BREWER OIL CO. V. STATE, 1995-NMCA-142,
121 N.M. 106, 908 P.2d 799 (Ct. App. 1995)
BREWER OIL COMPANY, QUEEN OIL AND GAS
COMPANY, BELL GAS,
INC., A-DOC OIL COMPANY, AND KW FUELS, INC.,
Petitioners/Cross-Respondents-Appellees,
vs.
THE STATE OF NEW MEXICO by and through the ATTORNEY
GENERAL
for the State of New Mexico, THOMAS S. UDALL,
Respondent/Cross-Petitioner-Appellant.
COURT OF APPEALS OF NEW MEXICO
1995-NMCA-142, 121 N.M. 106, 908 P.2d 799
APPEAL FROM THE DISTRICT COURTS OF
EDDY, CHAVES AND LEA COUNTIES. JAMES L. SHULER, District Judge.
Petition for Writ of Certiorari filed
November 29, 1995, denied December 19, 1995. Released for Publication December
26, 1995.
F. EDWIN HALLMAN, JR., DAVID C. MOSS,
DECKER & HALLMAN, Atlanta, Georgia, PAUL BARDACKE, PETER S. KIERST, KERRY
C. KIERNAN, EAVES, BARDACKE & BAUGH, P.A., Albuquerque, New Mexico,
Attorneys for Petitioners/Cross-Respondents-Appellees.
TOM UDALL, Attorney General, JEROME
MARSHAK, Assistant Attorney General, Santa Fe, New Mexico, SUSAN G. WHITE,
Assistant Attorney General, Albuquerque, New Mexico, Attorneys for
Respondent/Cross-Petitioner-Appellant.
HARRIS L HARTZ, Judge. BENNY E. FLORES,
Judge, MICHAEL D. BUSTAMANTE, Judge, concur.
{1} The Attorney General
appeals the district court's entry of a summary judgment
{*107}
quashing five civil investigative demands (CIDs). The only question to be
resolved is whether the record before the district court established beyond
genuine dispute that the Attorney General had no proper purpose for seeking the
CIDs. Because we answer in the negative, we reverse and remand to the district
court for further proceedings.
{2} The New Mexico Antitrust
Act, NMSA 1978, §§
57-1-1 to -15 (Repl. Pamp. 1995), authorizes the Attorney
General to apply to the Santa Fe County district court for approval of CIDs
that require the recipients to submit to examination under oath or to produce
items for inspection and copying. To obtain a CID directed to a particular
person, the Attorney General must have "reasonable cause to believe that
[the] person has information or may be in possession, custody or control of any
document or other tangible object relevant to a civil investigation for
violation of [the Antitrust act]." Section 57-1-5(A). Prior to the filing
of an action for violation of the Act, the Attorney General must keep the
testimony or material confidential "unless [1] confidentiality is waived
by [a] the person being investigated and [b] the person who has testified,
answered interrogatories or produced material, or [2] disclosure is authorized
by the court." Section 57-1-5(c).
{3} In May and June of 1994
the Santa Fe County district court issued CIDs to the five gasoline marketers
(collectively referred to as the Marketers) who are the petitioners in this
case. The Attorney General's applications for the CIDs stated that each of the
Marketers possessed information relevant to a civil investigation under the
Antitrust Act and alleged that gasoline price and market data suggested that
segments of the gasoline industry may be violating the Act. In August and
September 1994 the Marketers filed petitions for declaratory judgment in the
Fifth Judicial District seeking a determination that the CIDs were unlawful and
should be quashed. The Attorney General cross-petitioned for orders requiring
the Marketers to comply with the CIDs. The five suits were consolidated in Eddy
County district court.
{4} On November 17, 1994 the
district court conducted a hearing on the Marketer's motions for summary
judgment. Two weeks later the district court entered an order granting the
motions, stating that the order was "based upon the uncontested proof that
the [Attorney General] has conducted an investigation under [the Antitrust Act]
for an improper purpose and intends to use the information elicited in the
investigation for impermissible purposes."
{5} First, to avoid confusion
we note that the ground for quashing the CIDs was not the lack of evidence of a
violation of the Antitrust Act. Under Section 57-1-5 it is necessary only that
the Attorney General be conducting a civil investigation to determine whether
the Antitrust Act has been violated and that there be reasonable cause to
believe that the recipient of the CID has information or material relevant to
the investigation.
See Material Handling Inst. v. McLaren, 426 F.2d 90
(3d Cir.) (CID obtained by justice department),
cert. denied, 400 U.S.
826, 27 L. Ed. 2d 55, 91 S. Ct. 50 (1970);
F.T.C. v. Invention Submission
Corp., 296 U.S. App. D.C. 124, 965 F.2d 1086 (D.C. Cir. 1992) (CID obtained
by FTC),
cert. denied, 122 L. Ed. 2d 654, 113 S. Ct. 1255 (1993);
cf.
