Crime in the Suites: An Analyis of Current Issues in White Collar Defense
Posts Tagged ‘Constitutional law’
Sep 17
2013

Divided Appeals Court Overturns N.J. Sports Betting Law: Is Supreme Court Next Stop?

Today the U.S. Court of Appeals for the Third Circuit affirmed a district court decision from New Jersey invalidating New Jersey’s sports betting law. The decision marks a setback in New Jersey’s efforts to implement sports betting in the state, but the case is very likely to be appealed to the Supreme Court where it could meet a different fate. Also, to the extent that online gaming, including poker, appears to be expanding on a state by state basis, the Third Circuit decision may be a setback to the approach for sports betting, and may be an invitation for federal legislators to revisit the federal statute held to bar New Jersey’s desire to permit sports betting. The full text of the opinion is available here.

The Professional and Amateur Sports Betting Act of 1992 (PASPA), prohibits any state from offering sports betting unless that state had a sports betting scheme in place between 1976 and 1990. Under the law Delaware, Oregon and Montana were granted limited sports betting schemes and Nevada is the only state authorized to offer single-game sports betting. Under the terms of the statute, New Jersey had an option at that time to seek to offer sports betting, but declined to do so.

In 2011, New Jersey revisited the issue and voters approved a referendum by a 2-1 margin to amend the state constitution to allow for sports betting in the state’s casinos and racetracks. The state legislature then passed a bill legalizing sports betting in the state and it was signed into law by New Jersey Governor Chris Christie (R). The New Jersey law would allow wagering on all major professional and collegiate sporting events, except collegiate sporting events involving New Jersey colleges, and all sporting events, professional or collegiate, taking place in the state.

In reaction to the new law, the National Collegiate Athletic Association, Major League Baseball, the National Football League, the National Basketball Association and the National Hockey League sued in federal district to prevent the state from offering sports betting. The U.S. Department of Justice then intervened to defend the constitutionality of PASPA. After the district court granted summary judgment in favor of the NCAA and the professional league plaintiffs, the state appealed to the Third Circuit Court of Appeals.

In a 2-1 decision issued today, the Third Circuit found that the leagues had standing to bring the case and that PASPA is a constitutional exercise of federal power that barred New Jersey from proceeding with sports betting in the state. The Third Circuit found that the leagues were able to meet the constitutional standard for standing to assert a challenge to New Jersey’s law, but stated that it was “hesitant to conclude that the Leagues may rely solely on the existence of the Sports Wagering Law to show injury.” The decision also found that PASPA was constitutional and that the anti-commandeering principle did not apply because PASPA serves to invalidate contrary state laws and not to directly regulate the states. In doing so, the court relied on the Supremacy Clause in its reasoning that the New Jersey sports wagering law is invalid because it is in direct contravention with PASPA.

The Third Circuit decision was by no means by consensus. In a dissent containing powerful language, Judge Thomas Vanaskie noted that there is clear precedent that the federal government cannot direct state legislatures to enact legislation or state official to implement federal policy. The leagues and the Department of Justice had argued that in those cases required the state was required to take affirmative steps to enact legislation and PASPA does not. The dissent noted that nothing in those cases, “limited the principles of federalism upon which those cases relied to situations in which Congress directed affirmative activity on the part of the states.” The nature of the anti-commandeering principle and if it requires the state to take affirmative steps will be a key part of any appeal from New Jersey.

New Jersey will now likely either petition for an en banc review in the Third Circuit or file a petition to have the Supreme Court review the case. New Jersey has 45 days to seek an en banc review in the Third Circuit. If New Jersey files a petition with the Supreme Court it will have 90 days from today to appeal the decision. The Supreme Court hears a very small percentage of the cases appealed to it, but due to the interesting and complex constitutional issues raised in this case it seems relatively likely that this case will be heard. The Supreme Court has never addressed the constitutionality of PASPA.

Today’s decision from the Third Circuit marks a setback in New Jersey’s efforts to legalize sports betting, but this case is far from over. The dissenting opinion on a key issue provides a very strong basis for review and shows that the court struggled in forming its opinion on the issue. In addition to the continuing fight in the courts, the Third Circuit decision may also spark new federal legislative efforts to permit some form of limited licensed sports betting beyond the few states now permitted to offer it. We will continue to follow this case and provide updates here.

posted in:
State Criminal
Sep 13
2013

FBI Hacking Into Electronic Devices: An Effective But Invasive Tool

Privacy and national security interests are notoriously tricky to balance.  Lean too far one way, and you lose an important tool in preventing and detecting crime; lean too far the other way, and you are depriving Americans of their liberty through persistent government intrusion and observation. This balancing act has been an especially hot topic given recent revelations about the National Security Agency’s surveillance and data-gathering networks. While attention has been focused on the NSA and the mass surveillance disclosures that took place earlier this summer, a particularly startling revelation about the FBI’s actions has flown largely under the radar.

