Dellwood Farms, Inc. v. Archer Daniels Midland Co.

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 99-2032 et al.
In re: High Fructose Corn Syrup
Antitrust Litigation
Dellwood Farms, Inc., et al.,
Plaintiffs-Appellants/Cross-Appellees,
v.
Archer Daniels Midland Company,
Defendant-Appellee/Cross-Appellant.
James R. Randall,
Intervenor-Appellee/Cross-Appellant.
Appeals from the United States District Court
for the Central District of Illinois.
Nos. 95 C 1477, 97 C1203--Michael M. Mihm, Judge.
Argued April 14, 2000--Decided June 19, 2000
Before Posner, Chief Judge, and Ripple and Rovner,
Circuit Judges.
Posner, Chief Judge. These appeals grow out of a
class action antitrust suit that is pending in a
federal district court in Illinois. The suit is
by purchasers from Archer Daniels Midland and
other manufacturers and charges price fixing. In
an earlier criminal investigation of the alleged
price-fixing conspiracy, an investigation that
led to criminal proceedings unnecessary to
discuss here, an ADM vice president named
Whitacre made a number of secret recordings both
of face-to-face conversations, and telephone
conversations, with persons who he thought might
be (and most of them were, but not intervenor
Randall) involved in the conspiracy. He did this
under unusual circumstances. He had been
defrauding ADM and apparently wanted to deflect
the FBI’s suspicions and so reported his
employer’s price fixing to the FBI and suggested
that he tape record incriminating conversations.
The FBI agreed. Some of the recordings were used
in the criminal proceedings but many were not,
and those that were not remain in the files of
the Justice Department. The plaintiffs in the
class action have subpoenaed those recordings.
ADM resisted the subpoena, along with its former
employee Randall who though not implicated in the
price fixing fears that some of the recordings
contain embarrassing statements by him on
unrelated matters. The Justice Department has no
objection to releasing the recordings to the
plaintiffs. The district judge ruled that the
plaintiffs are entitled to them but, in the case
of the telephone conversations, not until the
trial. His ruling is before us under 28 U.S.C.
sec. 1292(b).
A set of provisions of the federal criminal code
commonly known as "Title III" regulates
electronic surveillance both of "oral
communications" and "wire communications." 18
U.S.C. secs. 2510 et seq. The latter term is
broadly defined to include communications any
part of which goes over a wire; so cellphone and
satellite communications are covered. See 18
U.S.C. sec. 2510(1); H.R. Rep. No. 647, 99th
Cong., 2d Sess. 31 (1986); United States v.
Jackson, 207 F.3d 910, 914 (7th Cir. 2000);
United States v. Rivera, 153 F.3d 809, 810-11
(7th Cir. 1998); United States v. Carrazana, 921
F.2d 1557, 1562 (11th Cir. 1991); Shubert v.
Metrophone, Inc., 898 F.2d 401 (3d Cir. 1990); 1
James G. Carr, The Law of Electronic Surveillance
sec. 3.2(a), p. 3-5 (2000). The former term
("oral communications") is rather narrowly
defined as a nonelectronic "oral communication
uttered by a person exhibiting an expectation
that such communication is not subject to
interception under circumstances justifying such
expectation." The district judge thought that the
face-to-face conversations that Whitacre
surreptitiously recorded were not oral
communications within this definition and so were
outside the protections of the statute. The judge
reasoned that the people whose conversations
Whitacre was recording could have had no basis
for supposing their conversations not subject to
being recorded by one or more of the
participants, because the only basis for such an
expectation could be the Fourth Amendment, which
has been held inapplicable to the recording of
conversations to which one of the parties
consents. United States v. Caceres, 440 U.S. 741,
750 (1979); United States v. White, 401 U.S. 745,
751-52 (1971); Lopez v. United States, 373 U.S.
427, 439 (1963); United States v. Eschweiler, 745
F.2d 435, 437 (7th Cir. 1984).