NMSA 1978, §
57-1-15 (Repl. Pamp. 1995) (New Mexico Antitrust Act "shall
be construed in harmony with judicial interpretations of the federal antitrust
laws"). This statutory standard appears to be essentially the same
standard that generally applies to investigative subpoenas.
See In re
Investigation No. 2 of the Governor's Organized Crime Prevention Comm'n, 91
N.M. 516, 517,
577 P.2d 414, 415 (1978) ("The inquiry must be within the
authority of the agency[,] the demand must be too indefinite[,] and the
information must be reasonably relevant to the purpose of the
investigation.").
{6} Instead, the basis for
the quashing of the CIDs was the impropriety of the Attorney General's purpose.
We agree that if the Attorney General obtains a CID without having the purpose
of pursuing a civil investigation for possible violations of the Antitrust Act,
then the CID is improper and should be quashed.
See Chattanooga {*108} Pharmaceutical Ass'n v. United
States Dep't of Justice, 358 F.2d 864 (6th Cir. 1966). Quashing the CID is
permissible, however, only if improper purposes are the exclusive purposes of
the Attorney General. If the Attorney General also has a proper purpose, the
CID is lawful
See Donaldson v. United States, 400 U.S. 517, 532-36, 27
L. Ed. 2d 580, 91 S. Ct. 534 (1971);
In re McVane, 44 F.3d 1127, 1139
(2d Cir. 1995);
Eli Lilly & Co. v. Staats, 574 F.2d 904, 909-10 (7th
Cir.),
cert. denied, 439 U.S. 959, 58 L. Ed. 2d 351, 99 S. Ct. 362
(1978);
Lynn v. Biderman, 536 F.2d 820, 826 (9th Cir.),
cert. denied,
429 U.S. 920, 50 L. Ed. 2d 287, 97 S. Ct. 316 (1976);
F.T.C. v. Carter,
205 U.S. App. D.C. 73, 636 F.2d 781, 789 (D.C. Cir. 1980). Of course,
protective orders are appropriate to prevent use for an improper purpose of
information obtained by a CID.
See Lynn, 536 F.2d at 826-27.
{7} In the present case the
Attorney General's purpose in seeking the CIDs was determined on summary
judgment. The procedural setting for the determination is critical to our
resolution of the appeal. Summary judgment is granted only when "there is
no genuine issue as to any material fact and . . . the moving party is entitled
to a judgment as a matter of law." SCRA 1986, 1-056(C) (Repl. 1992);
see
Richardson v. Glass, 114 N.M. 119, 122,
835 P.2d 835, 838 (1992). The
moving party must submit a memorandum which sets out "a concise statement
of all of the material facts as to which the moving party contends no genuine
issue exists." SCRA 1-056(D). Each fact must "refer with
particularity to those portions of the record upon which the moving party relies."
Id. If the opposing party does not specifically controvert a fact set
forth in the moving party's memorandum, the fact "shall be deemed
admitted."
Id.; see Richardson, 114 N.M. at 122, 835 P.2d 838.
{8} The Mareters' briefs in
support of their motions for summary judgment recited 29 facts (Facts) about
which they claimed there was no genuine issue. They attached affidavits and
other documents upon which they relied as support for their Facts. The
supporting document relevant to the issues on this appeal is their Exhibit 1, a
report by the Attorney General entitled "Gasoline Pricing and Marketing in
New Mexico/ An Interim Report/ May 1994." The Marketers incorporated the
Interim Report by reference into their memoranda in support of their motions
for summary judgment.
{9} On appeal the Marketers
contend that "the uncontested facts demonstrate that the Attorney General
was attempting to influence the free-market economy by collecting information
under the guise of CIDs, which would eventually be used to formulate
legislation designed to fix and lower the price of gasoline." They rely on
their Facts 26 through 29, which state:
The Attorney General's opinion is that
"persistently oligopolistic markets with high barriers to entry may be of
concern even where there is no identifiable illegal conduct occurring and it
may be desirable for the state to intervene in such markets and attempt through
regulation or other means to encourage greater competition." See,
Exhibit 1, page 77.
Further, "the Attorney General's staff will
carefully review legislation enacted in other states intended to foster
increased competition in gasoline markets and decrease retail gasoline prices
and consider legislative solutions to the problem." See, Exhibit 1,
page 78.
The Attorney General is attempting to influence the
free-market economy of New Mexico by obtaining confidential financial
information under the guise of a CID. See, Exhibit 1, page 78.