A recent New York Times article revealed that the FBI has been gathering information from suspects by remotely hacking into their electronic devices and covertly tapping into the information that can be found on and through the devices.  The FBI accomplishes this in much the same way that criminal, civilian hackers do: by delivering spyware to the devices through web or email links. When the user clicks on the link, either on a computer or a smartphone, the government can use the spyware either to collect existing files or to activate the device’s recording devices for continuing surveillance.  According to the article, one former U.S. official confirmed that the FBI can remotely activate the microphones in phones running the Android operating system to record conversations.

This sort of government intrusion goes well beyond the NSA’s acknowledged collection of telephone and email metadata.  This spyware is programmed to collect full conversations, real-time photos and videos, and stored files of all types, from devices that people have near them 24 hours a day.  This type of intrusive government intrusion into a device in which an individual has a reasonable expectation of privacy is the type that the Constitution’s Fourth Amendment is meant to address.  And, in theory, it does.  The FBI and other law enforcement agencies are required to obtain a warrant each time that they implement this technology to gather content such as computer files, and must meet a stricter standard for wiretaps when conducting surveillance using the webcam or microphone.

As technology advances, it becomes easier for the government to watch our every move.  Whereas once the government could listen to conversations only on wiretapped telephones or bugged areas, it is now able to keep an open microphone on a device that people keep on them no matter where they are.  We hope that law enforcement and the courts will seek and allow the use of this incredibly invasive and effective technique only rarely where no other surveillance is sufficient and not as a matter of course in standard investigations.

Aug 12
2013

Federal Judge Rejects NYPD’s ‘Stop and Frisk’ Policies

In a decision issued today that could potentially change the way police operate in the Big Apple, U.S. District Judge Shira A. Scheindlin (S.D.N.Y.) ruled that, for years, New York City police officers have been systematically stopping innocent people in the street without any objective reason to suspect that they were engaged in any kind of wrongdoing. The 195-page decision, issued after a lengthy trial, accuses the NYPD of a widespread disregard for the Fourth Amendment – particularly as the “stop-and-frisk” episodes soared in number over the last decade. To address the issue, Judge Scheindlin said she planned to designate an independent private attorney as a monitor for the police department’s compliance with the Constitution.

Judge Scheindlin’s ruling is a brave rebuke to the department’s increasingly aggressive policing policies.During the two-month trial, the court heard testimony regarding some 4.3 million stops between 2004 and mid-2012. The U.S. Supreme Court has long sanctioned stopping and frisking an individual based upon reasonable suspicion that he or she is engaged in wrongdoing. But experts testified in the trial that in about 88 percent of the stops, police found no contraband or other evidence of illegal behavior – an incidence so high that it suggests that there was no credible basis on which to stop many of those individuals in the first place.

Given that the individuals in question were usually young minority men, a policing policy that essentially permitted police to treat as suspicious behavior that was perfectly innocent had the effect of watering down the Constitution’s protection against illegal searches and seizures. In her ruling, Judge Scheindlin rejected the testimony of numerous police officers and commanders who typically defended the legality of stops and said that they were made only when officers reasonably suspected criminal behavior.

Judge Scheindlin’s ruling in the case comes on the heels of what some have characterized as an effort by the administration of NYC Mayor Michael Bloomberg to influence the judge or to create some kind of extrajudicial bias against her ruling in the Second Circuit Court of Appeals (which will doubtless be hearing an appeal of this decision). In June, the mayor’s office offered to a number a press outlets a “study” it had conducted that purported to show that Judge Scheindlin grants motions to suppress evidence for constitutional violations in a much higher percentage of criminal cases than do her colleagues in the Southern District of New York. Today’s decision certainly makes clear that Judge Scheindlin was not influenced by those communications in favor of the city, and it is left to be seen whether press reports on that study will have the unlikely consequence of influencing the appellate court.

Judge Scheindlin’s decision is important because it seeks to address constitutional violations on an institutional level and also because it addresses those violations that befall individuals who are not charged with any crime. In a case in which a person faces criminal charges, he or she usually can challenge the admission of physical evidence or his or her own statements based on a claimed violation of constitutional rights, and a favorable ruling will result in the exclusion of that evidence from any trial on those charges. But for a person whose civil rights are violated by an illegal search that results in no criminal charges, the recourse is less obvious.

While there are circumstances in which an individual could sue individual police officers based on an illegal search, the burdens of litigation and the proof required usually are high enough that few if any people pursue such cases. Indeed, a police department policy that encouraged officers to engage in searches of questionable legality appears to rely on those disincentives to protect the officers and the department from liability and scrutiny. By finding an institution-wide set of violations, and by imposing a requirement that an independent monitor ensure compliance, Judge Scheindlin’s ruling (if upheld on appeal) has the potential to provide a more reliable guarantee of constitutional rights to New Yorkers.

