Com. of PA, OAG v. N. Patel ( 2019 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Commonwealth of Pennsylvania, :
Office of Attorney General, :
Petitioner :
:
v. : No. 116 M.D. 2019
: ARGUED: September 11, 2019
Nisha Patel, :
Respondent :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE ELLEN CEISLER, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE CEISLER FILED: October 29, 2019
Before this Court is a “Petition to Compel Compliance with Subpoena”
(Petition) filed by the Office of Attorney General (OAG) against Respondent Nisha
Patel (Patel). After careful review, we deny the OAG’s Petition.
I. Background
In support of its Petition, the OAG alleges the following:
1. In June 2018, the Commonwealth of Pennsylvania (Commonwealth),
along with several dozen states, filed a complaint against multiple
pharmaceutical companies alleging they engaged in a price-fixing scheme
which reduced competition and artificially inflated generic pharmaceutical
prices. That matter is currently pending before the United States District
Court for the Eastern District of Pennsylvania (U.S. District Court);
2. The OAG continues to investigate allegations of price fixing in the generic
pharmaceutical industry, as well as potential violations of the Unfair Trade
Practices and Consumer Protection Law (CPL),1 which prohibits unfair
methods of competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce;
3. Section 919(a) of The Administrative Code of 1929 (Administrative
Code)2 authorizes the Attorney General to compel the testimony of
witnesses and the production of documents and files relating to
commercial and trade practices “which the [OAG]”3 has authority to
investigate. Petition, ¶ 19. The Attorney General has discretion to use
subpoenaed material as he deems necessary by virtue of Section 919(b) of
the Administrative Code. 71 P.S. § 307-3(b).
4. Patel engaged in trade and commerce in the generic pharmaceutical
industry within the Commonwealth;
5. Pursuant to Section 919(a) of the Administrative Code, the Attorney
General issued a subpoena to Patel, requesting “all cell phone data,
including but not limited to any text messages or iMessages, from July 3,
1
Act of December 17, 1968, P.L. 1224, as amended, 73 P.S. §§ 201-1 – 201-9.3.
2
Act of April 9, 1929, P.L. 177, as amended, added by Act of December 17, 1968, P.L.
1221, 71 P.S. § 307-3(a).
3
We note that Section 919(a) limits the subpoena power of the Attorney General to those
“commercial and trade practices which the Bureau of Consumer Protection (Bureau) has authority
to investigate[.]” 71 P.S. § 307-3(a) (emphasis added).
2
2016 to the present,” as well as all communications from July 3, 2016, to
the present made between Patel and approximately 30 named individuals.4
Petition, Ex. D at 6.
6. Patel communicated her refusal to comply with the subpoena on the basis
it was overly broad and the Attorney General intended to share any
documentary materials received pursuant to the subpoena with the
Connecticut Attorney General’s Office, one entity involved in the multi-
state litigation pending in U.S. District Court. Petition, Ex. C at 3.
Following Patel’s refusal to comply, the OAG filed its Petition requesting this
Court compel Patel to produce all records and documents specified in the subpoena.
II. Issues
In its principal brief filed in support of the Petition, the OAG raises the
following issues:
1. Whether documentary material subpoenaed by the Attorney General
pursuant to its powers under the Administrative Code may be used to
enforce the CPL?
2. Whether documentary material subpoenaed by the Attorney General may
be shared with another jurisdiction’s office of attorney general?
4
The subpoena presented here is the second issued by the Attorney General. The first was
withdrawn following objections by Patel that it was overly broad and the Attorney General
improperly intended to share subpoenaed materials with the Connecticut Attorney General’s
Office. Petition, Ex. C at 3. The sole difference between the first and second subpoenas is the
second document specifically identifies the individuals whose communications with Patel are
subject to disclosure.
3
III. Analysis
A. Use of Subpoenas in Enforcing the CPL
First, we address whether material subpoenaed by the Attorney General under
the relevant provisions of the Administrative Code may be used to enforce the CPL.
The scope of judicial inquiry in a subpoena enforcement action is whether 1) the
inquiry is within the authority of the agency, 2) the demand is sufficiently definite,
and 3) the information sought is reasonably relevant. United States v. Morton Salt
Co., 338 U.S. 632, 652 (1950). Pertinent to our discussion here is whether the
inquiry is within the authority of the agency.
Disposition of this issue requires an examination of the relevant powers and
duties of both the Attorney General and the Bureau of Consumer Protection
(Bureau), as set forth in the Administrative Code and the CPL, as well as an
assessment of the continued validity of our decision in Commonwealth by Packel v.
