## F I L E D United States Court of Appeals Tenth Circuit 

### JUL 6 1998 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA, Plaintiff-Appellant, v. LIN LYN TRADING, LTD., and RAYMOND LYNN THOMAS, Defendants-Appellees. No. 96-4126

Appeal from the United States District Court

for the District of Utah (D.C. No. 94-CR-168G)
Deborah Watson, Department of Justice (Scott M. Matheson, Jr., United States Attorney for the District of Utah, and Wayne T. Dan ce, Assistant United States Attorney, with her on the briefs), for Plaintiff-Ap pellant. Max D. Wheeler, Snow, Christensen & Martineau, SaltLake City, Utah (James D. Gilson, Van Cott, Bagley, Cornwall & McCarthy, SaltLake City, Utah, with him on the briefs), for Defendants-Appellees.

Before BALDOCK , Circuit Judge, McWILLIAMS , Senior Circuit Judge, and EBEL , Circuit Judge.

EBEL , Circuit Judge.1 We assume the facts in the light most favorable t o the appellees, because

the government is appealing adverse rulings on the Motion to Suppress and Dismiss. See United States v. Griffin , 48 F.3d 1147, 1150 (10th Cir. 1995). - 2 - As a result of the government’s seizure of a notepa d containing confidential attorney-client communications, defendants-appellee s Raymond Lynn Thomas and Lin Lyn Trading, Ltd., successfully moved for the s uppression of evidence and the dismissal of the indictment against them. The United States appeals. Because we agree that the district court did not err in sup pressing the evidence, but conclude the district court abused its discretion i n dismissing the indictment, we affirm in part and reverse in part.

BACKGROUND A tip by a confidential informant in the fall of 19 90 led to a Customs investigation of defendant-appellee Lin Lyn Trading , Ltd. (“Lin Lyn”), an import company owned by defendant-appellee Raymond Lynn Th omas (“Thomas”) and his wife. 1 Thomas also served as Lin Lyn’s Vice President an d Director of Operations. The informant told Customs agents thatLin Lyn imported plush toys and lace items into the United States, and that the lace items were either not declared or falsely described in Customs entry form s. Further, the informant alleged that Lin Lyn was importing trademarked toys illegally. Later in the year, the informant gave Customs incriminating documents sent to Lin Lyn.- 3 -

In January 1991, Customs agents discovered undeclar ed lace merchandise in a shipment to Lin Lyn. With the information fro m the informant and the results of the seizure, Salt Lake City Customs Agent Dale Brua (“Brua”) obtained a warrant to search Lin Lyn’s business premises. T he warrant was executed on February 22, 1991, and a large number of documents was seized. Thomas was advised that he and Lin Lyn were under investigatio n for violating 18 U.S.C. § 542 (unlawful entry of goods into the United Stat es) and 18 U.S.C. § 545 (smuggling goods into the United States). On March 29, 1991, Thomas returned to the United St ates from Asia and was detained by Customs inspectors at the Portland International Airport. After conferring by telephone with Brua about the ongoing investigation of Thomas and Lin Lyn, Portland Customs Agent Keith Seagraves (“S eagraves”) inspected the documents Thomas was carrying. The documents inclu ded a yellow notepad. Thomas informed Seagraves that the notepad document ed Thomas’s conversations with his legal counsel. Seagraves copied documents pertinent to the investigation and returned the originals of most of the documents to Thomas, although the notepad was not returned. He also contacted Brua a nd read him some of the contents of the notepad. Seagraves then decided to seize the notepad, despite the potentially privileged nature of the contents, beca use it contained information that- 4 -

indicated Thomas and Lin Lyn had undervalued import ed shipments. Seagraves made copies of the notepad and then sent the notepa d to Brua. Soon thereafter, defendants’ counsel asked for the return of the notepad. Salt Lake City Assistant United States Attorney Way ne Dance (“AUSA Dance”) ordered that the materials received from Seagraves be sealed. By that time, however, the existence of the notepad was common kn owledge in the Salt Lake City Customs office. Further, unknown to AUSA Danc e, Seagraves had kept copies before mailing the documents. Seagraves’s c opies remained in the Portland office in an unmarked folder, and they wer e not sealed. The materials Seagraves sent to Brua remained in Brua’s custody u ntil he retired, and then became the responsibility of his replacement, AgentDennis Grossman (“Grossman”). In addition, on April 4, 1991, Custo ms refused to return documents from the January seizure because “new evi dence” had been received. The district court inferred that the “new evidence” was the material seized from defendants on March 29, 1991. After the investigation concluded in the summer o f 1993, the defendants were notified that to get the notepad back they wou ld have to file a motion for return of property pursuant to Federal Rule of Crim inal Procedure 41(e). The sealed envelope which contained the notepad and oth er documents was delivered to the district court after defendants filed a Rule 41(e) motion on August 24,- 5 -

