In Re Motion to Unseal Electronic Surveillance Evidence. Howard J. Smith v. Donn H. Lipton

HEANEY, Senior Circuit Judge.

Howard J. Smith filed a motion to unseal electronic surveillance evidence for use in a state court action against Donn H. Lipton. Finding no authority for such disclosure in Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. §§ 2510-2520 (1988) (“Title III”), the district court denied Smith’s motion. We affirm.

I

Smith brought an action against Lipton and others in the Circuit Court of St. Louis City on theories of fraud, breach of fiduciary duty, tortious interference, and violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968 (1988). The action concerns several unsuccessful real estate transactions to which both Smith and Lipton were party.

In preparation for his suit in state court, Smith sought access to electronic surveillance evidence of conversations between Lipton and Sorkis Webbe Sr. and Sorkis Webbe Jr. that he believes will support his allegation of RICO violations by Lipton. He first sought access under the Freedom of Information Act, 5 U.S.C. § 552 (1988), but when that action met no success because the material requested was under seal, Smith filed a motion in federal district court to unseal the electronic surveillance evidence. Smith sought access to the tapes and transcripts of conversations that involved certain pieces of property. Smith v. Lipton, No. 91-643C(1), slip op. at 1 (E.D.Mo. May 7, 1991).

The tapes Smith sought were the product of electronic surveillance of the offices of the Webbes at the Mayfair Hotel in the City of St. Louis conducted by the Federal Bureau of Investigation (“FBI”) pursuant to a court order of October 15, 1982, granted under Title III.¹ United States v. Webbe, 652 F.Supp. 20, 22 (E.D.Mo.1985). Lipton concedes that the tapes include conversations he had with the Webbes, but that he does not remember the contents of those conversations. Although portions of these tapes were admitted into the trial of Webbe Jr., United States v. Webbe, 791 F.2d 103, 104 (8th Cir.1986), the conversations sought by Smith were not included in those admitted into evidence and therefore remain under seal.

II

It is agreed that authority for release of the tapes under Title III must be found in section 2517.² That section provides for disclosure in a number of circumstances, most of which involve uses for law enforcement. Smith relies on subsections (5) and (8), which provide for disclosure through courtroom testimony of wiretap evidence related to offenses other than those for which the wiretap was sought. Smith argues that in its current form section 2517(3) provides for the disclosure he seeks. As the Second Circuit said of a similar argument, this “argument based on the language of § 2517(3) has a surface plausibility, but only if one concentrates on the language alone and ignores the rest of Title III and the legislative struggle leading to its enactment.” National Broadcasting Co. v. United States Dep’t of Justice, 735 F.2d 51, 53 (2d Cir.1984).³

A

Title III was enacted in response to the Supreme Court’s decisions in Berger v. New York, 388 U.S. 41, 87 S.Ct. 1873, 18 L.Ed.2d 1040 (1967), and Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967), which held eavesdropping on private- conversations by the state to be a seizure under the Fourth Amendment. See S.Rep. No. 1097, 90th Cong., 2d Sess. 66 (1968), reprinted in 1968 U.S.C.C.A.N. 2112, 2153 (“Senate Report”). In enacting Title III Congress recognized, as had Justice Brandéis, that the interception of wire communications raises unique privacy concerns:

Whenever a telephone line is tapped, the privacy of the persons at both ends of the line is invaded and all conversations between them upon any subject, and although proper, confidential, and privileged, may be overheard. Moreover, the tapping of one man’s telephone line involves the tapping of the telephone of every other person whom he may call, or who may call him.

Olmstead v. United States, 277 U.S. 438, 475-76, 48 S.Ct. 564, 571, 72 L.Ed. 944 (1928) (Brandéis, J., dissenting). One of the two stated purposes of Title III was to “protect[] the privacy of wire and oral communications.” Senate Report at 2153. In passing Title III, Congress made a specific finding on the need for such protection:

To safeguard the privacy of innocent persons, the interception of wire or oral communications where none of the parties to the communication has consented to the interception should be allowed only when authorized by a court of competent jurisdiction and should remain under the control and supervision of the authorizing court. Interception of wire and oral communications should further be limited to certain major types of offenses and specific categories of crime with assurances that the interception is justified and that the information obtained thereby will not be misused.

