United States v. Sdi Future Health ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,  No. 07-10261
Plaintiff-Appellant, D.C. No.
v. CR-05-00078-PMP
SDI FUTURE HEALTH, INC.; TODD  ORDER
STUART KAPLAN; JACK BRUNK, AMENDING
Defendants-Appellees. OPINION AND
AMENDED
 OPINION
Appeal from the United States District Court
for the District of Nevada
Philip M. Pro, District Judge, Presiding
Argued and Submitted
May 13, 2008—San Francisco, California
Filed January 27, 2009
Amended June 1, 2009
Before: Diarmuid F. O’Scannlain, Michael Daly Hawkins,
and M. Margaret McKeown, Circuit Judges.
Opinion by Judge O’Scannlain
6395
UNITED STATES v. SDI FUTURE HEALTH 6399
COUNSEL
Robert L. Ellman, Appellate Chief, Office of the United
States Attorney, Las Vegas, Nevada, argued the cause for the
plaintiff-appellant and filed the briefs; Gregory A. Brower,
United States Attorney, Las Vegas, Nevada, Steven W.
Myhre, First Assistant United States Attorney, Las Vegas,
Nevada, Michael Chu, Peter S. Levitt, Elizabeth A. Olson,
Crane Pomerantz, and Roger W. Wenthe, Assistant United
States Attorneys, Las Vegas, Nevada, 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,
California, filed a brief on behalf of amicus curiae the Ameri-
can 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, Massachu-
setts, filed a brief on behalf of amicus curiae the National
6400 UNITED STATES v. SDI FUTURE HEALTH
Association of Criminal Defense Lawyers in support of
defendants-appellees’ petition for rehearing en banc. Sheryl
McCloud, the National Association of Criminal Defense Law-
yers, 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 Com-
merce 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.
ORDER
I
The opinion filed in this case on January 27, 2009, is
amended as follows.
At page 933 of the slip opinion, add the following counsel
to the counsel list:

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
At page 943 of the slip opinion, delete the paragraph begin-
ning and replace with the fol-
lowing two paragraphs:
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
6402 UNITED STATES v. SDI FUTURE HEALTH
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 Gonza-
lez. 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, replace
with
At page 945 of the slip opinion, line 10, delete <, family-
run>
At page 949 of the slip opinion, line 9, delete footnote 9.
At page 949 of the slip opinion, immediately before Part
III.A.2, insert a new paragraph and footnote as follows:

At page 951 of the slip opinion, line 6, add a footnote at the
end of the sentence ending The footnote
should read 344 F.3d 1010 (9th Cir. 2003),
does not require a contrary result. In Bridges, an Attachment to the war-
rant mentioned the associated affidavit: “Based on the facts as presented
in the Affidavit for Search Warrant. . . .” Id. at 1017. When later consider-
ing whether the affidavit could cure the warrant’s failure to describe the
specific criminal activity suspected by the government, the panel noted,
without any discussion, that “the warrant neither incorporates the Affidavit
by reference, nor is a copy of the Affidavit physically attached to the war-
rant or any of its incorporated parts.” Id. at 1018. Because the affidavit
also failed the second prong of Kow in that it was not attached to or did
not accompany the warrant, any determination regarding incorporation
was not necessary to the result in Bridges. Moreover, unlike Vesikuru,
Bridges contains absolutely no discussion or analysis regarding suitable
words of incorporation, perhaps because in Bridges it was an attachment
to the warrant which referenced the affidavit rather than the warrant itself.
We cannot know for sure because of the cursory nature of the conclusion
that there was no incorporation. As we have explained, “not every state-
ment of law in every opinion is binding on later panels. Where it is clear
that a statement is made casually and without analysis . . . or where it is
merely a prelude to another legal issue that commands the panel’s full
attention, it may be appropriate to re-visit the issue in a later case.” United
States v. Johnson, 256 F.3d 895, 915 (9th Cir. 2001) (en banc).
6404 UNITED STATES v. SDI FUTURE HEALTH
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 Law-
yers, 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 chal-
lenge 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
UNITED STATES v. SDI FUTURE HEALTH 6405
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 physi-
cians and cardiac diagnostic companies to defraud the Medi-
care program, the Federal Employees Health Benefit
Program, and private healthcare insurance carriers by seeking
payment for services that SDI never rendered. According to
the affidavit, they sometimes billed twice for such services
and made kickback payments to physicians who participated
in the scheme. It alleged specifically that SDI employees who
were placed in participating doctors’ offices would induce
patients to participate in a sleep study. While cardiac diagnos-
tic companies affiliated with SDI would purport to complete
a report of the results of each sleep study, officers of SDI
would instead affix a signature stamp bearing the signatures
of staff physicians on reports that other SDI employees had
actually completed. Referring physicians were instructed to
bill for time spent reviewing the reports, a task the physicians
never actually performed. Frequently, SDI would then recom-
1
While this is an appeal from the district court’s grant of the defendants’
motion to suppress, the defendants also filed a motion for a Franks hear-
ing, alleging that investigators engaged in material misrepresentations and
omissions in obtaining the warrant. See generally Franks v. Delaware, 438
U.S. 154 (1978). After granting the defendants’ motion to suppress in its
entirety, the district court denied the Franks motion as moot. Accordingly,
we presume that the factual allegations in the government’s affidavit are
true.
6406 UNITED STATES v. SDI FUTURE HEALTH
mend that a patient participate in further studies, usually in
cases where the patient’s health insurer would pay for them.
The affidavit also revealed incidents of alleged tax fraud.
It noted that Kaplan and his wife reported negative gross
income and, consequently, paid no taxes in the years 1996,
1998 and 1999, and reported relatively low income in 1997
and 2000. During the same period, however, the couple pur-
chased several expensive automobiles and watercraft and sup-
ported a home mortgage. This discrepancy, according to the
affidavit, provided the probable cause to support the investi-
gators’ belief that Kaplan and his wife substantially under-
reported their gross income during those years. The govern-
ment also alleged that SDI had violated federal tax laws by
under-reporting its sales revenue and its income at least for
the years 1996-2000.
