United States of America et al v. Fischer
Filing
15
ORDER granting 1 Motion to Compel: For the reasons set forth in the attached Summary Order, Petitioners' motion is GRANTED. Respondent shall comply with Petitioners' subpoena by October 22, 2013. SO ORDERED. Ordered by Judge Pamela K. Chen on 10/8/2013. (Doerr, Mark)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA
and
PATRICK P. O’CARROLL, JR.
INSPECTOR GENERAL OF THE SOCIAL
SECURITY ADMINISTRATION,
Petitioners,
SUMMARY ORDER
13-CV-4405 (PKC)
v.
LARRY FISCHER,
Respondent.
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PAMELA K. CHEN, United States District Judge:
Pending before the Court is the petition of the United States of America and Patrick
O’Carroll, the Inspector General of the Social Security Administration (“SSA OIG”),
(collectively, “Petitioners”), seeking enforcement of an administrative subpoena duces tecum
issued to Larry Fischer (“Respondent”), pursuant to 5 U.S.C. app. § 6(a)(4), seeking information
and records relating to Respondent’s ownership and use of the URL/domain name
“socialsecurity.com.” For the reasons set forth below, the Court grants Petitioner’s motion, and
directs Respondent to comply with the subpoena by October 22, 2013.
BACKGROUND
In late November 2012, SSA received a citizen complaint about the website
“www.socialsecurity.com.” (Declaration of B. Chad Bungard, Dkt. 1-3, ¶ 5.) The complainant
reported that she had visited the website and was charged $10 for completing a disability
application on the website. 1 Id. SSA referred the complaint to SSA OIG, which subsequently
determined that Respondent was the owner and operator of the website. Id.
On February 6, 2013, SSA OIG sent a letter to Respondent advising him that SSA OIG
had determined that the URL/domain name “socialsecurity.com” violated Section 1140 of the
Social Security Act (“Section 1140”), which prohibits the use of the words "Social Security,"
inter alia:
[I]n connection with any item constituting an advertisement, solicitation . . . or
other communication . . . alone or with other words, letters, symbols, or emblems
. . . in a manner which such person knows or should know would convey, or in a
manner which reasonably could be interpreted or construed as conveying, the
false impression that such item is approved, endorsed, or authorized by the Social
Security Administration.
42 U.S.C. § 1320b-10(a)(1); (Dkt. 1-3 at 7–9.) 2 The letter further advised Respondent of SSA
OIG’s conclusion that “[t]he URL socialsecurity.com uses Social Security words in a manner
that conveys the false impression that the related destination website is either SSA’s official
website or is approved, endorsed, or authorized by SSA or that its operator has some connection
with, or authorization from SSA.” (Dkt. 1-3 at 7–9.) The letter also noted that the fact that an
individual who clicked on the URL and arrived at the website would realize that it is not
affiliated with SSA did not “negate the fact that the URL itself violated Section 1140.” Id.
1
At the oral argument regarding this petition, held on October 1, 2013, Respondent disputed the
accuracy of the complaint, stating, in sum, that it was impossible for the complainant to have
completed a disability application from Respondent’s website, and that the complainant must
have accessed the application through a different website, which may have been linked to
Respondent’s website. The Court, however, considers the accuracy of the citizen complaint
immaterial for purposes of this decision.
2
The page numbers for docketed filings are based on the ECF pagination and not the document’s
internal pagination.
2
In the letter, SSA OIG requested that Respondent cease using the domain name, and that
he provide certain information that would enable SSA OIG to determine whether a civil penalty
was warranted, and if so, in what amount. Id. ¶ 6.
By letter dated February 26, 2013, Respondent’s attorney notified SSA OIG that, while
denying any violation of Section 1140, Respondent had disabled the socialsecurity.com website
“out of caution.” Id. § 8. Respondent, however, refused thereafter to produce the information
and documents requested by SSA OIG in its February 6, 2013 letter. Id. at ¶¶ 9–12.
By letter dated April 9, 2013, Respondent set forth in detail the bases for his refusal to
comply with the subpoena, the gist of which was, and continues to be, that Section 1140 does not
cover URLs/domain names and that SSA OIG, therefore, lacks the authority to subpoena
information relating to an alleged violation of Section 1140 based on the ownership or use of a
URL/domain name. (Dkt. 1-3 at 33–41.)
