Brelvis Consulting, Llc v. State Of Washington

Filed
Washington State
Court of Appeals
Division Two
November 20, 2018
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
STATE OF WASHINGTON, No. 50235-6-II
Respondent,
PUBLISHED OPINION
v.
BRELVIS CONSULTING LLC,
Appellant.
BJORGEN, J. — Brelvis Consulting LLC (Brelvis) appeals from the superior court’s order
requiring it to comply with the civil investigative demand (CID) issued and served on Brelvis by
the Attorney General’s Office (AGO) pursuant to RCW 19.86.110. Brelvis argues that the
superior court erred by compelling it to comply with the CID because it violates Brelvis’ (1)
right against self-incrimination, (2) right against intrusion into its private affairs, and (3) right
against unreasonable search and seizure. Brelvis also argues that the CID is directed at the
managing member of Brelvis, Bruce Mesnekoff, in his personal capacity.
We hold that the superior court properly required Brelvis to comply with the CID and
consequently affirm its decision.
No. 50235-6-II
FACTS
On August 3, 2016, the AGO received a complaint regarding an entity known as the
Student Loan Help Center LLC. Although the complaint identified the “National Student Loan
Help Center” as its subject, it included an Internet address for the “Student Loan Help Center.”
Clerk’s Papers (CP) at 159-60. The complaint also included a link to the Better Business
Bureau’s (BBB) Internet complaint page regarding the Student Loan Help Center. The BBB
webpage for the Student Loan Help Center included the following information:
Pattern of Complaints
BBB files indicate that The Student Loan Help Center has a pattern of complaints
stating that the business does not consolidate loans after the consumer pays an
initial fee. Complaints further show that consumers[’] request for refunds go
unanswered by the business.
In September 2014, July 2015, and December 2016, BBB sent a request to The
Student Loan Help Center to address this pattern and what actions the business has
taken to help eliminate the causes of complaints. As of today’s date, BBB has not
received a response from the business.
CP at 164.
The Student Loan Help Center also does business under the name Brelvis Consulting
LLC. Mesnekoff owns and operates Brelvis and is its registered agent. On October 21, the AGO
sent a CID to Brelvis pursuant to RCW 19.86.110 as part of its investigation into whether Brelvis
had engaged in unfair or deceptive business practices in violation of RCW 19.86.020.1 The CID
was addressed to Brelvis, in care of Mesnekoff. The AGO’s investigation related to possible
misrepresentations about student loan forgiveness and other possible violations of Washington’s
Debt Adjusting Act, chapter 18.28 RCW, and Consumer Protection Act, chapter 19.86 RCW,
1
RCW 19.86.020 states, “Unfair methods of competition and unfair or deceptive acts or
practices in the conduct of any trade or commerce are hereby declared unlawful.”
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No. 50235-6-II
based on the August 3 complaint. The CID included 12 interrogatories and 13 requests for
production. The CID requested several categories of documents and responses from Brelvis
regarding matters such as advertisements, payment records, customer complaints, client intake
and communication records, and other information about Brelvis’ business, its employees, and
any litigation against the company.
On November 22, counsel for Brelvis contacted the AGO requesting additional time to
respond to the CID. On December 29, after multiple e-mail communications, the AGO informed
Brelvis that if it did not respond to the CID by January 5, 2017, the AGO would file a motion to
enforce the CID. Brelvis retained new counsel who, on January 12, e-mailed the AGO
requesting additional time to respond to the CID. Then, on January 27, counsel informed the
AGO that Brelvis was again seeking new counsel with regard to the CID. On January 30, the
new counsel for Brelvis contacted the AGO to confirm that it had taken over representation for
Brelvis. On February 3, the AGO told Brelvis that it would give it until February 10 to respond
to the CID. Brelvis did not respond to the interrogatories and requests for production.
On February 14, the AGO filed a petition to enforce the CID, which the superior court
granted. Brelvis filed a motion for reconsideration of the order enforcing the CID, which the
superior court denied. Brelvis appealed both the superior court’s order enforcing the CID and its
order denying reconsideration to our court. On April 21, Brelvis filed a motion to stay the
superior court’s March 24 order, which the superior court granted.
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No. 50235-6-II
ANALYSIS
Brelvis argues that the superior court’s order compelling compliance with the CID is
erroneous because it violates Brelvis’ (1) right against self-incrimination, (2) right against
unlawful intrusion into its private affairs, and (3) right against unreasonable search and seizure.
We disagree.
I. SCOPE OF CID
As an initial matter, Brelvis argues that Mesnekoff’s individual rights against self-
incrimination, unlawful intrusion into his private affairs, and unreasonable search and seizure are
implicated. We disagree.
