commission was

consolidating its earlier cases into this matter.

45a

mission that they had been retained to represent the five

organizations. In addition to seeking further information

about the charges, counsel requested the Commission to

Stay its investigation until the District Court decided the

Jones case. This request was denied.

On June 24, 1977, the Commission, in furtherance of its

investigation, subpoenaed the five organizations to produce

at their New York offices on July 8, 1977, specified docu-

ments pertaining to their expenditures, contributions, and

lease and loan agreements.* On July 1, 1977, the Com-

mission received a request from local Washington counsel

asking for additional time in which to secure counsel in

New York and to assemble the documents for Commission

review. This request was denied; however, the Commis-

sion staff offered to reschedule the return date.

On July 8, 1977, when the Commission staff went to

New York to examine the subpoenaed documents, repre-

sentatives of the five organizations and newly retained

New York counsel indicated that the materials were not

yet assembled. Counsel for the Commission nonetheless

used the occasion to review each subpoena and the at-

tachments thereto with the representatives of the organi-

zations and New York counsel. At the July 8 meeting,

New York counsel stipulated to produce the documents

on July. 20, 1977; counsel for the Commission agreed to

return to New York to review the documents on that

date. On July 19, 1977, however, New-York counsel

notified the Commission that the five organizations would

not comply with the subpoenas.

On August 23, 1977, the Commission petitioned the

District Court below for enforcement of the subpoenas

*The Commission issued the subpoenas pursuant to its

authority “to require by subpoena, signed by the chairman or

the vice chairman, the attendance and testimony of witnesses

and the production of all documentary evidence relating to the

execution of its duties.” 2 U.S.C. § 487d(a) (3) (1976).

46a

pursuant to 2 U.S.C. section 437d(b), which authorizes

any United States district court “within the jurisdiction

of which any inquiry is carried on” to order compliance

with a Commission subpoena. That same day, the District

Court issued a show cause order requiring the five or-

ganizations to appear on September 8, 1977, to demon-

strate why the subpoenas should not be enforced. The

District Court further directed that the show cause order

be served on the organizations by the United States

Marshal in New York. Copies of the petition, exhibits,

and memoranda also were mailed to the organizations’

New York counsel and hand delivered to local Washing-

ton counsel.

On September 7, 1977, local Washington counsel filed a

motion to dismiss the petition on the ground (1) that,

inasmuch as New York, not the District of Columbia, was

the situs of the Commission’s inquiry, the District Court

lacked subject matter jurisdiction to entertain the suit

under 2 U.S.C. § 487d(b), (2) that the United States

Marshal in New York had not effected service of the show

cause order upon either CTEL or the USLP, and (3) that

the remaining three organizations, having been served

only earlier that day, lacked adequate time to prepare a

defense. At the show cause hearing held on Septem-

ber 8, 1977, local counsel also urged the District Court not

to enforce the subpoenas for several additional reasons,

including the allegation that the subpoenas were issued

for the improper purpose of harassment and retaliation

for the two pending law suits filed by CTEL and the

USLP against the Commission. At the conclusion of his

argument, local counsel requested leave to file a “written

statement” within 10 days. The District Court, however,

after hearing rebuttal argument, rejected counsel’s re-

quest, indicating that it would probably rule on the

papers.

On September 26, 1977, the District Court issued a

Memorandum Order concluding that it had subject mat-

47a

ter jurisdiction over the petition because the Commission’s

inquiry was properly viewed as being carried on in the

District of Columbia. The District Court also held that,

except for the USLP, all the organizations had been

properly served, and had been afforded adequate time

to prepare their defense. It further rejected the claim

that the subpoenas were issued for the purpose of harass-

ment or retaliation. Accordingly, the District Court or-

dered CTEL, NCLC, New Solidarity, and Campaigner to

comply with the Commission’s subpoenas.

On September 28, 1977, those organizations filed this

appeal and later applied for a stay pending appeal. This

court, on November 8, 1977, denied appellants’ motion

for a stay.

vo II.

We are urged to reverse the District Court on three

grounds.‘ Two of the grounds relate to the jurisdictional

provision for the enforcement of Commission subpoenas,

2 U.S.C. § 487d (b), which provides:

Any United States district court within the juris-

diction of which any inquiry is carried on, may,

upon petition by the Commission, in case of refusal

to obey a subpoena or order of the Commission issued

under subsection (2) of this section, issue an order

requiring compliance therewith. Any failure to obey

* We find no merit in appellants’ fourth ground for reversal,

namely, that the enforcement of the Commission’s subpoenas

was “premature” insofar as the Commission failed to dis-

charge its obligation to afford appellants “a reasonable oppor-

tunity to demonstrate that no action should be taken against

{[them],” 2 U.S.C. § 487g(a) (4) (1976). It is our view that

appellants were afforded a more than adequate opportunity

to demonstrate their compliance with the federal election laws

when, on July 8, 1977, counsel for the Commission, who had

been sent to New York to examine the subpoenaed documents,

reviewed the subpoenas and the attachments thereto with

appellants and their New York counsel.

48a

the order of the court may be punished by the court

as a contempt thereof.

First, appellants renew their argument that the District

Court lacked subject matter jurisdiction to entertain this

enforcement petition, because, within the meaning of sec-

tion 487d(b), the Commission’s “inquiry [was] carried

on” in New York rather than in the District of Columbia.

