Center Art Galleries-Hawaii, Inc. v. U.S.

• Citation: 875 F.2d 747
• Decision Date: 19 May 1989
• Docket Number: INC,GALLERIES--HAWAI,No. 88-2474,88-2474
• Parties: CENTER ART; William D. Mett, Petitioners-Appellees, v. UNITED STATES of America, Respondent-Appellant. Ninth Circuit
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 747

875 F.2d 747

57 USLW 2736

CENTER ART GALLERIES--HAWAII, INC.; William D. Mett Petitioners-Appellees, v. UNITED STATES of America, Respondent-Appellant.

No. 88-2474.

Ninth Circuit.

Argued and Submitted Sept. 16, 1988.

Decided May 19, 1989.

Leslie E. Osborne, Asst. U.S. Atty., Honolulu, Hawaii, for respondent-appellant.

Brook Hart, Hart & Wolff, Honolulu, Hawaii, and John R. Wing, Weil, Gotshal & Manges, New York City, for petitioners-appellees.

Appeal from the United States District Court for the District of Hawaii.

Before BOOCHEVER, REINHARDT and THOMPSON, Circuit Judges.

DAVID R. THOMPSON, Circuit Judge:

The government appeals the district court's order requiring the return of certain property pursuant to Rule 41(e) of the Federal Rules of Criminal Procedure. The government makes three contentions: first, that the district court erred by holding that the search warrants which commanded seizure of the property were overbroad; second, that even if the warrants were overbroad, the district court should have denied the Rule 41(e) motion based on the good faith exception to the exclusionary rule; and third, that the district court should have applied the inevitable discovery doctrine and permitted the government to keep the property even if the seizure was illegal. ¹

1] We have jurisdiction under 18 U.S.C. Sec. 3731. We affirm.

I FACTS

As part of an investigation of suspected mail and wire fraud involving the sale of forged Salvador Dali artwork, federal agents executed search warrants at six locations under the control of Center Art Galleries-Hawaii. The searches lasted from twelve to fourteen hours. Federal agents seized a total of five truckloads of documents, artwork and other property.

Following the seizures, William Mett and Center Art Galleries (collectively "CAG") filed a motion in district court seeking the return of the seized property pursuant to Rule 41(e). See Fed.R.Crim.P. 41(e). The district court held that the warrants were unconstitutionally overbroad and ordered the return of all the seized property except artwork attributable to Salvador Dali. See In re Motion for Return of Property Pursuant to Rule 41, 681 F.Supp. 677, 687-88 (D.Haw.1988) [hereinafter In re Motion ]. It is from this order that the government appeals.

II OVERBREADTH

We, review a warrant's alleged overbreadth de novo. United States v. McLaughlin, 851 F.2d 283, 285 (9th Cir.1988). "Only a warrant 'particularly describing the place to be searched and the persons or things to be seized' is valid. U.S. Const. amend. IV." United States v. Cardwell, 680 F.2d 75, 77 (9th Cir.1982). "The specificity required in a warrant varies depending on the circumstances of the case and the type of items involved." United States v. Spilotro, 800 F.2d 959, 963 (9th Cir.1986); McLaughlin, 851 F.2d at 285; Cardwell, 680 F.2d at 78 (courts must "consider the totality of circumstances in determining the validity of a warrant"). As we explained in Spilotro:

In determining whether a description is sufficiently precise, we have concentrated on one or more of the following: (1) whether probable cause exists to seize all items of a particular type described in the warrant, (2) whether the warrant sets out objective standards by which executing officers can differentiate items subject to seizure from those which are not, and (3) whether the government was able to describe the items more particularly in light of the information available to it at the time the warrant was issued.

Spilotro, 800 F.2d at 963 (citations omitted); see also McLaughlin, 851 F.2d at 285.

Each of the six warrants was identical except for the place to be searched. The relevant part of the warrants commanded the executing officer to seize:

documents, books, ledgers, records and objects which are evidence of violations of federal criminal law including but not limited to:

records of completed sales, customer correspondence including complaint files and refund-related documents, personnel files including payroll records, lists of current and former employees, employee compensation records for all employees, including but not limited to salesmen, art consultants, gallery directors and managers, records of payments to shareholders, financial records customer account statement sheets, bank records, including but not limited to cancelled checks, monthly account statements and deposit slips, cash receipt and disbursement records, telephone toll records, mail and telegram records including customer mailing lists, sales literature, sales training materials, including written sales pitches and program descriptions, tape recordings relating to sales business, customer contracts and records, business contracts including We agree with the district court that the warrants are overbroad. The warrants' provision for the almost unrestricted seizure of items which are "evidence of violations of federal criminal law" without describing the specific crimes suspected is constitutionally inadequate. Spilotro, 800 F.2d at 964; Cardwell, 680 F.2d at 78 (" 'limiting' the search to only records that are evidence of the violation of a certain statute is generally not enough"); cf. McLaughlin, 851 F.2d at 286 (warrant described "the specific crimes charged").

