U.S. v. Leary

• Decision Date: 02 May 1988
• Docket Number: Nos. 86-2487,86-2488,s. 86-2487
• Citation: 846 F.2d 592
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Richard J. LEARY, and F.L. Kleinberg & Co., Defendants-Appellees.

Page 592

846 F.2d 592

UNITED STATES of America, Plaintiff-Appellant, v. Richard J. LEARY, and F.L. Kleinberg & Co., Defendants-Appellees.

Nos. 86-2487, 86-2488.

United States Court of Appeals, Tenth Circuit.

May 2, 1988.

Bruce F. Black, Asst. U.S. Atty. (Robert N. Miller, U.S. Atty., with him on the briefs), Denver, Colo., for plaintiff-appellant.

Michael F. DiManna, Di Manna & Jackson, Denver, Colo., for defendant-appellee, Leary.

Robert T. McAllister, Dill, Dill & McAllister, Denver, Colo., for defendant-appellee, Kleinberg.

Before HOLLOWAY, Chief Judge, ANDERSON and TIMBERS, ^* Circuit Judges.

STEPHEN H. ANDERSON, Circuit Judge.

The government appeals from the district court's decision granting defendants' motion to suppress evidence seized under a search warrant. We affirm the district court, holding that the defendants' fourth amendment rights were infringed, that the search warrant was facially overbroad and invalid, and that the evidence seized should be suppressed.

I. Background

This appeal stems from the execution of a search warrant at the offices of the F.L. Kleinberg Company ("Kleinberg") in Boulder, Colorado on August 23, 1984. Kleinberg and Richard J. Leary, a vice-president at Kleinberg, were subsequently indicted for conspiring to violate the Export Administration Act. 50 U.S.C.App. Sec. 2410. Kleinberg and Leary, as defendants, moved to suppress the fruits of the search of the Kleinberg offices. The district court granted that motion and the government appeals pursuant to 18 U.S.C. Sec. 3731.

The search warrant was obtained by federal customs agent John Juhasz on the basis of his affidavit alleging violations of the Arms Export Control Act, 22 U.S.C. Sec. 2778, and the Export Administration Act. The affidavit recites in detail the purchase and attempted export of a Micro-tel Precision Attenuation Measurement Receiver ¹ by Kleinberg in 1984. In short, the affidavit alleges that Kleinberg did not have the proper license to export this particular piece of equipment and that Kleinberg was attempting to illegally export the receiver to the People's Republic of China via a series of "front" companies in Hong Kong. The affidavit addresses only this single transaction and the companies ² involved in that transaction. No other companies, countries, or commodities are mentioned in the affidavit or alleged to be part of any illegal export scheme.

Based on the affidavit, a warrant was issued to search the Kleinberg offices and seize the following property:

Correspondence, Telex messages, contracts, invoices, purchase orders, shipping documents, payment records, export documents, packing slips, technical data, recorded notations, and other records and communications relating to the purchase, sale and illegal exportation of materials in violation of the Arms Export Control Act, 22 U.S.C. 2778, and the Export Administration Act of 1979, 50 U.S.C.App. 2410.

The warrant was executed on August 23, 1984 by Agent Juhasz and six other Customs officers. Twenty boxes of business records were seized including references to sales and sales contacts throughout the world, telexes to Australia and South Africa, information from applicants for employment with Kleinberg, Leary's application with Shearson American Express for personal financial planning, Leary's life insurance policy, and correspondence relating to other businesses for which Leary acted as sales representative.

After the indictment, Kleinberg and Leary moved to suppress all of the evidence seized in the search. The district court granted that motion, finding first that the affidavit was not supported by probable cause, ³ and second, that the warrant did not sufficiently specify the evidence to be seized. The court also found that the "good faith" exception to the exclusionary rule adopted by the United States Supreme Court in United States v. Leon, 468 U.S. 897, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984) was inapplicable.

On appeal, the government argues (1) Leary and Kleinberg have no standing to raise a fourth amendment claim; (2) the warrant was sufficiently particular in specifying the items to be seized; (3) the warrant was supported by probable cause; and (4) even if the warrant is found upon review to be invalid, reliance on the warrant was "objectively reasonable" and the evidence should not be suppressed under the reasoning of Leon.