Second, urging us to construe section 4387d(b) as not

authorizing extraterritorial service of process, appellants

assert that, inasmuch as they were served in New York,

the District Court lacked personal jurisdiction to enforce

the subpoenas. Third, in a claim unrelated to seetion

487d (b), appellants argue that the District Court erred

in not providing them with at least some opportunity to

substantiate their allegations that the subpoenas were

issued for an improper purpose. We turn now to these

arguments.

Appellants assert that, within the meaning of section

437d (b), the District of Columbia was not a place where

the Commission’s “inquiry [was] carried on” and that,

accordingly, the District Court lacked subject matter

jurisdiction to entertain this suit. It is appellants’ view

that inasmuch as the documents at issue were located in

New York, the subpoenas were made returnable in New

York, appellants maintain their principal places of busi-

ness in New York, and prior Commission audits took

place in New York, the District Court erred in conclud-

ing that the District of Columbia was a situs of the Com-

mission’s inquiry.

It appears that we are the first court, other than the

District Court, to be called upon to determine where a

Commission “inquiry [was] carried on” for purposes of

establishing jurisdiction to enforce a subpoena under sec-

tion 487d(b). But, as the District Court correctly noted,

we do not write on an entirely clean slate. Both section 9

49a

of the Federal Trade Commission Act, 15 U.S.C. § 49

(1976), and section 112(c) (4) of the National Traffic and

Motor Vehicle Safety Act, 15 U.S.C. § 1401(c) (4) (1976),

are virtually identical to section 487d(b), providing as

they do for the enforcement of subpoenas in any “United

States district court within the jurisdiction of which [the

agency’s] inquiry is carried on.”* Several courts have

construed these provisions, and we look now to their

decisions.

The leading case in this regard is FTC v. MacArthur,

532 F.2d 1135 (7th Cir. 1976). There the FTC was con-

ducting an investigation to determine whether Bankers

Life and Casualty Company had engaged in unfair and

deceptive acts or practice in connection with the sale of

land in Colorado. The FTC, as part of the investigation,

5 These provisions are not precisely identical to section

437d(b). Section 9 authorizes the enforcement of an FTC

subpoena in any United States district court “within the juris-

diction of which such inquiry is carried on” (emphasis

added), referring to the express power of the FTC to require

the “attendance of witnesses, and the production of docu-

mentary evidence, . . . from any place in the United States,

at any designated place of hearing.” 15 U.S.C. § 49 (1976).

Section 112(c) (4) provides for the enforcement of a subpoena

of the National Highway Traffic Safety Administration in any

United States district court “within the jurisdiction of which

an inquiry is carried on.” 15 U.S.C. §1401(c) (4) (1976)

(emphasis added). Finally, section 437d(b) authorizes the

enforcement of a Commission subpoena in any United States

district court “within the jurisdiction of which any inquiry is

carried on.” 2 U.S.C. §437d(b) (1976) (emphasis added).

These minor differences in phrasing, however, are not, we

think, significant enough to cause us to depart from the case

law interpreting section 9 and section 112(c) (4) in our task

of determining where, within the meaning of section 437d (b),

the Commission’s inquiry [was] carried on.” See United

States v. Firestone Tire & Rubber Co., 455 F. Supp. 1072

(D.D.C. 1978) (applying the section 9 case law to interpret

section 112(c).(4) ).

50a

subpoenaed Bankers’ president to produce specified docu-

ments and to testify at an investigative hearing at the

FTC’s regionai office in Chicago. When the FTC later

sought judicial enforcement of the subpoena in Chicago,

Banker’s president resisted on the ground that many of

the subpoenaed documents were located in Florida and

that, in any event, no inquiry was being carried on in

Chicago because other FTC regional offices also were

involved in the investigation. The district court appar-

ently rejected this argument at least with regard to the

documents located within its jurisdictional limits.

When the argument was renewed on appeal, the Sev-

enth Circuit outlined the following test:

The test whether the Commission is undertaking an

inquiry in a particular place is whether that place

and the activities occurring there bear a reasonable

relation to the subject matter of the investigation.

Factors such as the convenience of the Commission,

the location of documents and witnesses, and the

corporate headquarters of the company are relevant

in determining whether there is an inquiry in a

particular judicial district when the only action

taken by the Commission is a request for informa-

tion. As in other areas, the Commission’s choice of

a place of inquiry is subject to the bound of rea-

sonableness.

Id. at 1140 (emphasis added). Applying this test, the

court concluded that inasmuch as Bankers had its cor-

porate headquarters in Chicago, many of the documents

presumably were located in Chicago, and the FTC had

selected Chicago as the place to conduct its investigational

hearing, sufficient inquiry was being carried on in that

district to confer jurisdiction to enforce the subpoenas.

Id. at 1140-41.

With regard to the fact that some documents may have

been located in Florida, the court recognized that where

Sla

an investigation involves matters in more than one juris-

diction, there necessarily may not be a single district in

which the inquiry is being carried on, but rather many

such districts. It also expressed the view that, subject

to the “bound of reasonableness,” an agency should be

given substantial leeway in selecting its place of inquiry

for subpoena enforcement purposes. The court in Mac-

Arthur concluded that, on the facts there presented, the

FTC had not exceeded that “bound” in selecting Chicago

as its place of inquiry. Jd.