The Attorney General stated that:
We must remember that consumers and members of the gasoline
industry are all citizens entitled to the protection of the laws. If there are
provable antitrust violations being committed, we are committed to putting a
stop to them. But if there are {*109} no
such violations, and the question becomes one of deciding as a community what
action should be taken to deal with high prices in a particularly vital
industry, that will be a question this office cannot answer by itself. We do
hope that our intensive study of this industry's pricing behavior will, when it
is completed, supply the kind of detailed and sophisticated information which
will be needed to deal with these issues.
See, Exhibit 1, pages 3 and 4 of the
Introduction.
{10} In response to the
Marketers' motions for summary judgment, the Attorney General did not
specifically controvert any of these four recited Facts. Rather than submitting
a prehearing affidavit asserting a proper purpose for the CIDs (which would
have precluded the summary judgment and avoided the resulting delay), the
Attorney General responded simply that "[Facts] numbered 11 through 27
contain allegations, some of which may be true and others of which are false,
none of which are material to issues before this Court."
{11} Perhaps Facts 26 through
29 read in isolation would establish that the Attorney General's sole purpose
in seeking the CIDs was an improper one. But because those Facts rely upon the
Interim Report as authority and because the Interim Report is incorporated into
the Marketers' memoranda in support of their motions for summary judgment, we
must examine the Interim Report as a whole to determine whether the only
reasonable conclusion that one can draw from it is that the CIDs were sought
for an improper purpose. Our review of the Interim Report reveals that it does
not necessarily establish an improper purpose for the CIDs.
{12} To be sure, the Interim
Report recognizes the possibility that there have been no antitrust violations
with respect to the marketing of gasoline, and it suggests that the Attorney
General may seek legislation to regulate the market. The Interim Report also
states that information acquired by the Attorney General may be used to support
such a legislative effort. The Marketers infer that the Attorney General is not
interested in pursuing violations of the Antitrust Act but is simply seeking
information to support his legislative agenda. Nevertheless, the statements in
the Interim Report fall short of establishing beyond genuine dispute that there
was any improper purpose for the CIDs, much less that the only purpose were
improper.
{13} There are two reasons
why the inference drawn by the marketers is not compelled by the Interim
Report. First, the Interim Report makes no mention of CIDs. It indicates that
the Attorney General had been collecting data by other means for some time. The
Marketers do not suggest that it would be unlawful for the Attorney General to
use the data to support a legislative agenda. Although one might conclude that
the Attorney General would also use any information obtained by CIDs to support
a legislative agenda, one could equally presume that the state's highest
law-enforcement official would not use information obtained by CIDs for a
purpose contrary to law. In other words, a reasonable person reading the
Interim Report would not necessarily conclude that the information to be used
by the Attorney General for his legislative agenda would include date acquired
through CIDs. When it is reasonable to draw two (or more) contrary inferences
from undisputed facts, the choice of inference cannot be made on summary
judgment.
See National Excess Ins. Co. v. Bingham, 106 N.M. 325, 328,
742 P.2d 537, 540 (Ct. App. 1987).
{14} Second, the Interim
Report's concession that there may be no Antitrust Act violations in the New
Mexico gasoline market does not compel the inference that the Attorney General
is not pursuing a legitimate civil investigation to determine whether such
violations exist. As noted above, it is appropriate for the Attorney General to
seek a CID despite the absence of any certainty that a violation of the
Antitrust Act has occurred or is occurring. The introduction to the Interim
Report states: "We will be endeavoring first of all to determine whether
there are violations of the antitrust laws." If the statement is true, one
can infer a proper purpose for the CIDs. The statement may be false, but its
falsity cannot be decided on a motion for summary judgment.
{*110} {15} We have also reviewed the transcript of the
hearing on the motions for summary judgment. We find no concession by the
Assistant Attorney General attending the hearing that the CIDs had no proper
purpose.
{16} In short, we hold that
the present record cannot sustain a summary judgment quashing the CIDs on the
ground that the Attorney General's purpose in seeking the CIDs was improper.
The Marketers are, of course, not foreclosed from seeking a determination on
this issue on the merits, after a full evidentiary hearing, nor are they
foreclosed from pursuing other grounds for quashing the CIDs. In addition, they
may seek protective orders to maintain the confidentiality of information
obtained by the CIDs. We need not decide at this juncture the circumstances
under which disclosure may be authorized by a court pursuant to Section
57-1-5(C). The statute itself fails to provide any substantive guidelines
governing disclosure. Until there has been a judicial determination regarding
when disclosure is authorized, it would be advisable for the Attorney General
to segregate any material acquired through CIDs from information otherwise
acquired.
{17} For the reasons, we
reverse the summary judgment issued by the district court and remand for
further proceedings consistent with this opinion.
MICHAEL D. BUSTAMANTE, Judge