II. Standing

In Rakas v. Illinois, 439 U.S. 128, 99 S.Ct. 421, 58 L.Ed.2d 387 (1978) the Supreme Court abandoned a separate analysis of "standing" for claims of violations of the fourth amendment in favor of an analysis focusing on the "substantive question of whether or not the proponent of the motion to suppress has had his own Fourth Amendment rights infringed by the search and seizure which he seeks to challenge." Id. at 133, 99 S.Ct. at 425. ⁴ See Rawlings v. Kentucky, 448 U.S. 98, 104, 100 S.Ct. 2556, 2561, 65 L.Ed.2d 633 (1980); United States v. Hansen, 652 F.2d 1374, 1379 n. 2 (10th Cir.1981). "Whether a person has standing to contest a search on fourth amendment grounds turns on whether the person had a legitimate expectation of privacy in the area searched, not merely in the items seized." United States v. Skowronski, 827 F.2d 1414, 1418 (10th Cir.1987) (citing United States v. Salvucci, 448 U.S. 83, 93, 100 S.Ct. 2547, 2554, 65 L.Ed.2d 619 (1980)). Determining whether a legitimate or justifiable expectation of privacy exists, in turn, involves two inquiries. First, the claimant must show a subjective expectation of privacy in the area searched, and second, that expectation must be one that "society is prepared to recognize as 'reasonable.' " Hudson v. Palmer, 468 U.S. 517, 525, 104 S.Ct. 3194, 3199, 82 L.Ed.2d 393 (1984) (quoting in part Katz v. United States, 389 U.S. 347, 361, 88 S.Ct. 507, 516, 19 L.Ed.2d 576 (1967) (Harlan, J., concurring)); see also United States v. Owens, 782 F.2d 146, 150 (10th Cir.1986). The "ultimate question" is "whether one's claim to privacy from government intrusion is reasonable in light of all the surrounding circumstances." Rakas, 439 U.S. at 152, 99 S.Ct. at 435 (Powell, J., concurring). Finally, standing is a legal question, and "[w]here the facts are not in dispute, this court may review the question of standing de novo." United States v. Kuespert, 773 F.2d 1066, 1067 (9th Cir.1985).

There is no doubt that a corporate officer or employee may assert a reasonable or legitimate expectation of privacy in his corporate office. Cf. Mancusi v. DeForte, 392 U.S. 364, 369, 88 S.Ct. 2120, 2124, 20 L.Ed.2d 1154 (1968) ("It has long been settled that one has standing to object to a search of his office, as well as of his home."); United States v. Lefkowitz, 464 F.Supp. 227, 230 (C.D.Cal.1979) (corporate officers had sufficient privacy interest in corporate office suite), aff'd, 618 F.2d 1313 (9th Cir.), cert. denied, 449 U.S. 824, 101 S.Ct. 86, 66 L.Ed.2d 27 (1980); see also 4 W. LaFave, Search and Seizure Sec. 11.3(d) (2d ed. 1987) [hereinafter LaFave]. Similarly, "it seems clear that a corporate defendant has standing with respect to searches of corporate premises and seizure of corporate records...." Id. at 316. See G.M. Leasing Corp. v. United States, 429 U.S. 338, 353, 97 S.Ct. 619, 629, 50 L.Ed.2d 530 (1977); Auster Oil & Gas, Inc. v. Stream, 835 F.2d 597 (5th Cir.1988). In addition, except in rare circumstances, a warrant is as necessary to support a search of commercial premises as private premises. See Blackie's House of Beef, Inc. v. Castillo, 659 F.2d 1211, 1216 n. 5 (D.C.Cir.1981) (citing Marshall v. Barlow's, Inc., 436 U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305 (1978)), cert. denied, 455 U.S. 940, 102 S.Ct. 1432, 71 L.Ed.2d 651 (1982).

Normally, our inquiry would end here. The government argues, however, that Leary and Kleinberg lack the requisite expectation of privacy in their offices and records because of the regulatory scheme imposed upon exporters by the federal government and the company's "open door" policy toward government inspectors. For purposes of clarity, we repeat the government's argument in some detail:

[T]he government would concede that if it were not for the regulatory scheme requiring that the defendants make, keep and produce the seized records to the government upon request, and the company's open door policy, both defendants would be able to assert a privacy interest in the seized records under Rakas v. Illinois, 439 U.S. 128 [99 S.Ct. 421, 58 L.Ed.2d 387] (1978).

The standing argument asserted by the government is limited to the very unusual facts of this case.... [T]he defendants operated in a highly regulated industry where the law required them to make, keep and produce all documents relating in any way to an export. Furthermore, company policy was that the government could come, scheduled or unscheduled and ask for any file or information it needed. Thus, the government's argument is that any privacy interest in the required records was waived by the company and Mr. Leary.

Mr. Leary must have known that under these circumstances any company record could be turned over to the government upon request at any time, whether he was present or not, without the government being required to resort to legal process.

The company's position is somewhat different, because it could have revoked the policy at any time. But it did not. At the conclusion of the search the President, Frederick L. Kleinberg, invited the agents back to examine any remaining records at a later time.

Reply Brief of Appellant at 3-5 (citations omitted).

We find the government's argument inherently misleading, as it attempts to concede an expectation of privacy with one hand and remove it with the other. Moreover, the argument confuses the law relating to searches or inspections of "regulated" industries with simple recordkeeping requirements. ⁵ Nevertheless, we will analyze the government's position in detail. The government's standing argument consists of two...