TULIPS INVESTMENTS, LLC, Pеtitioner v. STATE of Colorado EX REL. John W. SUTHERS, Attorney General for the State of Colorado; and Julie Anne Meade, Administrator, Uniform Consumer Credit Code, Respondents.
Supreme Court Case No. 12SC996
Supreme Court of Colorado.
January 12, 2015
340 P.3d 1126 | 2015 CO 1
En Banc
Attorneys for Respondents: John W. Suthers, Attorney General, Paul Chessin, Senior Assistant Attorney General, Denver, Colorado.
Attorneys for Amicus Curiae Colorado Department of Regulatory Agencies: John W. Suthers, Attorney General, Russell B. Klein, First Assistant Attorney General, Denver, Colorado.
Attorneys for Amici Curiae State of Wyoming and Thirty-five Other States: Peter K. Michael, Wyoming State Attorney General Travis J. Kirchhefer, Senior Assistant Attorney General, Cheyenne, Wyoming.
Opinion
JUSTICE HOBBS delivered the Opinion of the Court.
¶ 1 At issue in this case is judicial enforcement of an administrative investigatory subpoena for documents of а corporation located outside of Colorado that is suspected of conducting business within Colorado in violation of its two leading consumer protection statutes.1 Tulips Investments, LLC (“Tulips“) is
¶ 2 Through these statutorily authorized officers, the State issued an investigatory subpoena requesting various documents from Tulips. When Tulips failed to produce the documents, the State sought and obtained a trial court order enforcing the administrative subpoena under UCCC
¶ 3 The State appealed. The court of appeals conducted a statutory construction analysis. It concluded that the UCCC authorized the State to issue the investigatory subpoena, and the trial court had authority to enforce it. Having made this conclusion, the court of appeals found it unnecessary to analyze the CCPA subpoena issue. We agree. We hold that the trial court has subject matter jurisdiction in this administrative subpoena enforcement action. In enacting the UCCC, the General Assembly conferred administrative subpoena issuance authority upon the UCCC Administrator and authorized the trial court to enforce such a subpoena against a nonresident who is alleged to have violated the Code and has refused to obey a subpoena. In so holding, we distinguish our decisions in Solliday and Colorado Mills, LLC v. SunOpta Grains & Foods Inc., 2012 CO 4, 269 P.3d 731. Both of those cases addressed a limitation under
I.
¶ 4 In December 2009, the Administrator of the UCCC (the “Administrator“) received a complaint from an elderly Colorado couple alleging that Tulips, doing business under the name Cash Banc, made them a car loan of $1,640.50 over the Internet at a high interest rate (365% per annum). The couple also alleged that Tulips automatically debited money from their checking account every two weeks, causing their account to be overdrawn. Based on this complaint, the Administrator concluded that Tulips was likely viоlating the UCCC by making loans to Colorado consumers without being licensed under the statute.
¶ 5 On January 21, 2010, the Administrator sent Tulips a cease-and-desist advisory regarding
¶ 6 Based upon the consumer complaint, additional information obtained by the Administrator, and Tulips’ responses to the information requests, the Administrator found reasonable cause to believe Tulips had made loans without being licensed under the statute and charged excessive finance charges in violation of the UCCC. Similarly, Colorado‘s Attorney General concluded that, by making supervised loans without the required governmental license, Tulips had engaged in deceptive trade practices in Colorado in violation of the CCPA.
¶ 7 On September 22, 2010, through a Delaware deputy sheriff, the State served upon Tulips’ registered agent in Delaware a subpoena ordering the company to produce various documents relating to the State‘s investigation. When Tulips failed to comply with the subpoena, the State applied for and obtained an ex parte order from the trial court to enforce the subpoena. On October 28, 2010, through a Delaware deputy sheriff, the State served the enforcement order on Tulips’ registered agent in Delaware. When Tulips again failed to comply, the State initiated contempt proceedings against it. On May 6, 2011, through a Delaware deputy sheriff, the State served the contempt citation on Tulips’ registered agent in Delaware. In response, Tulips filed a motion to dismiss under
¶ 8 The trial court granted Tulips’
¶ 9 The State appealed the trial court‘s dismissal order. The court of appeals reversed and remanded for further proceedings. The court of appeals differentiated between judicial subpoenas, which were at issue in Solliday, and the administrative investigatory subрoena at issue in this case. The court ruled that the UCCC grants the Administrator authority to issue investigatory subpoenas, enforceable by a trial court order, against a nonresident entity which the Administrator finds reasonable cause to believe has engaged or is engaging in conduct in Colorado that violates the UCCC. Having reached this determination, the court of appeals found it unnecessary to address whether the CCPA also authorizes the issuance and enforcement of the subpoena in this case. We uphold the judgment of the court of appeals.
