No. 99-949
In the Supreme Court of the United States
KARL L. DAHLSTROM, PETITIONER
v.
UNITED STATES OF AMERICA
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
BRIEF FOR THE UNITED STATES IN OPPOSITION
SETH P. WAXMAN
Solicitor General
Counsel of Record
JAMES K. ROBINSON
Assistant Attorney General
THOMAS E. BOOTH
Attorney
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
QUESTION PRESENTED
Whether the presence of a state law enforcement officer at the scene when
employees of petitioner's corporation removed corporate records made that
removal a governmental seizure subject to the Fourth Amendment.
In the Supreme Court of the United States
No. 99-949
KARL L. DAHLSTROM, PETITIONER
v.
UNITED STATES OF AMERICA
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
BRIEF FOR THE UNITED STATES IN OPPOSITION
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1a-18a) is reported at 180
F.3d 677.
JURISDICTION
The judgment of the court of appeals was entered on July 13, 1999. The petition
for a writ of certiorari was filed on October 7, 1999. The jurisdiction
of this Court is invoked under 28 U.S.C. 1254(1).
STATEMENT
Following a jury trial in the United States District Court for the Southern
District of Texas, petitioner was convicted on one count of fraud in connection
with the purchase and sale of securities, in violation of 15 U.S.C. 78j(b);
one count of fraud in the offer and sale of securities, in violation of
15 U.S.C. 77q(a); one count of the sale of unregistered securities, in violation
of 15 U.S.C. 77e(a); one count of acting as an unregistered broker-dealer,
in violation of 15 U.S.C. 78o(a)(1); and eight counts of mail fraud, in
violation of 18 U.S.C. 1341. Petitioner was sentenced to 78 months' imprisonment,
to be followed by three years' supervised release, and was ordered to make
restitution in the amount of $1,997,003. The court of appeals affirmed.
Pet. App. 1a-18a.
1. In 1991, petitioner and his daughter Karla solicited investments for
the production and marketing of Uni-snuff, a gel designed to extinguish
oil well fires like the ones raging in Kuwait at the time. Uni-snuff, however,
was not commercially viable. Petitioner knew that efforts to market Uni-snuff
in Mexico and Kuwait had failed, that the product would rot if it remained
in a mixed solution for a few days, that mixing the components at the scene
of a fire was impractical, and that an independent report had concluded
that Uni-snuff would not perform well on oil well fires. Petitioner told
his investors, however, that the product was out of the prototype stage,
that it had been successfully tested on all types of fires, and that it
was commercially viable. Pet. App. 1a-3a.
In April 1991, after ten people had agreed to invest in the product, petitioner
incorporated Inferno Snuffers, Inc. (ISI) for the sole purpose of producing
and marketing Uni-snuff. ISI maintained its office and laboratory in Bryan,
College Station, Texas. Pet. App. 2a.
Petitioner encouraged the selling of securities to meet the ever increasing
need for investment money. By July 1991, the number of investors in ISI
had exceeded the number permitted under securities laws for unregistered
securities; to evade those restrictions, petitioner placed new investors
into "trusts." Petitioner also attempted to circumvent laws requiring
the registration of brokers and dealers in securities by designating fees
he received for selling securities as "consulting fees." In September
1991, the Texas Securities Board advised petitioner that securities sold
to the general public had to be registered and could be sold only by registered
dealers absent an applicable exemption. Nonetheless, petitioner and his
daughter continued to sell securities. Pet. App. 2a, 4a-6a; Gov't C.A. Br.
11-14, 45.
An audit later revealed that the company had suffered a loss of more than
$2 million and that no product had been sold. In April 1992, petitioner
made a formal rescission offer to the stockholders, but the company did
not have enough money to fund the offer. Pet. App. 6a.
ISI's lease on its offices expired on April 30, 1992. The Board of Directors
decided to move the company to another plant, in Navasota, Texas. At that
time, petitioner no longer held a majority interest in ISI and was not on
the Board of Directors. When petitioner learned of the planned move, however,
he attempted to bar ISI employees from removing any property from the premises.
On May 11, 1992, ISI employees arrived at the ISI offices to relocate the
company's property to the Navasota plant. They were accompanied by a local
sheriff's deputy. Petitioner asked the employees to leave, but they refused.
