149 F.3d 1112 (10th Cir. 1998), 96-4126, United States v. Lin Lyn Trading, Ltd.

Docket Nº:96-4126.
Citation:149 F.3d 1112
Party Name:UNITED STATES of America, Plaintiff-Appellant, v. LIN LYN TRADING, LTD., and Raymond Lynn Thomas, Defendants-Appellees.
Case Date:July 06, 1998
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1112

149 F.3d 1112 (10th Cir. 1998)

UNITED STATES of America, Plaintiff-Appellant,

v.

LIN LYN TRADING, LTD., and Raymond Lynn Thomas, Defendants-Appellees.

No. 96-4126.

United States Court of Appeals, Tenth Circuit

July 6, 1998

Page 1113

Deborah Watson, Department of Justice (Scott M. Matheson, Jr., United States Attorney for the District of Utah, and Wayne T. Dance, Assistant United States Attorney, with her on the briefs), for Plaintiff-Appellant.

Max D. Wheeler, Snow, Christensen & Martineau, Salt Lake City, Utah (James D. Gilson, Van Cott, Bagley, Cornwall & McCarthy, Salt Lake City, Utah, with him on the briefs), for Defendants-Appellees.

Before BALDOCK, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and EBEL, Circuit Judge.

EBEL, Circuit Judge.

As a result of the government's seizure of a notepad containing confidential attorney-client communications, defendants-appellees Raymond Lynn Thomas and Lin Lyn Trading, Ltd., successfully moved for the suppression of evidence and the dismissal of the indictment against them. The United States appeals. Because we agree that the district court did not err in suppressing the evidence, but conclude the district court abused its discretion in dismissing the indictment, we affirm in part and reverse in part.

BACKGROUND

A tip by a confidential informant in the fall of 1990 led to a Customs investigation of defendant-appellee Lin Lyn Trading, Ltd. ("Lin Lyn"), an import company owned by defendant-appellee Raymond Lynn Thomas ("Thomas") and his wife. 1 Thomas also served as Lin Lyn's Vice President and Director of Operations. The informant told Customs agents that Lin Lyn imported plush toys and lace items into the United States, and that the lace items were either not declared or falsely described in Customs entry forms. Further, the informant alleged that Lin Lyn was importing trademarked toys illegally. Later in the year, the informant gave Customs incriminating documents sent to Lin Lyn.

In January 1991, Customs agents discovered undeclared lace merchandise in a shipment to Lin Lyn. With the information from the informant and the results of the seizure, Salt Lake City Customs Agent Dale Brua ("Brua") obtained a warrant to search Lin Lyn's business premises. The warrant was executed on February 22, 1991, and a large number of documents was seized. Thomas was advised that he and Lin Lyn were under investigation for violating 18 U.S.C. § 542 (unlawful entry of goods into the United States) and 18 U.S.C. § 545 (smuggling goods into the United States).

On March 29, 1991, Thomas returned to the United States from Asia and was detained by Customs inspectors at the Portland International Airport. After conferring by telephone with Brua about the ongoing investigation of Thomas and Lin Lyn, Portland Customs Agent Keith Seagraves ("Seagraves") inspected the documents Thomas was carrying. The documents included a yellow notepad. Thomas informed Seagraves that the notepad documented Thomas's conversations with his legal counsel. Seagraves copied documents pertinent to the investigation and returned the originals of most of the documents to Thomas, although the notepad was not returned. He also contacted Brua and read him some of the contents of the notepad. Seagraves then decided to seize the notepad, despite the potentially privileged nature of the contents, because it contained information that indicated Thomas and Lin Lyn had undervalued imported shipments. Seagraves made copies of the notepad and then sent the notepad to Brua.

Soon thereafter, defendants' counsel asked for the return of the notepad. Salt Lake City Assistant United States Attorney Wayne Dance ("AUSA Dance") ordered that the materials received from Seagraves be sealed. By that time, however, the existence of the notepad was common knowledge in the Salt Lake City Customs office. Further, unknown to AUSA Dance, Seagraves had kept copies before mailing the documents. Seagraves's

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copies remained in the Portland office in an unmarked folder, and they were not sealed. The materials Seagraves sent to Brua remained in Brua's custody until he retired, and then became the responsibility of his replacement, Agent Dennis Grossman ("Grossman"). In addition, on April 4, 1991, Customs refused to return documents from the January seizure because "new evidence" had been received. The district court inferred that the "new evidence" was the material seized from defendants on March 29, 1991.

After the investigation concluded in the summer of 1993, the defendants were notified that to get the notepad back they would have to file a motion for return of property pursuant to Federal Rule of Criminal Procedure 41(e). The sealed envelope which contained the notepad and other documents was delivered to the district court after defendants filed a Rule 41(e) motion on August 24, 1993. In November 1993, Grossman was transferred to the Portland Customs office to replace Seagraves.

After a hearing in February 1994, Magistrate Judge Samuel Alba recommended that the Rule 41(e) motion be granted in regards to the notepad because its seizure was unlawful and the government's continued possession of privileged attorney-client communications would cause the defendants irreparable injury. District Judge Dee Benson accepted the recommendation and granted the Rule 41(e) motion on September 7, 1994. The government appealed to this court but voluntarily dismissed the appeal after the Solicitor General refused to give permission to proceed.

Thomas and Lin Lyn were indicted on October 20, 1994 for conspiracy to defraud the United States in violation of 18 U.S.C. § 371, smuggling goods into the United States in violation of 18 U.S.C. § 545, unlawful entry of goods into the United States in violation of 18 U.S.C. § 542, and aiding and abetting the violation of the latter two statutes in violation of 18 U.S.C. § 2. (R. I at 22-49.) On October 25, Thomas's documents were returned to him as directed by the court's September 7, 1994, order.

On January 31, 1996, Thomas and Lin Lyn filed a motion to suppress all evidence seized on March 29, 1991, and thereafter on the theory that the illegally seized notepad became a "roadmap" for the case investigation. The government responded that it did not intend to introduce any items seized on March 29, 1991, but it contested the suppression of all evidence obtained after that date because it had independent sources for the evidence. When defendants replied to the government's response, they requested for the first time that the indictment be dismissed because the invasions of the...

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