Title III — Wiretapping and Electronic Surveillance: Findings, Pub.L. 90-351, § 801(d), 82 Stat. 211, 211 (1968); see Gelbard v. United States, 408 U.S. 41, 48, 92 S.Ct. 2357, 2361, 33 L.Ed.2d 179 (1972) (“although Title III authorizes invasions of individual privacy under certain circumstances, the protection of privacy was an overriding congressional concern”).⁴

Congress provided for very limited disclosure of any wiretap evidence that is obtained. It specifically required that recordings made under Title III be sealed by the authorizing judge, see 18 U.S.C. § 2518(8)(a) (1988), and provided for disclosure and use of the intercepted conversations under very specific circumstances. When addressing disclosure of the contents of a wiretap, the question is whether Title III specifically authorizes such disclosure, not whether Title III specifically prohibits the disclosure, for Title III prohibits all disclosures not authorized therein. See United States v. Underhill, 813 F.2d 105, 110 (6th Cir.), cert. denied, 482 U.S. 906, 107 S.Ct. 2484, 96 L.Ed.2d 376 (1987); United States v. Dorfman, 690 F.2d 1230, 1232 (7th Cir.1982).

B

Notwithstanding the drafters’ concerns about conversational privacy, Smith argues that the statute now provides for use of previously undisclosed wiretap evidence in private civil RICO actions, and that concomitantly, the authorization of testimonial disclosure includes pretrial access to the contents of the wiretap. He bases his argument on a 1970 amendment to Title III. As originally enacted, section 2517(3) provided for courtroom testimonial disclosure only in criminal proceedings. See 18 U.S.C. § 2517(3) (Supp. V 1965-69). With the passage of RICO in 1970, Congress amended the wiretap statute to allow for testimonial use in civil proceedings as well. Organized Crime Control Act of 1970, Pub.L. No. 91-542, § 902(b), 84 Stat. 922, 947 (1970). In support of his argument that the statute now authorizes pretrial disclosure to private civil RICO litigants, Smith cites cases in which wiretap evidence has been used by an agency other than that which initially sought the wiretap. For example, Smith cites to cases in which the Internal Revenue Service obtained wiretap evidence from the FBI for use in civil prosecutions. Such cases provide no authority for disclosure, pretrial or otherwise, to a private civil RICO litigant.

The legislative history of the 1970 amendment adds little support to Smith’s argument. As the district court noted, the legislative history

merely indicates the obvious, that the change “amends 18 U.S.C. 2517 to permit evidence obtained through the interception of wire or oral communications under court order to be employed in civil actions.” The language of this brief commentary suggests, however, that Congress envisioned the gatherer of such evidence, i.e., a law enforcement or governmental investigative agency, to be the party making use of the evidence in a civil case. If the change had been intended to open the door to private civil litigants, further comment would have been warranted.

Smith v. Lipton, No. 91-6430(1), slip op. at 5-6 (E.D.Mo. May 7, 1991) (quoting H.R.Rep. No. 1549, 91st Cong., 2d Sess. 18 (1970), reprinted in 1970 U.S.C.C.A.N. 4007, 4036); see also James G. Carr, The Law of Electronic Surveillance § 7.3(b) at 7-42 (2d ed. 1990).

An examination of the situation that preceded the enactment of Title III supports the district court’s view. One of the significant protections Title III gives to private conversations is a sweeping exclusionary rule, which applies in all government proceedings, rather than simply in judicial proceedings. See 18 U.S.C. § 2515 (1988). The existing exclusionary rule crafted by the Supreme Court did not apply to civil proceedings generally, and the drafters believed that they were expanding the rule. Michael Goldsmith, The Supreme Court and Title III: Rewriting the Law of Electronic Surveillance, 74 J.Crim.L. & Criminology 1, 40 n. 232 (1983) (citing Standards Relating to Electronic Surveillance 115 (Approved Draft 1968)). To cut back on the rule of exclusion by allowing the unsealing of wiretap materials for use by private litigants in civil actions would require greater clarity on the part of Congress. Given the overriding concern Congress expressed for the privacy of such conversations when it initially passed Title III, this Court would need greater evidence of Congress’s intent to read the 1970 amendment as setting those concerns aside when dealing with private civil RICO litigants.