invoices relating to sources of art work, business agreements, certificates of authenticity, lists of curators, curator contracts, calendars, internal memoranda and handwritten notes, diaries, key punch computer cards, computer floppy disks and diskettes, computer printout sheets with printouts of Information Systems Design programs, computer memory banks, computer tapes or other data storage devices, prints attributed to Salvador Dali; numbered, unnumbered, signed, unsigned, other works of art attributed to Salvador Dali, lead cards, lead sheets, lead source material, sales records and customer/client information, lithographic and etching plates, blank sheets of paper used for art reproduction; signed and unsigned (Rives, Japon and Arches paper), insurance documents relating to refund insurance coverage and refund claims.

The government also failed to limit the warrants to items pertaining to the sale of Dali artwork despite the total absence of any evidence of criminal activity unrelated to Dali. As the district court noted, "[a]ll of the 22 instances of misrepresentations [alleged in the government's affidavit] concerned Salvador Dali artwork.... CAG is not primarily involved in Dali art. Approximately 80% of its business concerns non-Dali art." In re Motion, 681 F.Supp. at 681. "There is simply no evidence contained in the affidavit that suggests that CAG was involved in non-Dali related fraud." Id. at 682. Moreover, the government had the means to identify accounts which may have involved Dali artwork. The lead government investigator "was aware that a special card was created for the file of all clients who were interested in Dali artwork." Id. at 679; cf. VonderAhe v. Howland, 508 F.2d 364, 366, 370 (9th Cir.1974).

The government contends that: (1) the specificity of the affidavit supporting the warrants cured any overbreadth in the warrants and (2) the warrants' broad scope was justified because CAG was permeated with fraud.

An affidavit can cure the overbreadth of a warrant if the affidavit is "attached to and incorporated by reference in" the warrant. Spilotro, 800 F.2d at 967; United States v. Leary, 846 F.2d 592, 603 (10th Cir.1988) ("the affidavit and search warrant must be physically connected so that they constitute one document ... and ... the search warrant must expressly refer to the affidavit and incorporate it by reference using suitable words of reference") (emphasis added); United States v. Hillyard, 677 F.2d 1336, 1340 (9th Cir.1982); see also United States v. Luk, 859 F.2d 667, 676 & n. 8 (9th Cir.1988). The former requirement assures that "the person being searched has notice of the specific items the officer is entitled to seize." In re Property Belonging to Talk of the Town Bookstore, Inc., 644 F.2d 1317, 1319 (9th Cir.1981). The latter requirement helps assure that the affidavit actually limits "the discretion of the officers executing the warrant." Id. In the case before us, the affidavit was not expressly incorporated into the warrant. Moreover, although the government alleges that some of its officers had copies of the affidavit, the government does not claim that the affidavit was physically attached to the warrants or was given to CAG as part of the search.

The breadth of the warrants is not justified by the "permeated-with-fraud" circumstance which was present in United States v. Offices Known as 50 State Distributing Company, 708 F.2d 1371 (9th Cir.1983), cert. denied, 465 U.S. 1021, 104 S.Ct. 1272, 79 L.Ed.2d 677 (1984). There we approved the use of a rather broad warrant where [i]t was not possible through more particular description to segregate those business records that would be evidence of fraud from those that would not, for the reason that there was probable cause to believe that fraud permeated the entire business operation....

Id. at 1374. Other circuits have approved such broadly defined warrants when this special circumstance exists. See, e.g., United States v. Brien, 617 F.2d 299, 308, 309 n. 11 (1st Cir.), cert. denied, 446 U.S. 919, 100 S.Ct. 1854, 64 L.Ed.2d 273 (1980) (affidavit showed that "entire operation was a scheme to defraud investors;" the "two hundred fifty complaints that surfaced could fairly be inferred to be only the tip of the iceberg"); National City Trading Corp. v. United States, 635 F.2d 1020, 1026 (2d Cir.1980) (affidavit demonstrated "probable cause to believe that NCTC's business was permeated with fraud").

In clarifying the nature of this exception, 50 State distinguished cases such as Cardwell--where a warrant allowing widespread seizure of business records was held to have violated the particularity requirement--because the investigations in such c...