The CID noted that it was directed to “Brelvis Consulting LLC” and to Mesnekoff as its
registered agent for service. CP at 18. The interrogatories and requests for production defined
“You,” “Your,” and “Brelvis” as referring to Brelvis Consulting LLC, including any principals,
owners, employees, officers, agents, and “any other persons or entities acting on behalf of or
under the direction, authorization or control of Brelvis.” CP at 18, 20. Brelvis argues that
because the definition of “You,” “Your,” and “Brelvis” encompasses Mesnekoff, “the CID
applies to him personally.” Reply Br. of Appellant at 10-11. Brelvis asserts that
[t]he plain language of the CID equates Mr. Mesnekoff individually and personally
with the word “Brelvis.” Mr. Mesnekoff is therefore required by the terms of this
CID to answer the interrogatories under oath.
Reply Br. of Appellant at 11. Brelvis also argues that Mesnekoff is personally implicated
because the CID was addressed to Brelvis in care of him.
A corporation is “artificial, invisible, intangible,” and it exists only in law. Diaz v. Wash.
State Migrant Council, 165 Wn. App. 59, 76-77, 265 P.3d 956 (2011); Broyles v. Thurston
County, 147 Wn. App. 409, 428, 195 P.3d 985 (2008). Our case law recognizes that
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No. 50235-6-II
[t]he invisible, intangible object of our legal contemplation cannot answer
discovery or be effectively sanctioned if it does not. By necessity it acts through
its officers, directors, employees, and other agents. As with a corporation’s duties
in every other sphere in which it operates, it is the corporate officers, directors, and
other agents who must discharge its duties in a lawsuit.
Diaz, 165 Wn. App. at 76-77 (internal citation omitted). Further, a “‘corporation exists as an
organization distinct from . . . its shareholders.’” State v. Chase, 1 Wn. App. 2d 799, 805, 407
P.3d 1178 (2017), review denied, 190 Wn.2d 1024 (2018) (quoting Grayson v. Nordic Constr.
Co., 92 Wn.2d 548, 552, 599 P.2d 1271 (1979)). Accordingly, corporations acting through
corporate officers and corporate officers acting in their personal capacity “maintain distinct legal
obligations and interests.” Id. A corporation’s separate legal identity is not lost because it is
owned by one person or members of a single family. Id.Brelvis’ claim that the CID targets Mesnekoff in his personal capacity is belied by case
law and the record. The United States Supreme Court has held that
without regard to whether the subpoena is addressed to the corporation, or as here,
to the individual in his capacity as a custodian, . . . a corporate custodian such as
petitioner may not resist a subpoena for corporate records on Fifth Amendment
grounds.
Braswell v. United States, 487 U.S. 99, 108-09, 108 S. Ct. 2284, 101 L. Ed. 2d 98 (1988)
(internal citations omitted).2 Nevertheless, the “privilege against self-incrimination includes the
right of a witness not to give incriminatory answers in any proceeding—civil or criminal,
2
We note that Braswell also stated,
We leave open the question whether the agency rationale supports compelling a
custodian to produce corporate records when the custodian is able to establish, by
showing for example that he is the sole employee and officer of the corporation,
that the jury would inevitably conclude that he produced the records.
Braswell, 487 U.S. at 118, n.11. However, it was not briefed and argued whether this open
question should be resolved by deviating from Braswell’s holding for LLCs with a single
member.
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No. 50235-6-II
administrative or judicial, investigatory or adjudicatory.” Eastham v. Arndt, 28 Wn. App. 524,
527, 624 P.2d 1159 (1981) (citing Kastigar v. United States, 406 U.S. 441, 92 S. Ct. 1653, 32 L.
Ed. 2d 212 (1972)).
Thus, Mesnekoff, in his capacity as Brelvis’ custodian, may not resist a request for
production of Brelvis’ records on Fifth Amendment grounds. See Braswell, 487 U.S. at 108-09.
However, where the interrogatories propounded by the AGO might tend to incriminate
Mesnekoff in future criminal proceedings, the Fifth Amendment privilege against self-
incrimination permits Mesnekoff to refuse to answer official questions asked in the context of the
CID. See King v. Olympic Pipeline Co., 104 Wn. App. 338, 351, 16 P.3d 45 (2000), which held
that the “Fifth Amendment privilege permits a person to refuse to testify at a criminal trial, or to
refuse to answer official questions asked in any other proceeding, where the answer might tend
to incriminate him or her in future criminal proceedings.”
For these reasons, we limit our review to Brelvis’ assignments of error as they apply to
Brelvis, and we also address whether Mesnekoff properly invoked his Fifth Amendment
privilege against self-incrimination.
II. GENERAL LEGAL STANDARDS
We review constitutional issues de novo. City of Seattle v. Evans, 184 Wn.2d 856, 861,
366 P.3d 906 (2015), cert. denied, 137 S. Ct. 474 (2016). We also review issues of statutory
interpretation de novo. Jongeward v. BNSF R. Co., 174 Wn.2d 586, 592, 278 P.3d 157 (2012).