In answering this concern, Smith relies on the decision of the Department of Justice not to oppose disclosure in this case, contrary to its position in the NBC case. To underscore the significance of the Department of Justice’s role in these determinations, Smith cites the district court in County of Oakland v. City of Detroit, 610 F.Supp. 364 (E.D.Mi.1984), appeal denied, 762 F.2d 1010 (6th Cir.1985). Relying on the Second Circuit’s NBC opinion, that court stated that “the Government is apparently given authority under § 2517(3) to determine whether release of the material would be in the overall public interest”’ Id. at 370. A careful reading of both the statute itself and the Second Circuit opinion belies the district court's conclusion.

In denying NBC’s application to inspect wiretap materials for use in defense of a libel suit, the Second Circuit responded to an argument by NBC that it is improper for only the government to be able to make use of wiretaps:

NBC argues that it is somehow unseemly that only the government can take advantage of wiretaps. This argument does not have much force. Under Title III, with few exceptions not here relevant, no one other than the government can lawfully engage in wiretapping and it therefore is not so unusual that only the government can enjoy its fruits. Beyond that, the government is in a position to make a judgment whether disclosure of the intercepted evidence will or will not be in accordance with the overall public interest, while a private litigant is not.

NBC, 735 F.2d at 54. The court of appeals was simply noting why it is not unseemly for the government to be allowed to make use of wiretaps. One reason is that it may have a broader perspective than a private litigant. This is not to say, however, that section 2517(3) grants the government any authority to determine when private litigants may make use of previously undisclosed wiretap information. We find that Title III does not grant the government such authority.⁵

Finally, Smith argues that a private litigant’s need should enter into the equation. Absent statutory authority for such disclosure, need is irrelevant. As the Second Circuit said in NBC,

[W]e are sure that Congress did not utilize a provision in the Organized Crime Control Act to make the fruits of wiretapping broadly available to all civil litigants who show a need for them. Indeed, there might be a question whether Congress could go that far. What the Supreme Court contemplated in Katz was a statute making an exception from the general ban for purposes of enforcement of the criminal law. If there is a constitutional doubt, the statute should be construed so as to avoid it.

NBC, 735 F.2d at 54 (emphasis added).

C

Though we find no provision in Title III to authorize disclosure in this case, even were we to find such authority, the manner of disclosure sought could not be accommodated. At no point does section 2517 authorize pretrial disclosure to private civil litigants. Those courts that have addressed the question have been unanimous on this point. See, e.g., County of Oakland, 610 F.Supp. at 371; Dowd v. Calabrese, 101 F.R.D. 427, 435 (D.D.C.1984).

Ill

In conclusion, we find no authority in Title III for pretrial or compelled testimonial disclosure of sealed electronic surveillance evidence to a private civil RICO litigant. Consequently, we affirm the decision of the district court in its entirety.

1 . No issue has been raised either below or on appeal regarding the propriety of the court order and surveillance. We therefore assume without deciding that the government’s interception of the conversations at issue in this case was proper.

We also note that the district court made no finding whether Lipton was a target of the FBI’s investigation, a point of dispute between the parties. We likewise find it unnecessary to reach the issue.

One of the dissent's criticisms of the court relies on the assumption that "the wiretaps at issue very likely contain information that may lead to evidence relevant to this civil RICO dispute.” Infra at 1021. To the best of our knowledge, the wiretaps in question have remained under seal throughout this litigation, and have not been listened to by the district court or by this court. The appellants clearly believe that the wiretaps contain relevant information to their suit, but our decision requires no answer to the issue, and the dissent's assertions on this issue are mere speculation.