Three cases decided in this jurisdiction, each involving

an essentially nationwide investigation conducted from an

agency’s national office here in the District of Columbia,

reveal that the “bound of reasonableness” is broad in-

deed. Two of these cases arose in the context of adjudi-

cative proceedings before the FTC. In FTC v. Browning,

435 F.2d 96 (D.C.Cir. 1970), where a corporation was

under investigation for possible antitrust violations with

regard to its acquisition of five firms in three states, the

FTC subpoenaed an officer of the corporation requiring

him to produce specified corporate books and records at a

hearing in the District of Columbia. When he failed to

comply, the FTC brought suit to enforce the subpoena in

the District of Columbia even though the corporate officer

maintained his residence and principal place of business

in Pennsylvania.* The district court issued an enforce-

ment order. On appeal, this court, noting that the sub-

poena against the corporate officer had been issued, and

was returnable, in the District of Columbia, concluded

that “the designated place of hearing is Washington, D.C.,

which is thus necessarily a place where the ‘inquiry is

carried on.’” Id. at 100 & n.8.

6In connection with the same investigation, the FTC was

also seeking to enforce thirteen subpoenas against third-party

witnesses located in seven different judicial districts. 435

F.2d at 100.

52a

The second case arising in the context of an FTC hear-

ing was FTC v. Cockrell, 481 F.Supp. 558 (D.D.C. 1977).

There the FTC had charged three parties, including the

American Medical Association, with violating section 5

of the Federal Trade Commission Act, 15 U.S.C. § 45

(1976), by agreeing to prevent or hinder competition

among physicians by means of publishing, circulating,

and enforcing nationwide “ethical standards.” As part

of an adjudicative proceeding being conducted in the Dis-

trict of Columbia, an FTC administrative law judge issued

subpoenas to respondents, a Texas medical society and its

executive director, as well as to other third-party witnesses

across the country. These subpoenas, which were made

returnable in the District of Columbia, sought informa-

tion regarding ethical standards imposed on physicians

and the interpretation, application, and enforcement of

those standards.

When the FTC petitioned for judicial enforcement of

the subpoenas in this jurisdiction, respondents objected

on the ground that the activities under investigation bore

no reasonable relationship to the District of Columbia and

that, accordingly, this was not a jurisdiction within which

the FTC’s inquiry was being carried on. The district

court rejected this argument:

Respondents, however, misconstrue the nature of

the FTC’s inquiry in the present case. The FTC

inquiry here is not focused on respondents and their

activities in Texas; rather, it is a nationwide in-

quiry and respondents are being subpoenaed merely

as third-party witnesses. As such, it is clear that

the Commission’s choice of the District of Columbia

as the place for its inquiry does not exceed “the

bound of reasonableness.”

431 F. Supp. at 559 (emphasis in original) (

quoting

FTC v. MacArthur, supra, 582 F.2d at 1140). Reasoning

that the case was controlled by Browning, the district

53a

court concluded that it had jurisdiction to enforce the

subpoenas.

A similar result was reached in United States v. Fire-

stone Tire & Rubber Co., 455 F.Supp. 1072 (D.D.C.

1978), a case involving not a formal adjudicative pro-

ceeding before the FTC, but rather an informal investi-

gation by the National Highway Traffic Safety Adminis-

tration (NHTSA). In Firestone Tire, NHTSA brought

suit in the District of Columbia to enforce “special or-

ders,” akin to administrative subpoenas, issued to Fire-

stone in connection with an investigation into alleged

defects in Firestone’s steel-belted radial tires. The special

orders, which were issued from the District of Columbia,

sought information regarding the different types and

quantities of tires produced and distributed by Firestone,

consumer complaints about those tires, and suits against

Firestone for damages due to accidents allegedly caused

by tire defects. When NHTSA sued for enforcement in

this jurisdiction under section 112(c) (4) of the Na-

tional Traffic and Motor Vehicle Safety Act, Firestone

urged the district court to conclude that it lacked juris-

diction because NHTSA’s “inquiry [was being] carried

on” not in the District of Columbia, but rather in Ohio

where Firestone maintained its corporate headquarters

and the requested information was located.

It was the view of the district court, however, that a

finding of no jurisdiction in the District of Columbia

would be contrary both to “common sense” and NHTSA’s

broad investigative mandate to ensure highway traffic

safety. The district court further observed:

NHTSA’s concern is not with the activities of Fire-

stone within the Northern District of Ohio, but with

the safety of all Firestone tires in the country. As

such, given the broad nature of NHTSA’s concern

in this case, this would appear to qualify as a na-

tionwide inquiry within the meaning of FTC v. Cock-

54a

rell, supra. Therefore, since this investigation is

directed from Washington, D.C., it does not exceed

the bounds of reasonableness to find that the District

of Columbia is a place within which this inquiry is

being carried on.

Id. at 1077. Thus, although recognizing that Ohio might

also be said to be a situs of the inquiry, the district court

concluded that, for jurisdictional purposes, the District

of Columbia was a place where NHTSA’s inquiry was

being carried on. Accordingly, as in the Browning and

Cockrell cases, the court in Firestone Tire, confronted

with a situation where an agency was conducting an es-

sentially nationwide investigation from its national office

in the District of Columbia, accorded the agency broad

discretion in selecting the District of Columbia as its

place of inquiry.

The case law interpreting section 9 and section 112

of determining- where the Commission’s “inquiry [was]

carried on” within the meaning of section 437d(b). Ac-

cordingly, we must determine (1) whether the District

of Columbia bore a. sufficiently “reasonable relation to

the subject matter of the investigation,” FTC v. Mac-

Arthur, supra, 582 F.2d at 1140, to qualify as a place

where the inquiry was carried on, and (2) whether the

agency’s choice of this jurisdiction as its place of inquiry

exceeded “the bound of reasonableness,” id.

It is our view that the District of Columbia was a

place where the Commission’s inquiry was carried on.