The government submitted a proposed warrant with its affi-
davit. Appendix A of the warrant stated that the premises to
be searched were SDI’s corporate headquarters, principal
business offices, and computers. Appendix B provided 24 cat-
egories of items to be seized and gave specific instructions
concerning retrieving and handling of electronic data and
other technical equipment.2
(Text continued on page 6408)
2
The categories of items to be seized are as follows:
1. Documents relating to patient lists;
2. Documents relating to billing procedures, billing manuals,
and billing materials;
3. Documents relating to lists of referring physicians both
active and inactive;
4. Documents relating to billing records and records of pay-
ments received;
5. Documents relating to contracts or “purchase service agree-
ments” with referring physicians;
6. Documents relating to contracts and agreements with cardiac
diagnostic companies;
UNITED STATES v. SDI FUTURE HEALTH 6407
7. Documents relating to non-privileged correspondence with
consultants;
8. Documents relating to correspondence with Medicare inter-
mediaries and private insurance companies;
9. Documents relating to non-privileged internal memoranda
and E-mail;
10. Documents relating to bank accounts, brokerage accounts,
trusts;
11. Checking, savings, and money market account records
including check registers, canceled checks, monthly state-
ments, wire transfers, and cashier’s checks;
12. Documents relating to personnel and payroll records;
13. Documents relating to accounting records;
14. Patient records including patient questionnaires, sleep study
referrals, results of cardiac risk assessment tests, results of
sleep studies, and sleep study reports;
15. Documents relating to raw sleep study data;
16. Documents relating to all state and federal income tax
returns including personal, corporate, trust, estate, and part-
nership, and information relating to the preparation of those
returns for the following: (a) Todd Stuart Kaplan, (b)
Denise Kaplan, (c) SDI;
17. Signature stamps for Dr. Gavin Awerbuch, Dr. Susan
Sprau, and any other physician signature stamps;
18. Computer zip discs containing sleep study data;
19. Documents relating to mailing or shipping records between
physicians and SDI;
20. Documents relating to employee training materials regard-
ing health service coordinator (“HSC”) program, cardiac
risk assessment program, and/or physician practice
enhancement program;
21. Documents relating to presentations and/or training materi-
als used to solicit patient referrals from physicians, and/or
placement of HSCs in the physician’s offices;
6408 UNITED STATES v. SDI FUTURE HEALTH
A magistrate judge took approximately two hours to review
the government’s affidavit and proposed warrant. He ulti-
mately concluded that probable cause existed for the search
and agreed to issue the proposed search warrant, on the condi-
tion that both the affidavit and the search warrant be amended
to include protections for patients’ medical information. The
government made the requested revisions, and the magistrate
judge issued the warrant.
The day before the execution of the search warrant, Special
Agent Raftery met with the forty-two agents who would make
up the search team. She distributed copies of the affidavit and
gave them time to read it. She then conducted a “verbal brief-
ing,” explaining the probable cause for the search warrant and
“the items that [the search team was] searching for and the
items to be seized.” All members of the search team were to
have the cellular phone number of Special Agent Raftery dur-
ing the search.
The team executed the search early the following morning,
on January 31, 2002. Upon arriving at the scene, Special
Agent Raftery met with one of SDI’s executive officers and
delivered a copy of the search warrant, but not a copy of the
affidavit because it had been sealed by the district court. The
affidavit was, however, available to the members of the
search team. Kaplan also received a copy of the warrant, and
he consented to allow investigators to search an off-site stor-
age warehouse used by SDI.
B
About three years after the search, a federal grand jury in
the District of Nevada returned an indictment charging SDI,
22. Holter monitor tapes containing cardiac monitor data;
23. Documents relating to material that provides instructions or
examples concerning the operation of the computer system,
computer software, and/or related device; and
24. Rolodexes, address books and calendars.
UNITED STATES v. SDI FUTURE HEALTH 6409
Kaplan and Brunk with one count of conspiracy, in violation
of 18 U.S.C. § 371—specifically conspiracy to commit health
care fraud, in violation of 18 U.S.C. § 1347, and to provide
illegal kickback payments, in violation of 42 U.S.C. § 1320a-
7b(b); 124 counts of health care fraud, in violation of 18
U.S.C. § 1347; one count of illegal kickbacks, in violation of
42 U.S.C. § 1320a-7b(b); one count of conspiracy to commit
money laundering, in violation of 18 U.S.C.
§§ 1956(a)(1)(A)(i) and 1956(h); and three counts of attempt-
ing to evade or defeat taxes, in violation of 26 U.S.C. § 7201.
Additionally, Kaplan and Brunk were each individually
indicted for three and four counts, respectively, of attempting
to evade or defeat taxes, in violation of 26 U.S.C. § 7201. The
indictment also alleged three counts of forfeiture for the pro-
ceeds of health care fraud and money laundering, under 18
U.S.C. §§ 24, 982(a)(7), 982(a)(1), and 1347.
On December 2, 2005, SDI, Kaplan and Brunk (collec-
tively “the defendants”) filed a motion to suppress evidence
obtained from the search warrant, arguing that the warrant
was vague and overbroad in violation of the Fourth Amend-
ment. On June 26, 2006, a magistrate judge entered a Find-
ings and Recommendation, in which he recommended that the
motion to suppress be granted in part.
On April 4, 2007, the district court adopted the magistrate
judge’s factual findings, but entered an order granting the
defendants’ motion to suppress in full rather than in part. The
district court first held that Kaplan and Brunk had standing to
challenge the search of SDI’s business premises, because they
“had significant ownership interests in SDI,” “exercised a
high level of authority over the operations of the company
including the authority to set and control policy regarding
access to SDI’s business records and computer systems,”
“maintained offices at SDI’s corporate headquarters and were
present during the execution of the Search Warrant,” and
because SDI “maintained a level of security and confiden-
6410 UNITED STATES v. SDI FUTURE HEALTH
tially [sic] practices regarding its premises and records that
one would reasonably expect of a health care provider.”
The district court concluded that items 7, 9-13, and 24 of
the search warrant were overbroad and lacked sufficient par-
ticularity because “[t]he search warrant did not limit these
general categories of business documents and financial
records to the seizure of records relating to the criminal activ-
ity described in the affidavit,” and because they lacked “any
time restriction.” Similarly, the district court noted that items
2, 4, 8, and 19, of the search warrant were “borderline in
acceptability,” but nevertheless violated the Fourth Amend-
ment because “some additional description could and should
have been provided regarding these categories.” Lastly, the
district court concluded that the “good faith exception” did
not apply in this case based on its conclusion that the affidavit
was not incorporated into the warrant. Without the affidavit,
the court concluded, the agents’ reliance on the warrant alone
was not objectively reasonable, since it “did not contain any
description of the alleged criminal activity relating to the
listed categories of documents.”
On May 3, 2007, the United States timely sought an inter-
locutory appeal of the district court’s order.
II
The government first argues that Kaplan and Brunk lack
standing to challenge the search and seizure of materials from
SDI’s premises.3 According to the government, their mere
3
Wisely, the government does not argue that SDI itself lacks standing
to challenge the underlying search and seizure. See United States v. Leary,
846 F.2d 592, 596 (10th Cir. 1988) (“[A] corporate defendant has standing
with respect to searches of corporate premises and seizure of corporate
records.” (internal citation and quotation marks omitted)). We therefore
only consider the Fourth Amendment standing of Kaplan and Brunk. Inso-
far as they do indeed lack standing, all evidence is admissible as to
charges against them. By contrast, insofar as we affirm the district court’s
suppression of some evidence, such evidence will be inadmissible against
SDI. Standing, therefore, makes a difference in this case.
