U.S. v. Sdi Future Health, Inc.

• Decision Date: 27 January 2009
• Docket Number: No. 07-10261.,07-10261.
• Citation: 568 F.3d 684
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. SDI FUTURE HEALTH, INC.; Todd Stuart Kaplan; Jack Brunk, A, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

568 F.3d 684

UNITED STATES of America, Plaintiff-Appellant, v. SDI FUTURE HEALTH, INC.; Todd Stuart Kaplan; Jack Brunk, A, Defendants-Appellees.

No. 07-10261.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 13, 2008.

Filed January 27, 2009.

Amended June 1, 2009.

Robert L. Ellman, Appellate Chief, Office of the United States Attorney, Las Vegas, NV, argued the cause for the plaintiff-appellant and filed the briefs; Gregory A. Brower, United States Attorney, Las Vegas, NV, Steven W. Myhre, First Assistant United States Attorney, Las Vegas, NV, Michael Chu, Peter S. Levitt, Elizabeth A. Olson, Crane Pomerantz, and Roger W. Wenthe, Assistant United States Attorneys, Las Vegas, NV, were on the briefs.

Lance Etcheverry, Attorney, Skadden, Arps, Slate, Meagher & Flom LLP, argued the cause for the defendants-appellees; C. Stanley Hunterton, Hunterton & Associates, Thomas J. Nolan, Skadden, Arps, Slate, Meagher & Flom LLP, and Mark S. Hardiman, Hooper, Lundy & Bookman, Inc., filed the brief.

Albert Giang, Caldwell, Leslie & Proctor, P.C., Los Angeles, CA, filed a brief on behalf of amicus curiae the American Civil Liberties Union of Nevada in support of defendants-appellees' petition for rehearing en banc. Andrew Esbenshade and Arwen Johnson, Caldwell, Leslie & Proctor, Los Angeles, CA; and Allen Lichtenstein, American Civil Liberties Union of Nevada, Las Vegas, NV, were also on the brief.

Kevin P. Martin, Goodwin Procter LLP, Boston, MA, filed a brief on behalf of amicus curiae the National Association of Criminal Defense Lawyers in support of defendants-appellees' petition for rehearing en banc. Sheryl McCloud, the National Association of Criminal Defense Lawyers, Seattle, WA, was also on the brief.

Jason M. Skaggs, the Law Offices of Jason M. Skaggs, Palo Alto, CA, filed a brief on behalf of amici curiae the Association of Corporate Counsel and the Chamber of Commerce of the United States of America in support of defendants-appellees' petition for rehearing en banc. Susan Hackett, the Association of Corporate Counsel, Washington, D.C.; and Robin S. Conrad and Amar D. Sarwal, the National

Chamber Litigation Center, Inc., Washington, D.C., were also on the brief.

Appeal from the United States District Court for the District of Nevada, Philip M. Pro, District Judge, Presiding. D.C. No. CR-05-00078-PMP.

Before: DIARMUID F. O'SCANNLAIN, HAWKINS, and M. MARGARET McKEOWN, Circuit Judges.

ORDER MENDING OPINION AND AMENDED OPINION

ORDER

I

The opinion filed in this case on January 27, 2009, 553 F.3d 1246, is amended as follows. At page 933 of the slip opinion, 553 F.3d at 1250, add the following counsel to the counsel list:

Giang, Caldwell, Leslie & Proctor, P.C., Los Angeles, California, filed a brief on behalf of amicus curiae the American Civil Liberties Union of Nevada in support of defendants-appellees' petition for rehearing en banc. Andrew Esbenshade and Arwen Johnson, Caldwell, Leslie & Proctor, Los Angeles, California; and Allen Lichtenstein, American Civil Liberties Union of Nevada, Las Vegas, Nevada, were also on the brief.

Kevin P. Martin, Goodwin Procter LLP, Boston, Massachusetts, filed a brief on behalf of amicus curiae the National Association of Criminal Defense Lawyers in support of defendants-appellees' petition for rehearing en banc. Sheryl McCloud, the National Association of Criminal Defense Lawyers, Seattle, Washington, was also on the brief.

Jason M. Skaggs, the Law Offices of Jason M. Skaggs, Palo Alto, California, filed a brief on behalf of amici curiae the Association of Corporate Counsel and the Chamber of Commerce of the United States of America in support of defendants-appellees' petition for rehearing en banc. Susan Hackett, the Association of Corporate Counsel, Washington, D.C.; and Robin S. Conrad and Amar D. Sarwal, the National Chamber Litigation Center, Inc., Washington, D.C., were also on the brief.>

At page 943 of the slip opinion, line 17, after the citation <412 F.3d 1102, 1117 (9th Cir.2005) (emphasis added).> add a new sentence reading Gonzalez we focused on the close control that the owner-operators exercised over their small business, which happened to be family-run.&gt

At page 943 of the slip opinion, 553 F.3d at 1256, delete the paragraph beginning and replace with the following two paragraphs:

Gonzalez supports their claim of Fourth Amendment standing, but their argument rests on an overbroad reading of our opinion. We explicitly tied the defendants' standing to the "nature of the location." Id. at 1116. The defendants exercised, in the context of "a small, family-run business housing only 25 employees at its peak," "managerial control over [the] day-to-day operations" of the office where the conversations the wiretap "seized" took place, they owned the building where the office was located, and they not only could access the office but actually "exercised full access to the building." Id. at 1116-17. In our detailed factual analysis, therefore, we made clear that it does not suffice for Fourth Amendment standing merely to own a business, to work in a building, or to manage an office.

