Harry I. Jacobs, Cutler & Cutler, Los Angeles, Cal., argued, for respondent-appellant; Felice R. Cutler, Los Angeles, Cal., on brief.

Mark E. Beck, Los Angeles, Cal., David J. Federbush, C. Lee Peeler, FTC, Washington, D. C., argued, for petitioner-appellee; Michael C. Denison, Asst. U. S. Atty., Los Angeles, Cal., on brief.

Appeal from the United States District Court for the Central District of California.

Before GOODWIN and FERGUSON, Circuit Judges, and PRICE,* District Judge.

PRICE, District Judge.

TRW appeals from a District Court Order which denied its motion to quash a Grand Jury Subpoena Duces Tecum.

TRW is a corporation which includes a division which provides a subscriber with consumer credit information. In November, 1977, TRW was served with a Subpoena Duces Tecum directing it to deliver to a Grand Jury any records in its possession concerning Arthur F. Gren. TRW moved to quash the subpoena, asserting that compliance with the subpoena not authorized by a magistrate or a district court judge would violate the provisions of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.1 The district court denied this motion, and TRW appealed. Arthur Gren, whose records were sought by the Grand Jury subpoena, did not seek to intervene in the initial hearing on TRW's motion to quash or in this appeal.

The rule generally governing the appealability of denials of motions to quash was most recently described by the Supreme Court in United States v. Ryan, 402 U.S. 530, 532, 91 S. Ct. 1580, 1581, 29 L. Ed. 2d 85, 88 (1971):

"... one to whom a subpoena is directed may not appeal the denial of a motion to quash that subpoena but must either obey its commands or refuse to do so and contest the validity of the subpoena if he is subsequently cited for contempt on account of his failure to obey...."

See Cobbledick v. United States, 309 U.S. 323, 60 S. Ct. 540, 84 L. Ed. 783 (1940).

The court in Ryan did, however, note that there were certain very limited exceptions to this rule, including that defined in Perlman v. United States, 247 U.S. 7, 38 S. Ct. 317, 62 L. Ed. 950. In Perlman the court held that when a third party custodian was directed to produce exhibits which were the property of the petitioner, and the petitioner intervened to challenge the validity of the subpoena, the denial of the motion to quash was appealable. This was because the third party addressee, the Clerk of the District Court "could hardly have been expected to risk a citation for contempt in order to secure a permanent opportunity for judicial review". United States v. Ryan, supra. See In Re Grand Jury Proceedings, 563 F.2d 577, 580 (3d Cir. 1977); In re Faltico, 561 F.2d 109, 110 n. 2 (8th Cir. 1977).

TRW relies on the Perlman exception and argues that the underlying rationale of that decision is applicable here. We agree.

The Fair Credit Reporting Act had a stormy birth in Congress. The Senate Bill (S. 823) passed out of that house containing two separate sections pertinent to our inquiry.

"A consumer reporting agency may furnish a consumer report under the following circumstances and no others:

"(1) In response to the order of a court having jurisdiction to issue such order ..."

"Notwithstanding the provisions of Section 604, a consumer reporting agency may furnish identifying information respecting any consumer, limited to his name, address, former address, places of employment, or former places of employment, to a governmental agency."

H.R. 1634, which was the bill which ultimately became House version of this Act, originally contained Section 35:

"A consumer reporting agency may not furnish information on individuals in its files, except identifying information such as names, addresses, former addresses, places of employment, or former places of employment, to a governmental agency for purposes other than those listed in section 34(b) unless pursuant to legal process.2

The Senate version won out, and when finally passed, the language enacted into law on this point is as follows:

"A consumer reporting agency may furnish a consumer report under the following circumstances, and no other:

"(1) In response to the order of a court having jurisdiction to issue such order," (15 U.S.C. 1681b)

and

"Notwithstanding the provisions of Section 604 (15 U.S.C. 1681b), a consumer reporting agency may furnish identifying information respecting any consumer limited to his name, address, former address, places of employment or former places of employment, to a governmental agency." (15 U.S.C. 1681f)

A careful reading of the legislative history, and particularly the hearings before the Subcommittee on Consumer Affairs of the Committee on Banking and Currency of the House of Representatives, 91st Congress, 2nd Session, indicates that this very issue was before the Congress. Representatives of credit reporting agencies, including the one presently before this court, the AFL-CIO, and the American Civil Liberties Union all argued for the position that governmental agencies not engaged in an activity which included the extending of credit should have very limited access to information held by a consumer reporting agency.