UNITED STATES v. SDI FUTURE HEALTH 6411
ownership and management of SDI, and the steps SDI took to
preserve the security of its business files, are inadequate to
support the conclusion that Kaplan and Brunk personally had
an expectation of privacy in the searched areas and seized
materials. While “[i]t has long been settled that one has stand-
ing to object to a search of his office, as well as of his home,”
Mancusi v. DeForte, 392 U.S. 364, 369 (1968), this case pre-
sents the novel issue of the extent to which a business
employee may have standing to challenge a search of business
premises generally.
A
[1] The Fourth Amendment ensures that “[t]he right of the
people to be secure in their persons, houses, papers, and
effects, against unreasonable searches and seizures, shall not
be violated, and no Warrants shall issue, but upon probable
cause, supported by Oath or affirmation, and particularly
describing the place to be searched, and the persons or things
to be seized.” U.S. Const. amend. IV. A person has standing
to sue for a violation of this particular “right of the people”
only if there has been a violation “as to him,” personally.
Mancusi, 392 U.S. at 367. In other words, Fourth Amendment
standing, unlike Article III standing, “is a matter of substan-
tive [F]ourth [A]mendment law; to say that a party lacks
[F]ourth [A]mendment standing is to say that his reasonable
expectation of privacy has not been infringed.” United States
v. Taketa, 923 F.2d 665, 669 (9th Cir. 1991). This follows
from the Supreme Court’s famous observation that the Fourth
Amendment “protects people, not places,” Katz v. United
States, 389 U.S. 347, 351 (1967).
[2] To show the government has violated his Fourth
Amendment rights, an individual must have “a legitimate
expectation of privacy in the invaded place,” United States v.
Crawford, 323 F.3d 700, 706 (9th Cir. 2003) (internal quota-
tion marks and citations omitted). Defendants must demon-
strate “a subjective expectation of privacy in the area
6412 UNITED STATES v. SDI FUTURE HEALTH
searched, and their expectation must be one that society
would recognize as objectively reasonable.” United States v.
Sarkisian, 197 F.3d 966, 986 (9th Cir. 1999).
[3] As a logical extension of this approach, “[p]roperty
used for commercial purposes is treated differently for Fourth
Amendment purposes from residential property.” Minnesota
v. Carter, 525 U.S. 83, 90 (1998) (plurality opinion); see also
New York v. Burger, 482 U.S. 691, 700 (1987) (“An expecta-
tion of privacy in commercial premises . . . is different from,
and indeed less than, a similar expectation in an individual’s
home.”).4 Of course, individuals may still have a “reasonable
expectation of privacy against intrusions by police” into their
offices. O’Connor v. Ortega, 480 U.S. 709, 716 (1987)
(“Within the workplace context, . . . an expectation [of pri-
vacy] in one’s place of work is based upon societal expecta-
tions that have deep roots in the history of the Amendment.”
(internal quotation marks and citations omitted)). But, unlike
the nearly absolute protection of a residence, the “great vari-
ety of work environments” requires analysis of reasonable
expectations “on a case-by-case basis.” Id. at 718.
4
The government makes much of the related Colonnade-Biswell doc-
trine, under which an expectation of privacy is substantially limited where
the premises searched is a business engaged in a “closely-regulated”
industry. Marshall v. Barlow’s, Inc., 436 U.S. 307, 313 (1978) (“Certain
industries have such a history of government oversight that no reasonable
expectation of privacy . . . could exist for a proprietor over the stock of
such an enterprise.” (citing United States v. Biswell, 406 U.S. 311 (1972)
(recognizing the exception in the firearms industry) and Colonnade Cater-
ing Corp. v. United States, 397 U.S. 72 (1970) (same in the liquor indus-
try)). However, this doctrine applies only to administrative searches. See
United States v. Aukai, 497 F.3d 955, 959 (9th Cir. 2007) (en banc); cf.
Griffin v. Wisconsin, 483 U.S. 868, 877-78 (1987) (distinguishing the
probable cause requirements for administrative searches and criminal
searches of closely-regulated businesses). Accordingly, the government’s
reliance on United States v. Chuang, 897 F.2d 646 (2d Cir. 1990), which
applied the doctrine in the context of the search of a bank building by the
Office of Comptroller of Currency, is unavailing.
UNITED STATES v. SDI FUTURE HEALTH 6413
[4] Our precedents provide numerous guideposts, however.
For starters, it is crucial to Fourth Amendment standing that
the place searched be “given over to [the defendant’s] exclu-
sive use.” Schowengerdt v. General Dynamics Corp., 823
F.2d 1328, 1335 (9th Cir. 1987). We have thus held that mere
access to, and even use of, the office of a co-worker “does not
lead us to find an objectively reasonable expectation of priva-
cy.” Taketa, 923 F.2d at 671. By the same token, we have
rejected managerial authority alone as sufficient for Fourth
Amendment standing. In United States v. Cella, we held the
corporate officer of a hospital, whom we described as the “de
facto controlling force in [its] management,” did not have
standing to challenge the seizure of records from the hospital
print shop. 568 F.2d 1266, 1270, 1283 (9th Cir. 1977). Even
though the defendant “had access to and control of the print
shop operations, his rights did not include any expectation of
privacy over documents which were kept at the print shop
premises but over which [he] did not show an independent
possessory or proprietary interest.” Id. at 1283.
[5] It thus appears that an employee of a corporation,
whether worker or manager, does not, simply by virtue of his
status as such, acquire Fourth Amendment standing with
respect to company premises. Similarly, and notwithstanding
the reference to “an independent . . . proprietary interest” in
Cella, to be merely a shareholder of a corporation, without
more, is also not enough.5 As always, a reasonable expecta-
5
The Second Circuit summarized this point memorably in language
quoted heavily by this and other circuits:
When a man chooses to avail himself of the privilege of doing
business as a corporation, even though he is its sole shareholder,
he may not vicariously take on the privilege of the corporation
under the Fourth Amendment; documents which he could have
protected from seizure, if they had been his own, may be used
against him, no matter how they were obtained from the corpora-
tion. Its wrongs are not his wrongs; its immunity is not his immu-
nity.
Hill v. United States, 374 F.2d 871, 873 (9th Cir. 1967) (quoting Lagow
v. United States, 159 F.2d 245, 246 (2d Cir. 1946) (per curiam)).
6414 UNITED STATES v. SDI FUTURE HEALTH
tion of privacy does not arise ex officio, but must be estab-
lished with respect to the person in question.
We took this approach in United States v. Gonzalez, in
which we held that the directors of a small, family-run corpo-
ration had standing to challenge a wiretap in one of the com-
pany’s buildings. That holding relied on the facts of the case:
[W]e simply hold that because the [defendants] were
corporate officers and directors who not only had
ownership of the [premises] but also exercised full
access to the building as well as managerial control
over its day-to-day operations, they had a reasonable
expectation of privacy over calls made on the prem-
ises.
412 F.3d 1102, 1117 (9th Cir. 2005) (emphasis added). Thus,
in Gonzalez we focused on the close control that the owner-
operators exercised over their small business, which happened
to be family-run.
Kaplan and Brunk argue that 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 “exer-
cised 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
UNITED STATES v. SDI FUTURE HEALTH 6415
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 Gonza-
lez. 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.
