Memorandum concerning subpoena power of California legislative co

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At our meeting in San Francisco yesterday a group of you asked we
re-publish our memorandum regarding the subpoena power of California
legislative committee. Here is a slightly edited version.

1. What is the basis of a Legislative Committee's Subpoena Power?

Authority: Government Code Section 9401, provides that "a subpoena
requiring the attendance of any witness before the Senate, Assembly, or a
committee may be issued by the President of the Senate, Speaker of the
Assembly, or the chairman of any committee before whom the attendance of the
witness is desired if permission has been secured from the rules committee
of the respective house."

Govt. Code Section 9402 provides that a subpoena is sufficient if it "(a)
states whether the proceeding is before the Senate, Assembly or a committee.
(b) is addressed to the witness [presumably the custodian of records when
documents are sought]. © requires the attendance of the witness at a time
and place certain and (d) is signed by the President of the Senate, Speaker
of the Assembly or chairman of the committee before whom attendance of the
witness is desired."

Contempt Power: If the witness does not appear or refuses to testify or
"neglects or refuses ... to produce upon reasonable notice any material and
proper books, papers or document sin his possession or under his control, he
has committed a contempt." Govt. Code Section 9405. If the contempt is
committed while the Legislature is in session, Govt. Code Section 9407
provides that the committee shall report the contempt to the Senate or
Assembly "for such action as may be deemed necessary by the Senate or
Assembly." If the Legislature is not in session, "the superior court in and
for the county in which any inquiry, investigation hearing or proceeding
[is] held ... may compel the ... production of books, papers, documents and
accounts, as required by the subpoena issued by the committee, on the filing
by the committee of a petition to the court asking that the witness be so
compelled."

Govt. Code Section 9409 provides that "any witness neglecting or refusing to
attend in obedience to subpoena may be arrested...." It is unclear how this
provision would or could be applied to a subpoena issued to the custodian of
records of a non-resident company.

Motion to Quash Subpoena: California courts have held, under C.C.P. Section
1985, that a motion to quash is the procedurally appropriate method of
testing the validity of a subpoena duces tecum. See e.g. People ex rel.
Dept. of Public Works v. Younger (1970) 5 Cal.App.3d 575. My research has
revealed no case in which a subpoena issued by a legislative committee has
been challenged by a motion to quash, but, as noted above, there appear to
be only a very few cases interpreting Govt. Code 9401 et seq. Therefore,
it appears that a superior court may be able to grant a motion to quash a
subpoena issued by a legislative committee (assuming that we want to take
the risk of state court jurisdiction).

In one early case, the Court of Appeal held that the contempt order and
accompanying affidavit issued by the Court upon the request of a Senate
Committee were fatally defective. Ex Parte McLain (1950) 99 Cal.App.2d 274.
In McLain, the Senate Interim Committee on Social Welfare served upon Mr.
McLain, the Chairman of the Board of Trustees of a corporation a subpoena
calling for the production of various books, papers and documents. Mr.
McLain appeared before the committee but refused to answer questions or
produce the documents. Upon representation of the Committee, the Superior
Court issued an order directing Mr. McLain to produce the documents. Mr.
McLain again appeared before the Committee and again refused to produce the
documents at which point, an affidavit was filed in Superior Court stating:

"That, based upon evidence in its possession, the said Senate Interim
Committee has determined that each of the books, papers, and documents
specified in said subpoena duces tecum is material to the matters now under
investigation by the said Senate Interim Committee, and the production of
such books, papers and documents is necessary in order to enable said Senate
Interim Committee properly to perform the duties imposed upon it and to
report to the Senate of the State of California pursuant to said Senate
Resolution No. 162." and "That each of the books, papers and documents
specified in said subpoena duces tecum is material to the matters now under
investigation by the said Senate Interim Committee and that the production
of such books, papers and documents is necessary in order to enable said
Senate Interim Committee properly to perform the duties imposed upon it and
to report to the Senate of the State of California pursuant to said Senate
Resolution No. 162."

