United States v. Phillip Branson

21 F.3d 113, 1994 U.S. App. LEXIS 6810, 1994 WL 114813

Opinions

SUHRHEINRICH, Circuit judge, delivered the opinion of the court, in which McKEAGUE, District Judge, joined. JONES, Circuit Judge (pp. 118-20), delivered a separate dissenting opinion.

SUHRHEINRICH, Circuit Judge.

Pursuant to 18 U.S.C. § 3731, the United States appeals the district court’s order granting defendant Branson’s motion to suppress evidence seized during a warrantless search of the defendant’s business premises. We review two issues on appeal: (1) whether Tenn.Code Ann. § 55-5-108 (1989), which regulates businesses that buy and sell uséd automobile parts, authorizes warrantless inspections of vehicles and parts; and (2) whether § 55-5-108 and the search conducted pursuant to the statute comport with the exception to the Fourth Amendment warrant requirement for administrative inspections of pervasively regulated industries as established in New York v. Burger, 482 U.S. 691, 107 S.Ct. 2636, 96 L.Ed.2d 601 (1987). For the following reasons, we REVERSE the order of the district court.

I.

On June 17, 1992, Tennessee Motor Vehicle Investigator Danny Wright, accompanied by two other investigators, conducted an inspection of defendant Phillip Branson’s auto repair shop. Defendant buys and stores automobile parts for use in his business. Wright advised Branson that a search warrant was not necessary because he was acting pursuant to Tenn.Code Ann. § 56-5-108 (1989). The investigators checked an open field used by the defendant in his business, then moved to an outbuilding on the property. During the course of the inspection, Wright, who had some familiarity with the premises from a past inspection, noticed that the second story of the building had been finished. Wright asked the defendant what he had upstairs and the defendant replied that he kept “old auto parts” in- the attic. Wright testified that he asked for consent to look in the attic and that Branson granted permission; however, Branson refuted this statement. Branson also testified that when he asked about a search warrant, the inspectors again told him that a search warrant was not necessary to go upstairs. Behind a closed door in a second room in the attic, one of the investigators discovered marijuana.

Defendant was charged in a two-count indictment with manufacturing marijuana in violation of 21 U.S.C. § 841(a)(1) and 21 U.S.C. § 841(b)(1)(B), and with possession of marijuana with intent to distribute in violation of 21 U.S.C. § 841(a)(1). Defendant filed a motion to suppress, alleging that the warrantless search was illegal.¹ The district court agreed, concluding that the officers’ search of defendant’s attic exceeded the scope of an administrative inspection permitted by § 55-5-108(a)(3); and, that the government failed to demonstrate that the inspecting officers applied the inspection program with “certainty and regularity.” See New York v. Burger, 482 U.S. 691, 702, 107 S.Ct. 2636, 2643-44, 96 L.Ed.2d 601 (1987). The district court then referred the matter to the magistrate for a report and recommendation on the issue of whether the good faith exception to the exclusionary rule applied. The magistrate judge determined the exception was inapplicable and the district court adopted that recommendation as well. Consequently, the ' seized evidence was suppressed.

II.

The statute governing this dispute provides in relevant part as follows:

Any person, firm or corporation engaged in the business of buying or selling of used automobile parts shall keep permanent records of transactions of buying or selling engines, transmissions, vehicle bodies.... Such records shall include from whom the item was purchased and his address and drivers license ... and shall be available to all law enforcement officers for inspection at any reasonable time during business hours without prior notice or the necessity of obtaining a search warrant.

Tenn.Code Ann. § 55-5-108(a)(1) (1989). Subdivision (a)(2) of the statute makes any person failing to keep the records guilty of a misdemeanor. Subdivision (a)(3) authorizes an inspector designated by the commissioner of revenue to inspect

any vehicle, whether intact, wrecked, or dismantled, at an automobile dismantler’s lot, salvage lot or other similar establishment required to keep records under subdivision (a)(1), within the state of Tennessee.

Subdivision (a)(4) of the statute limits inspection to regular business hours “in a manner so as to minimize interference with or delay of business operations.” Tenn.Code Ann. § 55-5-108(a) (1989).

A.

The district court examined the statute and concluded that it does not authorize a motor vehicle investigator to inspect vehicles and vehicle parts at a regulated business unless he obtains a warrant. Specifically, the district court found that Wright had to first examine the defendant’s records and discover some discrepancy, then seek a warrant for the search of the premises based on the discrepancy. It reached this conclusion because subdivision (a)(1) expressly states that officers may inspect records without “prior notice or the necessity of obtaining a search warrant.” In contrast, subdivision (a)(3) merely authorizes inspection of any vehicle on the premises of a business required to keep records under subdivision (a)(1). There is no mention of doing so without a warrant.