Thus, although our precedents provide a basic outline, we
are left with little case law directly on point. Exclusive use of
an office may be sufficient, Schowengerdt, 823 F.2d at 1335
and Mancusi, 392 U.S. at 369, but Gonzalez illustrates that it
is not necessary. Between the lines these three cases draw, it
is unclear in which premises and materials belonging to a cor-
poration a corporate employee has a legitimate expectation of
privacy. One of our sister circuits, however, has crafted a bal-
ancing test that we believe helps to fill in the gap.
In United States v. Anderson, the Tenth Circuit laid out a
test to deal with situations in which a corporate employee
does not work on a regular basis in the area searched. See 154
F.3d 1225, 1230-32 (10th Cir. 1998). Given our case law,
Anderson suggests three factors a court should consider in
cases where an employee has not established that the area
searched is “given over to [his] exclusive use.” See
Schowengerdt, 823 F.2d at 1335. The Tenth Circuit’s Ander-
son test looks to “(1) the employee’s relationship to the item
6416 UNITED STATES v. SDI FUTURE HEALTH
seized; (2) whether the item was in the immediate control of
the employee when it was seized; and (3) whether the
employee took actions to maintain his privacy in the item.”6
Anderson, 154 F.3d at 1232.
Though phrased vaguely, the first factor really addresses
whether the item seized was personal property without any
relationship to work. Id. at 1231 (noting that although
“[o]wnership of an item does not confer automatic standing[,]
. . . property ownership is a factor to be considered in deter-
mining whether an individual’s Fourth Amendment rights
have been violated” (internal quotation marks and citation
omitted)). In addition, we note that the third factor involves
actions the employee takes on his own behalf, not as an agent
of the corporation. See id. at 1232; see also O’Connor, 480
U.S. at 716 (noting that an employee has a reasonable expec-
tation of privacy in the contents of closed personal luggage in
his office) (emphasis added); United States v. Mancini, 8 F.3d
104, 110 (1st Cir. 1993) (emphasizing that the defendant
“took steps to assure that no one would have access to his
files without his prior authorization [and] . . . that [his]
belongings were clearly labeled and were segregated from
other items in the secured archive attic.”).
[6] Reading Anderson alongside our own precedent, we
conclude that, except in the case of a small business over
which an individual exercises daily management and control,
an individual challenging a search of workplace areas beyond
his own internal office must generally show some personal
connection to the places searched and the materials seized. To
adapt Anderson, although all the circumstances remain rele-
vant, we will specifically determine the strength of such per-
sonal connection with reference to the following factors: (1)
6
We note that Anderson did not limit the analysis to these three factors.
Indeed, the Tenth Circuit stated that it would consider “all of the relevant
circumstances,” which included the three factors which we find instructive
in this case. Anderson, 154 F.3d at 1232.
UNITED STATES v. SDI FUTURE HEALTH 6417
whether the item seized is personal property or otherwise kept
in a private place separate from other work-related material;7
(2) whether the defendant had custody or immediate control
of the item when officers seized it; and (3) whether the defen-
dant took precautions on his own behalf to secure the place
searched or things seized from any interference without his
authorization.8 Absent such a personal connection or exclu-
sive use, a defendant cannot establish standing for Fourth
Amendment purposes to challenge the search of a workplace
beyond his internal office.
B
[7] The district court relied on three facts in concluding that
Kaplan and Brunk had Fourth Amendment standing: their
ownership of SDI, their management of SDI from offices in
the building searched, and the security measures SDI took to
secure its business records. Our review of relevant precedent
indicates that these facts are too broad and generalized to sup-
port the district court’s conclusion. The security measures that
SDI took to ensure the privacy of its business records are rele-
7
In light of the Supreme Court’s opinion in O’Connor, it cannot suffice
for Fourth Amendment standing to challenge the seizure of an item in the
workplace that the item is the personal property of an individual. See 480
U.S. at 715-16 (noting that “[t]he workplace includes those areas and
items that are related to work and are generally within the employer’s con-
trol,” such as “the hallways, cafeteria, offices, desks and file cabinets,”
“even if the employee has placed personal items in them, such as a photo-
graph placed in a desk”). Therefore, though personal ownership is impor-
tant, Supreme Court precedent precludes us from considering it sufficient
by itself to confer standing in this context.
8
We add that this list of factors is not exclusive, though it indicates what
kind of factors are relevant. The law of Fourth Amendment standing in
general, see Katz, 389 U.S. at 351; Taketa, 923 F.2d at 669, and of our
cases on employee standing in particular, see Gonzalez, 412 F.3d at 1116-
17; Cella, 568 F.2d at 1282-84; Hill, 374 F.2d at 872-73, emphasize that
a defendant must show a personal connection to the place searched and
item seized; therefore we will only consider factors that relate to such
inquiry.
6418 UNITED STATES v. SDI FUTURE HEALTH
vant only to the standing of the corporation itself, not of its
officers. As for Kaplan and Brunk, their ownership and man-
agement do not necessarily show a legitimate expectation of
privacy. See Hill, 374 F.2d at 873; Cella, 568 F.2d at 1283.
Because neither claims to enjoy “exclusive use” of the places
searched—that is, the entire SDI office—they each must show
a personal connection, along the lines we have drawn out of
Anderson, to justify an expectation of privacy.
[8] Lacking precedent on what is admittedly a novel issue
of law, the district court did not adequately develop the
record. Therefore, the district court’s grant of the motion to
suppress must be reversed and the matter remanded for fur-
ther fact-finding. It seems that none of the items seized were
the personal property of Kaplan or Brunk, nor were they in
the custody of either. Therefore, on remand, the district court
should focus its inquiry on, but need not confine it to, whether
either Kaplan or Brunk took measures, each on his or the
pair’s personal behalf, to keep the items private and segre-
gated from other general business materials. Of course,
Kaplan and Brunk do have standing to challenge the admis-
sion of any evidence obtained from their own personal, inter-
nal offices.
III
Regardless of whether Kaplan and Brunk have Fourth
Amendment standing, the government does not challenge the
standing of SDI itself. We therefore discuss the merits of
SDI’s challenge to the search, which focuses on the warrant.
SDI challenges the warrant as overbroad and lacking particu-
larity.
A
[9] Before addressing its contentions on the merits, we
must answer the threshold question of whether the warrant
incorporated Special Agent Raftery’s affidavit. See United
UNITED STATES v. SDI FUTURE HEALTH 6419
States v. Towne, 997 F.2d 537, 544 (9th Cir. 1993) (“Only
after the content of ‘the search warrant’ is established . . . can
the warrant be tested to see if it meets [the Fourth Amend-
ment’s] requirements.”). If it was incorporated, then we eval-
uate the affidavit and the warrant as a whole, allowing the
affidavit to “cure” any deficiencies in the naked warrant. Id.We consider an affidavit to be part of a warrant, and there-
fore potentially curative of any defects, “only if (1) the war-
rant expressly incorporated the affidavit by reference and (2)
the affidavit either is attached physically to the warrant or at
least accompanies the warrant while agents execute the
search.” United States v. Kow, 58 F.3d 423, 429 n.3 (9th Cir.