The Superior Court found Mr. McLain guilty of contempt and ordered him
committed to the sheriff until he produced the records. The Court of
Appeals found that the order and affidavit were defective because "a witness
who is otherwise orderly and respectful cannot be adjudged guilty of
contempt unless the order affirmatively sets forth the materiality and
pertinency of the books and papers called for. In cases of constructive
contempt, as is this, not only the order but also the affidavit upon which
it is based must sufficiently charge the alleged facts constituting the
offense." McLain at 276.

This holding appears to be somewhat consistent with cases interpreting
C.C.P. 1985, which hold that the subpoena and affidavits must allege
material facts rather than conclusory statements. See e.g. Grannis v. Board
of Medical Examiners (1971) 19 Cal.App.3d 551.

However, cases interpreting C.C.P. 1985 also require the subpoena to
demonstrate a level of specificity, materiality and relevance to be held
proper. See e.g. Pacific Auto Ins. Co. v. Superior Court (1969) 273
Cal.App.2d 61. It is unclear, but arguable that subpoenas issued by
legislative committees will be held to this same standard.

2. What is the likely impact of a legislative committee subpoena issued
against Enron for out-of-state Enron documents?

There is little case law interpreting Govt. Code 9401 et seq. and the Govt.
Code reporters cross reference to the Code of Civil Procedure Sections on
issuance of subpoenas (C.C.P. 1985, et seq.). Therefore, it is likely that
the provisions of both the Govt. Code and the C.C.P. will govern the
issuance and enforceability of a subpoena issued by a legislative committee.
Accordingly we use these provisions to analyze this question.

(a) Subpoenas against out-of-state residents under C.C.P. 1985 et
seq.

C.C.P. 1989 is entitled "Residency requirements for attendance of witnesses"
and provides that "A witness, including a witness specified in subdivision
(b) of Section 1987, is not obliged to attend as a witness before any court,
judge, justice or any other officer, unless the witness is a resident within
the state at the time of service."

However, there is a statutory limitation on the residency requirement
imposed by Section 1989. Section 1987.3 provides "[w]hen a subpoena duces
tecum is served upon a custodian of records or other qualified witness as
provided in Article 4 (commencing with Section 1560) of Chapter 2 of
Division 11 of the Evidence Code, and his personal attendance is not
required by the terms of the subpoena, Section 1989 shall not apply."
(Evade. Code 1650 lays out the terms for compliance with a subpoena for
business records where the business is "neither a party nor the place where
any cause of action is alleged to have arisen.")

On commentator noted the following with respect to C.C.P. 1987.3:

"The rule limiting subpoenas to California "residents" (C.C.P. 1989) does
not apply to a subpoena duces tecum served on custodians of records unless
their personal attendance is required. See C.C.P. 1987.3; Amoco Chem. Co. v.
Certain Underwriters at Lloyd's of London (1995) 34 Cal.App.4th 554, 561 fn.
9. Thus, a nonresident custodian of business records may be required to
respond to a subpoena duces tecum served upon him or her while present in
California, by producing the records in accordance with Cal. Evid. Code 1560
(delivering copies of the records and accompanying affidavit to the court
clerk)... [However], C.C.P. 1987.3 probably applies only where the
nonresident custodian is employed by a business entity subject to California
jurisdiction. Otherwise, there would be no way for the court to enforce
compliance with a subpoena served on a nonresident. See Amoco Chem. Co. v.
Certain Underwriters at Lloyd's of London, supra."

Werner, Fairbanks & Epstein, Rutter Group, California Practice Guide: Civil
Procedure & Trials at 1.57-58

Moreover, in one unpublished case, Allee v. King (1988) 206 Cal.App.3d 1081,
the court held that it lacked power to compel a nonresident defendant to
produce original out-of-state documents at trial. In so holding, the court
stated that:

"even though King apparently voluntarily attended the trial, his presence
does not confer jurisdiction on the court to oblige him to deliver the
out-of-state documents. Although section 1989 uses the word "witness" and
does not refer to documents, it has long been presumed under common law that
documents in other states are outside the court's territorial jurisdiction,
so that a court will allow the use of copies or other secondary evidence
instead of originals. (See, e.g., Heinz v. Heinz (1946) 73 Cal.App.2d 61,
66, 165 P.2d 967, and cases cited therein.) The recognition that
out-of-state documents are not subject to the court's process is in
conformity with the general rule under common law that, absent a statute
properly conferring broader powers, the extent of a state's subpoena power
and its accompanying subpoena duces tecum power is coterminous with its
borders. (See 97 C.J.S., Witnesses, S 17, p. 367, S 23, p. 375, S 25, p.
380; 81 Am.Jur.2d, Witnesses, S 8, p. 32, S 14, p. 39.)

