Opinion ID: 176129
Heading Depth: 2
Heading Rank: 3

Heading: Does Title III Prohibit All Civil Pre-Trial Discovery Disclosure Orders?

Text: Appellants primarily argue that the text of Title III, which authorizes certain methods of disclosing wiretap materials, implicitly forbids civil discovery orders requiring disclosure of wiretap materials from criminal defendants. We disagree.
Largely in response to two Supreme Court decisions, one holding that a broadly written statute authorizing police to conduct wiretaps violated the Fourth Amendment, see Berger v. New York, 388 U.S. 41, 87 S.Ct. 1873, 18 L.Ed.2d 1040 (1967), and the other that attaching a recording device outside a telephone constitutes a search within the meaning of that Amendment, see Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967), `Congress undertook to draft comprehensive legislation both authorizing the use of evidence obtained by electronic surveillance on specified conditions, and prohibiting its use otherwise.' Bartnicki, 532 U.S. at 523, 121 S.Ct. 1753, quoting Gelbard, 408 U.S. at 78, 92 S.Ct. 2357 (Rehnquist, J., dissenting). The result of Congress's efforts was Title III, which established a comprehensive scheme for the regulation of wiretapping and electronic surveillance. Gelbard, 408 U.S. at 46, 92 S.Ct. 2357. Title III authorizes the interception of private wire and oral communications, but only when law enforcement officials are investigating specified serious crimes and receive prior judicial approval. Id., citing 18 U.S.C. § 2516, 2518(1)-(8). All interceptions of wire and oral communications not authorized in Title III are flatly prohibited, and Title III generally bars the use as evidence before official bodies of the contents and fruits of illegal interceptions, and provides procedures for moving to suppress such evidence in various proceedings. Id., citing 18 U.S.C. § 2515, 2518(9)-(10). [9] However, Title III permits the use and disclosure of lawfully-obtained wiretap materials in certain circumstances. Id.; see, e.g., 18 U.S.C. § 2517. Appellants argue that Title III's text prohibits the disclosure at issue. However, Appellants point to no provision that prohibits the disclosure of wiretap materials to a civil enforcement agency by a civil defendant in the course of ordinary civil discovery in an enforcement proceeding, following the government's disclosure of the materials to the civil defendant in the defendant's parallel criminal proceedings. Instead, Appellants point to numerous provisions in Title III barring and permitting types of disclosures and interceptions not at issue in the instant case. Despite Appellants' arguments to the contrary, we reiterate today that Title III does not prohibit whatever disclosures of lawfully seized communications it does not expressly permit. See Newsday, 895 F.2d at 77. Appellants first note that Title III only authorizes the government to wiretap communications when investigating certain crimes, which do not include insider trading or securities fraud. See 18 U.S.C. § 2516. However, even if wiretaps could not be authorized for the purpose of investigating these crimes, nothing in Title III bars the use of the fruits of authorized wiretaps obtained in the pursuit of investigations of suspected crimes that are listed in Title III in securities fraud or insider trading proceedings. Cf. 18 U.S.C. § 2517(5) (permitting disclosure and use of wiretap communications relating to offenses other than those specified in the order of authorization). [10] Next, Appellants focus on the language in 18 U.S.C. § 2518(8)(b) requiring a showing of good cause before wiretap applications or orders can be disclosed, and argue that the SEC is not an aggrieved person such that it can show the requisite good cause. See In re New York Times Co., 577 F.3d 401, 406 (2d Cir.2009) ([O]ur Court concluded a quarter-century ago that `good cause' could be found where the applicant seeking to unseal wiretap applications was an `aggrieved person,' but not upon any lesser showing.); 18 U.S.C. § 2510(11) (defining aggrieved person as a person who was a party to any intercepted ... communication or a person against whom the interception was directed). However, section 2518(8)(b) applies only to the disclosure of wiretap applications and orders, not to the disclosure of the contents of wiretapped communications, which is discussed briefly in a separate subsection of the same section that has no good cause requirement, compare 18 U.S.C. § 2518(8)(a) with 18 U.S.C. § 2518(8)(b); see also 18 U.S.C. § 2518(9), and, at length, in a separate section of Title III, see 18 U.S.C. § 2517. Since Congress has specifically laid out different requirements for the disclosure of wiretap applications and orders than for the disclosure of wiretapped communications, we decline to read the requirements for the former to apply to the latter. [11] Appellants next argue that even if the SEC had shown good cause (or was not required to do so), disclosure would still be prohibited, because the disclosure of intercepted communications is only permitted (1) when the government discloses the information for certain prescribed purposes, see 18 U.S.C. § 2517(1) & (2), or (2) when [a]ny person discloses the contents during testimony, see 18 U.S.C. § 2517(3). Section 2517 states, in relevant part, that: (1) Any investigative or law enforcement officer who, by any means authorized by this chapter, has obtained knowledge of the contents of any wire, oral, or electronic communication, or evidence derived therefrom, may disclose such contents to another investigative or law enforcement officer to the extent that such disclosure is appropriate to the proper performance of the official duties of the officer making or receiving the disclosure. (2) Any investigative or law enforcement officer who, by any means authorized by this chapter, has obtained knowledge of the contents of any wire, oral, or electronic communication or evidence derived therefrom may use such contents to the extent such use is appropriate to the proper performance of his official duties. (3) Any person who has received, by any means authorized by this chapter, any information concerning a wire, oral, or electronic communication, or evidence derived therefrom intercepted in accordance with the provisions of this chapter may disclose the contents of that communication or such derivative evidence while giving testimony under oath or affirmation in any proceeding held under the authority of the United States or of any State or political subdivision thereof. 