Shults, 362 A.2d 1129 (Pa. Cmwlth. 1976), in which this Court determined that the
subpoena powers granted to the Attorney General under the Administrative Code
could not be used to investigate violations of the CPL.
1. Subpoena Powers of the Attorney General
The subpoena power at issue is derived from Section 919(a) of the
Administrative Code, which authorizes the Attorney General to compel the
production of documents and files related to commercial and trade practices “which
the [Bureau] has authority to investigate[.]” 71 P.S. § 307-3(a) (emphasis added).
Section 919(b) relevantly provides that the Attorney General “or any attorney
designated by him may use such documentary material or copies thereof as he
determines necessary in the enforcement of this act.” 71 P.S. § 307-3(b) (emphasis
added).
4
2. Investigative Powers of the Bureau
The powers and duties of the Bureau are outlined in Section 918(1) of the
Administrative Code, which authorizes the investigation of “commercial and trade
practices in the distribution, financing, and furnishing of goods and services to or for
the use of consumers in order to determine if such practices are detrimental to the
public interest . . . .” 71 P.S. § 307-2(1). The Bureau is further tasked with
conducting “studies, investigations and research in matters affecting consumer
interest,” advising the executive and legislative branches on matters affecting
consumer interest, developing executive policies, drafting legislative programs to
protect consumers, investigating “fraud, misrepresentation and deception in the sale,
servicing and financing of consumer goods and products[,]” promoting consumer
education, and publicizing matters related to consumer fraud, deception, and
misrepresentation. 71 P.S. § 307-2(1)-(2). Relevantly, the Bureau has no power or
authority under the Administrative Code to enforce the provisions of the CPL.
3. The CPL
Generally, the CPL prohibits unfair methods of competition and unfair or
deceptive acts or practices in the conduct of any trade or commerce. 73 P.S. § 201-
3. Section 3.1 of the CPL provides that the Attorney General may adopt rules and
regulations to enforce and administer the CPL.5 Section 4 of the CPL grants the
Attorney General, or any district attorney, the authority to bring civil actions for
injunctive relief to restrain alleged trade practices that violate the CPL. 73 P.S. §
201-4. The provisions of the CPL neither mention the Bureau nor grant the Bureau
enforcement powers.
5
73 P.S. § 201-3.1, added by Act of November 24, 1976, P.L. 1166.
5
4. Commonwealth Attorneys Act (Attorneys Act)6
Section 201(a) of the Attorneys Act establishes the OAG as an independent
department under the direction of the Attorney General. 71 P.S. § 732-201(a).
Section 201(c) of the Attorneys Act directs the Attorney General to appoint the
Bureau’s director, who may exercise “such powers and perform such duties as may
be prescribed by the [AG].” 71 P.S. § 732-201(c). Section 204(d) of the Attorneys
Act provides that the Attorney General is to administer the provisions relating to
consumer protection set forth in Sections 917 through 922 of the Administrative
Code (relating to the Bureau),7 and appoint the advisory committees established in
Section 922. 71 P.S. § 732-204(d).
5. Continued Viability of Shults
The pertinent question in Shults was whether an investigative subpoena issued
by the Bureau pursuant to Section 919(a) of the Administrative Code lay “within the
authority of the agency” that issued it, thus satisfying the first prong of the test in
Morton Salt. Shults, 362 A.2d at 1131. The Bureau issued a subpoena to Shults,
requesting he appear at a hearing and present documents related to his business,
which had been under investigation by the Bureau for several months. The purpose
of the subpoena was to initiate an action against Shults under the CPL. After Shults
6
Act of October 15, 1980, P.L. 950, as amended, 71 P.S. §§ 732-101 – 732-506.
7
As to those provisions not implicated by this matter, Section 917 of the Administrative
Code establishes the Bureau under the direction of a director appointed by the Attorney General.
71 P.S. § 307-1. Section 920 provides that the Attorney General shall appoint the personnel
required to conduct the work of the Bureau. 71 P.S. § 307-4. Section 921 provides that the Bureau
shall not duplicate or interfere with the work of the Pennsylvania Public Utility Commission or
substitute for any other Commonwealth agency with the power to protect consumer interests in a
particular field. 71 P.S. § 307-5. These other agencies are to cooperate, however, with the Bureau
in carrying out its functions. Id. Section 922 grants the Governor authority to create advisory
committees to assist the Bureau. 71 P.S. § 307-5.
6
failed to appear, the Commonwealth sought and obtained an order to compel his
compliance with the subpoena. Contempt proceedings were initiated in the lower
court after Shults once more refused to provide the subpoenaed materials. The lower
court’s finding of contempt was appealed to this Court.
