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IN THE SUPREME COURT OF IOWA
No. 32 / 04-1692 Filed August 3, 2007 STATE OF IOWA ex rel. THOMAS J. MILLER, ATTORNEY GENERAL OF IOWA, Appellee, vs. SMOKERS WAREHOUSE CORP. and BRUCE VOGEL, Appellants.

Appeal from the Iowa District Court for Polk County, Robert J. Blink, Judge.

Defendants appeal from a district court order directing them to comply with civil investigative demands issued by the Iowa Attorney General. AFFIRMED.

Daniel B. Shuck and Jeana L. Goosmann of Heidman, Redmond, Fredregill, Patterson, Plaza, Dykstra & Prahl, L.L.P., Sioux City, and Leonard Violi, Mamaroneck, New York, for appellants.

Thomas J. Miller, Attorney General, and Steve St. Clair, Assistant Attorney General, for appellee.

2 TERNUS, Chief Justice. The appellants, Smokers Warehouse Corp. and its owner/president, Bruce Vogel, appeal from a district court order granting the State's application to enforce civil investigative demands issued by the appellee, Iowa Attorney General Thomas J. Miller, under the authority of the Iowa Consumer Fraud Act, Iowa Code section 714.16 (2003). Smokers

Warehouse and Vogel challenge the Attorney General's authority to issue a civil investigative demand under the Act and assert section 714.16 violates their due process rights. We affirm. I. Background Facts and Proceedings. In 2003 the Iowa Attorney General filed a consumer fraud lawsuit against Smokers Warehouse Club, Inc., an Illinois corporation. The State alleged Smokers Warehouse Club had misled Iowa residents by falsely advertising that Iowans could purchase tax-free cigarettes from the defendant through the mail. In addition, the State alleged Smokers

Warehouse Club had failed to exercise due care to ensure that minors did not purchase cigarettes from the company. This lawsuit was dismissed without prejudice upon the motion of Smokers Warehouse Corp., a Mississippi corporation, based on the State's failure to name and serve the proper entity. Rather than re-filing the lawsuit against the proper defendant, the Attorney General employed the investigative tools of the Consumer Fraud Act by sending civil investigative demands (CIDs), which were substantially the same, to Smokers Warehouse Corp. and to its owner/president, Bruce Vogel. These CIDs requested information and records regarding the

corporate structure and control of Smokers Warehouse Corp., its advertising and sales to Iowans, and its policies and practices relating to excise tax compliance and the prevention of underage cigarette sales.

3 Smokers Warehouse Corp. and Vogel filed a motion for protective order in the dismissed action, which the court denied on the basis there was no pending lawsuit. These parties persisted in their refusal to respond to the CIDs, so on June 30, 2004, the State filed an "application to enforce consumer fraud subpoena," in which the State asked the court to direct the defendants, Smokers Warehouse Corp. and Vogel, to comply with the CIDs. The

defendants filed a resistance and a request for a protective order. Thereafter, the district court entered a ruling, concluding the requirements of due process had been satisfied and there was no Fourth Amendment violation. The district court granted the State's application to enforce, subject to specific limitations, and enjoined the defendants from selling or advertising any merchandise in or from Iowa or to Iowa residents should the defendants fail to comply with the CIDs. The defendants appeal from this order. They raise two main issues. First, they claim the Attorney General is without authority to issue a CID in a consumer fraud investigation, and consequently, the State has violated the defendants' Fourth Amendment rights by conducting an impermissible search. Second, the defendants claim Iowa Code section 714.16 violates the Due Process Clause because it does not require reasonable cause as a condition of issuance of a CID. II. Scope of Review. We will review the defendants' first assignment of error, grounded in statutory interpretation, for correction of errors of law. See State v. Wolford Corp., 689 N.W.2d 471, 473 (Iowa 2004). To the extent the defendants' claims are based upon the Due Process Clause and the Fourth Amendment, our review is de novo. See State ex rel. Miller v. Pace, 677 N.W.2d 761, 767 (Iowa 2004).

4 III. Authority to Issue CID Under Section 714.16. Iowa's Consumer Fraud Act is found in Iowa Code section 714.16. Subsection (3) of this section specifies various actions the Attorney General may take when he believes that a person may be engaging in a practice prohibited by the Act. See Iowa Code

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