If some will decry the decision as threatening the ability of police to control crime, they have forgotten the historical lessons about the importance of safeguarding the rights of minorities in our country, and the important role that the Constitution plays in protecting the rights of the innocent.

posted in:
State Criminal
Jun 26
2013

Appeals Court Hears Argument on N.J. Sports Betting Law, With Uncertain Outcome

Very lively oral arguments were held today, June 26, in the U.S. Court of Appeals for the Third Circuit on the New Jersey sports betting law, in a case that will have an enormous impact on the future of sports betting in the United States.

At issue in the case is the federal Professional and Amateur Sports Protection Act of 1992 (PASPA), which prohibits any state from offering sports betting unless that state had a sports betting scheme in place between 1976 and 1990. Last year, New Jersey Governor Chris Christie signed into law a bill authorizing single-game sports betting in the state. In August, the four major professional sports leagues and the National Collegiate Athletic Association (NCAA) filed suit arguing that the state’s sports gambling law was in violation of federal law.

In December 2012, Judge Michael Shipp of the U.S. District Court for the District of New Jersey held oral arguments to determine whether the sports leagues had standing to bring the lawsuit and determined that they did have standing. The U.S. Department of Justice (DOJ) later intervened in the case to defend the constitutionality of the statute. Oral arguments were held in February, and Judge Shipp held that the New Jersey law was invalid as conflicting with PASPA, which he found to be a valid exercise of congressional power. In March, New Jersey filed an appeal with the Third Circuit, appealing both the standing and constitutionality rulings.

Today in the Third Circuit, the judges dictated the path that the oral arguments took for both sides. Ted Olson, a former United States Solicitor General arguing on behalf of New Jersey, began the arguments by stating that PASPA is “plainly unconstitutional.” Olson also argued that the sports leagues did not have standing to bring the lawsuit because they did not meet the Article III requirement that they actually suffered harm from the New Jersey wagering law.

On the issue of anti-commandeering, which could be crucial to the court’s decision on the constitutionality of PASPA, the judges peppered Olson with questions regarding precedent on the issue and whether “commandeering” is limited to instances in which the federal government forces a state to take affirmative steps. There seemed to be some skepticism from the judges that PASPA should be considered an instance of commandeering because New Jersey did not have to do anything to comply with the statute. Olson argued that PASPA is a federal initiative and the responsibility for enforcing it is on the states, thus making this an instance of commandeering.

The issue of state sovereignty was not an issue that New Jersey focused on in the district court or in their briefs in the Third Circuit, but today Olson focused more on the issue by citing Supreme Court decisions that were issued yesterday and today, arguing that those cases support the position that PASPA is a violation of state sovereignty. Olson took contention with the argument made by their opponents in the briefs that the issue of state sovereignty only applies to states that are newly admitted to the Union.

Paul Clement, also a former United States Solicitor General, argued for the sports leagues. He pointed to the Third Circuit’s previous decision in Office of the Commissioner of Baseball v. Markell, a case that he conceded did not directly address standing, to support his position that the leagues have standing in the case. Clement also pointed to other cases, such as copyright cases, that show that the leagues are entitled to protect their product, and in sports wagering, it is their product, the games, that is at issue.

Clement was questioned about the recent Supreme Court decisions and was asked why PASPA was not a violation of state sovereignty. Clement attempted to distinguish the cases by arguing that they did not apply to PASPA because it was passed under the Commerce Clause, which affords the federal government broad powers to regulate interstate commerce. The U.S. Attorney for the District of New Jersey, Paul Fishman, argued on behalf of the federal government and agreed with Clement’s stance that PASPA is distinguishable from those cases.

There is no definitive timetable for a decision in the case, but it may take several months before an opinion is issued. Regardless of the decision reached by the Third Circuit, the losing party will have the option of seeking a rehearing en banc in that court or filing for a writ of certiorari to the United States Supreme Court. However, both these steps are subject to court discretion.

The ruling from the Third Circuit in this case will have far-reaching implications. A decision in New Jersey’s favor would remove the primary hurdle preventing states from offering sports betting within their borders. The panel today left no clear impression about which way they are leaning in their decision. and ultimately it may take a Supreme Court ruling before there is a definitive answer on PASPA.

posted in:
State Criminal
Jun 11
2013

DOJ Files Briefs in Key 3rd Circuit Case on N.J. Sports Betting Law

On June 7, 2013, the U.S. Department of Justice (DOJ) as well as the four major professional sports leagues and the National Collegiate Athletic Association (NCAA) filed their briefs in the U.S. Court of Appeals for the Third Circuit in a case with major implications for the future of sports betting in the United States.

Last February, U.S. District Judge Michael Shipp struck down New Jersey’s new sports betting law, finding it invalid as conflicting with federal law. The federal law at issue is the Professional and Amateur Sports Protection Act of 1992 (PASPA), which prohibits any state from offering sports betting unless the state had a sports betting scheme in place between 1976 and 1990.