18 U.S.C. § 2517(1)-(3). Appellants argue that because § 2517(1) and (2) do not permit the USAO itself to provide the wiretapped conversations to the SEC, these provisions must implicitly bar the SEC from acquiring the conversations from the Appellants. The USAO supports the first part of this proposition in an amicus curiae brief filed in this appeal, agreeing that it could not provide the wiretap conversations to the SEC without any law enforcement purpose and solely to assist the SEC in a civil case. [12] Without ruling on whether the USAO's position is correct, we conclude that even if Title III does not authorize the USAO to disclose the wiretap contents to the SEC, it would not follow that Title III prohibits the disclosure here, where the USAO has lawfully disclosed wiretapped communications to criminal defendants pursuant to § 2517(2). That is the only disclosure that has been made by law enforcement officers in this case, and it is plainly permitted by § 2517(2). Nothing in § 2517(1) or (2) addresses the rights or duties of criminal defendants to whom intercepted communications are lawfully disclosed to engage in further disclosures. The purpose behind any prohibition on the USAO's sharing wiretap contents with a civil enforcement agency would appear to be to limit law enforcement uses of the materials to those prescribed in the statute. This purpose does not suggest that the SEC should not receive these materials from a civil defendant in the instant case. Such disclosure implicates completely different interests relating to the role of civil discovery in ensuring informational equality between parties. Title III's limited authorizations for law enforcement officers' disclosure of intercepted communications do not address the situation of disclosures by criminal defendants, who have been provided with wiretap fruits in criminal discovery, and who are simultaneously defendants in a civil enforcement proceeding. Giving such persons access to these wiretap communications while denying the civil enforcement agency plaintiff the ability to seek those materials in discovery would create an informational imbalance between civil litigants. Nothing in Title III addresses the rights of other parties to civil litigation to obtain wiretap materials legitimately in the possession of their adversaries through conventional civil discovery. While the USAO may not be authorized to provide these materials to the civil enforcement agency to help it investigate or prosecute a civil case, the civil discovery rules may well give the civil enforcement agency a right to these materials following their release to the defendants, to avoid an informational imbalance that would give the defendants an unfair advantage in the civil proceeding. Nor are we persuaded that 18 U.S.C. § 2517(3), which permits [a]ny person, to disclose wiretap contents while giving testimony prohibits the ordered disclosure in this case. Congress's categorical authorization of testimonial disclosures is not reasonably construed as a bar to a district court's authorizing other disclosures as warranted in particular cases. [13] Indeed, a reading of the statute that confined disclosures by non-law enforcement and non-investigative personnel literally to the act of testifying, and that foreclosed disclosures necessarily adjunct to providing testimony, would cause unfortunate and certainly unintended consequences. Surely, prior to testimonial disclosure, a district court may order that wiretap materials be disclosed to the attorney who will examine or cross-examine the witness, thereby allowing counsel to prepare for trial. Indeed, Appellants do not argue that they are forbidden from sharing the wiretap materials in their possession with their criminal co-defendants, even though such a disclosure is not expressly authorized in the statute. We thus reject Appellants' invitation to construe the identification of explicitly permitted disclosures in § 2517(1), (2), and (3) as an implicit prohibition on district court disclosures in any other circumstances. Finally, Appellants claim that Title III bars the disclosure at issue, because they could be subject to criminal sanctions for complying with the order, since they would be intentionally disclos[ing] the wiretapped communications while knowing or having reason to know that the information was obtained through the interception of a wire, oral, or electronic communication, 18 U.S.C. § 2511(1)(c), in violation of Title III. We disagree. Criminal sanctions would not be applicable to any disclosure by Appellants pursuant to the order, because good faith reliance on a court ... order ... is a complete defense against any civil or criminal action brought under Title III. 18 U.S.C. § 2520(d)(1). Section 2511(1)(c) provides a criminal sanction for disclosures that violate the provisions of Title III, but it does little or nothing to help answer the question of whether a particular disclosure is allowed or not. In sum, Appellants have failed to point to any provision of Title III that explicitly or implicitly prohibits the disclosure at issue.