1993. In November 1993, Grossman was transferred t o the Portland Customs office to replace Seagraves. After a hearing in February 1994, Magistrate Judge Samuel Alba recommended that the Rule 41(e) motion be granted i n regards to the notepad because its seizure was unlawful and the government ’s continued possession of privileged attorney-client communications would cau se the defendants irreparable injury. District Judge Dee Benson accepted the rec ommendation and granted the Rule 41(e) motion on September 7, 1994. The govern ment appealed to this court but voluntarily dismissed the appeal after the Soli citor General refused to give permission to proceed. Thomas and Lin Lyn were indicted on October 20, 199 4 for conspiracy to defraud the United States in violation of 18 U.S.C. § 371, smuggling goods into the United States in violation of 18 U.S.C. § 545, unlawful entry of goods into the United States in violation of 18 U.S.C. § 542, and aiding and abetting the violation of the latter two statutes in violation o f 18 U.S.C. § 2. (R. I at 22-49.) On October 25, Thomas’s documents were returned to him as directed by the court’s September 7, 1994, order. On January 31, 1996, Thomas and Lin Lyn filed a mot ion to suppress all evidence seized on March 29, 1991, and thereafter o n the theory that the illegally seized notepad became a “roadmap” for the case inve stigation. The government- 6 -

responded that it did not intend to introduce any i tems seized on March 29, 1991, but it contested the suppression of all evidence ob tained after that date because it had independent sources for the evidence. When def endants replied to the government’s response, they requested for the firsttime that the indictment be dismissed because the invasions of the attorney-cli ent privilege had interfered with their Sixth Amendment right to counsel. District Judge J. Thomas Greene held an evidentiaryhearing on the motion on February 15 and March 21-22, 1996, and heard ora l argument on March 29, 1996. Thomas, Brua, and Grossman were among the wi tnesses who testified. After Grossman testified, he located in his office the unmarked folder containing the copy of the notepad. The folder had a yellow s ticker from Seagraves stating that “Dennis, There is no Portland case on this guy (SLC) he’s all yours.” Grossman sent the folder and an affidavit explainin g the circumstances of its discovery to AUSA Dance, who turned the documents o ver to the court on March 14, 1996. The district court ordered that Grossmanbe produced to explain this matter. Grossman again testified on March 22, expl aining that in the press of Portland Customs business he had never looked at th e file; that following his initial testimony he had remembered the file and th ought it might have something to do with this case; and that once he glanced thro ugh the folder and saw what it- 7 -

contained he refrained from further reading any ite m in the folder and sent the documents to AUSA Dance. The district court found that Seagraves intentional ly seized the notepad with knowledge that it contained privileged information. It found that it was common knowledge among the agents in the Salt Lake City Customs office that the contents of the notepad were allegedly privileg ed communications containing incriminating statements and general defenses relev ant to the Lin Lyn investigation and that it was more likely than not that Grossman and Seagraves had “full discussion” about the notepad’s contents. Further, it refused to credit Grossman’s testimony regarding his unknowing posses sion of the unmarked folder. Thus, it found that Customs agents had acc ess to the notepad and used it to conduct their investigation of Thomas and Lin Ly n and that the entire investigation was tainted by the illegal seizure. In addition, the court found that the government had not shouldered its burden of sho wing independent sources for the information in the indictment. Because of the government’s deliberate intrusion into the attorney-client relationship, th e court held that defendants’ Fifth and Sixth Amendment rights were violated and that t he only practicable remedy was dismissal of the indictment. The government filed a timely motion to reconsider accompanied by further affidavits. In the motion, it argued that the Sixt h Amendment right to counsel- 8 -

was not implicated because the Sixth Amendment had not attached at the time the notepad was seized, and it reiterated through affid avits that the copy of the notepad kept in Portland was not kept knowingly in violation of the court’s order nor was that copy of the legal pad utilized in the investigation or prosecution of the defendants. The defendants filed a motion to s trike the government’s motion. They contended that the government improperly sought to add additional evidence and arguments which should have been submitted duri ng the evidentiary hearing and arguments on defendants’ motions. The districtcourt denied the government’s motion and granted the defendants’ mot ion to strike. The government now appeals.

