Federal Judiciary

A must-read for white collar folks.

Players: Decision by Judge Diarmuid F. O?Scannlain (left), joined by Judges Hawkins and McKeown.

Facts: Feds suspected Medicare and tax fraud within SDI Future Health Services, and got a search warrant for the company. Id. at *1. The corporate-executive defendants successfully challenged this search when they were later prosecuted. Id. at *2. The government took an interlocutory appeal. Id. at *3.

Issue(s): ?We must decide whether corporate executives may challenge a police search of company premises not reserved for the executives? exclusive use.? Id. at *1. ?The government . . . argues . . that [the defendants] lack standing to challenge the search and seizure of materials from SDI?s premises. According to the government, the mere ownership and management of SDI, and the steps SDI took to preserve the security of its business files, are inadequate to support the conclusion that [the corporate executive defendants] personally had an expectation of privacy in the search areas and seized materials.? Id. at *3. ?[T]his case presents the novel issue of the extent to which a business employee may have standing to challenge a search of business premises generally.? Id.

Held: ?[W]e conclude that, except in the case of a small, family-run business over which an individual exercises daily management and control, an individual challenging a search of workplace areas beyond his own internal office must generally show some personal connection to the places searched and the materials seized. To adapt [United States v.] Anderson, [154 F/3d 1225, 1230-32 (10th Cir. 1998)] although all the circumstances remain relevant, we will specifically determine the strength of such personal connection with reference to the following factors: (1) whether the item seized is personal property or otherwise kept in a private place separate from other work-related material; (2) whether the defendant had custody or immediate control of the item when officers seized it; and (3) whether the defendant took precautions on his own behalf to secure the place searched or things seized from any interference without his authorization. Absent such a personal connection or exclusive use, a defendant cannot establish standing for Fourth Amendment purposes to challenge the search of a workplace beyond his internal office.? Id. at *5 (footnotes omitted). ?The district court?s grant of the motion to suppress must be reversed and the matter remanded for further fact-finding.? Id. at *7.

Of Note: The new rule of SDI is an imported 10th Circuit standing test. There are, however, many additional Fourth Amendment sub-issues in the decision. Judge O?Scannlain discusses the incorporation of affidavits into search warrants ? and finds that the affidavit was incorporated in this warrant. Id. at *8-*9. The decision also explains the difference between ?particularity? and ?overbreadth? in a search warrant challenge ? and finds that several categories of the warrant were in fact overbroad. Id. at *10. Finally, the opinion expounds on severance of a search warrant, allowing for a partial suppression of materials seized from overbroad categories of the warrant. Id. at *13-*14. All in all, an expansive Fourth Amendment decision.

How to Use: White-collar counsel (and P.D.s who inherit these clients when retainers are tapped) will want to read SDI carefully. Note that the decision doesn?t strip corporate executives of all standing to challenge a search of a business: here, the executive-defendants still had ?standing to challenge the admission of any evidence obtained from their own, personal, internal offices.? Id. at *7. Also, the opinion?s many footnotes merit close attention. For example, notes six and eight concede that these new standing factors are not exclusive. Id. at *5-*6, nn. 6 & 8.

For Further Reading: SDI was the most important case of the week: Quon, the most interesting to read. The panel for the great Quon v. Arch Wireless decision (cops and pager searches) fended-off an en banc attempt, prompting a dissent from the denial of rehearing en banc by Judge Ikuta (right). This in turn sparked a blistering ?concurrence? in the denial of rehearing en banc by Judge Kim Wardlaw (left). See Judge Wardlaw's concurrence here.

Here?s Judge Wardlaw?s memorable first line: ?No poet ever interpreted nature as freely as Judge Ikuta interprets the record on this appeal.? Id.

Image of the Hon. Diarmuid O'Scannlain from http://law.lclark.edu/org/bov/oscannlain.html. Image of the Hon. Sandra Ikuta from http://ms-jd.org/blogs/212. Image of the Hon. Kim Wardlaw from http://www.abovethelaw.com/2008/02/

Steven Kalar, Senior Litigator, N.D. Cal. FPD. Website at www.ndcalfpd.org

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Full post as published by Ninth Circuit Blog on January 31, 2009 (boomark / email).