In December, the court held oral arguments on just the standing issue and later held that the leagues did have standing to bring the suit. The Department of Justice later intervened in the lawsuit to defend the constitutionality of PASPA.

New Jersey filed its opening brief in April and will have the opportunity to file a reply brief by June 14 to the briefs submitted by DOJ and the sports leagues. Oral arguments are scheduled for June 26. New Jersey is challenging both the constitutionality of PASPA and the leagues’ standing to bring the case.

Also in April, the attorneys general from Georgia, Kansas, Virginia and West Virginia filed an amicus brief with the Third Circuit in support of reversal of the district court’s ruling, on the basis that the ruling threatens the system of dual sovereignty.

A key to this case will likely be how the Third Circuit interprets the anti-commandeering principle recognized by the U.S. Supreme Court in a number of cases. DOJ argues in its brief that PASPA does not offend the anti-commandeering principle and focuses on the fact that the Supreme Court has only applied the principle twice in invalidating a federal law.

DOJ argues that from those two decisions the Supreme Court has established “the basic touchstone of the anti-commandeering doctrine: it applies when a federal law requires a State to enact or implement a federal regulatory program.” In this case, PASPA is not demanding affirmative regulatory action; instead it prohibits New Jersey from sponsoring sports betting. The brief from the leagues points out that the Third Circuit has never held that a statute violates the Tenth Amendment.

The other key constitutional question that the Third Circuit is being asked to address is whether PASPA violates the equal sovereignty principle. New Jersey has argued that because PASPA discriminates among the states by allowing only a few states to offer sports betting, it violates the state’s right to equal sovereignty, which requires any discrimination among the states to be justified by “a showing that a statute’s geographic coverage is sufficiently related to the problem that it targets.” DOJ argues that PASPA does not offend the equal sovereignty doctrine and has traditionally been applied only in the context of States’ admission to the Union, and “has never been understood to invalidate, or even subject to heightened scrutiny, all federal legislation that draws distinctions among particular States.”

Regardless of the decision reached by the Third Circuit, the losing party will have the option of seeking a rehearing en banc in the Third Circuit, or filing for a writ of certiorari to the United States Supreme Court. However, both options are discretionary, leaving the possibility that the ruling from the Third Circuit will be final.

There have been prior challenges to PASPA in federal court, but none of those cases required the court to directly address the constitutionality of the statute, which the Third Circuit is being asked to do here.

The ruling from the Third Circuit in this case will have far-reaching implications. A decision in New Jersey’s favor removes the primary hurdle preventing states from offering sports betting within their borders. A decision that opines on the constitutional issues in the case could have a significant impact in the future on the federal government’s ability to regulate the states.

posted in:
State Criminal
Apr 30
2013

N.J. Files Brief Supporting Sports Betting Law in Key Gambling Litigation

The state of New Jersey filed its opening brief on April 29 in the U.S. Court of Appeals for the 3rd Circuit, in a case that could ultimately decide the fate of sports betting in the United States.

In February, U.S. District Court Judge Michael Shipp struck down New Jersey’s new sports betting law, finding it invalid as conflicting with federal law. The federal law at issue is the Professional and Amateur Sports Betting Act of 1992 (PASPA), which prohibits any state from offering sports betting unless the state had a sports betting scheme in place between 1976 and 1990.

In 2011, New Jersey voters approved a referendum by a 2-1 margin to amend the state’s constitution to allow sports betting in the state’s casinos and racetracks. The state legislature then passed a bill legalizing sports betting in the state and it was signed into law by Gov. Chris Christie (R). The New Jersey law would allow wagering on all major professional and collegiate sporting events, except collegiate sporting events involving New Jersey colleges, and on all sporting events, professional or collegiate, taking place in the state.

In August, the four major professional sports leagues and the National Collegiate Athletic Association (NCAA) filed suit against New Jersey arguing that the sports gambling law violated federal law. The U.S. Department of Justice (DOJ) later intervened as a plaintiff in the suit, joining the leagues.

The district court agreed with the plaintiffs and held that PASPA was a rational exercise of congressional power.

There have been prior challenges to PASPA in federal court, but none of those cases directly addressed the constitutionality of the statute, which the Third Circuit is being asked to do in this case.

New Jersey argues that PASPA is unconstitutional because it violates the anti-commandeering principle that Congress may not “require the States in their sovereign capacity to regulate their own citizens.” The Third Circuit’s view on the application of the anti-commandeering principle to PASPA is likely the key to this case for both sides. The district court held that PASPA did not violate the anti-commandeering principle because the doctrine is limited to laws that require some affirmative act by a state, and here New Jersey does not have to affirmatively take any action under the law.

New Jersey argues in its brief that there is no doctrinal basis for this requirement of affirmative conduct for “commandeering,” and that PASPA’s requirement to maintain existing laws is indistinguishable from a requirement to pass new laws. New Jersey cites case law stating that the anti-commandeering precedent turns on whether a law seeks “to control or influence that manner in which States regulate private parties.”

