U.S. v. Cioffi, et al., Case No. 08-CR-415 (FB) (E.D.N.Y. Oct. 26, 2009)
Slip Opinion (hosted by WSJ)

The Eastern District of New York granted defendant Matthew Tannin’s motion to suppress evidence obtained from his personal Gmail account. Ralph Cioffi and Matthew Tannin were charged with conspiracy, securities fraud and wire fraud in connection with their roles as Bear Sterns hedge fund managers. Prosecutors obtained a warrant to search Tannin’s personal Gmail account, but the warrant failed to specify what evidence could be seized or to what crimes the evidence must relate.  After some initial difficulty, Google delivered a copy of the email account to the Government. As the Wall Street Journal reported, one email contained a comment that funds Tannin managed could “blow up.” Tannin moved to suppress this evidence on the ground that it violated the Fourth Amendment.

District Judge Block held that the warrant was facially overbroad and thus violated the Fourth Amendment. The Court reasoned that because the warrant itself was not particular as to either the items to be seized or to a particular crime, and because the affidavit was not attached or incorporated into the warrant, the warrant was unconstitutional. The court also held that the warrant did not merit a “good faith” or “inevitable discovery” exception, largely because the executing officers should have known the warrant was overbroad.

The Wall Street Journal provides a brief overview of the case. The Eric Goldman Blog also provides a summary of the case. Orin Kerr of the Volokh Conspiracy criticizes the ruling, saying that the good faith exception should have been granted since the case law was not firmly established at the time of execution.

In holding that the warrant was overbroad, the court reasoned that the warrant should have included information about the particular items to be seized and what crimes were at issue. Interestingly, the court did not take a firm position on the particularity requirement for computer searches. Instead, the court focused on particularity requirements in general.  Even though the warrant was based on an affidavit containing useful and particular information about the evidence to be siezed and the crime being charged, the warrant was facially overbroad because it did not formally incorporate and attach the affidavit.

The court went on to deny admission under either the “good faith” or  “inevitable discovery” exceptions. In denying the first exception, the court held that the good faith exception does not apply to cases with facially invalid warrants that executing officers could not reasonably presume to be valid. The court reasoned that this was such a case  because of the lack of particularity in the warrant. In denying the inevitable discovery exception, the court relied on United States v. Eng., and held that the analysis must focus on “what would have happened had the unlawful search never occurred.” 997 F.2d 987, 990 (2d Cir. 1993). The court reasoned that the government relied on the invalidation of the warrant to show that discovery was inevitable. Thus, the government essentially focused on what would have happened given, rather than without, the unlawful search. The court, therefore, granted the motion to suppress the evidence obtained from the government’s warrant.

This case is significant for two main reasons. First, it deals a major blow to the prosecution’s case against the two former hedge fund managers. The emails seemed to contain powerful evidence of knowledge of the funds’ instability, evidence that is now inadmissible. Second, it helps affirm the Second Circuit’s position that an affidavit must be attached and incorporated into the warrant in order for it to “cure” the warrant’s lack of particularity. To do so, it interprets a less than explicit section of the Supreme Court’s opinion in Groh v. Ramirez, 540 U.S. 551 (2004). It thus adds weight to this distinct interpretation of Groh. Perhaps future Supreme Court jurisprudence will clarify and solidify the issue.

Federal Prosecutors Launch New Attack Against Online Gamblers in the United States

On June 9, the New York Times reported that federal prosecutors asked four American banks to freeze accounts containing money believed to be used for distributing winnings to online poker players. Wells Fargo, one of the contacted banks, received a court order requiring that the funds be frozen. Professor I. Nelson Rose of Whittier Law School described the move as “surprising” and as a “gamble” by the prosecutors. Professor Rose also said that it is unclear what laws apply to the seizure of individuals’ money.

Canadian Government Decides Not to Regulate Internet Video and Audio Broadcasts

Canadian radio and television broadcasters are required by the Canadian Radio-television and Telecommunications Commission (CRTC) to broadcast a minimum amount of Canadian content. On June 9, Ars Technica reported that the CRTC issued a report saying that although internet audio and video do count as “broadcasting” for the purposes of their regulatory schemes, they will retain a regulatory exemption from providing Canadian content. The CRTC’s decision, while currently supported by major providers of online audio and video such as Google, leaves open the possibility that the CRTC will impose future regulations.

Electronic Frontier Foundation Urges Court to Hold Email Protected Under the Fourth Amendment

On June 10, the Electronic Frontier Foundation (EFF) filed an amicus brief in the Sixth Circuit’s ongoing case Warshak v. United States. The brief argues that the Justice Department violated Warshak’s Fourth Amendment expectation of privacy in his email. The EFF reports that “the government acquired over 27,000 emails spanning over six months from Warshak’s email provider, all without probable cause.” The basis of EFF’s position is that email should receive the same protection against unlawful search and seizure as is given to phone calls, postal mail, and private papers kept at home.

Court Abused Discretion by Failing to Apply eBay Factors

On June 9, Patently-O reported that the Federal Circuit remanded a patent dispute case back to the district court because it failed to consider the eBay factors in its refusal to grant a permanent injunction to the patent holder. In the eBay case, the Supreme Court required a patentee seeking injunctive relief to “demonstrate (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.”