Our fundamental objective in statutory interpretation is to give effect to the legislature’s intent.
Id. If a statute’s meaning is plain on its face, then we give effect to that plain meaning as an
expression of legislative intent. Id. at 594. We discern plain meaning not only from the
provision in question, but also from closely related statutes. Id. “[W]e will not
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No. 50235-6-II
read additional language into a statute that the legislature did not write.” Killian v. Seattle Pub.
Sch., 189 Wn.2d 447, 459, 403 P.3d 58 (2017). We do not interpret a statute such that it renders
any portion meaningless or superfluous. Jongeward, 174 Wn.2d at 601.
III. PRIVILEGE AGAINST SELF-INCRIMINATION
A. Legal Standards
The Fifth Amendment to the United States Constitution states, in part, “No person . . .
shall be compelled in any criminal case to be a witness against himself.” U.S. CONST., amend. V.
Similarly, article I, section 9 of the Washington constitution provides, “No person shall be
compelled in any criminal case to give evidence against himself.” WASH. CONST., art. I, § 9.
Article I, section 9 provides the same protection as the Fifth Amendment. State v. Easter, 130
Wn.2d 228, 235, 922 P.2d 1285 (1996).
A person who seeks to prevent disclosure of evidence under the privilege against self-
incrimination must show that the evidence is (1) compelled, (2) testimonial, and (3)
incriminatory. United States v. Hubbell, 530 U.S. 27, 34-38, 120 S. Ct. 2037, 147 L. Ed. 2d 24(2000). Whether an act of production is testimonial in this regard is a fact-intensive
determination. In re Grand Jury Subpoena, Dated April 18, 2003, 383 F.3d 905, 909 (9th Cir.
2004).
Generally, “a person must invoke the Fifth Amendment protections in order for them to
apply.” State v. Warner, 125 Wn.2d 876, 884, 889 P.2d 479 (1995). A person may invoke the
privilege against self-incrimination under the Fifth Amendment when that person is compelled to
provide testimonial evidence that may be incriminating. Hubbell, 530 U.S. at 34-35. Although
both constitutional provisions refer to criminal cases, one may assert the privilege against self-
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No. 50235-6-II
incrimination in any proceeding. Alsager v. Bd. of Osteopathic Med. & Surgery, 196 Wn. App.
653, 664, 668-69, 384 P.3d 641 (2016), cert. denied, 138 S. Ct. 165 (2017).
A “party in a civil proceeding need not answer questions ‘where the answer might
incriminate him in future criminal proceedings.’” Alsager, 196 Wn. App. at 668 (quoting State
v. King, 130 Wn.2d 517, 524, 925 P.2d 606 (1996)). Further,
“[t]he privilege [against self-incrimination] not only extends to answers that would
in themselves support a conviction under a . . . criminal statute but likewise
embraces those [answers] which would furnish a link in the chain of evidence
needed to prosecute the claimant for a . . . crime.”
Eastham, 28 Wn. App. at 528 (alterations in original) (quoting Hoffman v. United States, 341
U.S. 479, 486-87, 71 S. Ct. 814, 95 L. Ed. 1118 (1951)). In a civil proceeding, however, “the
right against testifying ‘necessarily attaches only to the question being asked and the information
sought by that particular question.’” Alsager, 196 Wn. App. at 668-69 (quoting Doe ex rel.
Rudy-Glanzer v. Glanzer, 232 F.3d 1258, 1264 (9th Cir. 2000)); State v. Hobble, 126 Wn.2d 283,
289-90, 892 P.2d 85 (1995).
B. Article I, Section 9—Gunwall Analysis
Brelvis argues that we must engage in an analysis under State v. Gunwall, 106 Wn.2d 54,
720 P.2d 808 (1986), to determine if article I, section 9 of the Washington Constitution provides
greater protections than the Fifth Amendment in the context of a corporation invoking the right
against self-incrimination. We disagree.
Washington courts have already determined that article I, section 9 provides the same
protection as the Fifth Amendment. Easter, 130 Wn.2d at 235-36; State v. Russell, 125 Wn.2d
24, 57-58, 882 P.2d 747 (1994); State v. Mecca Twin Theater & Film Exch., Inc., 82 Wn.2d 87,
91, 507 P.2d 1165 (1973); State v. Terry, 181 Wn. App. 880, 889, 328 P.3d 932 (2014).
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Accordingly, a Gunwall analysis is unnecessary. We analyze Brelvis’ self-incrimination
arguments only under the Fifth Amendment.
C. Invocation of the Privilege Against Self-Incrimination
Brelvis claims that the superior court erred in granting the AGO’s motion to enforce the
CID because it violates Brelvis’ constitutional privilege against self-incrimination. Brelvis also
contends that both individuals and entities can properly invoke the privilege against
incrimination.
1. Brelvis’ Privilege Against Self-Incrimination
Brelvis contends that the privilege against self-incrimination applies generally to both
individuals and entities. We disagree.