On appeal, Shults argued that the subpoena issued by the Bureau for purposes
of initiating an injunctive action under the CPL was not authorized by Section 919
of the Administrative Code. Actions under the CPL were instead governed by the
pre-trial discovery process outlined in the Pennsylvania Rules of Civil Procedure
(Rules). By using its investigatory powers under the Administrative Code, the
Bureau sought to circumvent the discovery limitations in the Rules.
In defense of its investigative subpoena, the Commonwealth asserted that the
purpose of Section 918(1) of the Administrative Code,8 which authorizes the Bureau
to investigate commercial and trade practices to determine whether such practices
are detrimental to the public interest, is to facilitate litigation under the CPL. The
Commonwealth further argued that Section 919(b) of the Administrative Code,
which permits the Attorney General to use subpoenaed material “as he determines
necessary in the enforcement of this act[,]” 71 P.S. § 307-3(b), contemplates the use
of such materials in litigation brought under the CPL.
While this Court affirmed the lower court’s determination that the subpoena
was valid, and Shults was in contempt of that order, this Court agreed with Shults
that the Bureau was not authorized under the Administrative Code to bring injunctive
actions under the CPL. While Section 918 of the Administrative Code grants the
Bureau the power to investigate, conduct studies and research, advise the executive
and legislative branch, assist in developing executive policies and propose
8
71 P.S. § 307-2(1).
7
legislation, as well as promote consumer education, it does not grant the Bureau the
power to enforce, restrain, or bring civil actions, and it makes no reference
whatsoever to the CPL. Thus, enforcement of the CPL was not among the Bureau’s
functions as enumerated in the Administrative Code.
This Court further noted that the Attorney General’s authority to use
subpoenaed materials was limited to “this act,” which clearly referenced the
Administrative Code and the establishment and functions of the Bureau. It most
certainly did not refer to the CPL and, therefore, any documentary material obtained
by subpoena under Section 919(a) of the Administrative Code could not be used in
any subsequent injunctive action brought under the CPL.
Presently, the OAG argues that, while Shults was decided correctly at the time,
its holding has been abrogated by passage of the Attorneys Act. More specifically,
Section 204(d) of the Attorneys Act tasks the Attorney General with administering
Sections 917 through 922 of the Administrative Code. The OAG notes that these
provisions relate to consumer protection and the enforcement of laws relating to
trade and commerce. As the CPL likewise relates to consumer protection, the OAG
contends that Sections 917 through 922 of the Administrative Code and the CPL
“should be construed together as one statute.” AG Br. at 23. Consequently, the
OAG reasons that the subpoena power granted the Attorney General under section
919(a) of the Administrative Code encompasses the enforcement provisions of the
CPL.
Furthermore, as Section 919(b) of the Administrative Code provides that the
Attorney General, or any attorney designated by him, may use documentary material
“as he determines necessary in the enforcement of this act, including presentation
before any court[,]” 71 P.S. § 307-3(b), the OAG maintains it may use the
8
investigative file developed under the Administrative Code to enforce compliance
with the CPL.
Patel does not dispute the Attorney General’s authority to issue an
investigative subpoena under the relevant provisions of the Administrative Code.
However, Patel suggests the OAG conflates the Attorney General’s duties relative
to the Bureau under the Administrative Code with his powers under the CPL to
initiate adversarial litigation. Documents obtained by the Attorney General through
his subpoena powers under the Administrative Code may only be used in furtherance
of his duties under the Administrative Code. Patel rejects the argument that Shults
was superseded by Section 204(d) of the Attorneys Act, as that statute merely directs
the Attorney General to “administer the provisions relating to consumer protection”
under Sections 917 through 922 of the Administrative Code. 71 P.S. § 732-204(d).
Section 204(d) of the Attorneys Act does not grant the Attorney General power to
enforce the CPL by means of an investigatory subpoena issued pursuant to the
Administrative Code.
As to this first issue, we agree with Patel, as the legislation which informed
our opinion in Shults remains fundamentally unchanged. The Attorney General’s
subpoena power under Section 919(a) of the Administrative Code is limited to
commercial and trade practices “which the Bureau has authority to investigate.” 71
P.S. § 307-3(a) (emphasis added). While the Bureau enjoys several powers and
duties under Section 918(1) of the Administrative Code, enforcement of the CPL is
not among them.
Moreover, the provisions of the Attorneys Act cited by the OAG in no way
further its arguments. Section 204, enacted some five years after Shults, directs the
9
Attorney General to administer the Bureau’s duties under the Administrative Code.