The facts in this case place SDI in a gray area outside the particular facts of Gonzalez, because at most Kaplan and Brunk managed and worked in the office of a business of which they were, together, controlling shareholders. SDI's headquarters is twice the size of the office at issue in Gonzalez. The magistrate judge's findings of fact, which the district court adopted, emphasize primarily two aspects of the role Kaplan and Brunk played at SDI. First, the magistrate judge noted that Kaplan and Brunk owned and had authority to set policy at SDI. He also pointed out that, in their directorial capacities, they put in place significant security measures at SDI's headquarters. These facts show that SDI, through Kaplan and Brunk, took steps to protect the privacy of its headquarters. But the magistrate judge's findings do not show that Kaplan and Brunk personally managed the operation of the office on a daily basis, only that they set its general policy as officers of SDI. Because Kaplan and Brunk personally exercised less control over the premises in question than did the defendants in Gonzalez, that precedent does not control here.>

At page 943 of the slip opinion, line 38, 553 F.3d at 1256, replace with

At page 945 of the slip opinion, line 10, 553 F.3d at 1257, delete

At page 949 of the slip opinion, line 9, 553 F.3d at 1259, delete footnote 9.

At page 949 of the slip opinion, immediately before Part III.A.2, 553 F.3d at 1259, insert a new paragraph and footnote as follows:

defendants argue that Vesikuru is distinguishable, because there we stated that "we learned at oral argument that in Washington State, contrary to the practice we usually see in federal court, the issuing judge routinely attaches the supporting affidavit, or `sworn complaint,' to the warrant, and that the issuing judge and the officers executing the warrant view the warrant and affidavit as one integrated document." Vesikuru, 314 F.3d at 1120. However, we do not read this passage as affecting the suitability of the words of reference. Although Vesikuru does not explicitly separate the two requirements, the passage is only logically applicable to the second prong of the Kow test, that "the affidavit either [be] attached physically to the warrant or at least accompan[y] the warrant while agents execute the search." 58 F.3d at 429 n. 3.¹>

At page 951 of the slip opinion, line 6, 553 F.3d at 1260, add a footnote at the end of the sentence ending The footnote should read course, nothing in this opinion affects the statutory obligation of the searching agents to leave a copy of the warrant and a receipt for property taken with "the person from whom, or from whose premises, the property was taken, or ... [left] where the officer took the property." Fed. R.Crim.P. 41(f)(1)(C). Defendants did not raise Rule 41(f) in their brief on appeal.>

II

The motions to become amicus curiae filed on February 27, 2009, by the National Association of Criminal Defense Lawyers, the Association of Corporate Counsel and Chamber of Commerce of the United States of America, and the American Civil Liberties Union of Nevada are, respectively, granted.

The panel has unanimously voted to deny the petition for rehearing and the petition for rehearing en banc. The full court has been advised of the petition for rehearing en banc and no active judge has requested a vote on whether to rehear the matter en banc. Fed. R.App. P. 35.

The petition for rehearing and the petition for rehearing en banc are DENIED. No further petitions for rehearing or rehearing en banc may be filed.

OPINION

O'SCANNLAIN, Circuit Judge:

We must decide whether corporate executives may challenge a police search of company premises not reserved for the executives' exclusive use.

I

A

After a nearly two-year investigation spearheaded by the Internal Revenue Service ("IRS") with the participation of four other federal and Nevada state agencies, investigators concluded that SDI Future Health, Inc. ("SDI"), a California corporation, had engaged in wide-ranging Medicare fraud. In addition, they believed that both SDI and Todd Stuart Kaplan, its president and part-owner, had committed extensive tax fraud. On January 28, 2002, based on the information obtained during the investigation, IRS Special Agent Julie Raftery applied for a warrant to search SDI's premises.

The warrant relied on an affidavit sworn by Raftery, which contained information she had learned from three former employees and two business associates of SDI.¹ The affidavit alleged that SDI, Kaplan and Jack Brunk, also an officer and part-owner of SDI, participated in a conspiracy with physicians and cardiac diagnostic companies to defraud the Medicare program, the Federal Employees Health Benefit Program, and private healthcare insurance carriers by seeking payment for services...