1995) (applying requirements with respect to overbreadth of
a warrant); see also United States v. Vesikuru, 314 F.3d 1116,
1120 (9th Cir. 2002) (applying requirements with respect to
the lack of particularity of a warrant).
Our analysis proceeds with the understanding that “[t]he
warrant requirement is a means of preventing arbitrary and
unreasonable invasions of privacy;” furthermore, “the search
warrant itself is the tangible evidence that precautions have
been taken to ensure that no such invasion has occurred.”
Towne, 997 F.2d at 548. The goal of the “cure by affidavit”
rule is to consider those affidavits that limit the “discretion of
the officers executing the warrant.” Id. at 545 (internal quota-
tion marks omitted). The two requirements of the rule, there-
fore, are designed to ensure that a would-be curative affidavit
fulfilled that function. Id. at 548 (“When the officer who
requests authorization for the search, the magistrate who
grants such authorization, and the officers who execute the
search expressly rely upon a given set of papers containing a
given series of words, they identify that set of papers and that
series of words as the proof that proper precautions were
taken to prevent an unreasonably invasive search. Fairness
and common sense alike demand that we test the sufficiency
of the precautions taken . . . by examining that evidence.”).
6420 UNITED STATES v. SDI FUTURE HEALTH
1
[10] A warrant expressly incorporates an affidavit when it
uses “ ‘suitable words of reference.’ ” See id. at 545 (quoting
United States v. Hillyard, 677 F.2d 1336, 1340 (9th Cir.
1982)). We have not defined precisely what verbiage is suit-
able for this purpose, Vesikuru, 314 F.3d at 1120 (noting that
“[n]one of our cases has addressed what ‘suitable words of
reference’ are required”); indeed “there are no required magic
words of incorporation.” Id. at 1121. However, in Vesikuru,
we held that “suitable words of reference” were used where
the “warrant explicitly stated: ‘Upon the sworn complaint
made before me there is probable cause to believe that the
[given] crime[ ] . . . has been committed.’ ” Id. at 1120
(emphasis in original).
[11] Such holding proves relevant to this case, because vir-
tually the same language was used in the search warrant here.
The warrant pointed to the affidavit explicitly, noting “the
supporting affidavit(s)” as the “grounds for application for
issuance of the search warrant.” The magistrate judge’s
conclusion—which the district court adopted—that these were
not suitable words of reference rested on his observation that
the government “could and should” have used more precise
language in this case. But our precedents do not require that
the government use the most precise language of reference
possible. Such language need only be “suitable.” See id. at
1121. In any event, the warrant in Vesikuru might also have
contained more explicit wording, but we still held the lan-
guage of reference in that case to suffice. Thus the similarity
of the language of reference in Vesikuru compels our holding
that the warrant here contained suitable language of reference
to the affidavit and therefore expressly incorporated it.
The 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 sup-
UNITED STATES v. SDI FUTURE HEALTH 6421
porting 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.3.9
2
[12] With respect to the second prong, there appears to be
no question that Special Agent Raftery and the search team
had copies of the affidavit in their possession when they exe-
cuted the warrant. Although it is unclear whether each mem-
ber of the team had his own copy as he conducted the search,
9
Our opinion in United States v. Bridges, 344 F.3d 1010 (9th Cir. 2003),
does not require a contrary result. In Bridges, an Attachment to the war-
rant mentioned the associated affidavit: “Based on the facts as presented
in the Affidavit for Search Warrant. . . .” Id. at 1017. When later consider-
ing whether the affidavit could cure the warrant’s failure to describe the
specific criminal activity suspected by the government, the panel noted,
without any discussion, that “the warrant neither incorporates the Affidavit
by reference, nor is a copy of the Affidavit physically attached to the war-
rant or any of its incorporated parts.” Id. at 1018. Because the affidavit
also failed the second prong of Kow in that it was not attached to or did
not accompany the warrant, any determination regarding incorporation
was not necessary to the result in Bridges. Moreover, unlike Vesikuru,
Bridges contains absolutely no discussion or analysis regarding suitable
words of incorporation, perhaps because in Bridges it was an attachment
to the warrant which referenced the affidavit rather than the warrant itself.
We cannot know for sure because of the cursory nature of the conclusion
that there was no incorporation. As we have explained, “not every state-
ment of law in every opinion is binding on later panels. Where it is clear
that a statement is made casually and without analysis . . . or where it is
merely a prelude to another legal issue that commands the panel’s full
attention, it may be appropriate to re-visit the issue in a later case.” United
States v. Johnson, 256 F.3d 895, 915 (9th Cir. 2001) (en banc).
6422 UNITED STATES v. SDI FUTURE HEALTH
the magistrate accepted Special Agent Raftery’s representa-
tion that “the affidavit was available during the search for ref-
erence by any member of the Government’s search team.” By
making the affidavit available, the search team ensured that it
“accompanied the warrant” to satisfy the requirements of
incorporation. Nothing more is necessary for the affidavit to
ensure “that the discretion of the officers executing the war-
rant is limited.” Towne, 997 F.2d at 548 (internal quotation
marks omitted).10
SDI argues that the failure of the search team to give a copy
of the affidavit to the defendants—which the government
concedes—means that the affidavit did not “accompany” the
warrant for purposes of this inquiry. Certainly some of our
precedents have held that the “purpose of the accompanying
affidavit . . . is both to limit the officer’s discretion and to
inform the person subject to the search what items the officers
executing the warrant can seize.” United States v. McGrew,
122 F.3d 847, 850 (9th Cir. 1997) (internal citation and quota-
tion marks omitted and emphasis removed); see also Towne,
997 F.2d at 548. Eliminating any doubt on this score, we held,
in United States v. Grubbs, that “our prior cases unambigu-
ously require officers to present any curative document . . . to
the persons whose property is to be subjected to the search.”
377 F.3d 1072, 1078-79 (9th Cir. 2004), rev’d by United
States v. Grubbs, 547 U.S. 90 (2006).
10
We have long since dispelled any lingering confusion in our case law
that the affidavit must be physically affixed to the search warrant. Towne,
997 F.2d at 544-48. We have also clarified that “[t]he documents that are
in fact relied upon to serve [the functions of a search warrant] simply are
the ‘search warrant’ for purposes of constitutional analysis.” Id. at 548(addressing the accompaniment requirement). It is true that the magistrate
judge questioned how much the search team actually relied on the affida-
vit to limit its search. As we discuss below, this was in the context of the
good faith exception, where the procedural posture in the district court was
different. In addition, we have never required actual reliance on an affida-
vit to meet the second prong for incorporation into a warrant.
UNITED STATES v. SDI FUTURE HEALTH 6423
[13] However, the Supreme Court overruled our decision.