The nexus between this jurisdiction and the Commis-

sion’s investigation lies in the fact that the District of

Columbia, where the Commission maintains its head-

quarters, was the hub of the Commission’s investigative

activity. It was in this jurisdiction where the Commis-

sion authorized the auditing of CTEL’s records and the

interviewing of its contributors, where the Commission

55a

determined that there was reason to believe that appel-

lants may have violated the federal election laws, where

all correspondence regarding those possible violations

emanated, and where the subpoenas were in fact issued.’

We also regard it as significant, though not surprising,

that appellants, when first notified by letter that they

were under investigation, retained ‘al counsel in the

District of Columbia. That appel!s«.s retained local coun-

sel before hiring New York counsel, and long before this

enforcement petition was filed, strongly suggests that

appellants themselves recognized that the District. of

Columbia was the important situs of the investigation.

We: have little difficulty, therefore, in concluding that,

within the meaning of section 437(b), the District of

Columbia was a place where the Commission’s “inquiry

[was] carried on.”

Nor do we regard the Commission’s choice of the Dis-

trict of Columbia as its place of inquiry as having ex-

ceeded the “bound of reasonableness.” Appellants urge

us to construe that “bound” more narrowly under section

437d(b) than under section 9 or section 112(c) (4) be-

cause the Commission’s investigative mandate, involving

as it does electoral activity, touches upon constitutionally

protected rights of freedom of association. In particular,

appellants argue that a substantial chilling effect would

result if the Commission, as part of a nationwide in-

vestigation, could enforce in the District of Columbia

subpoenas issued to individual contributors to a minor

party across the United States.

7 It is true that the subpoenas were returnable in New York,

but this was done solely for the convenience of appellants.

A. 9-10. The Commission intended to send its staff from

Washington to New York to examine the documents. The

same procedure had been followed when the Commission

conducted its audit of CTEL’s records in connection with

La Rouche’s application for primary matching funds.

56a

It is our view that appellants are correct in suggest-

ing that the chilling effect of the Commission’s choice of

its place of inquiry ought to be considered in determining

whether the choice falls within the “bound of reasonable-

ness.” In the instant case, however, which of course

does not involve subpoenas issued to individual contribu-

tors, the record is devoid of any evidence of chill resulting

from the fact that the subpoenas were enforced in the

District of Columbia.

What the record does reveal is that the Commission’s.

investigation was not localized in New York, but rather

was nationwide in scope.* When La Rouche applied for pri-

mary matching funds, he submitted a notarized statement

that he had raised the threshold amount of $5,000 or

more in contributions of $250 or less in each of 20 states.

In an effort to verify La Rouche’s statement, the Com-

mission conducted field interviews of CTEL contributors

in three states, Delaware, Massachusetts, and Wisconsin.

When those interviews, together with an audit of CTEL’s

records in New York, yielded discrepancies with reported

contributions, the Commission conducted additional field

interviews in Indiana. Moreover, when the Commission

finally subpoenaed appellants’ records, it was investigat-

ing to determine whether appellants had made illegal in-

® Thus, appellant’s reliance on FTC v. Western General

Dairies, Inc., 4832 F.Supp. 31 (N.D. Cal. 1977), is misplaced.

In Westcrn General, which involved an investigation into

possible unfair trade practices in the distribution of milk

in Utah and Idaho, the court rejected the argument that

simply because a subpoena had been issued from the FTC’s

regional office in the Northern District of California, the

FTC’s inquiry was being carried on in that district. But, in

so ruling, the court relied principally on the fact that the

investigation was neither nationwide in scope nor related in

any manner to the Northern District of California. Jd. at 33-

34. It is our view that, inasmuch as the instant case involves

a nationwide investigation, Western General is inapposite.

57a

kind corporate contributions, submitted false and mis-

leading statements, and committed other violations of the

federal election laws in connection with the national cam-

paign of a candidate who had been endorsed by the USLP

Caucus in 30 states and the District of Columbia.

It is our view that here, as in Browning, Cockrell, and

Firestone Tire, the Commission was conducting an es-

sentially nationwide investigation from its national office

in the District of Columbia and, accordingly, it should

be afforded broad discretion in selecting this jurisdiction

as its place of inquiry. We cannot say, given the breadth

of that discretion and the absence of any evidence of chill,

that the Commission exceeded the “bound of reasonable-

ness” in bringing this enforcement action in the District

of Columbia. Accordingly, we conclude that the District

Court had subject matter jurisdiction under section 437d

(b) to entertain this subpoena enforcement action.°

We turn now to the argument that the District Court

lacked personal jurisdiction over appellants inasmuch as

they were served not in the District of Columbia where

the District Court sits, but rather in New York where

appellants maintain their principal places of business.

*To say that the Commission’s inquiry was being carried

on in the District of Columbia is not to say that it was not

also being carried on in New York. See FTC v. MacArthur,

supra, 632 F.2d at 1141. Certainly, given the facts that the

subpoenaed documents were located in New York, appellants

maintain their principal places of business in New York,

the subpoenaes were made returnable in New York, and prior

Commission auditing took place in New York, the Commission

probably could have brought this action to enforce its sub-

poenas in that district. But the Commission chose not to do

so, and we honor their choice. It is our view that, for the

reasons stated above, the Commission’s choice of Washington

as its place of inquiry did not exceed the “bound of rea-

sonableness.”

58a

Service of process outside the territorial limits of the

state in which a district court sits normally is permitted

only “when authorized by a statute of the United

section 437d(b) is a statute authorizing extraterritorial

service of process.

