Scott v. United States

• Decision Date: 27 October 1983
• Docket Number: No. 81-3697,3-82-0076 and 3-82-0077.,81-3697
• Citation: 573 F. Supp. 622
• Parties: Homer Lee SCOTT v. UNITED STATES of America. Jack DICKENS v. UNITED STATES of America. Charles J. RESHA, III v. UNITED STATES of America.
• Court: U.S. District Court — Middle District of Tennessee

573 F. Supp. 622

Homer Lee SCOTT v. UNITED STATES of America.

Jack DICKENS v. UNITED STATES of America.

Charles J. RESHA, III v. UNITED STATES of America.

Nos. 81-3697, 3-82-0076 and 3-82-0077.

United States District Court, M.D. Tennessee, Nashville Division.

October 27, 1983.

Hugh C. Howser, Jr., Nashville, Tenn., for plaintiffs.

Robert E. Rice, Dept. of Justice, Washington, D.C., for defendant.

MEMORANDUM

WISEMAN, District Judge.

This action to recover the payment of wagering excise taxes, penalties, and interest¹ is before this Court on plaintiffs' motion for summary judgment. In their motion for summary judgment plaintiffs allege that the only evidence the Internal Revenue Service used in assessing the wagering tax at issue was obtained in violation of Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. §§ 2510-20, and that suppression of the evidence is the proper remedy for this violation. Defendant opposes this motion, asserts that disclosure was proper, and contends that even if disclosure were unauthorized the Court should not suppress the evidence.

I. Background

Pursuant to court order, the FBI conducted electronic surveillance of plaintiffs to investigate alleged gambling operations.² The information gained from the wiretap was used by the FBI to obtain search warrants for the premises of several individuals, including plaintiffs. Agents seized various documents during the search, but plaintiffs have never been indicted or tried for any of the offenses designated in the wiretap order or search warrants. Nevertheless, local newspaper accounts of the raids aroused the curiosity of IRS agents, working in the Excise Tax Division, who inquired of the FBI about the information obtained in the search. Individuals engaged in wagering must pay an excise tax pursuant to 26 U.S.C. § 4401 et seq., which plaintiffs had done. The IRS agents, however, wanted to investigate whether plaintiffs had paid the proper amount of tax. The FBI allowed the IRS agents to photocopy documents seized and from these documents the agents computed the additional assessment at issue in this case.

Plaintiffs objected to the assessments and filed protests with the IRS. In addition, plaintiffs filed suit for declaratory and injunctive relief in the Middle District of Tennessee, but their cause was dismissed for violation of the Anti-Injunction Act, 26 U.S.C. § 7421. The Sixth Circuit affirmed, Dickens v. United States, 671 F.2d 969 (6th Cir.1982).³ Plaintiffs subsequently paid a portion of the assessment to the IRS and filed a protest, which was unanswered. This suit was then filed to recover the amount paid with interest, and costs including attorney fees. The complaint alleges first that the taxes were illegally assessed because they were based on information disclosed in violation of 18 U.S.C. § 2517, and second that 18 U.S.C. § 2515 requires suppression of the evidence obtained through the unauthorized disclosure. Defendants counterclaimed for the assessed taxes that remain unpaid. Plaintiffs then filed this motion for summary judgment.

This action is ripe for summary judgment because the determining issue is a legal rather than a factual one. Both parties essentially agree that whether or not the evidence obtained by the IRS from the FBI is suppressed will determine the lawsuit. Without the evidence the IRS cannot meet its burden of proving the plaintiffs' tax liability. Griffin v. United States, 588 F.2d 521, 528 (5th Cir.1979).

Accordingly, and for the reasons stated below, this Court holds that the disclosure by the FBI to the IRS violates 18 U.S.C. § 2517 and that this violation merits suppression of the evidence disclosed. Consequently, the Court grants plaintiffs summary judgment and awards them the relief requested.

II. Disclosure Under Title III

Title III effectively prohibits all electronic surveillance not specifically provided for in the Act. S.Rep. No. 1097, reprinted in 2 U.S.Code Cong. & Admin.News 1968, 90th Cong., 2d Sess., 2112, at p. 2113; United States v. Giordano, 416 U.S. 505, 514, 94 S.Ct. 1820, 1826, 40 L.Ed.2d 341, 353 (1974). Inherent in that prohibition is a corresponding prohibition on the use of evidence obtained by electronic surveillance. See Title III, Pub.L. No. 90-351, § 801(b), 82 Stat. 211 (1968) (congressional statement of findings). Plaintiffs contend that the disclosure of surveillance evidence by the FBI to the IRS violates section 2517 of Title III. Defendant's position is that the disclosure is authorized in Title III by both section 2517(1) and section 2517(2).

