Pervasively Regulated Businesses Case Law
In Shapiro v. United States (1948) 335 U.S. 1 68 S. Ct. 1375, 92 L. Ed. 1787 the court sustained a conviction for violation of wartime price regulations based in part on evidence derived from the defendant's business records surrendered in compliance with an administrative subpoena.
The court held Shapiro was not privileged to withhold his records because:
"The record involved in the case at bar was a sales record required to be maintained under an appropriate regulation, its relevance to the lawful purpose of the Administrator is unquestioned, and the transaction which it recorded was one in which the petitioner could lawfully engage solely by virtue of the license granted to him under the statute." (Id. at p. 35 68 S. Ct. at p. 1393.)
A closely or pervasively regulated business is one which is subject to such " 'close supervision and inspection' " its owner "cannot help but be aware that his property will be subject to periodic inspections undertaken for specific purposes." (Donovan v. Dewey (1981) 452 U.S. 594, 600 101 S. Ct. 2534, 2538-2539, 69 L. Ed. 2d 262.)
The Supreme Court has taken a liberal view of what constitutes "close regulation," putting the teeth of the analysis in the reasonableness requirement instead. (New York v. Burger, supra, 482 U.S. at p. 702 107 S. Ct. at pp. 2643-2644; and see discussion post.)
Thus, in Burger, the court held automobile junkyards are "closely regulated" businesses in the State of New York because the operator must meet certain licensing requirements, obtain a license and pay a fee, maintain specified records, display his registration to the public and is subject to criminal penalties, revocation of his license or civil fines for failure to comply with these provisions. (Id. at pp. 704-705 107 S. Ct. at pp. 2644-2645.)
The court noted the duration of the particular regulatory scheme was also relevant but not determinative. ( Id. at p. 705 107 S. Ct. at p. 2645.)
In California the insurance brokerage business is closely regulated under the Burger test.
Insurance agents must meet certain licensing requirements and obtain a license (Ins. Code, 1631- 1707.51), maintain specified records (Ins. Code, 1727; Cal. Code Regs., tit. 10, 2190.2- 2190.6), and are subject to license revocation and civil fines for failure to comply with these provisions (Ins. Code, 1708 et seq., 1737 et seq.).