Although confronted with a question of first impres-

sion, we find, once again, that the same question has been

resolved in a case involving a subpoena enforcement ac-

tion brought under section 9 of the Federal Trade Com-

mission Act." In FTC v. Browning, 435 F.2d 96 (D.C.

10 FED. R. Civ. P. 4(f).

11 Section 9 provides in relevant part:

For the purposes of sections 41 to 46 and 47 to 58 of

this title the Commission, or its duly authorized agent or

agents, shall at all reasonable times have access to, for

the purpose of examination, and the right to copy any

documentary evidence of any person, partnership, or

corporation being investigated or proceeded against; and

the Commission shall have power to require by subpoena

the attendance and testimony of witnesses and the pro-

duction of all such documentary evidence relating to any

matter under investigation. Any member of the Commis-

sion may sign subpoenas, and members and examiners of

the Commission may administer oaths and affirmations,

examine witnesses, and receive evidence.

Such attendance of witnesses, and the production of

such documentary evidence, may be required from any

place in the United States, at any designated place of

hearing. And in case of disobedience to a subpoena the

Commission may invoke the aid of any court of the

United States in requiring the attendance and testimony

of witnesses and the production of documentary evidence.

Any of the district courts of the United States within

the jurisdiction of which such inquiry is carried on may,

in case of contumacy or refusal to obey a subpoena issued

to any person, partnership, or corporation issue an order

requiring such person, partnership, or corporation to ap-

pear before the Commission, or to produce documentary

59a

Cir. 1970), appellant resisted the enforcement of a sub-

poena on the ground that he was served by mail outside

the District of Columbia where the suit was filed. Ap-

pellant argued that section 9, which provides for the

enforcement of an FTC subpoena in any United States

district court “within the jurisdiction of which such in-

quiry is carried on,” ought to be construed simply as a

venue provision, rather than as a special jurisdictional

provision authorizing extraterritorial service of process.

This court in Browning rejected appellants’ argument:

To interpret Section 9 as simply a venue statute

would be to restrict the place of suit to a particular

district and yet to deprive the court in that district

of the power to obtain personal jurisdiction of a

respondent, absent the fortuitous circumstance of

that respondent voluntarily entering the district

where the inquiry is being conducted.

Id. at 99. Such a construction, we noted, would run

counter to the I'TC’s broad investigative powers and its

express authority under section 9 to compel “attendance

and testimony of witnesses and production of . . . docu-

mentary evidence relating to any matter under investiga-

tion .... from any place in the United States, at any

designated place of hearing.” We also observed that ex-

traterritorial service of process would make “for uni-.

formity in the application of the law and economy of

judicial administration” by permitting an agency to cen-

ter its enforcement proceedings in a single court. Jd. at

100. Accordingly, we concluded that “by granting the

power to enforce subpoenas only to those district courts

‘within the jurisdiction of which such inquiry is carried

evidence if so ordered, or to give evidence touching the

matter in question; and any failure to obey such order

of the court may be punished by such court as a contempt

thereof.

15 U.S.C. § 49 (1976).

on,’ section 9 so limits the place of suit for enforcement

of Federal Trade Commission subpoenas as to require

an implied grant of authority for extraterritorial service

of process in order to effectuate the purpose of the regu-

latory scheme.” Id. (footnote omitted).

Section 437d(b) is, as we noted above, virtually iden-

tical to section 9, insofar as it grants the Commission

authority to enforce its subpoenas only in those United

States district courts “within the jurisdiction of which

any inquiry is carried on.” * Thus, at least at first blush,

it appears that the reasoning of the Browning decision

would be equally applicable in the instant case. Appel-

lants, however, urge us, on three grounds, to depart from

Browning in determining whether section 437d(b) is an

implied grant of authority for extraterritorial service of

process.**

122 U.S.C. §487d(b) (1976). We attach no decisional sig-

nificance to the fact that section 9 refers to “the jurisdiction

of which such inquiry is carried on,” whereas section 437d (b)

refers to “the jurisdiction of which any inquiry is carried on.”

See note 5 supra. As we explain below, the Commission is

vested with an implicit grant of extraterritorial compulsory

process broad enough to permit the Commission to conduct

an inquiry comparable to that contemplated under section 9

by the FTC. See pages 31-33 infra. Accordingly, we see noth-

ing on the facé of the two provisions that would suggest that

they should be interpreted differently at least insofar as

extraterritorial service of process is concerned.

18 Appellants also advance a fourth ground for distinguish-

ing Browning, namely, that the legislative history of section

9 supported a finding of an implied grant of authority for

extraterritorial service of process, whereas the legislative

history of section 437d(b) is silent in this regard. This argu-

ment, we think, overstates this court’s reliance in Browning

on the legislative history of section 9, for the Browning

court itself recognized that the legislative history was “not

conclusive.” 435 F.2d at 100.

6la

Appellants first argue that the Commission, unlike the

FTC, is not charged by statute with regulatory respon-

sibility over matters requiring nationwide investigations.

While describing “FTC investigations [as] often aimed

at industrywide practices, which cover regional or pos-

sibly national areas, beyond a single person or company,”

appellants assert that “the FEC regulates individual can-

didates and their campaign committees, which are clearly

limited to one locality.” We are urged, therefore, to con-

clude that, given the localized nature of Commission in-

vestigations, it is unnecessary to construe section 437d

(b) as authorizing extraterritorial service of process.

This argument, we think, falls far short of the mark.

