The opinion of the court was delivered by: SIMMONS
The Interstate Commerce Commission (ICC) originally commenced the present action in this Court on March 1, 1978. The Commission filed suit against James R. Gould, doing business as Brokers for Agricultural Cooperative Associations, seeking an injunction to compel the production of business records for inspection.
The original purpose of the ICC inquiry was to determine if the business of James R. Gould (Gould) was subject to the Interstate Commerce Act, and if so, whether he had violated or was violating any provision of the Act. Gould, in his answer, asserted that an injunction should not be issued because: (1) The ICC lacked statutory authority to inspect his business records since his business was exempt from the jurisdiction of the Commission; (2) The requests for the production of records were made in bad faith; and (3) The records were protected by the Self Incrimination Clause of the Fifth Amendment.
After hearing arguments from both sides, this Court granted summary judgment in favor of the ICC enjoining Gould from refusing to produce or permit access to his transportation related records.
Gould promptly appealed the case to the United States Court of Appeals for the Third Circuit. See ICC v. Gould, 629 F.2d 847 (3rd Cir. 1980).
The Court of Appeals addressed three broad categories of issues as follows: (1) Whether the ICC has jurisdiction to conduct its investigation and thus obtain inspection of Gould's papers; (2) whether the ICC has followed the procedures required by statute and case law; and (3) whether the Constitution nevertheless shields certain of Gould's records from disclosure.
As to the first question presented, the Court of Appeals held that under the circumstances of this case the ICC had statutory jurisdiction to inspect Gould's records which he kept as a sole proprietorship, and further, the ICC was authorized to use the summary provisions of the applicable statute to seek a court injunction to compel Gould to permit an inspection of said records.
As to the second question raised, the Court of Appeals held that the ICC had complied with the mandated procedures required by the applicable statute that would ordinarily have permitted this Court to have compelled the broker Gould to submit to an inspection of the books and records of Gould's sole proprietorship by the use of this Court's injunctive power.
The third question raised by the Court of Appeals, as to whether the United States Constitution shielded certain of Gould's sole proprietorship records from ICC inspection, if Gould should properly invoke his Fifth Amendment privilege against self incrimination, was not answered by the Court of Appeals. The Appeals Court held that the record in the District Court was insufficient to determine the answer to the third question because there was no evidence in the lower court record that would reveal the true legal nature of the ICC's proposed investigation of Gould's sole proprietorship records. In order to develop a proper record, the District Court was directed to hold an evidentiary hearing in order to determine whether the inspection practices of the ICC resembled a subpoena-summons procedure or whether they were similar to a search and seizure procedure.
If the proposed ICC's inspection of Gould's sole proprietorship records were found to resemble a subpoena-summons procedure where there are elements of testimonial compulsion, then Gould would be entitled to a Fifth Amendment privilege which would protect him from being required to turn over any sole proprietorship papers to the ICC which would tend to incriminate him.
In summary, the Court of Appeals remanded the case back to the District Court to determine via an evidentiary hearing whether the ICC's procedure more closely resembled a subpoena-summons procedure or a search and seizure procedure, in order to properly address the third question which was presented to but unanswered by the Court of Appeals.
Gould thereupon petitioned the United States Supreme Court for a Writ of Certiorari in this matter, which subsequently was denied. See: ICC v. Gould, 629 F.2d 847, cert. denied, Gould v. ICC, 449 U.S. 1077, 101 S. Ct. 856, 66 L. Ed. 2d 800 (1981).
After the case was remanded to this District Court for further proceedings, the ICC discovered that the same James R. Gould involved in this litigation, had incorporated a business entity in Kansas (on July 9, 1979) after this litigation had begun, known as BACA, Inc.
However, Gould continued to assert in this litigation that he was also doing business simultaneously as a sole proprietorship in Pittsburgh, Pennsylvania, as BACA, or in the more formal name of "Brokers for Agricultural Cooperative Associations".
In Gould, at 862, the Circuit Court stated:
If the ICC demonstrates that BACA is in fact not a sole proprietorship or that some person other than Gould has possession of BACA's records, then the injunction previously issued by the District Court would be appropriate because under Bellis (v. United States, 417 U.S. 85, 94 S. Ct. 2179, 40 L. Ed. 2d 678 (1974)) or Colucci ( In re Grand Jury Empanelled, 597 F.2d 851 (3 Cir. 1979)) respectively, the Fifth Amendment would be inapplicable.
After learning that Gould also was conducting his business in a corporate name "BACA, Inc.", the ICC served a subpoena duces tecum on Gould requesting his business books, records and Form 1120 Income Tax returns for all corporate entities owned by him.
The required evidentiary hearing was subsequently conducted to afford counsel for both sides the opportunity to present evidence that provided a factual basis for this court to determine: (1) Whether Gould was doing business as BACA, as a sole proprietorship, or as a corporation, or as both; (2) Whether Gould, if doing business as a sole proprietorship had the sole possession of the sole proprietorship records; (3) What was the character and type of the ICC's visitorial investigative inspection procedure; and (4) Which records, if any, should be turned over to the ICC in the light of this Court's findings as to Questions 1, 2 and 3. This Court addressed ...