Summary
quashing a D.C. Superior Court subpoena because "a district court, such as this one, which would have no jurisdiction to even issue the subpoenas, has no jurisdiction to enforce the subpoena issued by a state court"
Summary of this case from State of Pal v. Barcode Corp.Opinion
Misc. No. 00MS141 (HHK/JMF)
July 25, 2000
REPORT AND RECOMMENDATION
Judge Kennedy has referred this case to me for a Report and Recommendation on the Motion to Dismiss and to Discharge and/or Quash [#2] filed by a group of Department of Transportation ("DOT") and Federal Aviation Administration ("FAA") employees and officials. They filed this motion in response to subpoenas issued them by the Washington Consulting Group ("WCG"). Having considered the government's motion and WCG's opposition, and for the following reasons, I recommend the Motion to Dismiss and to Discharge and/or Quash be granted.
The FAA and DOT employees and officials are represented by the U.S. Attorney's office. Thus, I will refer to their motion as "the government's motion."
Facts
WCG brought an action in the Superior Court for the District of Columbia, Washington Consulting Group v. Monroe, C.A. 3513-99, in which it alleged that defendants Monroe and Fairchild represented to WCG's Chief Executive Officer, Mr. Chapelli, that they had certain inside information about a failed bid for an FAA contract. WCG lost this contract to Lockheed Martin, after it first appeared that WCG had won the contract. WCG alleges that relying on this "inside information," it paid Monroe and Fairchild "thousands of dollars to assist in the contract dispute appeal. . . hundreds of thousands of dollars to a law firm in the District of Columbia to prosecute the appeal." Complaint at 2. WCG alleges that Monroe and Fairchild nevertheless refused to disclose their "source" in the FAA. In the action pending in Superior Court, WCG seeks money damages from Monroe and Fairchild for fraudulent misrepresentation and breach of fiduciary duty.Complaint at 2-4.
In the process of conducting discovery in the Superior Court case, WCG learned that several officials and employees of the FAA and DOT had information which WCG believed would be relevant to its case. WCG obtained D.C. Superior Court subpoenas in an effort to secure testimony and documents from those employees and officials. Pursuant to DOT regulations (DOT regulations control the FAA), 49 C.F.R. § 9.1 et. seq., counsel for DOT and FAA advised plaintiff's counsel that, in order for the DOT and FAA to grant permission to depose their employees and officials, counsel needed to comply with the DOT regulations. This would involve, for example, making representations about the scope of and procedures for the depositions. See, e.g. February 14, 2000 Letter from Assistant U.S. Attorney Heather Kelly to Joel Bennett, WCG's counsel, attached as an exhibit to the Motion to Dismiss and or Quash/Discharge. After several attempts at complying with the regulations, WCG moved to enforce the subpoenas in the D.C. Superior Court. The government employees then removed WCG'sMotion to Enforce to this District Court pursuant to 28 U.S.C. § 1442 (a) on March 9, 2000.
The government cites to 28 U.S.C. § 1446(d) as authority for removal in its Motion to Dismiss and to Discharge and/or Quash. This is the portion of the removal statue that deals with notice. The more appropriate citation, which the government did cite in its Notice of Removal, would have been to 28 U.S.C. § 1442 (a) — the section that allows federal officials to remove cases to federal court.
On April 14, 2000, WCG also filed an action in District Court pursuant to the Administrative Procedures Act ("A.P.A."), 5 U.S.C. § 551 et. seq., in which it challenged the Department of Transportation's refusal to permit its employees to testify.Washington Consulting Group v. Secretary of Transportation, Docket No. 00-cv-822. It then moved to consolidate that case with this miscellaneous action. On June 8, 2000, Judge Kennedy denied WCG's Motion to Consolidate.
Discussion Jurisdiction
Though WCG has not opposed on jurisdictional grounds the government's removal to federal court of WCG's Motion to Enforce, it is worth a brief look at the case law to assure that this matter is properly before this court. A recent ruling by the D.C. Circuit indicates that the action was properly removed to federal court and should be addressed here. Brown Williamson Tobacco Corp., v. Williams, 62 F.3d 408 (D.C. Cir. 1995). Acknowledging a split in the circuits, the D.C. Circuit found that 28 U.S.C. § 1442 (a) allows a federal official to remove an action to federal court not only in the situation where a federal officer has a colorable federal defense, but also where a federal official seeks to challenge a state court subpoena. The Brown Williamson Court ruled that, although a subpoena enforcement proceeding is not a "civil action," but a charge of contempt against the federal officer for failing to comply would qualify "as a civil action," it would be "quite artificial" to deny removal until the contempt proceeding was filed. Id. at 414-415. Similarly, here, though contempt is not available against the DOT and FAA officials for failing to comply with the subpoenas (see infra), it would seem "quite artificial" to refuse to hear the motion to quash the subpoenas as "once the subpoena is issued, a clash between state power and the federal official appears naturally inevitable." Id. Therefore, it seems entirely appropriate for this Court to rule upon the Motion to Dismiss and/or Quash.