Both state and federal courts have determined that corporate3 defendants “cannot claim a
Fifth Amendment privilege with regard to corporate records.” United States v. Blackman, 72
F.3d 1418, 1426 (9th Cir. 1995). More broadly, in Braswell, the Supreme Court held that “it is
well established that . . . artificial entities are not protected by the Fifth Amendment.” 487 U.S.
at 102; accord, Nat’l Abortion Fed’n v. Ctr. for Med. Progress, 134 F. Supp. 3d 1199, 1202
(N.D. Cal. 2015) (“Case law is dispositive that the corporate defendants may not assert Fifth
Amendment rights.”). Washington case law mirrors these holdings. In Diaz, 165 Wn. App. at
74, the court held it was well settled that a corporation does not have a Fifth Amendment
privilege; and in Mecca, 82 Wn.2d at 91, our state Supreme Court held that neither corporations
nor corporate officers acting on behalf of the corporations are protected by the constitutional
privilege against self-incrimination.
3
Here and at other points in the Analysis, we cite case law dealing with corporations. Brelvis is
a limited liability company (LLC). No party argues that we should not rely on otherwise
relevant case law applying to corporations in deciding the issues raised in this appeal.
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No. 50235-6-II
Brelvis contends that other case law has eroded these holdings. Citing Burwell v. Hobby
Lobby Stores, Inc., 134 S. Ct. 2751, 189 L. Ed. 2d 675 (2014), and Commonwealth v. Doe, 405
Mass. 676, 679, 544 N.E.2d 860 (1989), Brelvis argues that the privilege against self-
incrimination may be invoked by corporate officers acting on behalf of the corporation.
However, neither Hobby Lobby nor Doe support this proposition.
In Hobby Lobby, the United States Supreme Court held that corporations were “persons”
for the purpose of the application of the Religious Freedom Restoration Act of 1993, 107 Stat.
1488, 42 U.S.C. § 2000bb, but did not purport to expand or alter a corporation’s rights under the
Fifth Amendment. Hobby Lobby, 134 S. Ct. 2768-69. More pointedly, Hobby Lobby did not
abandon or alter the Supreme Court’s holding in Braswell that artificial entities such as
corporations “are not protected by the Fifth Amendment.” 487 U.S. at 102.
Doe, on the other hand, addressed the individual rights of a records custodian, not the
rights of a corporation to assert a right against self-incrimination. 405 Mass. at 679 n.4. The
court stated flatly that it did not “reach the issue whether a corporation has art[icle] XII rights
[rights against self-incrimination].” Id. at 679. Even if we were inclined to follow
Massachusetts law, it would not serve Brelvis’ case.
Finally, Brelvis points out that Braswell has never been cited by a Washington State
court. That may be true, but allowing a state court to disregard established Supreme Court
precedent simply by not citing it would leave little of the Supremacy Clause, U.S. CONST., art.
VI, cl. 2. This invitation we decline.
Under established case law, a corporate entity does not enjoy a constitutional privilege
against self-incrimination, and its officers and agents may not invoke that privilege on its behalf.
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2. Proper Invocation of the Right Against Self-Incrimination
Brelvis argues that it properly invoked its right against self-incrimination because the
answers to interrogatories were testimonial and Mesnekoff could have been personally
incriminated. Even if we assume that the answers to the CID were testimonial and that Brelvis
was able to invoke a right against self-incrimination, Brelvis failed to properly invoke its right.
The right against self-incrimination must be invoked “through specific, individual
objections, not by invoking blanket constitutional protection to avoid participating in the
proceedings.” Alsager, 196 Wn. App. at 668. Our Supreme Court has explained that in order to
invoke the privilege against self-incrimination, “the danger of incrimination must be substantial
and real, not merely speculative.” Hobble, 126 Wn.2d at 290. A “witness cannot establish the
privilege [against self-incrimination] merely by making a ‘blanket declaration . . . that he cannot
testify for fear of self-incrimination.’” State v. Levy, 156 Wn.2d 709, 732, 132 P.3d 1076 (2006)
(alterations in original) (quoting United States v. Gomez-Rojas, 507 F.2d 1213, 1220 (5th Cir.
1975)). A witness who does not assert the privilege against self-incrimination as to specific
topics or requests does “not properly invoke it as to matters potentially related to criminal
liability.” Alsager, 196 Wn. App. at 669.
Brelvis failed to produce any responsive documents. Brelvis and Mesnekoff also failed
to properly object to the CID, including its requests for production and interrogatories, and failed
to explain how responding to those requests for production and interrogatories would be
testimonial and incriminating. Blanket assertions of privilege are insufficient to invoke the Fifth
Amendment protections. Levy, 156 Wn.2d at 732; Alsager, 196 Wn. App. at 668. As stated
above, Mesnekoff, in his capacity as Brelvis’ custodian, may not resist a request for production
of records on Fifth Amendment grounds. See Braswell, 487 U.S. at 108-09. Furthermore, even
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assuming that interrogatories in the CID might tend to incriminate Mesnekoff in his individual
capacity, neither Brelvis nor Mesnekoff properly invoked the Fifth Amendment privilege with
regard to those interrogatories. Accordingly, this argument fails.