The Commission’s investigative responsibilities with re-

gard to primary matching funds are obviously nation-

wide in scope. A prerequisite for eligibility for matching

funds is a minimum level of financial support for a

candidate in at least 20 states. 26 U.S.C. § 9033 (b) (3)-

(4) (1976). Review of determinations in matching fund

cases is centralized by statute in this court. Jd. § 9041.

Moreover, the Commission’s general responsibilities under

the Federal Election Campaign Act also clearly make it

responsible for administering the federal election laws

with regard to many organizations not local in nature,

such as corporations and unions, 2 U.S.C. § 441b (1976),

multicandidate committees and national parties, id. § 441

a(a), and government contractors, id. §441c. Appel-

lants thus are simply wrong when they state “the FTC

regulates individual candidates and their campaign coiii-

mittees, which are clearly limited to one locality” (em-

phasis added). Many of the Commission’s responsibilities

involve nationwide matters, in particular Presidential

campaigns, especially those seeking federal funds. It is

our view, therefore, that the instant case is in no way

distinguishable from Browning on grounds related to the

scope of the Commission’s investigative mandate.

62a

Nor do we find merit in appellants’ second ground for

distinguishing Browning, namely, that the Commission,

unlike the FTC, is not expressly authorized to compel

“attendance and testimony of witnesses and the produc-

tion of . .. documentary evidence relating to any matter

under investigation .. . . from any place in the United

States, at any designated place of hearing.” * Although

the Commission is not expressly granted extraterritorial

power of compulsory process, we find such authority im-

plicit in the breadth of the Commission’s express investi-

gative powers.

Section 487d(a) of the Federal Election Campaign

Act vests the Commission with the power:

(1) to require, by special or general orders, any

person to submit in writing such reports and an-

swers to questions as the Commission may prescribe;

and such submission shall be made within such a

reasonable period of time and under oath or other-

wise as the Commission may determine;

(3) to require by subpoena, signed by the chairman

or the vice chairman, the attendance and testimony

of witnesses and the production of all documentary

evidence relating to the execution of its duties;

(4) in any proceeding or investigation, to order tes-

timony to be taken by deposition before any person

who is designated by the Commission and has the

power to administer oaths and, in such instances, to

compel testimony and the production of evidence in

the same manner as authorized under paragraph (3)

of this subsection ; *®

It is inconceivable to us that Congress would have vested

the Commission with such broad powers of compulsory

445 U.S.C. § 49 (1976).

152 U.S.C. § 487d(a) (1), (8), (4) (1976).

63a

process, while intending that they not have extraterri-

torial effect. The Commission, if denied the power of

extraterritorial compulsory process, would be unable to

conduct a nationwide investigation without sitting, or

sending its staff, to every jurisdiction in which witnesses

or documents were located. To so fragment an investi-

gation undoubtedly would frustrate the Commission in

discharging what we have already determined is its

nationwide mandate to oversee the federal election laws.

Thus, although we need not, and do not, decide the precise

extent to which the Commission may compel testimony

and the production of documents from anywhere in the

United States, we are convinced that the scope of the

Commission’s power in this regard is sufficiently broad to

warrant an implied grant of authority for extraterri-

torial service of process under section 437(b).?*

16 This conclusion finds support in United States v. Fire-

stone Tire & Rubber Co., supra, 455 F. Supp. at 1078-80, a

suit to enforce “special orders,” akin to administrative sub-

poenas, filed in the District of Columbia by the National High-

way Traffic Safety Administration (NHTSA) under Section

112(c) (4) of the National Traffic and Motor Vehicle Safety

Act, 15 U.S.C. §1401(c) (4) (1976). Respondent, which had

been served by mail at its corporate headquarters in Ohio,

argued that section 112(c) (4) was not an implied grant of

authority for extraterritorial service of process and that,

accordingly, the district court lacked personal jurisdiction

to enforce the special orders. Although recognizing that sec-

tion 112(c) (4), like section 9 of the Federal Trade Commis-

order in any United States district court “within the juris-

diction of which an inquiry is carried on,” respondent sought

to distinguish Browning on the ground that the Federal

Trade Commission Act expressly authorized the FTC to issue

subpoenas nationwide, whereas section 112(c) (4) contained

no such grant of authority.

The court in Firestone, however, found such authority im-

plicit in NHTSA’s enabling statute. To deny NHTSA the

power to issue special orders anywhere in the United States,

the court reasoned, would be inconsistent with the broad

enforcement jurisdiction conferred on the federal district

64a

Appellants’ t¥fird, and final, ground for distinguishing

Browning is that extraterritorial service of process in the

instant case, unlike that in Browning, would result in a

substantial chilling effect on the exercise of constitu-

tionally protected associational rights. It is asserted that

a substantial chilling effect on associational rights un-

doubtedly would result in cases involving minor parties

if individual contributors were subject to such long-

distance service of process. We are urged, therefore, not

to permit extraterritorial service of process under section

437d (b).

This “chilling effect”? argument is, on the record of this

case, simply too speculative to warrant us to construe

section 487d(b) in a manner that we feel would frus-

trate the Commission in discharging its statutory man-

date. The record before us is devoid of any evidence to

suggest that, in the instant case, a chilling effect resulted

from the fact that the Commission initiated this suit in

the District of Columbia through extraterritorial service

of process of appellants in New York.” Nor is there any

courts under section 112(c) (4) and the wide-ranging investi-

gative powers conferred on NHTSA to discharge its national

mandate of ensuring highway traffic safety. Having deter-

mined that NHTSA had an implied grant of authority to issue

special orders nationwide comparable to that in the Federal

Trade Commission Act, the court concluded, on the authority

of Browning, that section 112(c) (4), like section 9, was an

implied grant of authority for extraterritorial service of

process.