II.
¶ 10 We hold that the trial court has subject matter jurisdiction in this administrative subpoena enforcement action. In enacting the UCCC, thе General Assembly conferred administrative subpoena issuance authority upon the UCCC Administrator and authorized the trial court to enforce such a subpoena against a nonresident who is alleged to have violated the Code and has refused to obey a subpoena. In so holding, we distinguish our decisions in Solliday and Colorado Mills. Each of those cases addressed a limitation under
A. Standard of Review
¶ 11 A
B. UCCC Administrative Subpoena Issuance Authority
¶ 12 The State contends that (1) the UCCC confers express authority for the Administrator, whom the Attorney General represents, to issue administrative investigatory subpoenas, and (2) Colorado courts have authority under this statute to enforce these subpoenas equally with regard tо resident and nonresident persons doing business within the State of Colorado who are suspected of conduct violating this statute. We agree.
¶ 13 Titled “Investigatory powers,”
(1) If the administrator has reasonable cause to believe that a person has engaged in an act that is subject to action by the administrator, the administrator may make an investigation to determine if the act has been committed, and, to the extent necessary for this purpose, ... may subpoena witnesses, compel their attendance, adduce evidence, and require the production of any matter that is relevant to the investigation, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of relevant facts, or any other matter reasonably calculated to lead to the discovery of admissible evidence.
(2) If the person‘s records are located outside this state, the person at his or her option shall either make them available to the administrator at a convenient location within this state or pay the reasonable and necessary expenses for the administrator or the administrator‘s representative to examine them at the place where they are maintained. The administrator may designate representatives, including comparable officials of the state in which the records are located, to inspect them on the administrator‘s behalf.
(3) Upon failure without lawful excuse to obey a subpoena or to give testimony, the administrator may apply to the district court for an order compelling compliance.
¶ 14 The General Assembly enacted the UCCC to, inter alia, “protect consumer buyers, lessees, and borrowers against unfair practices by some suppliers of consumer credit.”
¶ 15 The plain language of the UCCC makes clear that the Administrator may issue subpoenas against nonresidents conducting business within the State.
¶ 16 Accordingly, the Administrator may serve upon any person who is suspected of doing business in the State, in violation of the Code, a subpoena for documents located out-of-state, and a trial court may compel compliance with the subpoena. Taken together, these three provisions of the UCCC demonstrate that (1) the General Assembly intended the Administrator to use subpoenas to obtain documents pursuant to an investigation for violations of the Code; (2) the Administrator can subpoena documents that are located within or outside of Colorado;4 and (3) a trial court has authority to enforce such a subpoena if a person fails to comply with it.