We hold that the statute does authorize warrantless inspections of vehicles and parts. Were we to adopt the district court’s construction of the statute, we would render § 55-5-108(a)(3) a nullity. It would authorize nothing more than that which motor vehicle inspectors can already do without a warrant — look at cars during business hours at dismantlers’ establishments in those areas which are open to the public.

The district court’s reading of the statute results in an interpretation unsustainable under rules of statutory construction. See United States v. Ron Pair Enter., Inc., 489 U.S. 235, 242, 109 S.Ct. 1026, 1031, 103 L.Ed.2d 290 (1989) (quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982)); Boise Cascade Corp. v. EPA, 942 F.2d 1427, 1432 (9th Cir.1991) (statute should not be construed in a manner that renders it meaningless). Statutes must be read as a whole and construed to give each word operative effect. United States v. Nordic Village, Inc., — U.S. -, -, 112 S.Ct. 1011, 1015, 117 L.Ed.2d 181 (1992). Further, they should be interpreted to “avoid untenable distinctions and unreasonable results whenever possible.” American Tobacco Co. v. Patterson, 456 U.S. 63, 71, 102 S.Ct. 1534, 1538, 71 L.Ed.2d 748 (1982). The district court’s reading of the statute, therefore is rejected.

In addition, the district court’s interpretation forces us to read a nonexistent “discrepancy” requirement into the statute. The district court believes the statute authorizes a search of vehicles and parts only if the inspector discovers a discrepancy in the records and obtains a warrant to search based on the discrepancy. We decline to imply this requirement. Further, this forced reading pales in light of the legislative history which provides a reasonable explanation for the absence of the “without a warrant” language in § 55-5-108(a)(3). Originally enacted in 1968, § 55-5-108 (what is now subdivision (a)(1)) was amended in 1972 to broaden the record-keeping obligation. Public Acts 1972, ch. 725, § 4. Not until 1980, twelve years after the original enactment, were subdivisions (a)(3) and (a)(4) enacted in their current form. Consequently, the variation in language is unalarming, and not indicative of a distinction in legislative intent. Accordingly, we turn our attention to the second issue before us.

B.

In general, we are nonplussed by the district court’s concern that, in the absence of a warrant requirement to inspect automobile parts, the statute becomes a vehicle for unconstitutional, general warrantless searches. A warrantless inspection of commercial premises may be reasonable within the meaning of the Fourth Amendment. See New York v. Burger, 482 U.S. 691, 702, 107 S.Ct. 2636, 2643-44, 96 L.Ed.2d 601 (1987). Specifically, the Supreme Court has recognized an exception to the warrant requirement for searches of “closely” or “pervasively” regulated industries, Burger, 482 U.S. at 702-03, 107 S.Ct. at 2643-44 (holding the exception applied to the search of an automobile junkyard), provided three criteria are met: (1) a “substantial” government interest exists “that informs the regulatory scheme pursuant to which the inspection is made”; (2) the inspection is “necessary to further the regulatory scheme”; and, (3) the statute’s inspéction program provides a “constitutionally adequate substitute for a warrant” in that it “advise[s] the owner of the commercial premises that the search is being made pursuant to the law and has a properly defined scope” and it “limit[s] the discretion of the inspecting officers.” Id. at 702, 107 S.Ct. at 2644 (citations omitted). Thus, under the reasoning of Burger, the statute acts as a substitute for a warrant provided the specified criteria are met.

In this ease, the parties do not dispute that the first element of the Burger test is met. The second element is also met because the authority to inspect automobile parts is necessary to further the regulatory scheme. If the inspector is required to first, examine the records; second, find a discrepancy; and, third, obtain a warrant to inspect the vehicles and vehicle parts, the dismantler most adept at doctoring records will evade inspection. Moreover, many discrepancies in record keeping will not be apparent until inspectors view vehicles and parts. Finally, the imposition of a warrant requirement pri- or to inspection of auto parts would interfere with the purpose of the statute — deterrence of theft. Flexibility and surprise are critical tools in the identification of stolen parts and the elimination of a market for these items. See Burger, 482 U.S. at 710, 107 S.Ct. at 2648. In Burger, the officers conducting the inspection proceeded even after the owner indicated that he had no records of the automobiles or vehicle parts in his possession. Id. at 694-95, 107 S.Ct. at 2639-40. The Supreme Court rejected the argument that a statute permitting searches of vehicles and parts in the absence of records against which the parts could be compared was unconstitutional. Id. at 698, 107 S.Ct. at 2641-42. Thus, the statute comports with the second element of Burger.