17 Appellants’ only specific complaint is that the fact that

the Commission made the subpoenas returnable in New York,

but later sought enforcement in the District of Columbia,

“forced [appellants] to obtain at least two sets of lawyers

in these respective locations, .. . and resulted in great harm

to [appellants] because of their limited ability to retain ade-

quate legal resources necessary in an action involving a fed-

eral agency with relatively unlimited resources.” The record

indicates, however, that the Commission made the subpoenas

returnable in New York for appellants’ convenience, A. 9-10,

and that, in any event, appellants had retained local counsel

in Washington well before this suit was filed, A. 135-36.

65a

evidence supporting the assertion that if we construe sec-

tion 437d(b) as authorizing extraterritorial service of

process, our holding will result in a significant encroach-

ment on associational rights in future cases. This asser-

tion, in our view, fails to recognize that the Commission’s

choice of its forum to enforce a subpoena is subject to the

“bound of reasonableness.” '* We are confident that, es-

pecially in cases involving investigations of minor parties,

district courts in determining whether the Commission’s

choice of forum falls within the “bound of reasonable-

ness” will give appropriate consideration to the chilling

effect of permitting the Commission to enforce its sub-

poenas outside the jurisdiction in which the subpoenaed

parties reside or maintain their principal places of busi-

ness. That protection, we think, is sufficient to safeguard

against undue chill in future cases.

It is our view, in sum, that the reasoning of the

Browning decision is equally applicable in the instant

case. We thus conclude that section 437d (b), by granting

the power to enforce subpoenas only to those district

courts “within the jurisdiction of which any inquiry is

carried on,” so limits the place of suit for enforcement

of Commission subpoenas as to require an implied grant

of authority for extraterritorial service of process to ef-

fectuate the purpose of the regulatory scheme. Appel-

lants, accordingly, were properly served in New York.’®

18 See pages 15-16 supra.

19 Nor do we find merit in appellants’ argument that service

on New Solidarity and NCLC was defective because the in-

dividuals served on behalf of New Solidarity and NCLC were

neither “officer[s]” nor “managing or general agent[s]” of

those organizations. See Feb. R. Civ. P. 4(d) (3). It appears

the individuals who were served held positions of sufficient

authority to satisfy the purposes of Rule 4(d) (3), see State

of Georgia v. National Democratic Party, 447 F.2d 1271, 1278

n.2 (D.C. Cir.), cert. denied, 404 U.S. 858 (1971), and that

appellants had adequate actual notice of the hearing to pre-

pare a proper defense, see Giordani v. Hoffman, 295 F. Supp.

468, 469 (E.D. Pa. 1969).

66a

—_—--—-----

Appellants’ final contention is that the District Court

erred in denying them at least some opportunity to sub-

stantiate their allegations of harassment and retaliation.

At the show cause hearing in the District Court, counsel

for appellants asserted that the Commission subpoenas

were issued in retaliation for two law suits brought by

CTEL and the USLP aaginst the Commission. He spe-

cifically alleged that “counsel for the .. . Commission has

stated as such that if we hadn’t brought those actions

that they wouldn’t have taken actions against the United

States Labor Party and the Committee to Elect Lyndon

La Rouche.” A. 84-85. The District Court, denying ap-

pellants’ request for “leave to file a written statement

within 10 days,” later concluded “there is no indication

that these subpoenas are part of a scheme to harass

respondents.” A. 111. 3

Appellants do not challenge directly the District Court’s

finding of no harassment inasmuch as they concede that

their allegations in this regard were unsubstantiated.

Instead, they urge us to conclude that the District Court

afforded them an inade.uate opportunity to substantiate

their allegations that the subpoenas were issued for pur-

poses of harassment and retaliation.

It is well settled that an agency may not use its sub-

poena power “for an improper purpose, such as to harass

the [subpoenaed party] or to put pressure on [it] to

settle a collateral dispute, or for any other purpose re-

flecting on the good faith of the particular investigation.”

United States v. Powell, 379 U.S. 48, 58 (1964) ; accord

United States v. Bisceglia, 420 U.S. 141, 146 (1975).

It is equally well settled that the burden of showing an

improper purpose is on the subpoenaed party, United

States v. Powell, supra, 379 U.S. at 58.

In cases involving the enforcement of IRS summonses,

several courts have held that, where a summonee raises

67a

colorable allegations of an improper purpose and seeks to

prove those allegations, the enforcement court must afford

the summonee at least some opportunity to substantiate

-its allegations. United States v. Church of Scientology,

520 F.2d 818, 822-25 (9th Cir. 1975); United States v.

McCarthy, 514 F.2d 368, 372-875 (3d Cir. 1975) ; United

States v. Salter, 482 F.2d 697, 699-701 (1st Cir. 1970).

To rule otherwise, these courts have noted, would render

it virtually impossible for a summonee to prove that a

facially valid summons was, in fact, issued for an im-

proper purpose. But, in recognition of the potential for

delay and burdensomeness to the IRS, these courts have

not afforded the summonee with the right to full-blown

discovery. Instead, they have held that, as an initial

matter, the summonee is entitled only to a preenforce-

ment evidentiary hearing limited to the question whether

the summons was issued for a proper purpose.