C. Application to This Case
¶ 17 Tulips argues that a “fundamental principle of federalism and individual state sovereignty deprives a Colorado district court of subject matter jurisdiction to require a nonresident to comply with an out-of-state subpoena;” therefore, the trial court was correct in dismissing the case under
¶ 18 First, Tulips’ argument with respect to sovereignty lacks merit. In asserting that it is a nonresident and therefore is not susceptible to the Administrator‘s subpoena, Tulips ignores foundational principles of sovereignty that empower the Colorado General Assembly to enact laws regulating an out-of-state entity‘s conduct of business within the State. Sovereignty involves a state‘s ability to make and enforce laws. As an independent sovereign, a state may “make and enforce laws for its government, and for the welfare and protection of its citizens and their property.” People v. Dist. Court, 11 Colo. 147, 152, 17 P. 298, 300 (1888); see also People v. Tool, 35 Colo. 225, 234–35, 86 P. 224, 226 (1905) (explaining that sovereignty involves a state‘s power to execute its laws). The UCCC is such an exercise in sovereignty, rеquiring residents and nonresidents alike to comply with its terms.5
¶ 19 Contrary to Tulips’ arguments based upon general principles of sovereignty, it is the province of the responsible state officials and the Colorado courts, not foreign courts, to investigate and enforce the laws of Colorado in the interest of its sovereignty. In fact, thirty-six other states, including Delaware, submitted an amicus brief authored by the State of Wyoming supporting Colorado‘s position in this case, demonstrating that the vast majority of states do not believe these
¶ 20 Second, Tulips’ assertion that “sovereignty dеprives a Colorado district court of subject matter jurisdiction” fails to recognize that the subject matter jurisdiction of a state court concerns that court‘s authority or competence to hear or decide a case and is determined solely by the state constitution and statute. See
¶ 21 Tulips has not pointed to any language in the UCCC that divests the trial court of subject matter jurisdiction to enforce the administrative subpoena in this case. To the contrary, the UCCC contemplates the issuance of extraterritorial administrative subpoenas and explicitly grants trial courts authority to enforce such subpoenas. See
¶ 22 Third, personal jurisdiction involves the court‘s ability to subject a particular defendant to the authority of the court. Due process prohibits the exercise of personal jurisdiction over a nonresident unless the person has certain minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Nickerson v. Network Solutions, LLC, 2014 CO 79, ¶ 11, 339 P.3d 526 (citing Int‘l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). Tulips appeared in response to the court‘s contempt citation, contesting the trial court‘s subject matter jurisdiction through a
¶ 23 Fourth, Tulips’ assertion that the trial court lacks authority to require it to comply with the Administrator‘s investigatory subpoena is incorrect. A court‘s authority to act derives from rule, statute, case law, or the inherent authority of courts. See, e.g., People v. Dist. Court, 195 Colo. 14, 16, 575 P.2d 7, 8 (1978) (concluding there was no statute or case that gave the court authority to remove a juvenile defendant from the State for an evaluation); Buder v. Sartore, 774 P.2d 1383, 1389–90 (Colo. 1989) (concluding the trial court had authority to assess damages for losses of custodial property derived from statute); Feigin v. Colo. Nat‘l Bank, N.A., 897 P.2d 814, 820 (Colo. 1995) (determining “in the exercise of their equitable authority district courts may quash an administrative subpoena found to be unreasonable оr oppressive“); People v. Aleem, 149 P.3d 765, 774 (Colo. 2007) (discussing a court‘s inherent authority to use all powers reasonably required to protect the integrity of the court and judicial process). For the reasons set forth in this opinion, we conclude the UCCC confers authority for the Administrator‘s issuance of the subpoena and the trial court‘s enforcement of it.
¶ 24 Fifth, Tulips misconstrues our decisions in Solliday and Colorado Mills in arguing that the State can never subject an out-of-state resident to a subpoena for the production of documents that are located outside the State. That the case now before us involves the trial court‘s authority to act and does not implicate the principles of sovereignty, subject matter jurisdiction, or personal jurisdiction fоllows from a careful examination of Solliday and its progeny. Tulips ignores our focus in Solliday upon our rules of civil procedure applicable to discovery by parties in civil actions. See Solliday, 135 Colo.
at 495–96, 313 P.2d at 1003 (quotation omitted).¶ 25 As we pointed out in Solliday, the trial court there had required an individual to
¶ 26 That our Solliday decision is ultimately grounded upon a trial court‘s lack of authority to act in a particular circumstance, and not upon lаck of subject matter jurisdiction, is apparent from our persistent use of the term authority, not jurisdiction, in our more recent Colorado Mills decision. Notably, our Colorado Mills discussion and holding does not once employ the term subject matter jurisdiction. Instead, we use the term authority throughout the opinion in making our rule absolute prohibiting judicial enforcement of an arbitrator‘s subpoena against a nonresident nonparty. There, we addressed whether a trial court could enforce a subpoena issued by an arbitrator against a nonresident who was not a party to the Colorado arbitration and was not served in Colorado. Colo. Mills, ¶¶ 1–6. We determined that Colorado‘s version of the
¶ 27 In determining that the requirements of
¶ 28 In sum, Solliday and Colorado Mills centered on the service of subpoenas in civil actions against nonresident nonparties under
[i]f the legislature intended that such proceeding was to be handled as just another civil proceeding, it could have said so. But it did not, and from the language of the statute itself, it is apparent to us that the legislature intended to provide a simplified procedure for the judicial enforcement of administrative subpoenas.