New Jersey also argues that PASPA violates the principle of equal sovereignty, which requires any discrimination among the states to be justified by “a showing that a statute’s geographic coverage is sufficiently related to the problem that it targets.” New Jersey argues that PASPA plainly discriminates among the states and that sports wagering is not the type of “local problem” that justifies different treatment among them. The justification in PASPA for the different treatment of the states was that some states already permitted sports wagering, a difference that does not justify the different treatment between the states.

New Jersey also challenged the leagues’ standing to bring the suit, arguing that although PASPA granted the leagues a right of action to enforce PASPA, “that act does not alter Article III’s jurisdictional requirements.” A separate hearing on just the standing issue was held by the district court in December, and the court found that the leagues did have standing to bring the suit. New Jersey argued that the district court relied on the general harm caused by illegal sports wagering, but that this harm was not traceable to the legalization of sports wagering in New Jersey. New Jersey also noted that the district court placed heavy emphasis on the 3rd Circuit decision in Office of the Commissioner of Baseball v. Markell, a decision that did not address the issue of standing.

The state argues that the standing of DOJ to enforce the law is irrelevant here because “intervention will not be permitted to breathe life into a ‘nonexistent’ law suit.” The court will sometimes treat the pleadings of an intervenor such as DOJ as a separate action, but New Jersey argues that this would not be justified here since DOJ’s intervention cannot be construed as a separate action because it did not sue to enforce the law; rather, DOJ intervened to defend PASPA’s constitutionality.

Intervenor defendants, the New Jersey Thoroughbred Horseman’s Association, Inc. as well as State Senate President Stephen Sweeney and Speaker of the New Jersey General Assembly Sheila Y. Oliver, also filed briefs arguing that PASPA is unconstitutional.

The deadline for the response from the leagues is May 23 and New Jersey will have an opportunity to file a reply brief by May 30. Oral arguments are scheduled in the appeals court on June 26.

The ruling in this case will have very far-reaching implications. A decision in favor of New Jersey will allow states to offer sports betting within their borders. It was not surprising that the district court ruled that New Jersey’s sports wagering law was invalid, but the law may have a different fate in the 3rd Circuit. New Jersey has some very compelling arguments that PASPA is unconstitutional and later this year we will find out if the appeals court agrees.

posted in:
State Criminal
Mar 29
2013

Judge Strikes Down FBI’s Use of ‘National Security Letters’

In a recent decision, U.S. District Judge Susan Illston of the Northern District of California struck down the FBI’s use of National Security Letters (NSLs) as unconstitutional. Unbeknownst to most Americans, the FBI has been issuing thousands of NSLs every year. The letters demand that recipients, such as banks and telephone companies, provide customers’ information such as their transactional records, phone numbers dialed, and email addresses mailed to and from. This doesn’t involve the content of the phone calls or emails but does involve the names of addressees or participants. One reason most Americans didn’t know about these letters is because more than 95 percent of them contain gag orders, barring the recipient from disclosing their content or even their existence.

This case began nearly two years ago, in May 2011, when a nonprofit advocacy group, the Electric Frontier Foundation (EFF), filed suit on behalf of an unnamed telecom company that had received an NSL. In defense of the NSLs, the government argued that this level of secrecy is necessary to protect the nation against potential security threats. NSLs were designed in the 1970s as a means to gather information on suspected foreign spies during terrorism and espionage investigations. However, the Patriot Act greatly expanded their reach to allow the FBI to secretly compel companies to provide data on American citizens.

The constitutionality of NSLs is dubious for two distinct reasons. Not only does the nondisclosure clause infringe on their recipients’ free speech, but, unlike a standard subpoena or search warrant, the NSLs do not have to be authorized by a judge. Accordingly, Illston concluded that NSLs and their nondisclosure provisions violate the First Amendment and separation of powers principles, and she ordered the FBI to stop issuing NSLs and cease enforcing all gag provisions. That said, we are uncertain whether Illston’s order will ever go into effect. Due to the gravity of the First Amendment and national security issues at stake, Illston issued a 90-day stay, giving the government time to appeal her decision to the U.S. Court of Appeals for the 9th Circuit.

Although the lawsuit was filed anonymously, various media sources have suggested that the unnamed defendant may be Credo Mobile, a phone provider that supports progressive causes. The day after the ruling was released, Credo’s CEO Michael Kieschnick released the following statement:

“This decision is notable for its clarity and depth. From this day forward, the US government’s unconstitutional practice of using national security letters to obtain private information without court oversight and its denial of the first amendment rights of national security letter recipients have finally been stopped by our courts.”

According to Matt Zimmerman, an EFF attorney, the NSL gags “have truncated the public debate on these controversial surveillance tools,” and his unnamed client “looks forward to the day when it can publicly discuss the issue.”