2 . The relevant portions of section 2517 provide as follows:

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

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

(3) Any person who has received, by any means authorized by this chapter, any information concerning a wire, oral, or electronic communication, or evidence derived therefrom intercepted in accordance with the provisions of this chapter may disclose the contents of that communication or such derivative evidence 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.

(5) When an investigative or law enforcement officer, while engaged in intercepting wire, oral, or electronic communications in the manner authorized herein, intercepts wire, oral, or electronic communications relating to offenses other than those specified in the order or authorization or approval, the contents thereof, and evidence derived therefrom, may be disclosed or used as provided in subsections (1) and (2) of this section. Such contents and any evidence derived therefrom may be used under subsection (3) of this section when authorized or approved by a judge of competent jurisdiction where such judge finds on subsequent application that the contents were otherwise intercepted in accordance with the provisions of this chapter....

18 U.S.C. § 2517 (1988).

3 . The dissent objects to this citation on a number of grounds. Taking a sentence of the NBC opinion out of context, it argues that the Second Circuit misunderstood the Supreme Court’s de-cisión in Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967), to ban all use of wiretap evidence. The following sentence of the NBC opinion indicates that Katz left . an exception for wiretap evidence that is procured pursuant to a warrant, an opening that led to the enactment of Title III as discussed infra. That the Second Circuit would have more accurately described Katz as banning all use of war-rantless wiretap evidence cannot be disputed, but the dissent’s assessment of the NBC decision as "wrong" based on a mischaracterization of the opinion in question presents a more serious error.

The dissent further argues that reliance on the "legislative struggle" that led to the enactment of Title III is unprecedented. The disagreement appears to rest initially on whether the language of the amendment, when considered in the context of Title III as a whole, is ambiguous. Though the dissent now chastises this court for looking beyond the language of the statute, the original panel opinion, after examining the statutory language and the legislative history of the amendment, determined that "the resolution of this issue ... requires that we look elsewhere.” In re Motion to Unseal Elec. Surveillance Evidence, 965 F.2d 637, 640. The panel opinion relied on various policy considerations in setting out a multi-part test to guide the district court’s ruling on a motion under section 2517. See id. at 641-42. We simply allow Congress’s “overriding concern for the protection of conversational privacy,” id. at 641, to guide our determination that section 2517 does not authorize disclosure in this, case.

4 . The dissent suggests that this court’s decision in In re Prines, 867 F.2d 478 (8th Cir.1989), precludes this court from relying on Congress's intent when it initially enacted Title III in 1968 when we interpret the 1970 amendment at issue in this case, as discussed infra. Prines involved a patent inconsistency between an unambiguous statutory amendment and preamble language from an earlier version of the statute. This court properly refused to limit statutory language that postdated the preamble. Despite the validity of the holding in Prines, it has no application to this case. The 1970 amendment is ambiguous, and, as discussed infra, its legislative history provides no assistance either. We therefore look to the statute as a whole, and the legislative history that led to its enactment, in construing the amendment at issue.

5 . Based on 28 C.F.R. § 16.26 (1991), which governs disclosure of material by the Justice Department in state or federal litigation, and on the Justice Department’s willingness to disclose in this case, Smith further argues that the Justice Department clearly believes it has the authority under Title III to disclose wiretap materials to private litigants with court approval. Though we hold that Title III does not authorize pretrial disclosure or compelled testimonial disclosure at trial, it is not necessary for us to reach the question of purely voluntary testimonial disclosure by the government during the course of private civil RICO litigation. We do note, however, that any such disclosure would appear to require court approval under §§ 2517(3) and (5).

The dissent’s reliance on Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), in regard to this issue is misplaced. Chevron addressed the proper deference to be given to "an agency’s construction of [a] statute which it administers.” Id. at 841, 104 S.Ct. at 2780. To say that the Justice Department administers section 2517 is to write out of existence the role of the court, which is statutorily mandated in section 2517(5). As the Justice Department cannot be said to administer this statute, its interpretation of section 2517 is not subject to the level of deference required by Chevron.