On August 5, 2013, Petitioners filed this motion to enforce the subpoena. Respondents
oppose enforcement of the subpoena for the same reasons articulated in his April 9, 2013 letter to
SSA OIG. On October 1, 2013, at Respondent’s request, the Court held oral argument on the
motion (the “Argument”).
DISCUSSION
I.
Appropriate Authority to Interpret Section 1140
The central issue raised by Respondent’s challenge to the subpoena is whether this Court,
as opposed to an SSA Administrative Law Judge (“ALJ”), should be the first to decide the issue
at the heart of Respondent’s challenge, i.e., whether Section 1140 applies to URLs/domain
names. Respondent seeks to have the Court make that determination; Petitioners argue that the
issue is one properly decided through the administrative process in the first instance.
3
The Court declines Respondent’s invitation to evaluate the scope of Section 1140 with
respect to domain names in this subpoena enforcement action because, as the Second Circuit has
held, the Court’s “role in a proceeding to enforce an administrative subpoena is extremely
limited.” Nat’l Labor Relations Bd. v. Am. Med. Response, Inc., 438 F.3d 188, 192 (2d Cir.
2006); see In re McVane, 44 F.3d 1127, 1135 (2d Cir. 1995) (citing Nat’l Labor Relations Bd. v.
C.C.C. Assoc., Inc., 306 F.2d 534, 538 (2d Cir. 1962)); Fed. Trade Comm’n v. Rockefeller, 591
F.2d 182, 190 (2d Cir. 1979); E.E.O.C. v. United Parcel Serv., 587 F.3d 136, 140 (2d Cir. 2009).
“[A]t the subpoena enforcement stage, courts need not determine whether the subpoenaed party
is within the agency’s jurisdiction or covered by the statute it administers.” United States v.
Construction Prods. Research, Inc., 73 F.3d 464, 470 (2d Cir. 1996). Rather, “the coverage
determination should wait until an enforcement action is brought against the subpoenaed party.”
Id. (emphasis added). 3 This approach is consonant with the principle that government agencies
should be afforded broad latitude to enforce their regulations and investigate potential violations
of the same. The Supreme Court has “imposed few constitutional limitations on agencies’ power
to issue administrative subpoenas.” McVane, 44 F.3d at 1134; see Okla. Press Pub. Co. v.
3
As Respondent points out, there is contrary authority in other circuits, where courts have opted
to address the underlying scope of administrative subpoenas in circumstances similar to here,
where “(1) the subpoena's enforceability depends upon a narrow question of law concerning
whether Section 1140 covers URLs as such (2) that does not require factual development as part
of agency proceedings (3) of an unprecedented matter (the OIG's authority to regulate domain
names) falling outside the agency's body of expertise, (4) where judicial intervention prior to
agency proceedings could save the parties significant time and resources, and (5) could provide
substantial guidance to similarly situated third parties on an issue of general public importance.”
(Dkt. 13 at 2 (citing Dkt. 10 at 7–10 n.5)); see, e.g., Reich v. Great Lakes Indian Fish & Wildlife
Comm'n, 4 F.3d 490, 492 (7th Cir. 1993) (finding that statutory coverage might be decided in
subpoena enforcement proceedings if certain factual issues already were determined); see also
(Dkt. 10 at 8–10 n.5) (collecting and describing cases). These authorities, of course, do not bind
the Court, and there is no indication that the Second Circuit has moved away from its wellestablished precedent that subpoena enforcement proceedings are not the appropriate venue for
reviewing agency interpretations of statutes within their area of expertise.
4
Walling, 327 U.S. 186 (1946); United States v. Morton Salt Co., 338 U.S. 632 (1950). In short,
“it is sufficient if the inquiry is within the authority of the agency, the demand is not too
indefinite and the information sought is reasonably relevant.” McVane, 44 F.3d at 1135 (citing
Morton Salt, 338 U.S. at 652) (emphases added).
Respondent argues that SSA OIG’s application of Section 1140 to his
“socialsecurity.com” URL/domain name is “categorically outside the agency’s statutory
authority,” and that, therefore, this Court should exercise its discretion to decide this issue rather
than letting it be heard first by an SSA ALJ. (Dkt. 10 at 6–10.) Were it clear that SSA OIG’s
subpoena is outside the bounds of the agency’s authority, see E.E.O.C. v. Karuk Tribe Hous.