WCG's Motion to Enforce and the Government's Response
WCG brought its Motion to Enforce Subpoenas in the D.C. Superior Court after the FAA and DOT employees did not comply with the Superior Court subpoenas issued them by WCG. Under well established law, when an agency of the federal government has enacted regulations pursuant to the "housekeeping statute," 5 U.S.C. § 301, that withdraw from employees the power to testify or produce documents without permission, a federal employee may not be held in contempt of court for failing to comply with that subpoena. See United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951). Thus, the DOT and FAA employees, on advice of agency counsel, did not comply with the subpoenas. The Fourth Circuit recently reinforced this course of action, stating:
Pursuant to 5 U.S.C.A. § 301, executive branch agencies may prescribe regulations for their own internal governance, conduct of business, record keeping, and document custody. Such regulations are commonly known as "housekeeping" regulations, and do not authorize the agency to withhold information from the public. Housekeeping regulations that create agency procedures for responding to subpoenas are often termed "Touhy regulations," in reference to the Supreme Court's decision in United States ex rel. Touhy v. Ragen, 340 U.S. 462, 71 S.Ct. 416, 95 L.Ed. 417 (1951). In Touhy the Court ruled that agency employees may not be held in contempt for refusing to answer a subpoena, if prohibited from responding by a superior. See id. at 468.Comsat v. National Science Foundation, 190 F.3d 269, 272 at n. 3 (4th Cir. 1999).
Pursuant to the "housekeeping statute," DOT has issued Touhy regulations at 49 C.F.R. § 9.1, et. seq. Sections 9.9, 9.13 and 9.15 detail the steps that must be taken in order for litigants in a suit between private parties to obtain testimony of or documents from DOT (and FAA) employees and officials. See, e.g. 49 C.F.R. § 9.9(a) ("In a legal proceeding between private litigants: (a) [t]he proper method for obtaining testimony or records from an employee . . ."). WCG argues that it has complied with the regulations set out by 49 C.F.R. § 9.1 et. seq., and therefore moved the D.C. Superior Court to enforce those subpoenas.
The D.C. Circuit recently confronted the issue of employees of a federal agency who refused to comply with a state court subpoena based on their own agency's regulations. Houston Business Journal, Inc. v. Office of the Comptroller, 86 F.3d 1208 (D.C. Cir. 1996). In Houston Business Journal, the Houston Business Journal ("HBJ") sought to compel the production of documents from the Treasury Department for use in a libel suit in a Texas State court. When HBJ attempted to subpoena the documents from Treasury, counsel for the Comptroller of the Currency responded that its Touhy regulations had to be complied with in order to gain access to the documents. Id. at 1210. Though the Comptroller released some of the documents, it withheld others and HBJ moved to compel production of the documents in the Texas State court. Id. at 1211. The Comptroller removed the case to federal court in Texas and the subpoena was quashed. ("[I]t is clear that federal sovereign immunity precludes the state court from enforcing the subpoena"). Fairfield v. Houston Business Journal, Inc., Civ. No. H-93-1794, 1993 U.S. Dist LEXIS 20365, 1993 WL 742740 (S.D.Tex. Sept 8, 1992), aff'd, Fairfield v. Houston Business Journal, Inc., 35 F.3d 562 (5th Cir. 1994). Subsequently, however, HBJ obtained a subpoena duces tecum out of the District Court for the District of Columbia, and moved to compel production here when the Comptroller again refused to comply. The District Court denied the motion to compel, but did so on collateral estoppel grounds. HBJ appealed.
The Circuit Court affirmed the District Court's ruling, but did so on jurisdictional, as opposed to preclusion, grounds. Citing a recent ruling by the Supreme Court, the D.C. Circuit found that a district court lacks jurisdiction to issue a subpoena when the underlying action is not even asserted to be within federal-court jurisdiction. Houston Business Journal at 1213. ("the discovery devices in federal court stand to facilitate the resolutions of actions cognizable in federal court") (citingUnited States Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U.S. 72. (1988)). In the case at hand, though WCG has moved to enforce the Superior Court subpoenas, and is not now seeking new subpoenas from a federal court, it certainly follows that a district court, such as this one, which would have no jurisdiction to even issue the subpoenas, has no jurisdiction to enforce the subpoena issued by a state court.
The Court in Abortion Rights Mobilization stated "the subpoena power of a court cannot be more extensive then its jurisdiction. It follows that if a district court does not have subject-matter jurisdiction over the underlying action, and the process was not issued in aid of determining that jurisdiction, then the process is void." United States Catholic Conference v.Abortion Rights Mobilization, Inc., 487 U.S. 72, 76 (1988). No one is suggesting here that WCG seeks this information to determine jurisdiction in federal court.
Further, even if there were jurisdiction here to enforce the subpoena, the Houston Business Journal Court clearly stated that a motion to enforce subpoenas is not the proper way to proceed where a federal agency has validly enacted regulations covering discovery from its employees. The Court stated:
A court cannot enforce a subpoena against an employee of the federal governmental agency when the agency has validly enacted a regulation (such as 49 U.S.C. § 9.1) that withdraws from employees the power to produce documents. Thus, a state-court litigant must request the documents from the federal agency pursuant to the agency's regulation, as indeed the Journal did. If the agency refuses to produce the requested documents, the sole remedy for the state-court litigant is to file a collateral action in federal court under the APA."Id. at 1211-1212 (citing Touhy, 340 U.S. 462 at 467-9) (emphasis added). The Court went on to say, in a footnote, "[u]nder Touhy, neither state-court nor federal-court litigants may obtain a subpoena ad testificandum against an employee of a federal agency that has enacted a Touhy regulation. In that situation, the litigant must proceed under the APA." Id. at 1212 (emphasis added) (citations omitted). Thus, DOT having issued its Touhy regulations, any proceeding to challenge their application must proceed under the APA.
The Court did say that in that situation, seeking mandamus against the agency head might be a possibility. Houston Business Chronicle, 86 F.3d 1312 at n. 5.
Conclusion
Under Houston Business Journal and United States Catholic Conference, this Court is without jurisdiction to enforce WCG's subpoenas. Further, even if there were jurisdiction, it appears clear that once an agency, that has enacted valid Touhy regulations, denies a request for documents or testimony of an employee, the "sole remedy" of a state-court litigant is to file an action under the APA. Accordingly, I must recommend to Judge Kennedy that the government's motion be granted.