The employees then entered the premises and removed a file cabinet, computers,
documents, and other property. The sheriff's deputy did not say anything
during the exchange between petitioner and the ISI employees, and he stayed
about eight feet away, in a hallway, when the employees were removing property
from the ISI offices. At one point, Robert Frenza, an ISI employee who was
working when the ISI movers arrived, walked out to his car with a box and
a briefcase. An employee asked Frenza to open the trunk of his car and his
briefcase to see whether Frenza was carrying ISI documents. When Frenza
refused, the sheriff ordered him to open the trunk and the briefcase. The
employees determined that Frenza was carrying only his personal effects.
Pet. App. 7a; Gov't C.A. Br. 71-74.
In 1993, the FBI opened an investigation into petitioner's activities. During
that investigation, the FBI obtained, by subpoena, documents that had been
removed from the ISI premises by the employees and were in the custody of
the ISI receiver at the Navasota plant. Gov't C.A. Br. 74.
2. Petitioner moved to suppress the documents removed from ISI offices in
1992 by ISI employees, arguing that the removal of those documents was an
invalid warrantless seizure in violation of the Fourth Amendment. The district
court denied the motion to suppress, finding that the employees were not
acting as government agents when they removed the documents, and that those
employees were acting for their own purposes and not for law enforcement
purposes in taking the documents. See Gov't C.A. Br. 76.
The court of appeals affirmed. The court held that the ISI employees' removal
of documents from the ISI offices did not violate the Fourth Amendment because
that removal was not a governmental search or seizure subject to the Fourth
Amendment. See Pet. App. 7a-9a. The court observed first that whether a
person is acting as a government agent for Fourth Amendment purposes is
a question of fact reviewable on appeal only for clear error. Id. at 7a-8a.
The court also stated that an individual acts on behalf of the government,
or as an agent or instrument of the government, for Fourth Amendment purposes
only if "(1) the government has offered the individual some form of
compensation for the search; (2) if the individual did not initiate the
idea on his own that he would conduct the search; and (3) the government
lacked specific knowledge that the individual intended a search." Id.
at 8a. Applying that standard, the court ruled that no government search
occurred in this case because the "individuals conceived the plan on
their own and solely for their own benefit. The officer's presence was merely
requested to keep the peace. In addition, the government did not acquire
possession of the documents until much later through proper discovery proceedings."
Id. at 9a.
ARGUMENT
Petitioner contends that the presence of a sheriff's deputy at the scene
while ISI employees removed company records, later introduced into evidence
against him, converted that removal into a government seizure under the
Fourth Amendment. That contention lacks merit and does not warrant further
review.
1. The Fourth Amendment applies only to the government, not to private persons.
See Burdeau v. McDowell, 256 U.S. 465, 475 (1921). Thus, "a search
or seizure, even an unreasonable one, effected by a private individual not
acting as an agent of the Government or with the participation or knowledge
of any governmental official" does not contravene the Amendment. United
States v. Jacobsen, 466 U.S. 109, 113 (1984).
Recognizing that the Fourth Amendment is limited to governmental searches
and seizures, the lower courts have consistently held that an otherwise
private search or seizure is not converted into governmental action merely
because a government agent is present during the search or seizure. If the
private individual conducts the search or seizure for a private purpose
(other than the motive to aid law enforcement) and the law enforcement officer
is present during the search or seizure merely to keep the peace, ensure
safety, or prevent destruction of evidence, then the search or seizure is
private. See United States v. Leffall, 82 F.3d 343, 347-349 (10th Cir. 1996)
(airline employee opened suspicious package to prevent harm to passengers
and employees); United States v. Cleaveland, 38 F.3d 1092, 1093-1094 (9th
Cir. 1994) (power company inspector did search to check for illegal hookup;
police officer present to ensure inspector's safety); United States v. Jennings,
653 F.2d 107, 110-111 (4th Cir. 1981) (airline employee searched suspicious
package "on his own initiative and for his own purposes"; officer's
presence was merely "passive"); United States v. Entringer, 532
F.2d 634, 637 (8th Cir.) (air freight company conducted inventory of apparently
stolen package to determine extent of loss; officer present to witness inventory
and prevent destruction of evidence), cert. denied, 429 U.S. 820 (1976);
see also Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511-513 (5th Cir.)