Grubbs, 547 U.S. at 98-99. The Court explained that “[t]he
Constitution protects property owners not by giving them
license to engage the police in a debate over the basis for the
warrant, but by interposing, ex ante, the deliberate, impartial
judgment of a judicial officer between the citizen and the
police, and by providing, ex post, a right to suppress evidence
improperly obtained and a cause of action for damages.” Id.
at 99 (internal quotation and punctuation marks and citation
omitted). Because the Supreme Court has rejected our previ-
ous position, SDI’s argument that the Fourth Amendment
required the search team to provide all defendants a copy of
the affidavit fails.11 We therefore conclude that the warrant
did incorporate the affidavit.
B
Evaluating the warrant (including the affidavit) to deter-
mine whether it met the demands of the Fourth Amendment,
we start with the relevant language, which, of course, pro-
vides that “no Warrants shall issue, but upon probable cause
. . . and particularly describing the place to be searched, and
the persons or things to be seized.” U.S. Const. amend. IV.
Our cases describe this requirement as one of “specificity”
and we have distinguished its “two aspects”: “particularity
and breadth. . . . Particularity is the requirement that the war-
rant must clearly state what is sought. Breadth deals with the
requirement that the scope of the warrant be limited by the
probable cause on which the warrant is based.” In re Grand
Jury Subpoenas Dated Dec. 10, 1987, 926 F.2d 847, 856-57
(9th Cir. 1991) (internal citations omitted).
11
Of course, nothing in this opinion affects the statutory obligation of
the searching agents to leave a copy of the warrant and a receipt for prop-
erty 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.
6424 UNITED STATES v. SDI FUTURE HEALTH
1
Particularity means that “the warrant must make clear to
the executing officer exactly what it is that he or she is autho-
rized to search for and seize.” Id. at 857. “ ‘The description
must be specific enough to enable the person conducting the
search reasonably to identify the things authorized to be
seized.’ ” United States v. Smith, 424 F.3d 992, 1004 (9th Cir.
2005) (alteration removed) (quoting United Sates v. Spilotro,
800 F.2d 959, 963 (9th Cir. 1986)). “However, the level of
detail necessary in a warrant is related to the particular cir-
cumstances and the nature of the evidence sought.” United
States v. Adjani, 452 F.3d 1140, 1147 (9th Cir. 2006). Indeed,
“[w]arrants which describe generic categories of items are not
necessarily invalid if a more precise description of the items
subject to seizure is not possible.” Spilotro, 800 F.2d at 963.
[14] Particularity is not the problem with the warrant in this
case. Even the most troubling items on the list, such as
“[r]olodexes, address books and calendars,” are particular in
that they “enable the person conducting the search reasonably
to identify the things authorized to be seized.” Smith, 424
F.3d at 1004 (internal quotation marks omitted). The officers
could tell from the warrant that, should they happen upon a
rolodex, they should seize it. Because the warrant was not
vague as to what it directed law enforcement officers to
search for and to seize, we are satisfied that it did not lack
particularity for Fourth Amendment purposes.
The district court only made one inquiry, which explicitly
conflated particularity and overbreadth. The court found that
the warrant “at issue here was unconstitutionally overbroad
because the lack of particularity provided no guidance in lim-
iting the search and no direction to government agents regard-
ing the purpose of the search or what types of records were
within its scope.” This error is quite understandable, given
that some of our own opinions have been unclear on the dif-
ference between particularity and overbreadth. However, we
UNITED STATES v. SDI FUTURE HEALTH 6425
now insist that particularity and overbreadth remain two dis-
tinct parts of the evaluation of a warrant for Fourth Amend-
ment purposes.
2
a
A warrant must not only give clear instructions to a search
team, it must also give legal, that is, not overbroad, instruc-
tions. Under the Fourth Amendment, this means that “there
[must] be probable cause to seize the particular thing[s]
named in the warrant.”12 In re Grand Jury Subpoenas, 926
F.2d at 857. “[P]robable cause means a fair probability that
contraband or evidence of a crime will be found in a particu-
lar place, based on the totality of circumstances.” United
States v. Diaz, 491 F.3d 1074, 1078 (9th Cir. 2007) (internal
quotation marks omitted); see United States v. Gourde, 440
F.3d 1065, 1069 (9th Cir. 2006) (en banc) (“[P]robable cause
means ‘fair probability,’ not certainty or even a preponder-
ance of the evidence.”). “The number of files that could be
scrutinized . . . is not determinative. The search and seizure
of large quantities of material is justified if the material is
within the scope of the probable cause underlying the war-
rant.” United States v. Hayes, 794 F.2d 1348, 1355 (9th Cir.
1986).
12
Although we have historically preferred that a warrant describe the
specific crimes of which the government suspects the defendants, see e.g.,
Kow, 58 F.3d at 427, the Supreme Court’s recent Grubbs opinion may
affect that preference. Grubbs, 547 U.S. at 98 (internal quotation marks
omitted) (observing that the Fourth Amendment “specifies only two mat-
ters that must be ‘particularly describ[ed]’ in the warrant: ‘the place to be
searched’ and ‘the persons or things to be seized[;]’ [and that the Court
has] previously rejected efforts to expand the scope of this provision to
embrace unenumerated matters”). We decline to consider here the effect
of this language because the warrant incorporated the affidavit, which did
describe the specific crimes the government suspected the defendants of
committing.
6426 UNITED STATES v. SDI FUTURE HEALTH
b
We turn now to the specific items with respect to which the
district court found the warrant invalid, keeping in mind the
warrant’s incorporation of the affidavit. First, the district
court, adopting the findings and recommendations of the mag-
istrate judge, pointed to four categories of materials that it
concluded were “borderline in acceptability,” but nevertheless
invalid:
2. Documents relating to billing procedures, billing
manuals, and billing materials.
4. Documents relating to billing records and
records of payments received.
8. Documents relating to correspondence with
Medicare intermediaries and private insurance
companies.
19. Documents relating to mailing and shipping
records between physicians and SDI.
The magistrate judge recognized that “SDI’s entire busi-
ness appears to have been the conducting of sleep studies, and
the affidavit supported the conclusion that SDI’s allegedly
fraudulent conduct was routine.”13 All the same, he concluded
13
The government does not expressly challenge the magistrate judge’s
conclusion that the “permeated with fraud” exception does not apply in
this case, but it cites and applies cases setting forth such principle. To dis-
pel any uncertainty, we confirm that the exception does not apply to this
case. We have held that “[a] generalized seizure of business documents
may be justified if the government establishes probable cause to believe
that the entire business is merely a scheme to defraud or that all of the
business’s records are likely to evidence criminal activity.” Kow, 58 F.3d
at 427. However, in this case the affidavit did not allege that SDI’s entire
business was fraudulent, and therefore such exception is inapplicable. See
Ctr. Art Galleries-HI, Inc. v. United States, 875 F.2d 747, 751 (9th Cir.
UNITED STATES v. SDI FUTURE HEALTH 6427
that these categories were “overbroad and vague . . . and not
adequately limited to seizure of documents relating to the
fraudulent scheme under investigation.”