As we await the higher court’s ruling, which we hope leaves Illston’s decision in place, one thing has already been accomplished of a positive nature. A federal district judge has shined some light on a little-known and highly dubious federal law enforcement technique.

Mar 11
2013

Court: Data on Unsecured Network May Qualify for 4th Amendment Protection

The vast increase in the use of wireless data networks has led to new legal issues regarding network users’ right to privacy. A recent opinion issued by the U.S. District Court for the District of Oregon indicates that, under some circumstances, individuals on an unsecured wireless network have a reasonable expectation of privacy entitling them to Fourth Amendment protection. As a result, police officers must obtain a warrant prior to accessing files on that network.

In United States v. Ahrndt, defendant John Henry Ahrndt moved to suppress evidence that a police officer obtained by accessing Ahrndt’s wireless home network and opening files without a search warrant.

In February 2007, one of Ahrndt’s neighbors connected to Ahrndt’s unsecured wireless internet network. When she opened her iTunes program, she was able to see “shared” files from Ahrndt’s iTunes and LimeWire accounts, and saw a number of titles indicative of child pornography.

The neighbor did not open any of the files, but called the police to report what she saw. A deputy came to her house and she showed him the file names as she had seen them. The deputy asked her to open one of the files. When she did, it opened an image of child pornography.

The deputy questioned the neighbor about whom the unsecured wireless network might belong to. She indicated that the network had been available since she moved into the building, and at the time Ahrndt’s home was the only other one that was occupied. The police ran the license plate of a car parked outside of the home and identified it as belonging to Ahrndt, a convicted sex offender.

Using a general description of what the neighbor and deputy recalled seeing in the list of file names, the police applied for and received a search warrant to access the wireless network again in order to get an IP address. The police then served a summons on the Internet provider. The provider disclosed that Ahrndt was the subscriber in question.

Using that information, the police obtained a search warrant for Ahrndt’s home. They ran a forensic search of his computer and identified images of child pornography in various folders. The forensic report did not mention either iTunes or LimeWire.

In considering the motion to suppress the evidence obtained through the initial warrantless search, the court concluded that it would have been appropriate for the deputy to view the titles of the files without a warrant, since a private party (the neighbor) had already viewed those files and told the police about them. However, the court concluded that it was a violation of Ahrndt’s Fourth Amendment rights for the police to instruct the neighbor to open the file, which she had not previously done. The opened image was no longer within the purview of private search, but a government search.

The court also found that Ahrndt’s privacy expectations were not eliminated by accessing an unsecured wireless network. There was no evidence that Ahrndt had intentionally enabled sharing for those files; rather, the default setting of the LimeWire program enabled sharing. It was Ahrndt’s reasonable belief that those files were contained only on his hard drive, and not shared on a public network. The court said that “[i]n short, the government does not dispute a person has a reasonable expectation of privacy in the files on his home personal computer.”

The court concluded that, lacking specific file names and a description of images, a magistrate would not have found probable cause to issue a search warrant. The only evidence that the police viewed lawfully was the file names, which the neighbor and deputy could not remember with specificity. Since the “partial recollections and characterizations” were too general to support a warrant, all related evidence from the unlawful search must be suppressed.

The court came to the right conclusion on this one. Our reliance on the Internet has become such that what is on our computers is as personal and private as the inside of our homes. The government is no more entitled to search our computer without probable cause than to search our homes. This case does not represent a free pass to intentionally share information on wireless networks and then assert Fourth Amendment rights when the government comes knocking. Rather, it is only that information to which an user has a reasonable expectation of privacy—such as files that he is not aware are accessible to others—that is protected against the government’s unlawful search and seizure.

It’s easy to see how this has implications for potential white-collar cases: the government might try to use financial information unintentionally made available to a neighbor through an unsecured network as a basis to initiate a financial fraud investigation. We hope that the courts will rely on this case and suppress any evidence obtained as a result of this type of unlawful search.

Mar 01
2013

Federal Judge Strikes Down N.J. Sports Betting Statute as Conflicting With Federal Law

Last night, U.S. District Court Judge Michael Shipp released an opinion in the widely watched New Jersey sports betting case, stating that New Jersey’s sports betting law is invalid as conflicting with federal law. Now, the future of sports betting in the United States will be decided by the U.S. Court of Appeals for the Third Circuit.

The Professional and Amateur Sports Betting Act of 1992 (PASPA), prohibits any state from offering sports betting unless that state had a sports betting scheme in place between 1976 and 1990. Under the law Delaware, Oregon and Montana were granted limited sports betting schemes and Nevada is the only state authorized to offer single-game sports betting.

In 2011, New Jersey voters approved a referendum by a 2-1 margin to amend the state constitution to allow for sports betting in the state’s casinos and racetracks. The state legislature then passed a bill legalizing sports betting in the state and it was signed into law by New Jersey Governor Chris Christie (R). The New Jersey law would allow wagering on all major professional and collegiate sporting events, except collegiate sporting events involving New Jersey colleges, and all sporting events, professional or collegiate, taking place in the state.