Auth., 260 F.3d 1071, 1076–77 (9th Cir. 2001), or raises a significant Constitutional issue, see
United States v. Minker, 350 U.S. 179, 183–88 (1956), the Court might choose to decide the
merits of Respondent’s objection. That is not the case here.
As demonstrated by Respondent’s extensive and intricately reasoned brief and oral
argument, the issue of whether Section 1140 covers URLs/domain names is a close question. As
such, it is one that the agency should be permitted to interpret, and the ALJ to rule on, in the first
instance. See Construction Prods. Research, Inc., 73 F.3d at 470; SEC v. Brigadoon Scotch
Distrib. Co., 480 F.2d 1047, 1053 (2d Cir. 1973) (“it is for the agency rather than the district
courts to determine in the first instance the question of coverage in the course of the preliminary
investigation into possible violations”); see also Okla. Press Pub. Co. v. Walling, 327 U.S. 186,
214 (1946) (“We think, therefore, that the Courts of Appeals were correct in the view that
Congress has authorized the Administrator, rather than the District Courts in the first instance, to
determine the question of coverage in the preliminary investigation of possibly existing
violations; in doing so to exercise his subpoena power for securing evidence upon that question,
5
by seeking the production of petitioners’ relevant books, records and papers; and, in case of
refusal to obey his subpoena, issued according to the statute’s authorization, to have the aid of
the District Court in enforcing it.”). Furthermore, requiring Respondent to first go through the
administrative process does not deprive him of the opportunity to have his challenge heard by the
courts. (Dkt. 14 at 2–3.) Once SSA OIG issues a penalty letter, if any, Respondent has 60 days
in which to request a hearing before an ALJ. If Respondent is dissatisfied with the ALJ’s
decision, he can obtain judicial review of the decision after the penalty becomes final, which is
30 days after the Respondent is served with the decision. Id.; see 20 C.F.R. § 498.222 (providing
for review by the Court of Appeals of any final action by the Commissioner of the SSA);
Brigadoon, 480 F.2d at 1052 (“Should the [SSA] seek to exercise regulatory control over
[Respondent’s] business affairs at some future date . . . [Respondent] will be entitled to a full
hearing on [his] contentions.”). 4
Accordingly, the Court declines to decide the merits of Respondent’s challenge to the
subpoena, namely, whether Section 1140 applies to URLs/domain names, such as
“socialsecurity.com.”
II.
Propriety of SSA OIG’s Subpoena
The Court’s duty in considering Petitioners’ subpoena enforcement motion is to
determine “[1] that the investigation will be conducted pursuant to a legitimate purpose, [2] that
the inquiry may be relevant to the purpose, [3] that the information sought is not already within
[the agency’s] possession, and [4] that the administrative steps required . . . have been followed .
. . .” Am. Med. Response, 438 F.3d at 192 (citing RNR Enters., Inc. v. S.E.C., 122 F.3d 93, 96
4
Based on the information provided by Petitioners, the average time between the issuance of a
penalty letter and the ALJ’s issuance of a decision is approximately one year. (Dkt. 14 at 3.)
6
(2d Cir. 1997)). “A subpoena that satisfies these criteria will be enforced unless the party
opposing enforcement demonstrates that the subpoena is unreasonable, or issued in bad faith or
for other improper purposes, or that compliance would be unnecessarily burdensome.” Id.
(citations and quotations omitted).
A.
Legitimate Purpose
The Court finds that the SSA OIG subpoena was issued as part of an investigation that is
being conducted for a legitimate purpose. 5 The Inspector General Act empowers inspectors
general “to require by subpoena the production of all information, documents, reports, answers,
records, accounts, papers, and other data . . . and documentary evidence necessary in the
performance of the functions assigned by this Act.” 5 U.S.C. app. 3 § 6(a)(4). Authority to
enforce Section 1140 has been expressly delegated to SSA OIG. 42 U.S.C. § 1320b-10(d); see
also 5 U.S.C. app. 3 § 9(a)(2). In the exercise of its authority to enforce Section 1140, SSA OIG
has determined that the statute applies to URLs/domain names that contain the words “Social
Security.” Because SSA OIG has the authority to assess civil penalties for violations of Section
1140, its issuance of the subpoena to Respondent to obtain information in order to make that
determination was proper.