Quon v. Arch Wireless Operating Co.
Ninth Circuit, No. 07-55282
Order denying rehearing en banc
Opinion concurring in denial of rehearing en banc
Opinion dissenting from denial of rehearing en banc

On January 27, 2009, the Ninth Circuit denied rehearing en banc in Quon v. Arch Wireless, a case decided by a Ninth Circuit panel in June of 2008.  The Ninth Circuit panel held that the City of Ontario, California violated the Fourth Amendment when Ontario Police Department officials audited text messages sent by a department employee. The court also held that Arch Wireless, the city’s service provider, had violated the Stored Communications Act (“SCA”), 18 U.S.C. § 2701-2711, when it disclosed messages to individuals who were not the addressees or intended recipients.

Shaun Martin of the California Appellate Report investigates the politics of the concurring and dissenting opinions.  Martin points out that despite the similarities between Judges Wardlaw and Ikuta (both judges are UCLA Law School graduates, well-recognized women in Southern California, and both practiced for the firm of O’Melveny & Myers), the conflict evident in their opinions amounts to a series of “dueling bench slaps extraordinarie.”

Judge Ikuta, who was joined in her dissent from the the denial of rehearing en banc by six other Ninth Circuit judges, criticized the Ninth Circuit panel’s conclusion that the city police department had violated the Fourth Amendment when it audited the text messages because it failed to use a less intrusive search method.  She argued that there were two problems with this conclusion: (1) in ruling that there was a reasonable expectation of privacy in the text messages sent and received on pagers provided to officers for work purposes, the panel “improperly hobble[d] government employers from managing their workforces;” and (2) the adoption of the less intrusive means test conflicted with Supreme Court case law and decisions of the majority of the federal circuit courts.

Judge Wardlaw, who authored the original panel opinion, responded in a concurring opinion that began with some harsh words:

No poet ever interpreted nature as freely as Judge Ikuta interprets the record on this appeal.  The dissent is not bound by the facts, even those found by the jury; nor is it confined to the actual fact-driven Fourth Amendment holding.

Judge Wardlaw argued that the panel opinion carefully and correctly applied Supreme Court precedent, whereas the dissent’s conclusions were based on its “loose recitation of ‘facts,’ untethered from the record evidence or jury findings.”

Previously: Ninth Circuit Applies Fourth Amendment to Text Messages at Work

H.R. 6304 — FISA Amendments Act of 2008
Full Text of Enrolled Bill
Senate Vote Summary
GovTrack.us Summary

On July 9, the Senate passed H.R. 6034, the FISA Amendments Act of 2008, and President George W. Bush signed it into law the following day. The new law modifies the Foreign Intelligence Surveillance Act of 1978 (“FISA”) to expand (subject to certain new checks) the federal government’s surveillance powers and retroactively immunize telecommunication companies that cooperated with the warrantless wiretapping program brought to light in 2005.

The New York Times summarizes the politics surrounding the FISA issue, in which presumptive Democratic nominee for president Barack Obama’s “yea” vote attracted scorn from some Democrats.

The Electronic Frontier Foundation (PDF), a longtime opponent of President’s surveillance program, calls Section 202 an immunity “compromise” in name only.

Orin Kerr, writing at The Volokh Conspiracy, criticizes as “misleading” media coverage that ignores the law’s new procedural safeguards (as compared to last year’s less restrictive Protect America Act (“PAA”)).

On the issue of immunity, Charlie Reina (writing at the Huffington Post), regrets that the public will never know who was monitored or which companies cooperated with the original warrantless wiretapping requests.

The bill’s history illustrates the controversy that surrounded the issue. In February, the Senate passed a bill similar to 6304, which included retroactive immunity provisions. In March, the House passed an alternative bill that did not include immunity for telecommunications companies and would have instituted additional checks on the executive’s ability to eavesdrop. However, under the threat of veto, the House on June 20 passed H.R. 6304, sponsored by Rep. Silvestre Reyes (D-TX), which provided for a “compromise” immunity procedure. Under it, the federal courts must dismiss any suit in which the Attorney General certifies that the defendant telecom acted upon a written notice indicating that the request was “authorized by the President and determined to be lawful.” Following a filibuster, the Senate passed H.R. 6304 this week, 69-28.

Apart from the debate over retroactive immunity, there are substantial questions about what kind of wiretapping regime the FISA Amendments Act has created. Relative to the Protect America Act of 2007, passed as a six-month stopgap, the text of the new law includes more procedural checks and an increased opportunity for judicial review.

Significantly, it requires a court order to eavesdrop on US persons abroad, and it instructs Foreign Intelligence Surveillance Courts to review statutory compliance de novo (See Orin Kerr’s analysis).

On the other hand, Marty Lederman notes that the new Act (like the PAA, but in contrast to the original FISA) permits intercepting foreign communications received in the US without a warrant — the very gravamen of the warrantless wiretapping program that first spurred Congress to reconsider the issue of surveillance. Additionally, Timothy B. Lee faults the law for what it doesn’t contain: a functional mechanism to prevent the abuse of unreviewable executive “authorizations,” nor one that will prevent the executive from stalling the review process while continuing to listen in.