However, the Allee court notes that the "state-border" limitation on
subpoena power has not been extended to local branches of national
corporations who are subpoenaed to deliver documents which are out-of-state.
Therefore, even under Allee, if a subpoena was issued to an Enron entity
within California that possessed responsive documents, that Enron entity may
be obligated to respond. See Boal v. Price Waterhouse & Co. (1985) 165
Cal.App.3d 806.

Therefore, if a subpoena is issued which requires the attendance of an
out-of-state officer of Enron, Enron has a very good argument that that
witness is not obligated to attend under C.C.P. 1989. It also seems
probable that, under Amoco and Allele cited above, if a subpoena is served
on an Enron custodian of records who is employed by a non-California Enron
entity, the subpoena may be invalid. However, if a subpoena seeking the
production of documents is served on the custodian of records (or someone
similarly situated) who is employed by an Enron entity that possesses
responsive documents and is subject to personal jurisdiction in California,
that Enron entity most likely is obligated to produce the documents. While
it is an open question, Enron can certainly argue that the custodian of
records employed by an Enron entity in California would only be required to
produce the Enron documents in the possession of the Enron California
entity. (This question is addressed somewhat in the commentary on the
C.C.P. 2020 statutory scheme, see below, but is still open.)

(b) Subpoenas against out-of-state residents under C.C.P. 2020 et
seq.

An additional threshold question regarding the territorial effect of this
subpoena concerns whether it is should be considered a deposition subpoena.
The question is: If the legislative subpoena was treated as a "deposition
subpoena," would a court deciding the enforceability of a legislative
subpoena treat Enron as a "party" or as a "non-party"?

The rules governing the reach of discovery in California are obviously
different for the two. The deposition of a party or party-affiliated
witness may be noticed (without a subpoena) for a place within 75 miles of
the witness' residence. It is unclear how a court would resolve this issue.
After all, if a court was resolving the issue at all, an Enron entity will
have appeared before it. and would be a "party." However, it seems
moderately more likely that the court would treat Enron's obligations under
the legislative committee subpoena as similar to its obligations if it was
served with a "non-party" subpoena.

There are three types of "deposition subpoena": a "testimony only subpoena"
(requires only the attendance and testimony of the witness), a "business
records subpoena" (requires only the production of business records) and a
"records and testimony subpoena" (requires both -- also formerly called
subpoena duces tecum). The second of these is the most relevant to Enron.

The attendance of an non party out-of-state witness or the production of
documents can be compelled only under the law of the place where the
deposition is to be taken. C.C.P. 2026 (b)(2). Specifically, C.C.P.
2026(b)(2) provides "If the deponent is not a party to the action or an
officer, director, managing agent, or employee of a party, a party serving a
deposition notice under this section shall use any process and procedures
required and available under the laws of the state, territory, or insular
possession where the deposition is to be taken to compel the deponent to
attend and to testify, as well as to produce any document or tangible thing
for inspection, copying, and any related activity."

Some states issue subpoenas routinely, some require a showing of materiality
or relevancy, and some require a commission from the court where the action
is pending. This question will depend on the law of the state when the
custodian of records resides.

Regarding the question of whether the service of a deposition subpoena on an
in-state custodian of records would compel the production of out-of-state
documents. Weil & Brown, Rutter Group, California Practice Guide: Civil
Procedure Before Trial at 5:540.4 notes:

"It is unclear whether service of a "business records" subpoena on a
nonparty corporation in California compels production of its records located
outside the state. ... C.C.P. 2020(d) requires that the subpoena be directed
to the records "custodian" (or someone authorized to certify the records).
Whether "custodian" requires actual custody of the records is unclear. If it
does, serving an officer or agent in California would not compel production
of business records located elsewhere. The result is different where a
"records and testimony" subpoena is used. That procedure extends to records
in control of the subpoenaed party, not merely in his or her custody."

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