D. RCW 10.52.090
Brelvis argues that the superior court erred by ordering it to comply with the CID
because, without a grant of immunity, compliance with the CID would violate RCW 10.52.090.
We disagree.
First, as discussed above, Brelvis has not validly asserted any privilege protecting it from
the CID. Second, RCW 10.52.090 does not apply to the CID.
RCW 10.52.090 states:
In every case where it is provided in this act that a witness shall not be excused
from giving testimony tending to criminate himself or herself, no person shall be
excused from testifying or producing any papers or documents on the ground that
his or her testimony may tend to criminate or subject him or her to a penalty or
forfeiture; but he or she shall not be prosecuted or subjected to a penalty or
forfeiture for or on account of any action, matter or thing concerning which he or
she shall so testify, except for perjury or offering false evidence committed in such
testimony.
The reviser’s note to RCW 10.52.090 refers to the note following RCW 9.01.120 for the
definition of “this act.” The note following RCW 9.01.120, in turn, states that “this act” includes
various titles and sections, including former RCW 19.60.010 (2011), RCW 19.60.025, .040,
.042, .045 and .050, former RCW 19.60.055 (1991), and RWC 19.60.057 and .060, which
address pawnbrokers and secondhand dealers. “This act,” however, does not include RCW
19.86.110 or RCW 19.86.020. RCW 9.01.120 reviser’s notes.
The AGO sent a CID to Brelvis pursuant to RCW 19.86.110 as part of its investigation
into whether Brelvis had violated RCW 19.86.020. Based on the plain language of RCW
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10.52.090 and the scope of its reference to “this act” in the reviser’s notes, RCW 10.52.090 does
not apply to the AGO’s investigation under chapter 19.86 RCW.4 Thus, Brelvis’ argument fails.
E. RCW 19.86.110(8)
Brelvis argues that the superior court erred in relying in part on Brelvis’ failure to file a
petition to modify or set aside the CID within the 20-day time period set forth in RCW
19.86.110(8). At the March 24, 2017 hearing, the superior court explained:
The Court finds that the request for discovery being sought by the State [via the
CID] does not implicate or constitute an unreasonable search under either the
Fourth Amendment, the Fifth Amendment, Article I, Subsection 7 of the State
Constitution.
The Court finds that the definition of “person” as it applies to this particular
statute includes the Respondent, Brelvis Consulting, LLC. The Court finds that the
Respondent did not move to set aside the [CID] within 20 days, as is required by
the statute. The Court grants the motion of [the] State of Washington.
Verbatim Report of Proceedings (Mar. 24, 2017) at 24.
Assuming, without deciding, that the superior court erred in relying on Brelvis’ failure to
meet the 20-day deadline, it is of no moment to this appeal. Even without that ground, the CID
survives Brelvis’ challenges to it, as shown by this opinion.
IV. ARTICLE I, SECTION 7
Brelvis argues that the requirement to comply with the CID is an unconstitutional
intrusion into private affairs without authority of law under article I, section 7 of the Washington
Constitution. Article I, section 7 states, “No person shall be disturbed in his private affairs, or
his home invaded, without authority of law.” Our analysis of an issue under article I, section 7
consists of two components. State v. Reeder, 184 Wn.2d 805, 814, 365 P.3d 1243 (2015). First,
4
The AGO’s interrogatory number 11 references RCW 18.28, 19.134, 19.86, and 19.190.
“[T]his act” does not include those chapters. RCW 9.01.120 reviser’s notes.
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we consider whether a private affair has been disturbed. Id. Second, we consider whether the
disturbance was justified by authority of law. Id.A. Private Affair
1. Brelvis
Brelvis argues that its business records are private affairs that are subject to protection
under article I, section 7.
As a threshold issue, the AGO apparently takes the position that the protections of article
I, section 7 are limited to Washington citizens. This reading is supported by the definition of
“private affairs” as those “‘interests which citizens of this state have held, and should be entitled
to hold, safe from government trespass.’” State v. Jorden, 160 Wn.2d 121, 126, 156 P.3d 893(2007) (emphasis added) (quoting In re Pers. Restraint of Maxfield, 133 Wn.2d 332, 339, 945
P.2d 196 (1997)).