The telephone conversations that Whitacre
recorded clearly fell within the statutory
definition of wire communications. But the judge
thought a limited disclosure of their contents to
the plaintiffs authorized by section 2517(3),
which allows a person to disclose the contents of
lawfully intercepted wire communications "while
giving testimony under oath or affirmation in any
proceeding held under the authority of the United
States or of any State or political subdivision
thereof." The judge rejected the argument that
the only proceeding contemplated by this
provision is a government proceeding, not a
private suit such as we have here. But because he
interpreted "while giving testimony" literally,
to mean that the plaintiffs had no authority to
obtain the recordings of Whitacre’s wire
communications until the trial, he thought it
premature to decide whether those communications
had been intercepted lawfully, which would mean
in conformity with either section 2511(2)(c) or
section 2511(2)(d). The first of these
subsections provides that it is not unlawful
under Title III for a person acting under color
of law to record his own conversations, and the
second that it is not unlawful for a person not
acting under color of law to record his own
conversations provided that he is not doing so
for the purpose of committing a crime or tort.
The district judge was following the law of this
circuit in holding that in defining "oral
communications" by reference to a justifiable
expectation that they would not be intercepted,
Congress had limited the protection of the
statute to situations in which the interception
would violate the Fourth Amendment if done by the
government. In re John Doe Trader Number One, 894
F.2d 240 (7th Cir. 1990); see also Dorris v.
Absher, 179 F.3d 420, 424-25 (6th Cir. 1999);
United States v. Longoria, 177 F.3d 1179, 1181-82
(10th Cir. 1999); Siripongs v. Calderon, 35 F.3d
1308, 1320-21 (9th Cir. 1994). One might wonder
why, if the statute tracks the Fourth Amendment,
the statute’s drafters bothered to carve an
express exception for oral communications
intercepted by one of the parties to the
communication, given that such interceptions do
not violate the Fourth Amendment. Some cases in
other circuits suggest, in conformity with the
statutory language, that there can be a
reasonable expectation that one’s conversations
even if not private will not be intercepted
electronically. See, e.g., Angel v. Williams, 12
F.3d 786, 790 n. 6 (8th Cir. 1993); Walker v.
Darby, 911 F.2d 1573, 1578-79 (11th Cir. 1990);
Boddie v. American Broadcasting Companies, Inc.,
731 F.2d 333, 338-39 and n. 5 (6th Cir. 1984).
None of the cases, however, involves recording
one’s own conversations, as in this case.
Another issue on which there is no case law in
this circuit is whether the strangely worded
section 2517(3) is limited to legal proceedings
brought by the government, as held in In re
Motion to Unseal Electronic Surveillance
Evidence, 990 F.2d 1015, 1018-20 (8th Cir. 1993)
(en banc), and National Broadcasting Co. v.
United States Department of Justice, 735 F.2d 51(2d Cir. 1984), although the wording seems merely
a shorthand for the longer and unambiguous
definition in the complementary section 2515 of
proceedings as covering "any trial, hearing, or
other proceeding in or before any court, grand
jury, department, officer, agency, regulatory
body, legislative committee, or other authority
of the United States, a State, or a political
subdivision thereof." See also section
2518(10)(a). Another issue on which authority is
scanty is whether section 2517(3) is limited to
trials and so excludes discovery, which would be
a particularly strange limitation, though it was
adopted (albeit in the briefest of discussions)
in In re Motion to Unseal Electronic Surveillance
Evidence, supra, 990 F.2d at 1020.
Regardless of how any of these issues is
resolved, we think the plaintiffs are entitled to
all the recordings, to use as they see fit except
insofar as the district judge may exercise his
power under the Federal Rules of Civil Procedure
to limit, by protective order or otherwise, such
disclosure of the contents of the recordings as
may infringe the privacy of parties to the
recorded conversations beyond what the plaintiffs
require to prosecute their antitrust case
effectively. Fed. R. Civ. P. 26(c); Gile v.
United Airlines, Inc., 95 F.3d 492, 496 (7th Cir.
1996); Jepson, Inc. v. Makita Electric Works,
Ltd., 30 F.3d 854, 858-59 (7th Cir. 1994); 8
Charles Alan Wright, Arthur R. Miller & Richard
L. Marcus, Federal Practice & Procedure sec. 2036
(2d ed. 1994).
Some states prohibit a person from recording his
telephonic or other conversations without the
other person’s consent, but Title III does not,
unless the person both is not acting under color
of state law and has a criminal or tortious
purpose. 18 U.S.C. secs. 2511(2)(c), (d).