B.
The Other Factors
Respondent does not contest the other three factors, to wit, whether the subpoena (2) is
relevant, (3) whether the documents sought already are in the Agency’s possession, or (4)
5
The Respondent’s opposition to the subpoena is directed to the first element, i.e., whether the
subpoena was issued pursuant to an investigation being conducted for a legitimate purpose.
Respondent contends that URLs/domain names are outside the scope of Section 1140 and that,
therefore, there is no legitimate purpose to the subpoena because the investigation pursuant to
which it was issued is not within the SSA's authority. (See, e.g., Dkt. 10 at 1–3.) To answer this
question favorably to Respondent, the Court would have to conclude that Section 1140 does not
cover URLs/domain names. However, as discussed above, the Court has determined that this is
not the proper time or forum for deciding this issue, and declines to do so.
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whether the Agency followed proper procedures in pursuing the subpoena (such as properly
serving the subpoena upon Respondent). Respondent did not respond to Petitioner’s arguments
regarding the subpoena’s compliance with those requirements, and they are deemed conceded for
purposes of the instant motion to enforce. See, e.g., In re UBS Ag Secs. Litig., 07-CV11225(RJS), 2012 WL 4471265, at *11 (S.D.N.Y. 2012) (finding that the defendant conceded
the issue through its silence); Gortat v. Capala Bros., Inc., 07-CV-3629(JLG), 2010 WL
1423018, at * 11 (E.D.N.Y. Apr. 9, 2010) (same).
In any event, upon independent review of the record and the parties’ submissions, the
Court finds that the subpoena complies with those requirements. First, as to relevancy, the Court
is constrained to “defer to the agency’s appraisal of relevancy, which ‘must be accepted so long
as it is not obviously wrong.’” McVane, 44 F.3d at 1135 (citing Resolution Trust Corp. v.
Walde, 18 F.3d 943, 946 (D.C. Cir. 1994)). The subpoena seeks any and all documents related to
the operation of the socialsecurity.com website, including documents relating to the operators
and managers of the website, and the number of instances and the identities of those people who
clicked on or viewed the socialsecurity.com website. (Dkt. 10-4 at ECF 3.) This information
clearly is relevant to SSA OIG’s investigation regarding whether people or the public have been
harmed, whether Respondent caused such harm, and, if so, whether civil monetary penalties are
appropriate and in what amount.
As for the last two factors, there is no evidence that the documents sought already are in
the SSA’s possession (Dkt. 1-3 at ¶ 16), and the necessary administrative steps have been
followed—Respondent has been served properly with the subpoena.
Lastly, Respondent does not contend that the subpoena is unreasonable, issued in bad
faith or for some other improper purpose, or that compliance with it would be unreasonably
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burdensome, see Am. Med. Response, 438 F.3d at 192, and so the Court finds no other basis to
conclude that the subpoena is improper or otherwise should not be complied with.
The Court recognizes Respondent’s desire to conserve resources by adjudicating his
defenses to the SSA’s potential enforcement action at this stage, before substantial litigation or
discovery has taken place. And Respondent’s submissions no doubt raise interesting questions
as to the scope of Section 1140. Indeed, by all accounts, the matter appears to be one of first
impression in federal courts. Nevertheless, as discussed, under this Circuit’s precedent, this
Court, at this stage, is not the proper forum for litigating that question.
CONCLUSION
The Court is guided by Second Circuit authority directing it to determine only whether
Petitioner’s subpoena satisfies the four requirements set forth in cases such as N.L.R.B. v.
American Medical Response, and declines Respondent’s invitation to deviate therefrom. For the
reasons set forth above, the Court finds that those requirements have been met, the subpoena is
proper, and the subpoena shall be enforced. Mr. Fischer hereby is ordered to comply with
Petitioner’s subpoena served upon him by October 22, 2013.
SO ORDERED:
/s/ Pamela K. Chen
PAMELA K. CHEN
United States District Judge
Dated: October 8, 2013
Brooklyn, New York
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