As noted, however, article I, section 7 states, “No person shall be disturbed in his private
affairs, or his home invaded, without authority of law.” WASH. CONST. art. I § 7 (emphasis
added). To reduce the scope of the provision to Washington citizens on the basis of this
statement from Jorden and Maxfield would be to significantly confine its reach in reliance on
cases which did not analyze that potentially significant a change. In addition, Jorden’s reference
to “citizens” can be harmonized with the use of “person” in article I, section 7. The
constitutional guarantee would extend to all persons within the state of Washington, while the
determination of what counts as a private affair would look to interests the state’s citizens have
held and should be entitled to hold safe from government trespass. For these reasons, we decline
any suggestion that the shield of article I, section 7 is limited to state citizens.
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Alternatively, if article I, section 7 were confined to state citizens, Brelvis would fall
outside its scope and its claims under article I, section 7 would fail for that reason. In Americold
Realty Trust v. Conagra Foods, Inc., 136 S. Ct. 1012, 1014, 194 L. Ed. 2d 71 (2016), the Court
held that a real estate investment trust takes the citizenship of its members for purposes of
diversity jurisdiction. In reaching this conclusion the court noted that Louisville, C. & C. R. Co.
v. Letson, 43 U.S. 497, 558, 11 L. Ed. 353 (1844), held that for diversity jurisdiction a
corporation is a citizen of the state it is created by and doing business in.
A rule that corporations are citizens for diversity purposes, though, does not travel well
into other settings. First, the general legal definition of “citizen” does not include corporations
and other business entities. Black’s Law Dictionary 298 (10th ed. 2014) defines “citizen” as
1. Someone who, by either birth or naturalization, is a member of a political
community, owing allegiance to the community and being entitled to enjoy all its
civil rights and protections; a member of the civil state, entitled to all its privileges.
Neither a corporation, limited liability company, nor similar entity is born or naturalized.
Therefore, none of these entities are citizens under this general definition. Black’s Law
Dictionary does recognize the diversity exception to this rule in its second definition of “citizen”:
2. For diversity-jurisdiction purposes, a corporation that was incorporated within a
state or has its principal place of business there. 28 USCA § 1332(c)(1).
Id. This recognition of corporate citizenship in federal diversity jurisdiction only highlights the
exclusion of these business entities from the class of citizens generally.
Second, the Privileges and Immunities Clause of our state constitution treats citizens and
corporations as separate categories. That clause states:
No law shall be passed granting to any citizen, class of citizens, or corporation other
than municipal, privileges or immunities which upon the same terms shall not
equally belong to all citizens, or corporations.
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WASH. CONST. art. I § 12. In Grant County Fire Protection District No. 5 v. City of Moses Lake,
150 Wn.2d 791, 807-08, 83 P.3d 419 (2004), our Supreme Court described the background of the
clause:
Article I, section 12 of the Washington State Constitution was modeled after article
I, section 20 of the Oregon State Constitution. . . .
The Washington provision differs from that of the Oregon provision only in that
the Washington provision added a reference to corporations, which our framers
perceived as manipulating the lawmaking process. Thompson, 69 Temp. L.Rev. at
1253. Washington’s addition of the reference to corporations demonstrates that our
framers were concerned with undue political influence exercised by those with
large concentrations of wealth, which they feared more than they feared oppression
by the majority.
The separate listing of “citizen” and “corporation” in the state Privileges and Immunities
Clause shows that each were viewed as discrete categories by the framers. To view
“corporation” as a subcategory of “citizen” would make the former superfluous in the
constitution, a result the court is to avoid in interpretation. State ex rel. Heavey v. Murphy, 138
Wn.2d 800, 811, 982 P.2d 611 (1999). This conclusion is buttressed by the fact that
“corporation” was specifically added by the framers of the Washington Constitution to guard
against “undue political influence exercised by those with large concentrations of wealth.”
Grant County, 150 Wn.2d at 808. The framers acted deliberately in treating “citizen” and
“corporation” as different categories.
This authority counsels that corporate entities should not be deemed state citizens for
purposes of article I, section 7. Thus, if article I, section 7 applies only to state citizens, Brelvis
would not be protected by this provision.
We conclude above, however, that article I, section 7 is not confined to state citizens, but
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rather applies to “persons.” Assuming that Brelvis is a person for these purposes, we next
address whether governmental conduct, in this case the CID, intrudes on a private affair. To
answer that question, courts look at “‘the nature and extent of the information which may be
obtained as a result of the government conduct’ and at the historical treatment of the interest
asserted.” State v. Hinton, 179 Wn.2d 862, 869, 319 P.3d 9 (2014) (quoting State v. Miles, 160
Wn.2d 236, 244, 156 P.3d 864 (2007)).
In Miles, a state agency issued an administrative subpoena for the bank records of an
individual suspected of securities fraud. In striking down the subpoena under article I, section 7,
the court explained that its holding in State v. Boland, 115 Wn.2d 571, 800 P.2d 1112 (1990),
that an individual’s garbage bags count as private affairs was based, in part, on the observation
that “garbage bags could include sensitive information about business records, bills,
correspondence, tax records, and so on.” Miles, 160 Wn.2d at 245. The court then held that
personal banking records are private affairs under the state constitution because business records,
bills, and financial records could reveal “sensitive personal information, such as ‘where the
person has travelled, the person’s reading habits, and the person’s financial condition.’” Chase,
1 Wn. App. 2d at 804 (quoting Reeder, 184 Wn.2d at 244). A corporation’s business records,
however, are distinct from personal records. Id. at 805.