Relying principally upon these IRS cases, appellants

assert that the District Court, by denying their request to

file “written materials,” failed to provide them with an

adequate opportunity to substantiate their allegations of

harassment and retaliation on the part of the Commission.

This argument, we think, is without merit. It is our view

that inasmuch as the record reveals that appellants in

fact never sought to avail themselves of an opportunity

to substantiate their allegations, they cannot now be

heard to complain about the loss of that opportunity.

Turning to the record, we find that appellants first

raised the issue of harassment and retaliation not in the

papers they filed before the show cause hearing in the

District Court, but rather at the hearing itself. There

counsel for appellants, in an unsworn statement, as-

serted that the subpoenas were issued in response to two

suits filed by CTEL and the USLP against the Commis-

sion and that counsel for the Commission “has stated as

such” that the Commission was acting in retaliation to

68a

those suits. Then, after discussing the burdensomeness of

the subpoenas, counsel for appellants concluded his argu-

ment with the following request: “I would like to add,

Your Honor, that we consider this a very significant case,

and would like leave to file a written statement within

10 days.” A. 89. The District Court, after hearing re-

buttal argument, rejected appellants’ request, noting “I

think I will rule on the papers.” A. 103.

We read the record as indicating that appellants never

requested the District Court to provide them with an

opportunity to substantiate their allegations of harass-

ment and retaliation. To be sure, appellants sought per-

mission to submit a “written statement” in connection

with their case. But we regard this request, especially

since it was not addressed to.any one claim in particular,

as a request not to substantiate appellants’ allegations

of harassment and retaliation, but rather to brief all the

grounds upon which appellants resisted enforcement.

Surely, in a summary enforcement proceeding for which

appellants had at least two weeks actual notice, the Dis-

trict Court is not to be faulted for denying a request

for additional briefing time.*°

20 In this regard, counsel for appellants argues that he had

virtually no time to prepare for the show cause hearing inas-

much as appellants were served, and he was retained, only

one day before the hearing. But the record reveals that appel-

lants were served with the subpoenas months before the

show cause hearing and that they were notified by counsel of

the show cause order two weeks before the hearing date when

counsel was served. The fact that appellants retained counsel

to represent them at the show cause hearing only one day

before the hearing does not detract from the fact that appel-

lants had actual notice of the hearing date two weeks earlier.

Accordingly, we agree with the conculsion of the District

Court that appellants “cannot reasonably argue that they

lacked adequate time to prepare their defense for the hear-

ing.” A. 108.

69a

Nor do we read the IRS cases as suggesting to the

contrary. Those cases seek to provide a summonee who

has raised colorable allegations of an improper purpose

underlying a summons with an opportunity as an evi-

dentiary matter to substantiate those allegations. In the

instant case, appellants’ request to submit a written state-

ment was not directed at establishing the truth of their

allegations of harassment and retaliation, but rather at

informing the District Court of what appellants regarded

as the legal consequences of their unsubstantiated allega-

tions. Appellants’ reliance on the IRS cases is thus mis-

placed. -

Appellants cannot argue that they improperly were

denied an opportunity to substantiate their claims when

they never requested such an opportunity. In the IRS

cases upon which appellants rely, the summonees all re-

quested either discovery or an evidentiary hearing to

substantiate their claim that a summons had been issued

for an improper purpose. Similarly, in the instant case,

appellants could have resolved the issue of improper pur-

pose simply by requesting the District Court to conduct

a limited evidentiary hearing. This could have been ac-

complished at the show cause hearing itself through the

testimony of counsel for the Commission who allegedly

had represented to appellants that the subpoenas were

issued in retaliation to the suits brought by CTEL and

the USLP.

Appellants, however, requested neither discovery nor

an evidentiary hearing, and we deem that failure to con-

stitute a waiver.” It surely is not the obligation of the Dis-

21 Our conclusion that appellants waived their right to sub-

stantiate their claims of harassment and retaliation is not,

we think, inconsistent with two other cases, United States

v. Church of Scientology, supra, 520 F.2d at 825; United

States v. McCarthy, supra, 514 F.2d at 376-77, where courts

declined to imply a waiver of the right to a preenforcement

evidentiary hearing. In those cases, which involved IRS sum-

70a

trict Court sua sponte to conduct a preenforcement evi-

dentiary hearing whenever counsel orally suggests an

improper purpose. The subpoenaed party must request

such a hearing, and, if it fails to do so, the District Court

must proceed on the record before it. Accordingly, we

conclude that, inasmuch as appellants never requested an

opportunity to substantiate their allegations of harass-

ment and retaliation, they waived their right to such an

opportunity.

III

It is our view, in sum, that (1) inasmuch as the Dis-

trict of Columbia was a place where the Commission’s

“inquiry [was] carried on” within the meaning of section

437d (b), the District Court had subject matter jurisdic-

tion to entertain this enforcement petition, (2) insofar

as section 487d(b) authorizes extraterritorial service of

process, appellants were properly served in New York,

and (8) inasmuch as appellants never requested an op-

portunity to substantiate their allegations of harassment

and retaliation, they waived their right to such an op-

portunity. Accordingly, we .affirm the decision under

review.

It is so ordered.

monees who had requested discovery rather than a preen-

forcement evidentiary hearing, the courts concluded that it

would be unduly harsh to imply a waiver of the right to such

a hearing. In the instant case, however, appellants requested

neither discovery, an evidentiary hearing, nor any other legal

mechanism to substantiate their factual allegations of harass-

ment and retaliation. It is not unduly harsh, we think, to

imply a waiver under the circumstances presented here.

Tla

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.