"While Title III . . . regulates electronic
surveillance conducted without the consent of
either party to a conversation, federal statutes
impose no restrictions on recording a
conversation with the consent of one of the
conversants." United States v. Caceres, supra,440 U.S. at 750. (This is a little broad, in
ignoring the exception in section 2511(d) for bad
purpose.) If by virtue of sections 2511(2)(c) or
(d) an interception is not prohibited by Title
III, there are no Title III restrictions on its
use. Section 2517(3) does not come into play and
such questions as whether the section authorizes
disclosure only in government proceedings and
only at trial drop out; the meaning of "oral
communications" also becomes moot.
That interceptions exempted by sections
2511(2)(c) or (d) are not subject to section
2517(3) is apparent from the structure of Title
III. Section 2511(1) forbids the interception of
covered communications (that is, oral, wire, or
electronic) "except as otherwise specifically
provided in [Title III]." There are two relevant
sets of "otherwise specifically provid[ing]"
provisions. One is in subsection 2 of section
2511 and includes, as we have been emphasizing,
most conversations intercepted by (or with the
consent of) one of the parties. The other
exceptions in subsection 2 include pen registers,
switchboard operators, marine distress signals,
and foreign intelligence surveillance--a
heterogeneous array. In each instance the
excluded practice is described in its own
subsection together with any exceptions to the
exception, such as, in the case of section
2511(2)(d), for recording one’s conversations for
a criminal or tortious purpose. Each of the
exception subsections in section 2511(2) is
complete and self-contained. But then there is
another set of provisions, sections 2516 to 2519,
defining and implementing the key exception for
interceptions pursuant to a warrant. It is in
that cluster of sections that section 2517(3)
resides. Its location indicates that it is
limited to cases in which an otherwise unlawful
interception is lawful by virtue of having been
made pursuant to warrant; the surrounding
provisions make clear that the "authorization" to
which the subsection refers is judicial
authorization, not exemption. See secs. 2516,
2518(9); Gelbard v. United States, 408 U.S. 41,
46 (1972); United States v. Cunningham, 113 F.3d
289, 293 (1st Cir. 1997). To exempt is not to
authorize, though the effect may be the same. So
if, as in the case of most interceptions of
communications by or with the consent of a party,
the interception does not require a warrant to be
lawful, Title III does not restrict its use.
The courts (including our own) have repeatedly
held this in civil suits under Title III, Thomas
v. Pearl, 998 F.2d 447, 451-53 (7th Cir. 1993);
Griggs-Ryan v. Smith, 904 F.2d 112, 119 (1st Cir.
1990); Smith v. Cincinnati Post & Times-Star, 475
F.2d 740 (6th Cir. 1973) (per curiam); Meredith
v. Gavin, 446 F.2d 794, 799 (8th Cir. 1971)--
which the present case is. Section 2511 exempts
the conversations covered by it from the entirety
of Title III. "Since . . . the interception in
the case was not obtained in violation of the
Act, its subsequent use and disclosure was not a
violation of the Act." Id.; see also Obron
Atlantic Corp. v. Barr, 990 F.2d 861, 863-64 (6th
Cir. 1993); Leitman v. McAusland, 934 F.2d 46, 50
(4th Cir. 1991); United States v. Shields, 675
F.2d 1152, 1157 n. 2 (11th Cir. 1982); United
States v. Howell, 664 F.2d 101, 105 (5th Cir.
1981); United States v. Head, 586 F.2d 508, 513
(5th Cir. 1978). As the case last cited put it,
"18 U.S.C. sec. 2511(2)(d) exempts from the
operation of the entire chapter, of which section
2518 is a part, consensual recordings such as
made here." Id. (emphasis added). It is true that
some cases assume that section 2517(3) applies to
conversations exempted by sections 2511(2)(c) or
(d), but they are cases in which the court found
that the requirements of section 2517(3) had been
met, so there was no occasion to consider
whether, had they not been met, it would have
made any difference, since the conversations were
exempt. See United States v. Little, 753 F.2d
1420, 1435 (9th Cir. 1984); United States v.
Haimowitz, 725 F.2d 1561, 1582 (11th Cir. 1984);
United States v. Armocida, 515 F.2d 49, 52 (3d
Cir. 1975); United States v. Bishton, 463 F.2d
887, 892 (D.C. Cir. 1972) (per curiam); see also
United States v. Clegg, 509 F.2d 605, 612-13 (5th
Cir. 1975).
