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Iowa companies must obey when AG's gumshoes call, SC rules

By Legal News Line | Aug 6, 2007

Chief Justice Marsha K. Ternus

DES MOINES -- Iowa Attorney General Tom Miller isn't infringing on a business's due process rights when he makes demands as part of a civil investigation, the Iowa Supreme Court ruled Friday. In state of Iowa v. Smokers Warehouse Corp. (docket# 04-1692) the Supreme Court affirmed a Polk County District Court ruling ordering the company to comply with an attorney-general's investigation. Miller was probing Smokers Warehouse Corp. for allegedly falsely advertising sales tax breaks on mail-ordered cigarettes. Miller first filed a Consumer Fraud Act suit against the Illinois company in 2003. Smokers Warehouse appealed the lower court's ruling on the grounds that Miller's authority to enforce such demands and the section of the Act granting it infringed its due process rights. But the Supreme Court disagreed unanimously. The attorney general's authority to issue civil investigative demands "includes questions in the nature of civil interrogatories and requests for production," wrote Chief Justice Marsh K. Ternus. And starting a possible fraud investigation based "upon the Attorney General's belief that a violation has occurred, as opposed to the existence of reasonable cause to believe a violation has occurred, does not violate substantive due process," she concluded. Justice Brent R. Appel did not take part in the case.

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