In August, the four major professional sports leagues and the National Collegiate Athletic Association (NCAA) filed suit against New Jersey arguing that the state’s sports gambling law was in violation of federal law.

In December, the court heard oral arguments on the leagues’ standing to bring the suit and found that they did have standing. After that ruling, the U.S. Department of Justice (DOJ) announced its intention to intervene and join the four major sports leagues and the NCAA as plaintiffs in the case. The DOJ filed a brief on February 1 defending the constitutionality of PASPA.

Judge Shipp heard oral arguments on February 14, 2013, on the constitutionality of PASPA. The oral arguments focused on three main constitutional issues: Congress’s power to regulate sports betting under the Commerce Clause and the applicability of the uniformity and equal sovereignty principles under the Commerce Clause, due process and equal protection issues under the Fifth Amendment, and the contention that the law violates the anti-commandeering principle that prohibits the federal government from imposing duties on state legislators or executive officials to carry out a federal initiative.

After a very lengthy analysis, the court found that PASPA did not violate the anti-commandeering principle because it “neither compels nor commandeers New Jersey to take any action.” One point of contention during oral arguments was if the anti-commandeering principle applies only when a state is required to engage in affirmative activity. The court agreed with the leagues on this point, by stating that the case law makes it clear that, “Congress cannot, via the Commerce Clause, force States to engage in affirmative activity” and noted that the difference between forcing a state to affirmatively do something and being prohibited from doing something “is not merely academic or insubstantial.”

The court’s opinion also made it clear that it does not believe that PASPA violates any Tenth Amendment principles. The state has argued that Nevada was essentially granted a monopoly on single game sports betting through PASPA and that was a challenge to its state sovereignty. The court did not agree that PASPA usurps state sovereignty and noted that “the fact that gambling might be considered an area subject to the States’ traditional police powers does not change this conclusion.”

The court found that PASPA’s grandfathering clause that allows a few states to offer sports betting comports with the Commerce Clause. The court pointed to the legislative findings of PASPA stating that, “Congress has determined that the substantial reliance interests of the grandfathered states merit preservation and protection,” and therefore, the grandfather clause contained in PASPA passed the rational basis review.

This decision on the constitutionality of PASPA will almost inevitably be appealed to the U.S. Court of Appeals for the Third Circuit and the state will have 30 days to file its appeal. The Third Circuit has heard prior appeals regarding PASPA, but has never directly addressed the constitutionality of the statute, which it will need to in this case.

New Jersey could also appeal the decision by Judge Shipp granting the leagues standing to bring this lawsuit. The leagues have stated in court filings that “the impact of state-sponsored gambling on the public perception of their games and their relationships with their fans are sufficient to confer constitutional standing in this case.” The leagues also argue that Congress expressly recognized that they would suffer from the spread of state-sponsored gambling on their games and provided them with a cause of action under PASPA.

The two sides disagree on what precedent has been set by the Third Circuit on standing issues related to PASPA. In 2009, the Third Circuit ruled in Office of the Commissioner of Baseball v. Markell, that Delaware’s plan to expand its sports betting offerings violated PASPA. Standing was not discussed in the opinion in Markell and lawyers for the leagues argued that this was because the standing of the leagues was so obvious that the court did not need to address it. At oral arguments, Judge Shipp directly asked the state how it could reconcile its argument that the league lacked standing with the Third Circuit’s decision.

The Supreme Court has never addressed PASPA.

This decision is a minor setback for New Jersey, and the future of sports betting in America will be played out in the Third Circuit. It would have been a bold step for a federal district court judge to overturn a federal law that had been existence for two decades. Judge Shipp’s ruling shows that he was being conservative in deferring to Congress in this case, even noting that “judicial intervention is generally unwarranted no matter how unwise a court considers a policy decision of the legislative branch.”

posted in:
State Criminal
Feb 20
2013

Does ‘Speech or Debate’ Trump the Right to Defend Oneself in Court?

On February 5, 2013, the Bipartisan Legal Advisory Group of the U.S. House of Representatives filed a brief urging the U.S. Court of Appeals for the D.C. Circuit to hold that U.S. legislators and their aides cannot be forced to testify about their legislative activities, even when their expected testimony might help exonerate a criminal defendant.

The case raises interesting questions about the balancing of constitutional imperatives – here, the separation of powers and a criminal defendant’s right to present a defense. Fraser Verrusio, a former House staffer, is hoping for a balance struck in favor of defendants’ rights.