DISCUSSION The government argues that the seizure of the notep ad was not illegal and that the district court imposed unwarranted sanctio ns, namely the suppression of2 Thomas and Lin Lyn have moved to strike portions o f the government’s

appellate brief. Some of the government’s appellat e arguments stem from its motion to reconsider and the affidavits attached to that motion, materials which were stricken by the district court. Because the m aterials are not properly in the appellate record, Thomas and Lin Lyn contend, the g overnment may not rely on them on appeal. We deny the motion to strike portions of the appell ant’s brief. The better practice would have been for the district court simply to deny the government’s motion rather than striking it, but any error here is harmless. It is obvious that the district court considered the motion before denying it and, as shown by our discussion in Section III, we have considered the g overnment’s arguments on appeal. See Kennedy v. City of Cleveland , 797 F.2d 297, 305 (6th Cir. 1986); Sidney-Vinstein v. A.H. Robins Co. , 697 F.2d 880, 885 (9th Cir. 1983). Further, the district court was justified in ignoring later- submitted evidence that could have been presented during the evidentiary hearing. - 9 - all evidence discovered after March 29, 1991, and d ismissal of the indictment. 2 We have jurisdiction under 18 U.S.C. § 3731. I. Legality of Seizure In granting Thomas and Lin Lyn’s motion for return of property in 1994, Judge Benson determined that the seizure of the not epad was illegal. The government did not appeal that ruling. Further, du ring argument before the district court on Thomas and Lin Lyn’s motions to s uppress evidence and to dismiss the indictment, the government conceded that Judge Benson had found that the seizure of the notepad was unlawful and ag ain declined to challenge the decision. Consequently, the government may not nowcontest the legality of the3 In addition, we note that Thomas and Lin Lyn, tho ugh treated throughout

this litigation collectively, are separate legal en tities. Consequently we assume that Thomas was present at the attorney-client conf erence in both his individual capacity and his capacity as an officer and represe ntative of Lin Lyn, and that he was searched in both capacities. Otherwise, Lin Lyn would not have had standing to claim the attorney-client privilege or object to the seizure of materials from Thomas. See Alderman v. United States , 394 U.S. 165, 174 (1969) (“Fourth Amendment rights are personal rights which, like so me other constitutional rights, may not be vicariously asserted.”). - 10 - seizure of the notepad. Its arguments on this poin t are waived, and we shall assume that the notepad was seized illegally. 3 II. Suppression of Evidence The government contends that the district court cle arly erred in determining that the illegally seized notepad was the basis forthe government’s investigation of Thomas and Lin Lyn. Rather, it argues, it has i ndependent sources for the information in the indictment. Those sources inclu de the confidential informant and the documents seized during the execution of th e search warrant at Lin Lyn’s office on February 22, 1991. “‘A district court’s ruling on a motion to suppress based upon live testimony at a suppression hearing is accepted unle ss clearly erroneous or influenced by an incorrect view of the law.’” Unit ed States v. Griffin , 48 F.3d 1147, 1150 (10th Cir. 1995) (quoting United States v. Wilson , 36 F.3d 1298, 1303 (5th Cir. 1994)). We review questions of law de no vo, taking the evidence in the light most favorable to the party that prevailed in the district court. See id.- 11 -

“‘Under the “fruit of the poisonous tree” doctrine, the exclusionary rule bars the admission of physical evidence and live wi tness testimony obtained directly or indirectly through the exploitation of police illegality.’” Id. (quoting Hamilton v. Nix , 809 F.2d 463, 465 (8th Cir. 1987)). The court may nevertheless admit evidence seized illegally, if the government shows that (1) the evidence was obtained from a source that was wholly independent of the illegal conduct, see Segura v. United States , 468 U.S. 796, 805 (1984); (2) that the evidence inevitably would have been discovered despite the i llegal activity, see Nix v. Williams , 467 U.S. 431, 444 (1984); or (3) that the link be tween the illegality and the evidence has “become so attenuated as to dissip ate the taint,” Nardone v. United States , 308 U.S. 338, 341 (1939). The government must make its showing by a preponderance of the evidence. See Nix , 467 U.S. at 444 & n.5. The government contends that it showed by a prepond erance of the evidence that it had an independent source for the evidence against Thomas and Lin Lyn. During the 1996 evidentiary hearing, the government presented several witnesses, including Agents Brua and Grossman, who testified that generally their investigation did not depend on the notepad and that none of the counts in the indictment were attributable to the information in the notepad. The district court, however, exercised its prerogative to disbelieve th e testimony of the government’s witnesses. Further, nothing in the re cord indicates that the4 On appeal, the government asserts that Agent Seag raves was recovering

