Tom v. Schoolhouse Coins, Inc.

Opinion

FUKUTO, J.

Schoolhouse Coins, Inc. (hereinafter Schoolhouse) appeals from an order of the superior court issued pursuant to Government Code section 11188, which compels compliance with a subpoena duces tecum issued by the Commissioner of Corporations (hereinafter Commissioner).

1

[829]

The issues presented are whether an administrative subpoena duces tecum issued by the Commissioner requiring a seller of numismatic coins to disclose the names and addresses of its customers (1) violates the customers’ right to privacy guaranteed by article I, section 1, of the California Constitution; (2) is necessary to achieve a compelling state interest; and (3) is the least burdensome method to achieve the purposes of the Department of Corporations.

On February 5,1986, the Commissioner served on Schoolhouse an administrative subpoena duces tecum requiring production of various business records including, in relevant part, the “[n]ames, addresses, and telephone numbers of all investors in coins or coin investments.” Schoolhouse produced the requested information for 25 of its customers, whom it claimed consented to disclosure, but refused to furnish the names and addresses of its remaining customers, asserting a right of privacy on their behalf. Pursuant to Government Code section 11187, the Commissioner petitioned the superior court for an order compelling production of a complete customer list. The declarations in support of the petition established, inter alia, that the information was needed “in connection with the Commissioner’s investigation and examination of [Schoolhouse’s] business operations and practices in connection with the possible offer and sale of unqualified securities in violation of Corporations Code Section 25110.”

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At the order to show cause hearing, the Commissioner acknowledged that it had already determined that Schoolhouse was offering unqualified securities for sale, and had issued orders restraining such conduct. The Commissioner nevertheless pressed for disclosure of the names and addresses of customers, arguing such persons could provide information regarding representations made and expectations held by investors, relevant to its investigation into whether fraud had been committed in the offering of unqualified securities. The superior court found that the public interest in disclosure outweighed any privacy interest asserted on behalf of Schoolhouse’s customers and ordered compliance with the subpoena duces tecum.