Each of these types of information is the sort of thing that would be sensitive personal
information for a natural person, but not for a legal abstraction like a corporation or LLC. See id.at 804-05 The CID requested information exclusively regarding Brelvis’ business practices. The
information sought would not reveal potentially sensitive personal information of any individuals
and does not meet the standard for a private affair under article I, section 7.
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For these reasons, Brelvis’ business records are not protected under article I, section 7 of
the Washington Constitution.
2. Mesnekoff
Brelvis contends that Mesnekoff can also assert a privacy interest in Brelvis’ business
records as a member and manager of Brelvis. Division One of our court recently rejected a
similar argument in Chase, 1 Wn. App. 2d at 799. In Chase, the defendant, a shareholder and
principal officer in a corporation, attempted to assert a privacy interest in the corporations’
banking records. 1 Wn. App. 2d at 801-02. The court determined that the defendant could not
assert a privacy interest in the corporation’s banking records because those records have not been
historically considered part of a shareholder or officer’s private affairs and “a corporation’s
financial transactions do not reveal sufficiently sensitive information about a person’s personal
contacts and associations.” Id. at 807. Therefore, Mesnekoff does not have a personal privacy
interest in Brelvis’ business records under article I, section 7.
With these conclusions, it is unnecessary to examine the second component in analyzing
claims under article I, section 7: whether the disturbance was justified by authority of law.
However that may be resolved, the CID did not violate this constitutional provision.
V. FOURTH AMENDMENT
Brelvis also maintains that the CID constituted an unreasonable search under the Fourth
Amendment. We disagree.
In Steele v. State ex rel Gorton, our Supreme Court considered whether a CID issued to a
corporation pursuant to RCW 19.86.110 was reasonable in the context of the Fourth
Amendment. 85 Wn.2d 585, 537 P.2d 782 (1975). In Steele, the AGO issued a CID to an
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employment agency as part of an investigation into unfair or deceptive practices. It requested
records related to
services rendered to applicants for employment; the manner of payment agreed
upon by the applicant and respondent; training materials and manuals supplied by
the franchisor to the respondent; applications for employment that had been placed
in the inactive file in the past year; refunds to applicants or fee adjustments; certain
pleadings filed in courts of record of this State in which respondent was a party;
certain contracts between respondent and lending or financial institutions; and
certain advertisements for employment placed by the agency in local newspapers.
Id. at 587.
The court observed that:
[W]e start with the well-established proposition that although corporations and
businesses are protected by the Fourth Amendment, . . . the privacy of their books
and records is not as stringently protected as is that of the privacy of individuals.
Indeed, both in England and in the United States, corporations and businesses
historically have been subject to wide investigative powers.
Id. at 592-93 (citations omitted). The court explained that the test
for determining the reasonableness of a subpoena . . . or similar order . . . requires
that (1) the inquiry is within the authority of the agency; (2) the demand is not too
indefinite, and (3) the information sought is reasonably relevant [to the purpose of
the subpoena].
Id. at 594.
Considering the first factor, the court stated, “[T]here is no question but that RCW
19.86.080 and RCW 19.86.110(1) accord to the Attorney General power to investigate possible
unfair or deceptive practices.” Id. at 594. Turning to the second factor, the court determined that
the demand was not impermissibly indefinite because “[t]here was no general or
[undiscriminating] request for all business records. Rather, the types of records and information
sought were in all instances explained with reasonable clarity” and were limited to records less
than three years old. Id. Finally, the court concluded that the information was reasonably
relevant to the investigation because “the requested information was directed at ascertaining the
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manner in which the [agency] filled supposed job openings and dealt with applicants seeking
employment.” Id. at 595.
After considering the three factors, the Supreme Court concluded:
Therefore, by application of the three-prong test . . . we are convinced that the
instance [CID] did not violate the prohibitions of the Fourth Amendment.
Situations could, of course, arise where the Attorney General arbitrarily serves a
[CID] upon a business. . . . But the record in the instant case discloses that the
Attorney General did not act arbitrarily in instituting the investigation. On the
contrary, the record discloses that an adequate foundation for the investigation
existed since the Attorney General had received various complaints with respect to
the operation of the employment agency.
Id. We now examine the present CID under the test in Steele.