Additionally, despite the district court’s finding that the infrequency and irregularity of inspections of defendant’s business violated the third criteria of the Burger test, we hold that the statute provides a constitutionally adequate substitute for a warrant. It provides notice to businesses that buy or sell used automobile parts that inspections will be made, establishes the scope of the inspections, and limits not only who may inspect but the manner in which the inspections will be conducted.

The fact that the officers used no articulated method in deciding to inspect Branson’s business does not distinguish this case from Burger. In Burger, the Court noted that it was unclear from the record why Burger’s junkyard was inspected. 482 U.S. at 694 n. 2, 107 S.Ct. at 2639 n. 2. Here, as in Burger, the reason for the inspection is not material.² Similarly, Wright’s testimony that he conducted audits, on' average, only one or two days per month depending on how busy he was, is nondispositive. In Burger, the dissenters argued, to no avail, that because there was no assurance that any inspection would occur, and no limits on the number of searches that could be conducted during' a specified time period, the third element was not satisfied. Id. at 711 n. 21, 723-24, 107 S.Ct. at 2648 n. 21, 2654-55. See also S &S Pawn Shop Inc. v. City of Del City, 947 F.2d 432, 438-39 (10th Cir.1991) (rejecting argument that administrative search statute must establish the regularity with which the search will occur).

Burger requires only that the statute advise the owner of the commercial premises that the search is being made pursuant to the law and that it limit the discretion of the inspecting officers. This means that the statute must be “sufficiently comprehensive” so that a commercial property owner “cannot help but be aware that his property will be subject to periodic inspection undertaken for specific purposes.” Burger, 482 U.S. at 703, 107 S.Ct. at 2644 (citations omitted). Although limitations on the number of searches is a factor in the analysis, it is not dispositive unless the statute, as a whole, inadequately limits the inspector’s discretion. Id. at 712, n. 22, 107 S.Ct. at 2648 n. 22. This statute meets the standard.

Here, the statute notifies all persons or business entities that buy or sell used auto parts that inspections are authorized. Tenn. Code Ann. § 55-5-108(a)((1). The statute then incorporates limitations on the inspections, requiring that they be conducted during normal business hours, in a manner that minimizes interference, and limits their scope to records and vehicles and parts. Tenn. Code Ann. § 55-5-108(a)(1), (3), and (4). Thus, the statutory scheme does not grant unfettered discretion to inspectors. Nor did the inspectors exercise unfettered discretion in this case. It is undisputed that.defendant bought auto parts; that the inspectors only-entered buildings and areas where automobile parts were stored; and that before the inspectors entered the attic, they inquired and learned that auto parts were stored in the attic. Once the defendant admitted that the attic contained auto parts, the officers were justified in concluding that the statute authorized inspection of those auto parts as well. An attic containing auto parts is viewed no differently under the statute than a garage containing auto parts. Their inspection fell within the limits established by the statute.

Because the statute authorizes warrantless searches of auto parts and comports with Burger, it acts as an exception to the warrant requirement. The inspectors only entered those areas where the defendant stored auto parts and they were lawfully in the attic when they discovered the marijuana plants. Accordingly, we REVERSE the order of the district court suppressing the evidence seized and REMAND this case for additional proceedings.

1 . The matter was referred to a magistrate judge for a report and recommendation. In addition to his recommendation that the motion to suppress should be granted, he concluded that the defendant’s consent was not voluntary but mere acquiescence to a show of lawful authority and therefore, was not valid. See Bumper v. North Carolina, 391 U.S. 543, 88 S.Ct. 1788, 20 L.Ed.2d 797 (1968). The district court agreed that Branson's consent to search was not voluntary. The government challenged this ruling as well as the district court's finding that the good faith exception to the exclusionaiy rule did not apply; because we find the statute authorized the inspection and the statute and the search conducted pursuant thereto comported with the Fourth Amendment, we do not address these arguments.

2 . There is no evidence in the record to indicate that this administrative inspection was a pretext for a drug search, a fact that might require suppression of the marijuana plants despite compliance with Burger.