In sum, privacy activists worry that the new law has unduly and unaccountably expanded domestic spying powers, and some legally-minded observers see the FISA Amendments Act as a naked attempt to aggrandize the executive branch. President Bush, on the other hand, has called it “vital” to protect American lives. The new law’s validity may soon be tested in court, as the American Civil Liberties Union, The Nation, and a host of other groups have filed a complaint in the Southern District of New York, seeking to have it declared contrary to the First and Fourth Amendments.

Related JOLT articles: Amitai Etzioni, Implications of Select New Technologies for Individual Rights and Public Safety, 15 Harv. J.L. & Tech. 257 (2002) (applying the national security vs. civil liberties debate to several new technologies and describing several forms of accountability); Christopher Woo and Miranda So, The Case for Magic Lantern, 15 Harv. J.L. & Tech. 521 (2002) (arguing for a limited use of keylogging software within the FISA framework of the time).

Quon v. Arch Wireless Operating Company, Inc.
Ninth Circuit, June 18, 2008, No. 07-55282
Slip Opinion

On June 18, 2008, the Ninth Circuit held that the City of Ontario, California violated the Fourth Amendment when Ontario Police Department officials viewed text messages sent by a department employee. The court also held that Arch Wireless, the city’s service provider, had violated the Stored Communications Act (“SCA”), 18 U.S.C. § 2701-2711, when it disclosed messages to individuals who were not the addressees or intended recipients.

In late 2001, Sergeant Jeff Quon received a pager from his employer, the Ontario Police Department. The pagers’ wireless text-messaging service provider, Arch Wireless, had stipulated that the city was required to pay overage charges for text messages exceeding a set character limit. Quon paid the overage fee several times without further inquiry into the content of the messages until August 2002, when the Ontario police Chief Scharf moved to obtain transcripts of Quon’s text messages from a support specialist at Arch Wireless.

At least three department employees, including Quon’s immediate supervisor, reviewed the transcripts and read many of Quon’s personal messages, some of which were sexually explicit. Quon and several recipients of the messages brought suit in the District Court of Central California. They appealed the district court’s holding, arguing that Arch Wireless had violated the SCA. Quon also argued that the city violated his Fourth Amendment right to be free from unreasonable search and seizure, as well as his rights under the California Constitution.

Fourth Amendment Violation

The Fourth Amendment protects individuals and entities from unreasonable searches. The Supreme Court has previously held that the Fourth Amendment extends to public employees, although their reasonable expectation of privacy could be curtailed by official or unofficial workplace practices.

Judge Wardlaw, writing for the Ninth Circuit, stated that the reasonable expectation of privacy for text message users is very fact-specific. He noted that the official in charge of the pagers had an informal policy that the messages would not be audited if the employee paid the overage charges. Based on Quon’s prior experiences paying for overage charges, the court found that Quon had a reasonable expectation of privacy in his text messages. The Court also found that the California Public Records Act (“CPRA”), which provides that public records are open to inspection at all times, did not diminish an employee’s reasonable expectation of privacy.

Judge Wardlaw acknowledged the finding of the jury in the lower court that that the search was reasonable “at its inception” because it had a legitimate work related purpose — to ensure that officers were not being required to pay for work-related expenses. However, the Ninth Circuit found that the scope of the search was unreasonable because there were less invasive ways to verify the efficacy of the 25,000 character limit without violating Quon’s Fourth Amendment right to privacy, including warning Quon of its intent to review the content of future messages or asking Quon to redact personal messages before reviewing the transcripts.

Judge Wardlaw limited discussion of the right to privacy to the Fourth Amendment, noting that the California Constitution offers no broader privacy protection.

The Stored Communications Act

The SCA prevents providers of communication services from disclosing private communications. Under the SCA, an “electronic communication service” (“ECS”) is allowed to divulge the contents of a communication only to the sender and recipient, while a “remote computing service” (“RCS”) is also allowed to release it to a “subscriber.” An ECS is a service which provides its users with the ability to send or receive wire or electronics communications, and an RCS is a computer storage or processing service provided to the public by means of an electronic communications system. Judge Wardlaw held that Arch Wireless’ service was properly categorized as an ECS because it enabled users to send and receive messages. The Court noted that the temporary storage incidental to the communication was insufficient to make the service an RCS.

Full Text of the Secured Communications Act of 1986 at the US Government Printing Office.

Orin Kerr of the Volokh Conspiracy approves of the holding and considers it broad enough to extend to emails as well as text messages.

An article in E-Commerce Times provides statements on the case from practitioners, with Charles Baker noting that this is the first case in which the Fourth Amendment has been applied to electronic communications in a work setting. Barry Werbin believes that this will set off a series of similar suits, while Evans C. Anyanwu expresses his view that the decision is a “warning to employers to not say one thing and then do another.” He suggests that Appellees could avoid this problem in the future by appending a statement to the city’s contract declaring it an “addressee” of all messages.