B. Authority of the Agency
The AGO issued a CID to Brelvis as part of its investigation into whether Brelvis had
engaged in unfair methods of competition and unfair or deceptive acts or practices in the conduct
of trade or commerce under RCW 19.86.020. Specifically, the AGO was investigating whether
Brelvis made misrepresentations about student loan forgiveness and committed other violations
of Washington’s Debt Adjusting Act, chapter 18.28 RCW, and Consumer Protection Act, chapter
19.86 RCW. Our Supreme Court has held that “there is no question but that RCW 19.86.080 and
RCW 19.86.110(1) accord to the Attorney General power to investigate possible unfair or
deceptive practices.” Steele, 85 Wn.2d at 594. Therefore, the AGO had the authority to
investigate whether Brelvis engaged in possible unfair or deceptive business practices.
C. Definiteness of Demand
The CID requested several categories of documents and contained interrogatories
regarding matters such as advertisements, payment records, customer complaints, client intake
and communication records, and other information about Brelvis’ business, its employees, and
litigation against the company. The CID requested customer information related only to
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No. 50235-6-II
Washington consumers, rather than all of Brelvis’ clients. The United States Supreme Court has
approved broad categorical requests pursuant to a subpoena. See, e.g., McPhaul v. United States,
364 U.S. 372, 374, 81 S. Ct. 138, 5 L. Ed. 2d 136 (1960) (approving a subpoena for all records,
correspondence and memoranda pertaining to the organization of, the affiliation with other
organizations and all monies received or expended by the entity). The CID issued to Brelvis was
properly focused and definite.
D. Relevance of Information Sought
As described above, the CID requested several categories of documents and contained
interrogatories covering matters such as advertisements, payment records, customer complaints,
client intake, communication records, Brelvis’ employees, and litigation against the company.
The CID requested customer information related only to Washington consumers, rather than all
of Brelvis’ clients. All of the information requested in the CID is reasonably relevant to the
AGO’s investigation into possible misrepresentations regarding student loan forgiveness and
other unfair methods of competition or unfair or deceptive acts by Brelvis.
E. Not Issued Arbitrarily
Brelvis argues that the AGO arbitrarily issued its CID because it did not have an adequate
foundation of complaints to initiate its investigation. As part of this argument, Brelvis asserts
that the AGO improperly conflated the Student Loan Help Center, a name under which Brelvis
does business, with the National Student Loan Help Center. We disagree.
“[T]he primary purpose of the Fourth Amendment is to protect the privacy of an
individual from arbitrary intrusions by government officials.” State v. Smith, 88 Wn.2d 127,
140, 559 P.2d 970 (1977). “Arbitrary” is generally defined as “relating to, or involving a
determination made without consideration of or regard for facts, circumstances, fixed rules, or
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No. 50235-6-II
procedures.” BLACK’S LAW DICTIONARY 125 (10th ed. 2014). In Steele, our Supreme Court
recognized that situations could “arise where the Attorney General arbitrarily serves a civil
investigative demand upon a business.” 85 Wn.2d at 595.
Here, though, the record shows that the AGO did not act arbitrarily in instituting the
investigation. The AGO relied on the August 3, 2016 complaint in issuing the CID. Although
the complaint identified the National Student Loan Help Center as its subject, it also included an
Internet address for the Student Loan Help Center and a link to the BBB’s Internet complaint
page regarding the Student Loan Help Center. Therefore, the AGO could have reasonably
interpreted the August 3 complaint to pertain to Brelvis, doing business as the Student Loan Help
Center. More importantly, the BBB page clearly relates to Brelvis and describes a “pattern of
complaints” regarding Brelvis’ failure to consolidate loans and respond to customer requests for
refunds. CP at 164. Therefore, the AGO had an adequate foundation to initiate its investigation
and did not act arbitrarily in doing so.
With this, the Steele test has been satisfied, and issuance of the CID did not violate
Brelvis’ rights under the Fourth Amendment.
VI. APPELLATE FEES AND COSTS
The AGO asks that we award the State attorney fees on appeal under RAP 18.1(a). RAP
18.1(a) allows a party to recover fees on appeal “if applicable law grants a party the right to
recover reasonable attorney fees or expenses.” RCW 19.86.080(1) states,
The attorney general may bring an action in the name of the state . . . against
any person to restrain and prevent the doing of any act herein prohibited or declared
to be unlawful; and the prevailing party may, in the discretion of the court, recover
the costs of said action including a reasonable attorney’s fee.
In the present case, the State asks the court to enforce the CID. Under RCW
19.86.110(5)(a) and (b), one receiving a CID must produce documentary material demanded and
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No. 50235-6-II
answer interrogatories subject to restrictions. Brelvis did not produce documents or answer
interrogatories in response to a CID we have determined to be valid. Thus, the present case is an
action “to restrain and prevent the doing of any act herein prohibited or declared to be unlawful”
under RCW 19.86.080(1). Therefore, we award reasonable appellate attorney fees to the State
under RCW 19.86.080(1).
CONCLUSION
The superior court properly required Brelvis to comply with the CID. Therefore, we
affirm its decision.
Bjorgen, J.
We concur:
Sutton, J.
Penoyar, J.P.T.
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