In light of the warrant’s incorporation of the affidavit, we
reject this conclusion. According to the affidavit, SDI’s entire
business involved sleep studies, and billing for phony sleep
studies lay at the core of its scheme. There was probable
cause, therefore, to support Category 2, in that any and all
documents related to billing practices would have information
relevant to whether SDI trained its employees to commit
fraud or otherwise engaged in fraudulent billing. The same
applies to Category 8. While the magistrate judge faulted the
government for failing to specify that it sought “billing and
payments for sleep studies,” such criticism relied on the non-
incorporation of the affidavit into the warrant. Including the
affidavit as part of the warrant moots this concern. The affida-
vit also alleged that SDI engaged in both tax fraud and Medi-
care fraud, providing probable cause to support the seizure of
all documents within the purview of category 4. Finally, in
light of the government’s allegation that SDI was engaging in
mail fraud and providing illegal kickback payments to refer-
ring physicians, we conclude that Category 19 adequately
limited the search to documents related to the mailing and
shipping records with physicians (i.e., as opposed to allowing
the seizure of all mailing and shipping records).14 It did not
have to be any more restrictive.
1989) (“[T]o qualify . . . the government must make the required showing
in obtaining the search warrant.”); see also United States v. Bridges, 344
F.3d 1010, 1018 (9th Cir. 2003) (noting that the exception “may be justi-
fied if the Government’s supporting affidavit made it clear that the target
business’s central purpose was to serve as a front for defrauding inves-
tors,” and relying on the fact that “[h]ere, the IRS did not allege in its
application that [the suspect’s] operations were permeated with fraud”
(internal quotation marks omitted)).
14
We note that the section of the affidavit setting forth the facts estab-
lishing probable cause discusses SDI’s fraudulent conduct in detail, but
6428 UNITED STATES v. SDI FUTURE HEALTH
The magistrate judge also pointed to seven categories that,
he believed, more clearly violated the Fourth Amendment:
7. Documents relating to non-privileged correspon-
dence with consultants.
9. Documents relating to non-privileged internal
memoranda and E-mail.
10. Documents relating to bank accounts, broker-
age accounts, trusts.
11. Checking, savings, and money market account
records, including check registers, cancelled
checks, monthly statements, wire transfers, and
cashier’s checks.
12. Documents relating to personnel and payroll
records.
13. Documents relating to accounting records.
24. Rolodexes, address books and calendars.
Certainly, the district court had better justification finding
these categories invalid under the Fourth Amendment. Indeed,
we disagree with the district court only with respect to Cate-
gories 7 and 13.
Category 7 involves the “non-privileged correspondence of
consultants.” Consultants are contract counter-parties outside
never explicitly alleges that SDI used mail or wire communications in
committing such fraud. Nevertheless, we believe that there was a “fair
probability” that such communication occurred in the course of SDI’s
fraudulent scheme—and thus that probable cause supported the allegation
of mail fraud. See Diaz, 491 F.3d at 1078 (“People draw ‘reasonable’ con-
clusions all the time without direct evidence. Indeed, juries frequently con-
vict defendants of crimes on circumstantial evidence alone.”).
UNITED STATES v. SDI FUTURE HEALTH 6429
of a firm who assist it with one or another part of its business.
Since, again, SDI’s entire business involved sleep studies, it
would have been difficult to specify beforehand which con-
sultants were complicit in the fraudulent sleep studies.
[15] Category 9, on the other hand, makes no attempt to
limit the search team’s reach to internal memoranda related to
the sleep studies. Since internal documents typically cover a
subject-matter far wider than do external communications,
this failure constitutes an invitation to a general, “exploratory
rummaging in a person’s belongings.” United States v. Holz-
man, 871 F.2d 1496, 1508 (9th Cir. 1989), overruled on other
grounds by Horton v. California, 496 U.S. 128 (1990) (inter-
nal citations and quotation marks omitted). It is true that the
affidavit stated that “SDI likely will have contracts, memo-
randa, Email and/or other documents explaining the relation-
ship between SDI and [cardiac diagnostic companies] and the
reasons for . . . payments.” But even though we find the war-
rant incorporated the affidavit, this does not mean that every
chance remark buried in its thirty-five pages can cure plain
defects in the warrant.
[16] Categories 10, 11, and 12 pose a similar problem.
Companies keep documents relating to the bank and checking
accounts or other financial information of most of their
employees. In other words, by failing to describe the crimes
and individuals under investigation, the warrant provided the
search team with discretion to seize records wholly unrelated
to the finances of SDI or Kaplan. See Kow, 58 F.3d at 427(“[G]eneric classifications in a warrant are acceptable only
when a more precise description is not possible.” (internal
citation and quotation marks omitted)); see also Ctr. Art
Galleries-HI, 875 F.2d at 750 (holding that, where investiga-
tors believed that an art gallery was selling forged Dali art-
work, the warrant should have limited the search “to items
pertaining to the sale of Dali artwork”).
Although SDI’s entire business revolved around sleep
studies, that does not mean, and no one has suggested, that its
6430 UNITED STATES v. SDI FUTURE HEALTH
entire business was a sham. As we noted above, the “perme-
ated with fraud” exception to the specificity requirements of
the warrant does not apply here. This makes Category 13
problematic. However, especially considering the allegations
that SDI engaged in tax fraud by understating its earnings, it
would be difficult to distinguish in the warrant between those
records which would provide evidence of the alleged fraud
and those that would not. Category 13, then, more closely
resembles Category 4 rather than Categories 10-12. That is to
say, the only accounting records companies typically keep are
those of their business dealings; they do not keep accounting
records of their employees’ personal finances. Since SDI’s
entire business involved sleep studies, all of its accounting
records could potentially reveal evidence of the alleged fraud.
[17] Finally, Category 24—SDI’s rolodexes, address
books, and calendars—amounts to the laziest of gestures in
the direction of specificity. Again, this category practically
begs the search team to find and to seize the contact informa-
tion of every person who ever dealt with SDI. It would have
been far more sensible, as well as constitutional, to limit the
search to information relating to consultants, physicians, and
health insurance companies, or some other group likely to
turn up conspirators in the alleged fraud. See United States v.
Hill, 459 F.3d 966, 975 (9th Cir. 2006) (“[A]lthough the war-
rant in this case authorized a wholesale seizure, the supporting
affidavit did not explain why such a seizure was necessary.”).
[18] We therefore conclude that Categories 9, 10, 11, 12,
and 24 were overbroad because “probable cause [did not]
exist[ ] to seize all items of [those] particular type[s].” Adjani,
452 F.3d at 1148 (internal quotation marks and citations omit-
ted).
IV
The government has one last redoubt, to which we now
turn: the good faith reliance exception.