In 2011, Verrusio was convicted of accepting an illegal gratuity in connection with his duties as then policy director of the House Transportation Committee. According to the prosecution, Verrusio accepted and failed to report an all-expenses-paid trip to New York City that included a ticket to the World Series and an outing to a strip club. The trip was funded by United Rentals, a construction-equipment company that had stepped up its lobbying efforts to get favorable amendments into the federal highway bill. United Rentals wooed senior staff member Verrusio, who reportedly advised the chair of the House Transportation Committee (as well as the committee) on legislative strategies and policy. Prosecutors alleged that when Verrusio accepted the $1,200 trip, he knew that United Rentals was compensating him for future assistance on the highway bill.

One key piece of evidence against Verrusio was an e-mail that United Rentals lobbyist James Hirni sent to Vivian Curry, legislative director for then-House Committee member John Boozman. In his e-mail, Hirni said, “I have spoken to [Verrusio] and he is good to go. I am resending him the language in the Senate bill, with changes which would represent the 100 percent victory for [United Rentals. Verrusio] asked us to give him the language plus what we would want in the perfect world.”

To address the possible inferences from that e-mail, Verrusio’s attorneys issued a trial subpoena to Curry. The defense expected her to testify that Verrusio had not inserted himself into the legislative process and had not pressured her. But Curry moved to quash the subpoena on grounds that her testimony was privileged under the Speech or Debate Clause of the Constitution. She argued that the testimony sought was protected because it concerned “information gathering for legislative purposes.”

Verrusio countered that the inability to call Curry would violate his rights to due process and to present a complete defense. During the hearing on Curry’s motion, the defense made a potentially critical error when it acknowledged the “high hurdle” imposed by the Speech or Debate Clause and then conceded that the clause “in fact did “appear to cover [the e-mail] communications.” The court held that Curry had properly invoked the privilege and could not be forced to testify.

After the jury returned a guilty verdict on all counts, Verrusio appealed. Among other things, he claims that the trial court erred when it prevented him from calling Curry as a witness. In his view, one of two results must follow. First, Verrusio contends that protections under the Speech or Debate Clause are not absolute but, in some cases, must give way to a defendant’s right to compulsory process. He argues that trial judges should balance a defendant’s need for otherwise-protected testimony against the potential burden on Congress. When the case involves an aide’s testimony regarding informal, passive information gathering from a third party, the potential burden is minimal to non-existent. In such cases, the next question to ask is whether the testimony sought is material. In cases like his — where the jury verdict is already of questionable validity — the “materiality” bar is lower. Thus, he argues, any evidence calling into question the government’s theory could have created reasonable doubt.

Verrusio contends in the alternative that, if the Speech or Debate Clause privilege is absolute, the indictment must be dismissed.

The prosecution replies that Verrusio waived his right to appeal the trial judge’s order to quash. Not only did the defense concede that Curry’s testimony was protected; it first introduced the “balancing test” argument on appeal. Therefore the appellate court may not consider it.

Speaking as friends of the court, the House’s Bipartisan Legal Advisory Group framed the issue as one upon which “the whole American fabric” rests – separation of powers. The decision is simply whether an individual’s right to evidence trumps American liberty in general – an impossible bar to meet. After summarizing the history of the Speech or Debate Clause, the House brief argues that the clause is absolute, regardless of whether the proceedings are civil or criminal. Moreover, the testimony Verrusio sought from Curry was unquestionably protected because it concerned “activities that were ‘an integral part of the deliberative and communicative processes by which Members participate in committee and House proceedings.’” According to the House brief, no court has held that the Speech or Debate Clause privilege is subject to a balancing test. And Verrusio’s reliance on cases recognizing some flexibility with respect to executive privilege is unavailing since executive privilege is not expressly mandated in the Constitution.

But the House brief glosses over the fact that executive privilege is rooted in separation of powers just like the speech or debate privilege. That leaves the question of why the separation of powers in executive-privilege cases need not be guarded so jealously.

Courts decline to address thorny constitutional questions if they can resolve a case on other grounds. It seems likely that the D.C. Circuit will home in on Verrusio’s alleged failure to preserve his argument and save the speech or debate issue for another day. Verrusio’s reply brief is due to be filed by March 13, 2013; the D.C. Circuit will likely issue its decision sometime mid-year.

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Crime in the Suites is authored by the Ifrah Law Firm, a Washington DC-based law firm specializing in the defense of government investigations and litigation. Our client base spans many regulated industries, particularly e-business, e-commerce, government contracts, gaming and healthcare.

Ifrah Law focuses on federal criminal defense, government contract defense and procurement, healthcare, and financial services litigation and fraud defense. Further, the firm's E-Commerce attorneys and internet marketing attorneys are leaders in internet advertising, data privacy, online fraud and abuse law, iGaming law.

The commentary and cases included in this blog are contributed by founding partner Jeff Ifrah, partners Michelle Cohen, David Deitch, and associates Rachel Hirsch, Jeff Hamlin, Steven Eichorn, Sarah Coffey, Nicole Kardell, Casselle Smith, and Griffin Finan. These posts are edited by Jeff Ifrah. We look forward to hearing your thoughts and comments!

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