¶ 27 Id. at 392, 435 P.2d at 377. Likewise, in Feigin, we held that
¶ 29 In order to determine whether the trial court has authority to enforce the subpoena, we look to the plain language of the UCCC. We conclude that, the trial court has authority to enforce the administrative subpoena. The UCCC contemplates the issuance of extraterritorial administrative subpoenas and explicitly grants trial courts authority to enforce such subpoenas. Tulips is suspected of doing business in Colorado in violation of statutory requirements that are applicable to all persons, whether residents or nonresidents. The special investigatory statutory procedures of the UCCC, in particular UCCC
¶ 30 In this case, the State served the investigatory subpoena, the trial court order enforcing the investigatory subpoena, and the contempt citation for failure to comply with the court‘s order upon Tulips’ registered agent in Delaware through a Delaware deputy sheriff. While the UCCC contains no reference to, or restriction upon, the manner of service of an investigatory subpoena on a nonresident person suspected of violating the Code or a court order requiring compliance, we conclude that the General Assembly‘s silence about the manner of service of a UCCC administrative subpoena does not require a default to the provisions of
¶ 31 In similar circumstances involving an administrative agency‘s investigatory subpoena power, the New Jersey Supreme Court analyzed the issue as presenting whether a state may require the attendance of one who has purposely availed himself, in that case, of the privilege of entering regulated securities markets in the forum state. See Silverman v. Berkson, 141 N.J. 412, 661 A.2d 1266, 1273 (1995). The court concluded that personal service of the subpoena within the territorial boundaries of the issuing state is not a prerequisite to a valid administrative order to appear. Id. The court nevertheless agreed thаt, absent purposeful availment, the authority to proscribe conduct in another forum would not suffice to confer jurisdiction to enforce a civil investigative demand in the territory of another state. Id. In order to minimize the degree of intrusion on the sovereignty of the other state, we insist that ... the process be served only by those authorized to do so under the laws of the state. Id. at 1275. Indeed, in the case before us, a deputy sheriff of Delaware served Colorado‘s investigatory subpoena, the Colorado court‘s order enforcing the subpoena, and the Colorado court‘s contempt citation upon Tulips’ registered agent in Delaware.
¶ 32 In sum, the special statutory рrovisions of the UCCC intend and authorize extraterritorial service of administrative subpoenas enforceable by Colorado courts. While subpoenas issued under the authority of
¶ 33 The authority in this case to issue the investigatory subpoena and obtain court-ordered compliance derives from the special statutory procedures the General Assembly provided in the UCCC. Adopting Tulips’ position that an investigatory subpoena can never be enforced against a nonresident would severely limit the Administrator‘s ability to effectuate the purpose of the UCCC: to protect Colorado consumers. With the growth of interstate business activity and the advent of the Internet, out-of-state persons increasingly can conduct business with Colorado consumers without ever physically entering the State. In order to protect Colorado consumers from unfair business practices, the General Assembly authorized judicial enforcement of the administrative investigatory subpoenas against out-of-state persons suspected of doing business in Colorado in violation of the statute.
¶ 34 Certainly, an out-of-state person may invoke lack of personal jurisdiction in a trial court subpoena enforcement proceeding. The principles of International Shoe and Colorado‘s long-arm statute,
¶ 35 Because we determine that the trial court has subject matter jurisdiction and authority under the UCCC to enforce the administrative subpoena in this case, we need not address the parties’ arguments regarding the CCPA.10
III.
¶ 36 Accordingly, we affirm the court of appeals’ judgment setting aside the trial court‘s
Notes
1. Whether the court of appeals erred in holding that the district court had jurisdiction to order petitioner to comply with an administrative subpoena that was served upon Petitioner in Delaware, requiring petitioner to produce documents at the office of the Attorney General in Colorado or face punishment for contempt.
2. Whether the court of appeals erred in holding that the Uniform Interstate Depositions and Discovery Act, C.R.S. §§ 13–90.5–101 et seq. , does not provide a means by which the production of the documents sought by the subpoena could have been obtained with the assistance of a Delaware court.