It does not expand the Bureau’s duties to encompass enforcement of the CPL.
As our Supreme Court has stated, “the General Assembly is quite able to
address what it believes is a judicial misinterpretation of a statute,” Commonwealth
v. Batts, 163 A.3d 410, 460 (Pa. 2017), and its failure to do so in the years following
the Shults decision gives rise to the presumption that the General Assembly is in
agreement with our interpretation. If the General Assembly wished to integrate the
Attorney General’s investigative subpoena powers under the Administrative Code
with its enforcement powers under the CPL, it could have explicitly done so. The
General Assembly has not acted, however, and the CPL has never been amended to
address the issue identified in Shults.9
In the absence of an express legislative grant of subpoena powers for actions
brought under the CPL, none exists. See Com. ex rel. Margiotti v. Orsini, 81 A.2d
891, 893-94 (Pa. 1951) (the only power of subpoena the Attorney General possesses
is that given by an act of the legislature – subpoena power, and the extent thereof, is
to be determined in each case by the express statutory grant); City of Erie v.
Cappabianca, 879 A.2d 823, 825 (Pa. Cmwlth. 2005) (in the absence of a statute
granting subpoena power to non-judicial bodies or officials, the power to issue
subpoenas is limited to the judiciary). Accordingly, we reaffirm our decision in
Shults and its central holding that the Attorney General lacks the authority to issue
an investigative subpoena under the Administrative Code for purposes of enforcing
9
In point of fact, the General Assembly amended the CPL just three months after this Court
rendered its decision in Shults. At that time, the General Assembly deleted the civil investigative
demand as a method for obtaining information from potential violators of the CPL. Nothing
prevented the General Assembly from simultaneously expanding the Bureau’s powers to include
enforcement of the CPL. Its failure to do so raises a presumption that our decision in Shults was
in accordance with legislative intent. Fletcher v. Pa. Prop. & Cas. Ins. Guar. Ass’n, 985 A.2d
678, 693 (Pa. 2009).
10
the CPL. Because the Attorney General’s intended use of the documentary material
sought through his investigative subpoena exceeds his authority under the
Administrative Code, we conclude the OAG has not met the first prong of the test in
Morton Salt, as the inquiry is not within the authority of the agency.
B. Limitation on Use of Subpoenaed Information
Next, we address the OAG’s argument that the Attorney General’s
contemplated disclosure of subpoenaed material to the Connecticut Attorney
General is authorized by Section 919(b) of the Administrative Code.
Section 919(b) provides as follows:
No documentary material produced pursuant to a demand
under this section shall, unless otherwise ordered by a
court for good cause shown, be produced for inspection or
copying by, nor shall the contents thereof be disclosed to
any person other than the authorized employe of the
Attorney General without the consent of the person who
produced such material: Provided, That under such
reasonable terms and conditions as the Attorney General
shall prescribe, such documentary material shall be
available for inspection and copying by the person who
produced such material or any duly authorized
representative of such person. The Attorney General or
any attorney designated by him may use such documentary
material or copies thereof as he determines necessary in
the enforcement of this act, including presentation before
any court . . . .
71 P.S. § 307-3(b) (emphasis added).
The OAG argues that the sentence which prohibits disclosure of
“documentary material” is subservient to the next sentence, which allows the
Attorney General “or any attorney designated by him” to use the material as the AG
deems necessary to enforce the act. The OAG provides no relevant legal authority
11
to support its contention that the investigative powers and duties set forth in the
Administrative Code extend beyond the territorial limits of the Commonwealth.
We find the OAG’s argument in this regard lacking in merit, as the “act”
contemplated is clearly the Administrative Code, and only the Administrative Code,
in the absence of any language to the contrary. The OAG’s related argument that
the Attorney General may share documentary evidence with Connecticut’s Attorney
General as an “attorney designated by him” is likewise without merit, as it cannot
be credibly maintained that Connecticut’s Attorney General seeks to enforce the
Administrative Code.
IV. Conclusion
As the OAG has not met the first requirement of the test in Morton Salt, that
the “inquiry be within the authority of the agency,” we are constrained to deny the
OAG’s Petition.
__________________________________
ELLEN CEISLER, Judge
12
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Commonwealth of Pennsylvania, :
Office of Attorney General, :
Petitioner :
:
v. : No. 116 M.D. 2019
:
Nisha Patel, :
Respondent :
ORDER
AND NOW, this 29th day of October, 2019, the Petition to Compel
Compliance with Subpoena filed by the Commonwealth of Pennsylvania Office of
Attorney General is DENIED.
__________________________________
ELLEN CEISLER, Judge