UNITED STATES v. SDI FUTURE HEALTH 6431
“[I]n United States v. Leon, the Supreme Court set out an
exception to the exclusionary rule for a search conducted in
good faith reliance upon an objectively reasonable search
warrant.” United States v. Crews, 502 F.3d 1130, 1135-36
(9th Cir. 2007) (citing United States v. Leon, 468 U.S. 897,
925 (1984)). “Working from the premise that the exclusionary
rule is a judicially created, as opposed to constitutionally
required, remedy for Fourth Amendment violations, the Court
reasoned that where police conduct is pursued in complete
good faith, the rule’s deterrent function loses much of its
force.” United States v. Luong, 470 F.3d 898, 902 (9th Cir.
2006) (internal quotation marks omitted). When it invokes the
exception, the government bears the burden of proving that
officers relied on the search warrant “in an objectively reason-
able manner.” Crews, 502 F.3d at 1136; Luong, 470 F.3d at
902 (“[T]he good faith test is an objective one.”); see also
United States v. Michaelian, 803 F.2d 1042, 1048 (9th Cir.
1986).
We have recognized that, where a warrant is defective
without incorporating a supporting affidavit, the good faith
exception may still apply. See United States v. Luk, 859 F.2d
667, 677 (9th Cir. 1988) (“The twenty-two page affidavit . . .
provided the particularity that the warrant lacked . . . In this
case, the affidavit did act as this sort of limit on the search.”).
However, the government must show that the officers who
executed the search actually relied on the affidavit. Id.; see
also Michaelian, 803 F.2d at 1048.
In Luk, while it was “unclear from the record whether the
affidavit was actually in hand during the search,” we noted
that the affiant was present at the scene, “and the agents spe-
cifically relied on the affidavit in determining at the scene
what items were properly within the scope of the search.”
Luk, 859 F.2d at 677 and n.10. Here, the record does show
that Special Agent Raftery, the affiant, had her search team
read her affidavit, briefed the team on its contents and what
items they were to search for, and was present during the
6432 UNITED STATES v. SDI FUTURE HEALTH
search. These compelling facts, however, do not trump our
precedent that the Luk good faith exception does not apply
where the searching officers do not “actually rel[y]” on the
affidavit. Kow, 58 F.3d at 429 (“[U]nlike the facts in Luk,
there is absolutely no evidence in this case that the officers
who executed the warrant, although instructed to read the affi-
davit, actually relied on the information in the affidavit to
limit the warrant’s overbreadth.”).
[19] It is, again, the government’s burden to show that this
occurred. In this connection, we note that in Luk, the proce-
dural posture was significantly different than it is in this case.
There, the district court had found that the good faith excep-
tion did apply and that the officers had relied on the affidavit
in executing it. 859 F.2d at 670. The opposite is the case here.
The magistrate judge in this case found that there was “[n]o
evidence . . . that the agents in fact relied on the affidavit to
restrict their search.” The government has pointed to no evi-
dence the magistrate judge overlooked that would show there
was any clear error. Accordingly, we conclude that the Luk
exception cannot apply here.
V
Having concluded that five of the twenty-four categories of
materials listed in the search warrant were unconstitutionally
overbroad and that no exception rescues them from suppres-
sion, we turn to the question of the appropriate remedy. Spe-
cifically, we review whether the district court was correct to
suppress all the evidence obtained in the search, as opposed
to severing violative portions of the warrant from the valid
ones, and suppressing only the evidence obtained pursuant to
the former.
We have endorsed a doctrine of severance, “which allows
a court to strike from a warrant those portions that are invalid
and preserve those portions that satisfy the [f]ourth
[a]mendment. . . . We have previously allowed severance
UNITED STATES v. SDI FUTURE HEALTH 6433
when a warrant lacked particularity because of some unduly
broad language in the warrant.” United States v. Sears, 411
F.3d 1124, 1129 (9th Cir. 2005) (internal quotation marks and
citations omitted). “Total suppression, on the other hand, is
appropriate when a warrant is wholly lacking in particularity.”
Id.In general, we do not allow severance or partial suppression
“when the valid portion of the warrant is a relatively insignifi-
cant part of an otherwise invalid search.” Kow, 58 F.3d at 428(internal citation and quotation marks omitted); see also In re
Grand Jury Subpoenas, 926 F.2d at 858 (allowing severance
where “the warrants were overbroad as to only nine of the
twenty-two persons or entities named,” and where “docu-
ments of the persons or entities for which there was probable
cause constituted the focus, and the vast majority, of the files
searched”). Here, the magistrate found that the portion of the
warrant he believed was valid—a smaller piece than that
which we have approved—was “a principal portion” of the
evidence the Government sought and was “not a relatively
insignificant” part of the warrant.
[20] Although the district court adopted this finding, it
oddly granted total suppression in this case. The district court
apparently saw a resemblance between the facts in this case
and those in cases where we have refused to sever a partially
invalid warrant, such as United States v. Cardwell, 680 F.2d
75 (9th Cir. 1982), Spilotro, and Kow. However, the viola-
tions in this case are not nearly as egregious as those we
found in those earlier cases, where we held that all or nearly
all the categories of items to be seized were defective. See
Cardwell, 680 F.2d at 76, 78-79 (“In this case even the most
specific descriptions . . . are fairly general.”); Spilotro, 800
F.2d at 964-65 (noting that “the government could have nar-
rowed most of the descriptions in the warrant[ ]” and
expressly relying on the conclusion that “the descriptions
found deficient in Cardwell were at least as precise as the
descriptions at issue here”); Kow, 58 F.3d at 427 (“By failing
6434 UNITED STATES v. SDI FUTURE HEALTH
to describe with any particularity the items to be seized, the
warrant is indistinguishable from the general warrants repeat-
edly held by this court to be unconstitutional.”). Here, the vio-
lative categories concerned only a specific subset of items—
i.e., rolodexes, address books, calenders, certain financial
documents, payroll and personnel records, and internal
correspondence—and the lion’s share of the categories did not
violate the Fourth Amendment. This is not a case where “the
officers, in effect, conducted a warrantless search,” Sears, 411
F.3d at 1130 (internal quotation marks omitted), and therefore
the district court should have granted partial suppression.
VI
[21] Finally, we consider whether Todd Kaplan’s consent
to search the off-site facility was voluntary, an issue the dis-
trict court did not reach. Consent received during an illegal
search is suppressed as fruit of the poisonous tree “unless sub-
sequent events have purged the taint.” United States v.
Chavez-Valenzuela, 268 F.3d 719, 727 (9th Cir. 2001),
amended by 279 F.3d 1062 (9th Cir. 2002). In this case, how-
ever, the search was not wholly illegal. The defendants rely
on United States v. Hotal, 143 F.3d 1223, 1228 (9th Cir.
1998), but in that case we suppressed all the evidence
obtained pursuant to the warrant. We therefore remand the
case to the district court on this issue to determine to what
extent the consent of Todd Kaplan was tainted by those
aspects of the search that violated the Fourth Amendment.
VII
For the foregoing reasons, the decision of the district court
is AFFIRMED in part, REVERSED in part, and
REMANDED for further proceedings consistent with this
opinion.