(in action brought under 42 U.S.C. 1983, finding no state action in repossession
of automobile despite presence of police officers because the sole reason
for their presence during the repossession was to respond to a complaint
about a disturbance), cert. denied, 449 U.S. 953 (1980).
The decision of the court of appeals in this case is to the same effect.
The court of appeals declined to suppress the documents at issue because
the employees who removed the ISI documents "conceived the plan on
their own and solely for their own benefit. The officer's presence was merely
requested to keep the peace." Pet. App. 9a. Nor is there any evidence
that the sheriff encouraged the employees to remove the property or attempted
to view the records while they were being moved.
2. Petitioner seeks to rely on a number of decisions in which the courts
of appeals have found that government agents were sufficiently involved
in searches by private individuals to turn those searches, at least arguably,
into governmental action. Those decisions, however, turn on significantly
greater official encouragement of or involvement in the private search,
and are therefore distinguishable from this case. In United States v. Reed,
15 F.3d 928 (9th Cir. 1994), the police officers acted as "lookouts"
while a motel employee searched a room for evidence of drug trafficking
and listened while the employee announced the results of his finds. The
court stressed that the employee had no legitimate private purpose for the
search, and that the employee's motive of finding evidence of criminal activity
was not independent of the government; given the direct participation of
the police in the search, the court found that the search was conducted
for law enforcement purposes. Id. at 932-933. In United States v. Knoll,
16 F.3d 1313 (2d Cir.), cert. denied, 513 U.S. 1015 (1994), the court of
appeals remanded for fact- finding on whether the prosecutor encouraged
private persons who had stolen the defendant's files to expand their search,
in order to determine the contents of the files. That encouragement, if
proven, would have established that the private persons were in fact acting
as agents of the government. See id. at 1319-1320.
In Specht v. Jensen, 832 F.2d 1516 (10th Cir. 1987), the court found sufficient
official involvement in a private search to constitute state action where
one officer demanded entry into an office building, another officer threatened
a person with arrest if she did not cooperate in the supposedly private
search of a residence, and a third officer supervised the other two. Id.
at 1523-1524. The court did not dispute, however, that no state action exists
when a police officer merely "stand[s] by in case of trouble,"
or acts as "a mere peace-keeping bystander," ibid., as was true
in this case. In Booker v. City of Atlanta, 776 F.2d 272 (11th Cir. 1985),
the court reversed an order granting summary judgment for the city because
there was a genuine factual dispute as to whether the police officer was
merely present "to prevent a breach of the peace," ibid., or "had
the effect of intimidating [the plaintiff] into not exercising his right
to resist, thus facilitating the repossession," id. at 274. That case
is not inconsistent with the decision below, in which the court of appeals
concluded that the sheriff's deputy was present during the private search
of petitioner's offices merely to prevent trouble.*
Petitioner's reliance (Pet. 6-7) on Soldal v. Cook County, 506 U.S. 56 (1992),
is also misplaced. In Soldal, the owner of a trailer home filed an action
under 42 U.S.C. 1983 against a county, alleging that the owners of the trailer
park conspired with county deputies to conduct an unlawful search and seizure
by forcibly removing his trailer home from the owner's trailer park. The
Court ruled that the forcible removal of the trailer home constituted a
seizure under the Fourth Amendment. The Court assumed that state action
was present; it did not review the court of appeals' holding that there
was sufficient evidence of a conspiracy between the deputies and the trailer
park owners to foreclose summary judgment on that issue for the county.
506 U.S. at 60 n.6.
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
SETH P. WAXMAN
Solicitor General
JAMES K. ROBINSON
Assistant Attorney General
THOMAS E. BOOTH
Attorney
FEBRUARY 2000
* Petitioner also cites (Pet. 4) United States v. Van Dyke, 643 F.2d 992
(4th Cir. 1981), but in that case, the court of appeals held only that law
enforcement agents violated the defendant's rights under the Fourth Amendment
by entering the curtilage of the defendant's residence without a warrant;
no private search issue was presented.