from a near-fatal auto accident at the time of the hearing and thus could not have testified. However, the record does not indicate t hat the government informed the district court during the hearing that Seagraves wa s unavailable or that the government would like to present his testimony but was unable to call him to the stand. In addition, the government’s motion to rec onsider did not inform the district court that Seagraves had been unavailable previously; that information was proffered only in the government’s response to defendants’ motion to strike the government’s motion to reconsider. Consequentl y, the district court was not obliged to consider Seagraves’s untimely affidavit. - 12 - government introduced any of the documents seized f rom Lin Lyn in the February 1991 search. The prosecutor told the district court that the documents existed, but without the documents to compare to the indictment the district court was free to disregard the government’s assurances as to the contents of the documents and thus, ultimately, the source of the evidence presen ted to the grand jury. Finally, the district court was not obliged to consider the nine additional affidavits the government proffered with its motion to reconsider, as there was no reason why the government could not have presented that eviden ce at the hearing. 4 Because the government failed to shoulder its burden to pro ve independent sources for the evidence, the district court did not err in suppres sing all evidence discovered after March 29, 1991.
III. Dismissal of the Indictment Finally, the government argues that dismissal of th e indictment is too harsh a sanction for the use of the notepad. We review adistrict court’s decision to- 13 -

dismiss an indictment for abuse of discretion. See United States v. Lacey , 86 F.3d 956, 971 (10th Cir.), cert. denied , 117 S. Ct. 331 (1996). “Abuse of discretion is established if the district court’s a djudication . . . is based upon an error of law or a clearly erroneous finding of fact .” Reliance Ins. Co. v. Mast
Constr. Co. , 84 F.3d 372, 375-76 (10th Cir. 1996). In this ca se, we find three abuses of the district court’s discretion: one in relying on the Sixth Amendment right to counsel where the illegal conduct occurred before the defendants were indicted, a second in not requiring Thomas and Lin Lyn to show prejudice from the government’s conduct, and a third in not consid ering a remedy less drastic than dismissal. The district court’s decision rested primarily on t he invasion of defendants’ Sixth Amendment right to counsel. The right to cou nsel, however, attaches only “at or after the initiation of adversary judicial c riminal proceedings – whether by way of formal charge, preliminary hearing, indictme nt, information, or arraignment.” Kirby v. Illinois , 406 U.S. 682, 689 (1972). The notepad was seized in March 1991, but defendants were not indic ted until October 1994. Under these circumstances defendants cannot claim aviolation of their Sixth Amendment right to counsel. See United States v. Kingston , 971 F.2d 481, 491 (10th Cir. 1992).- 14 -

In response to the government’s argument in its mot ion to reconsider that the Sixth Amendment right to counsel had not attach ed at the time the notepad was seized, the district court stated that the seiz ure violated the Fourth Amendment and that, because of the use of the taint ed evidence, the Sixth Amendment right to counsel was violated immediatelyupon return of the indictment. In Maine v. Moulton , 474 U.S. 159 (1985), however, the Supreme Court addressed the use of evidence obtained in vio lation of the Sixth Amendment. It held that evidence obtained by recor ding the defendant’s conversations with a state agent, in which the agen t induced the defendant to discuss defense strategy, would not be admissible i n a case in which an indictment had already been filed because such cond uct violated the Sixth Amendment. See id. at 180. In contrast, the Sixth Amendment would no t be offended by the use of the same evidence in cases i n which indictments had not been returned. See id. at 180 & n.16. In light of Moulton , we do not agree that the Sixth Amendment was violated immediately upon r eturn of the indictment where the illegal seizure had occurred previously. The district court erred in finding a Sixth Amendment violation in this case. Given the record of this case, the district court a lso erred in finding Thomas and Lin Lyn were prejudiced by the governmen t’s conduct. Because the district court was not provided with the documents lawfully seized from Lin Lyn’s5 The district court may have predicated its findin g of continuing prejudice

