Originally published by the Journal of Commerce in May 2015
Deflategate and laptop searches – these are not topics which seemingly have much in common. Their relationship to international business appears even more remote, but like so many international business/commercial issues, their outcome turned on the quality of the policies and procedures of the involved parties.
Let’s start at the beginning. For those who do not follow sports, Deflategate is all about allegations the New England Patriots cheated by using under-inflated balls during the first half of the American Football Conference playoff game against the Indianapolis Colts on January 18, 2015. The Patriots went on to win that game and eventually the Super Bowl. The cheating allegations were investigated by the National Football League (NFL) which meted out its own punishment. The relevance of this incident for our purposes is the outcome of the case turned, in large part, on text messages of two team employees whom the NFL required to turn over their cell phones, and the refusal of Quarterback Tom Brady to make his text messages available to the NFL under any circumstances. There is no doubt if the investigation had instead been a lawsuit, Mr. Brady would be required to turn over his text messages or run the risk of incurring the judge’s wrath, charges of spoliation of evidence and other sanctions, such as being barred from introducing specific evidence at trial.
As far as the policies and procedures issue goes, the team owned the cell phones of the employees so their production could be compelled. On the other hand, as a member the player’s union, Mr. Brady’s compliance could not be compelled. This incident serves as a reminder to employers to review their policies about cell phones and other electronic devices. For example, it is common for employers to have policies that allow complete access to all company-owned devices. Does your policy extend to those devices where cost is reimbursed? How about those devices on which company business is conducted (regardless of ownership)? Do your company policies need to be updated?
The laptop search case involved action by Homeland Security Investigations (HSI) in seizing a laptop computer from an outbound traveler for the sole purpose of seeking evidence of criminal activity. See U.S. v. Jae Shik Kim, Karham Eng. Corp., Crim. Action No. 13-0100 (ABJ), U.S. District Court for the District of Columbia (May 2015). The defendant brought a motion in his criminal case to suppress the seized evidence. The court granted it! This all began as an HSI agent was conducting an investigation into export violations involving controlled articles sold to Chinese businessmen who resold them to Iranian buyers. One individual had been arrested and was cooperating. The HSI agent suspected the outbound traveler, but had no real evidence beyond an allegation from the cooperating suspect.
Both individuals were thought to have participated in an illegal export in 2008. The agent testified he wanted to get his hands on the laptop as he thought it would contain evidence about that past violation and possibly current illegal activities, but he could not list any current illegal activities for which Mr. Kim was under suspicion. Due to this past activity, Mr. Kim’s name was in the relevant database, so when he arrived and left the country was known to HSI. HSI waited to seize the laptop until he was leaving, in the hope there might be something on it about current illegal activity.
The laptop was seized at LAX. It was neither opened nor activated at the time. Mr. Kim was considered so low risk, he was allowed to catch his flight. HSI sent the laptop to its forensic lab in San Diego for further analysis. As is common practice, the laptop was mirrored, software was used to identify relevant email traffic based on key word search terms, and the identified emails were reviewed by the investigating HSI agent. The agent then swore out an affidavit to support a search warrant which was granted by the judge. The affidavit went into detail, as they commonly do, about the steps that would be taken as part of the forensic analysis. However, all the steps described in the affidavit had already been taken. At the hearing on the motion to suppress, the HSI agent admitted nothing more was done to that data as a result of the search warrant being issued. The computer itself has long since been returned to Mr. Kim.
The judge spent some time in the decision discussing prior decisions by various courts, but, in the end, she found there was no reasonable suspicion to stop Mr. Kim. There was nothing in the record about his travels in the U.S. between arrival and departure which were questionable. The agent testified he just wanted to get his hands on the laptop, nothing more. The judge dealt with the issue about which anyone carrying an electronic device is concerned – it contains my life, who should have access to that data and under what circumstances? The government argued it has an absolute right to search anything at the border. The judge held that may be true for national security, public safety and public health reasons, but none of those were present here. First, there was no evidence a crime had been committed at the time of the seizure, much less a reasonable suspicion about one. Second, as a general proposition, the law requires a search warrant before property can be seized. The recognized exception is in the context of an arrest and then only to protect the arresting officers from harm, or if evidence could be lost or destroyed. Those factors were not present here.
Another troubling factor (although the judge did not dwell on it) was the agent swore out an affidavit for a search warrant but never mentioned the 2008 case either there or in his contemporaneous report! Just how important could it have been if it escaped earlier mention?
While the government argued the reasonable suspicion was tied to such factors as trying to identify co-conspirators or possible buyers, the judge was not convinced. In the end, the lack of a reasonable suspicion about contemporaneous criminal activity, coupled with the fact the laptop was sent 120 miles away, and its contents mirrored and carefully reviewed over quite some time, the judge granted the motion to quash.
In rendering its decision, the District of Columbia District Court looked to Riley v. California, 134 S.Ct. 2473 (2014). That case involved a cell phone which was viewed without a warrant following the arrest of Mr. Riley. He had been stopped for a traffic violation which led to his arrest on weapons charges. What was on the cell phone (pictures, videos, caller ID and the like) was then used by the prosecution to argue gang membership with the aim of an enhanced sentence. The U.S. Supreme Court held that generally to search an electronic device, law enforcement needs to first obtain a warrant. While agencies at the border are given broader discretion, their power is not unlimited. This case reinforces the point that even the government needs proper policies and procedures. HSI needed to make sure that when personal property was seized, that seizure complied with all the legal requirements. Here, the HSI agent was totally out of line and a possible piece of evidence of a potentially serious crime was lost.
Given their context, these cases are stark reminders that everyone must have policies and procedures in place which are current and followed. The government lost evidence in the Kim case because the agent took improper action. Mr. Brady has appealed the punishment the NFL imposed on him. Whether or not he manages to lessen that punishment, the court of public opinion yields a naïve but typical reaction – if he had nothing to hide, why not turn over his text messages? Can the damage to his reputation be repaired?
While neither of these cases is the sort of situation where the typical business finds itself, these cases are strong reminders for entities of all sizes and business purposes to regularly review their policies and procedures, make sure they are up-to-date, employees are properly trained and those policies and procedures are actually being followed.