To subject interceptions made lawful by sections
2511(2) (c) and (d) to section 2517(3) would have
absurd consequences. It would mean that Whitacre
had violated the statute by turning his
recordings over to the FBI, since on the district
court’s reading of that section the only
permissible disclosure of the contents of an
interception made lawful by sections 2511(2)(c)
or (d) is to play a tape of, or testify to, those
contents in court. Section 2517(3) reflects a
traditional sensitivity about wiretapping and
related methods of electronically eavesdropping
on other people’s conversations. As is implicit
(and sometimes explicit) in the cases that hold
that such eavesdropping violates the Fourth
Amendment but that recording your own
conversations does not, there just is not the
same sensitivity about the latter practice. Title
III does not require a warrant for such recording
or regulate its use in any way. The matter has
been left to the states, except for the flat
prohibition of consensual recording for improper
purposes.
So if Whitacre’s recordings were made lawful by
either of these subsections, Title III does not
restrict their use by the plaintiffs. It is clear
that they were. When the FBI agreed to Whitacre’s
suggestion that he make the recordings in order
to gather evidence of price fixing, the FBI made
him a government informant, and in then making
the recordings in that role he was acting under
color of law within the meaning of section
2511(2)(c). Thomas v. Pearl, supra, 998 F.2d at
449-51; Berger v. Hanlon, 129 F.3d 505, 516 (9th
Cir. 1997), rev’d on other grounds, 526 U.S. 808,
relevant part of opinion reaffirmed, 188 F.3d
1155 (9th Cir. 1999); Obron Atlantic Corp. v.
Barr, supra, 990 F.2d at 864-65; United States v.
Haimowitz, supra, 725 F.2d at 1581-82; United
States v. Shields, supra, 675 F.2d at 1156-57.
(Obron and Haimowitz are factually
indistinguishable from the present case.)
And if this is wrong, it makes no difference; it
just puts Whitacre under subsection 2511(2)(d).
Desnick v. American Broadcasting Cos., 44 F.3d
1345, 1353 (7th Cir. 1995); United States v.
Zarnes, 33 F.3d 1454, 1469 (7th Cir. 1994);
United States v. Cassiere, 4 F.3d 1006, 1021 (1st
Cir. 1993); United States v. Dale, 991 F.2d 819,
841 (D.C. Cir. 1993). He would not be within the
exception to that subsection for recording for a
criminal or tortious purpose, because a purpose
of gathering evidence of a violation of law is
not criminal or tortious. E.g., United States v.
Zarnes, supra, 33 F.3d 1454, 1469 (7th Cir.
1994); By-Prod Corp. v. Armen-Berry Co., 668 F.2d
956, 959 (7th Cir. 1982); United States v. Dale,
supra, 991 F.2d at 841; United States v. Ruppel,
666 F.2d 261, 271 (5th Cir. 1982); 1 Carr, supra,sec. 3.5(b), p. 3-112. It is the opposite. True,
his motive in making the recordings may have been
criminal or tortious (or more likely both)--to
elude detection of his fraud against ADM by
becoming a valued FBI informant and good-guy
whistleblower. But when the law speaks of
recording conversations with a criminal or
tortious purpose, it has, we think, regard for
the intended use of the recordings. There was
nothing of that here. It was not as if Whitacre
were going to use the recordings to blackmail
Randall or extort money from ADM. He was going to
give them to the FBI for use in evidence, a
clearly lawful purpose, as the cases we have
cited make clear. To repeat, so far as what was
recorded was concerned, the intent was to collect
evidence of antitrust violations, not evidence
that might be used for an improper purpose. The
recordings were no more unlawful than an arrest
would be by a police officer who wanted to
demonstrate zeal in the performance of his duties
in the hope that it would shield him from
prosecution for embezzling funds of the police
department.
The judgment of the district court is modified
to eliminate the restriction that the court
placed on the use of the recordings of the wire
communications by the plaintiffs, though without
prejudice to the judge’s considering whether to
impose a protective order under Fed. R. Civ. P.
26(c). As so modified, the judgment is
Affirmed.