upon its belief that the defendants’ Sixth Amendmen t rights were violated. However, as we discussed above, the Sixth Amendmentis inapplicable in this situation. - 15 - office on February 22, 1991, and because it refused to consider the affidavits proffered by the government with its motion to reco nsider, the record contains little basis on which to conclude that Thomas and L in Lyn were prejudiced by the seizure of the notepad. In Kingston , we held that “even if [the defendant] can show that an important privilege or right, such as those asserted here, was violated during the grand jury stage of a criminal prosecution, the indictment will not be dismissed unless [the defendant] can show pr ejudice .” 971 F.2d at 491 (emphasis added). Kingstonmakes it clear that before the indictment may be dismissed, it is Thomas and Lin Lyn’s burden to sho w prejudice or a substantial threat thereof, not the government’s burden to showlack of prejudice. This remains the rule even if the government’s violation is deliberate. See United States v. Morrison , 449 U.S. 361, 365 (1981). Although the district court made a finding that prejudice was presumed because the “ta int occurred so early in the investigation that it affected and tainted the enti re subsequent investigation,” the record simply does not support that finding. 5 Finally, the district court also held that the cond uct of the government agents violated defendants’ Fifth Amendment right t o due process and a fair trial- 16 -

because the tainted evidence was “inextricably conn ected” with the investigation of the case. Consequently, it held that the only p racticable remedy was dismissal of the indictment. We believe that the district co urt’s failure to consider alternative adequate remedies was an abuse of its d iscretion. “Because it is a drastic step, dismissal of an indi ctment is a disfavored remedy.” Kingston , 971 F.2d at 491 (citing United States v. Rogers , 751 F.2d 1074, 1076-77 (9th Cir.1985)). Before deciding to dismiss a case, a district court must consider whether a lesser sanction would satis fy the competing considerations at issue. See Mobley v. McCormick , 40 F.3d 337, 341 (10th Cir. 1994); Ehrenhaus v. Reynolds , 965 F.2d 916, 921 (10th Cir. 1992). Further, the district court must include its reasoning in the re cord to enable this court to conduct a meaningful review. Failure to do so cons titutes an abuse of discretion.
See Mobley , 40 F.3d at 341. The Supreme Court’s approach has been “to identify and then neutralize the taint by tailoring relief appropriate in the circum stances to assure the defendant the effective assistance of counsel and a fair tria l.” Morrison , 449 U.S. at 365. “The remedy in the criminal proceeding is limited t o denying the prosecution the fruits of its transgression.” Id. at 366; see also United States v. Blue , 384 U.S. 251, 255 (1966) (“Even if we assume that the Govern ment did acquire incriminating evidence in violation of the Fifth Am endment, [the defendant]- 17 -

would at most be entitled to suppress the evidence and its fruits if they were sought to be used against him at trial.”). In this case, the district court did not adequately explain why less extreme sanctions would not suffice to protect the defendan ts’ rights. Under these circumstances, suppression of all evidence obtainedafter March 29, 1991 would appear to be an adequate remedy. This is not a cas e in which the independence of the grand jury was so compromised that the proceedi ngs were fundamentally unfair and dismissal is required. See Bank of Nova Scotia v. United States , 487 U.S. 250, 256-57 (1988); see also United States v. Pino , 708 F.2d 523, 530 (10th Cir. 1983) (“An indictment may be dismissed for pro secutorial misconduct which is flagrant to the point that there is some signifi cant infringement on the grand jury’s ability to exercise independent judgment.”). The violation at issue is the illegal seizure of evidence, and the Supreme Court has held that a grand jury may consider evidence seized unconstitutionally as long as the grand jury itself does not violate a constitutional privilege. See United States v. Calandra , 414 U.S. 338, 344-46 (1974); Costello v. United States , 350 U.S. 359, 363 (1956). Additionally, although the prosecution did not pers uade the district court regarding the contents of the documents seized fromLin Lyn, from the record we can reasonably be sure that such documents exist. Thus, this is not a case in which essential evidence against the defendant is s uppressed and dismissal of the- 18 -

indictment must naturally follow. Cf. United States v. Johnson , 463 F.2d 70, 73 (10th Cir. 1972). By suppressing the evidence acquired as a result of the illegal seizure, the prosecution is unable to benefit from the governmen t’s unconstitutional conduct. On the other hand, there is nothing to forbid the g overnment from beginning a new investigation, using the evidence legitimately acquired prior to March 29, 1991, and conducted by personnel – both investigato ry and prosecutorial – untouched by the taint of the yellow notepad. If t he government is able to prosecute its case by presenting untainted evidence derived from legally acquired materials, then it should be allowed to do so; defe ndants have no right to be protected from governmental actions taken in compli ance with constitutional requirements.
CONCLUSION The district court’s decision to suppress all evide nce obtained on or after March 29, 1991 is AFFIRMED. Its decision to dismis s the indictment is REVERSED, and the case is REMANDED for further proc eedings not inconsistent with this opinion.