Section 2517(1) provides:

(1) Any investigative or law enforcement officer who, by any means authorized by this chapter 18 U.S.C. §§ 2510 et seq., has obtained knowledge of the contents of any wire or oral communication, or evidence derived therefrom, may disclose such contents to another investigative or law enforcement officer to the extent that such disclosure is appropriate to the proper performance of the official duties of the officer making or receiving the disclosure.

Defendant argues that the FBI agent who disclosed the information and the IRS agent who received it are both investigative or law enforcement officers and that the disclosure was appropriate to the proper performance of the duties of either officer. In direct support of its position defendant cites United States v. Iannelli, 477 F.2d 999 (3d Cir.1973), aff'd on other grounds, 420 U.S. 770, 95 S.Ct. 1284, 43 L.Ed.2d 616 (1975).⁴ The Third Circuit Court of Appeals in Iannelli concludes without explanation that "Internal Revenue Service agents are investigative or law enforcement officers within the meaning of 18 U.S.C. § 2510(7) and disclosure was appropriate to the performance of their duties. 18 U.S.C. § 2517(1)." Iannelli, supra, at 1001. This Court disagrees.⁵

Section 2510(7) of Title III specifically defines "investigative or law enforcement officer" to mean

any officer of the United States or of a State or political subdivision thereof, who is empowered by law to conduct investigations of or to make arrests for offenses enumerated in this chapter 19 U.S.C. §§ 2510 et seq., and any attorney authorized by law to prosecute or participate in the prosecution of such offenses.

This provision clearly limits the officials authorized to make or receive § 2517(1) disclosures by defining investigative or law enforcement officer in terms of the enumerated offenses in section 2516, none of which concerns a violation of the Internal Revenue Code. To ignore the clear meaning of that limitation renders nugatory both section 2510(7) and section 2517.⁶

Defendant also argues that section 2517(2) authorizes the FBI disclosure in this case. Section 2517(2) provides:

(2) Any investigative or law enforcement officer who, by any means authorized by this chapter 18 U.S.C. §§ 2510 et seq., has obtained knowledge of the contents of any wire or oral communication or evidence derived therefrom may use such contents to the extent such use is appropriate to the proper performance of his official duties.

Defendant argues that an FBI agent may be said to be properly performing his duties by disclosing information relevant to the enforcement of the tax laws to the IRS. This argument fails for two reasons. First, if this disclosure were intended to be within the performance of the officer's duties in section 2517(2), then section 2517(1) would be totally unnecessary. Why would Congress limit disclosure in section 2517(1) only to throw it wide open in section 2517(2)? The only logical conclusion is that disclosure is not included in the definition of "use" as it is intended in section 2517(2). "Use" in section 2517(2) means use in the officer's own departmental investigation and prosecution. In the legislative history to Title III, Congress states that section 2517(2) "envisions use of the contents of intercepted communications, for example, to establish probable cause for arrest, to establish probable cause to search, or to develop witnesses." S.Rep. No. 1097, supra, at 2188 (citations omitted). The provision does not envision disclosure to any government official who happens to knock on the door.

Second, to extend the authorized disclosure of surveillance evidence beyond that defined in section 2517(1) would authorize unconstitutional invasions of privacy. The constitutional framework for Title III was derived from Berger v. New York, 388 U.S. 41, 87 S.Ct. 1873, 18 L.Ed.2d 1040 (1967), and Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967).⁷ The Supreme Court in both Berger and Katz stated that it had approved the electronic surveillance in Osborn v. United States, 385 U.S. 323, 87 S.Ct. 429, 17 L.Ed.2d 394 (1966), because "no greater invasion of privacy was permitted than was necessary under the circumstances." Berger, supra, 388 U.S. at 56-57, 87 S.Ct. at 1882; Katz, supra, 389 U.S. at 355, 88 S.Ct. at 513. Title III drafters balanced law enforcement interests and personal privacy interests as guaranteed by the fourth amendment in constructing a statute within the limits prescribed by Berger and Katz. The Supreme Court in Berger stated that the basic purpose of the fourth amendment, "as recognized in countless decisions of this Court, is to safeguard the privacy and security of individuals against arbitrary invasions by government officials." Berger, supra, 388 U.S. at 53, 87 S.Ct. at 1880. Plaintiffs in this case had a protected privacy interest in their communications guaranteed by both the fourth amendment and Title III.⁸ Title III and the fourth amendment allow invasions of that privacy for very particular and specific law enforcement uses as defined in a judicially authorized warrant.⁹ The FBI in this case was judicially authorized to invade the plaintiffs' privacy to investigate violations of specific gambling laws. Plaintiffs retain a privacy interest in their communications for all other purposes. For the...