On the other hand, Mr. Richard G. Kleindienst, then Deputy Attorney General of the United States, Mr. Hugo A. Rinta, then the Acting General Counsel of the Treasury Department, both argued forcibly that the governmental agencies should have unlimited access to this information, particularly in the law enforcement and revenue departments of the government. Indeed, Mr. Kleindienst suggested an amendment to or additional section to the Act which would read as follows:

"No provision of this Act is intended to prohibit or limit the furnishing of information requested by a public investigative or law enforcement agency in the performance of its official duty."

It was against this background that the Act was finally adopted containing the provisions set forth above.

What other attributes we may ascribe to Congress, this court can hardly hold that Congress did not know, when it enacted this law, that Grand Jury subpoenas were not the equivalent of a court order.

The evolution of the mechanics of issuance of a Grand Jury Subpoena is not at all clear, but as is noted in In Re Grand Jury Proceedings, 486 F.2d 85 at 89, 90 (1973):

"First, although federal grand juries are called into existence by order of the district court, Fed.R.Crim.P. 6(a); 18 U.S.C. § 1331, they are 'basically ... a law enforcement agency.' United States v. Cleary, 265 F.2d 459, 461 (2nd Cir.), cert. denied, 360 U.S. 936, 79 S. Ct. 1458, 3 L. Ed. 2d 1548 (1959). They are for all practical purposes an investigative and prosecutorial arm of the executive branch of government. See 8 J. Moore, Federal Practice P 6.02(1), (6) (2d ed. Cipes ed. 1972). Second, although like all federal court subpoenas grand jury subpoenas are issued in the name of the district court over the signature of the clerk, they are issued pro forma and in blank to anyone requesting them. Fed.R.Crim.P. 17(a). The court exercises no prior control whatsoever upon their use. Third, although grand jury subpoenas are occasionally discussed as if they were the instrumentalities of the grand jury, they are in fact almost universally instrumentalities of the United States Attorney's office or of some other investigative or prosecutorial department of the executive branch. Grand jury subpoenas then, when they are brought before the federal courts for enforcement, for all practical purposes are exactly analogous to subpoenas issued by a federal administrative agency on the authority of a statute, without any prior judicial control."

In Re Grand Jury Proceedings, 486 F.2d 85 at 89, 90 (1973).

As conceded by counsel for the government at oral argument, the usual practice in most federal districts and counties of the various states is for the clerk of the several courts to issue a grand jury subpoena ex parte upon the application of the prosecutor's office. Frequently, the clerk furnishes the prosecutor with these subpoena forms issued in blank.

Further, at both federal and state levels, a myriad of administrative agencies have been authorized to issue administrative subpoenas on their own volition, without even a visit to the office of the Clerk of the Court to pick up the forms!

A consumer reporting agency rarely has direct contact with the persons about whom it accumulates information. Indeed, it is usually the person, firm or organization granting credit who has contact with the affected consumer; while the consumer reporting agency is merely the repository of all known information collected in a variety of ways about the individual involved. Hence, it is no answer to say that Mr. Gren, or any other person whose records are sought by a grand jury, may intervene and contest the application since there is neither a common law nor statutory duty on the part of the consumer reporting agency to notify the person affected of the receipt of the grand jury's command.

It may be argued that Congress, by not providing for a procedure by which the court orders contemplated under the section are to be obtained, intended to leave the law as it was; however, we note that Congress in the past has frequently left the courts to their own devices in fashioning due process procedures in unique situations.3

For all the foregoing reasons, it would appear that the person or organization having custody of the type of information covered by the Fair Credit Reporting Act is faced with even a greater dilemma than was Perlman. Perlman would risk only being held in contempt of court for failure to obey; the custodian of the information possessed by a consumer reporting agency must risk on the one hand being held in contempt of court for failure to comply, and on the other being sued for damages4 if he does in fact comply.

Accordingly, the order of the District Court denying petitioner's motion is reversed, and the court is instructed to enter judgment consistent with this opinion.5