Although Appellants can point to no provision in Title III prohibiting the disclosure at issue, they argue more broadly that Title III's failure expressly to permit the disclosure at issue implicitly prohibits it. This argument is foreclosed by our decision in In re Newsday, Inc., 895 F.2d 74. [14] In Newsday, a newspaper sought access to a search warrant application containing wiretap communications that had been sealed by the district court at the request of the government. Id. at 75. Following a guilty plea by the subject of the wiretap, the government withdrew its earlier objection to unsealing the application, and the district court released a redacted copy of the warrant materials. Id. The subject of the wiretap appealed, making essentially the same argument that Appellants make in the instant case: that Title III forbade such public disclosure of wiretap information, because the disclosure provisions of Title III are the exclusive means by which intercepted communications may be released to the public. Id. at 77. We held that Title III did not specifically address the issue of a right of public access to intercepted communications when those communications become part of a public document [such as the warrant affidavit at issue] after having been used by the government in the course of its law enforcement activities. Id. at 76. Rejecting the appellant's reliance on the Seventh Circuit's decision in United States v. Dorfman, 690 F.2d 1230, 1232 (7th Cir. 1982) (Title III implies that what is not permitted is forbidden), we agreed that Title III generates no right of [public] access, but found it a non-sequitur to conclude the obverse: that Congress intended in § 2517, which relates solely to use in law-enforcement activities and judicial proceedings, to forbid public access by any other means on any other occasion. Newsday, 895 F.2d at 77. We noted that nowhere does Title III state rules regarding disclosure of intercepted communications to the public incident to, or after, their use under § 2517.... No doubt the framers of Title III expected that the main channel of public disclosure of intercepted communications would be testimonial, but they did not so confine it. Id. at 78. In Newsday, we ruled that there was a common law right of access to the judicial documents at issue, but that the right of access needed to be balanced against the privacy rights at issue, i.e., the privacy rights of the person whose intimate relations may ... be disclosed. Id. at 79. We then concluded that the district court had not abused its discretion in ordering the release of a redacted affidavit. Id. at 80; see also id. at 75 ([W]e hold that the district court properly balanced the common law right of access to judicial records with the defendant's privacy rights, and affirm its release of a redacted copy of the warrant application.). In short, in Newsday, we held that Title III does not prohibit all disclosures of legally intercepted wire communications that it does not expressly permit, and that in determining whether a right of access should lead to disclosure of Title III materials, the right of access should be weighed against the relevant privacy interests at stake. The district court should have applied that analysis in the instant case. Appellants argue that Newsday is distinguishable, because it involved a disclosure of wiretap materials that had already been filed as part of a public document. [15] Although the specific context of Newsday was the right of public access to judicial documents, the case necessarily reflects a broader principle, of which its narrow holding is simply one example. Here, just as in Newsday, the SEC's discovery request asked for disclosure of Title III materials incident to, or after, their use under § 2517. Cf. id. at 78 ([N]owhere does Title III state rules regarding disclosure of intercepted communications to the public incident to, or after, their use under § 2517. (emphasis added)). In Newsday, the government had already properly disclosed the material pursuant to § 2517(2) in seeking a search warrant; here, the USAO disclosed the wiretap materials as part of the criminal discovery process, also pursuant to the proper performance of [its] official duties under 18 U.S.C. § 2517(2). [16] Newsday sought wiretap materials that had already been disclosed pursuant to § 2517 by invoking its independent right of access to judicial documents; the SEC here similarly seeks such material, also already legitimately disclosed to Appellants pursuant to § 2517, by invoking its independent right to discovery in civil litigation. Just as in Newsday, Title III does not expressly address the right claimed here. The issue, therefore, is whether there is an independent right of access to the materials that might permit further disclosure, and, if so, whether the district court properly balanced any such right against the privacy interests at stake. [17] We have repeatedly employed such balancing when dealing with Title III issues. [18] We have similarly employed a balancing in other relevant discovery contexts. [19] We are therefore confident that district courts can engage in such balancing in the present context without undue difficulty.
Appellants argue that other circuit precedent counsels against such an analysis. First, Appellants cite our decision in National Broadcasting Co. v. U.S. Department of Justice, 735 F.2d 51 (2d Cir.1984) ( NBC )our only precedent that deals directly with a civil discovery dispute, as opposed to a common-law or First Amendment right of access, involving wiretap materials. In NBC, we noted that Congress did not utilize a provision in the Organized Crime Control Act [amending § 2517] to make the fruits of wiretapping broadly available to all civil litigants who show a need for them. Id. at 54. While that statement is clearly correct so far as it goes, NBC does not stand for the proposition that the disclosure of Title III materials in civil discovery is necessarily foreclosed. NBC involved a libel suit brought by Wayne Newton, the entertainer, against NBC, the broadcasting corporation, based on broadcasts concerning organized crime investigations involving Newton. Id. at 51-52. The government had conducted wiretaps in an investigation of organized crime members' attempts to extort money from Newton and others. Id. at 52. To defend against the libel action, NBC sought discovery from the government of the wiretap applications, orders, and recordings. Id. The government opposed disclosure of these documents. Id. The district court found that, while the interceptions were legal, it lacked the power to order the government to disclose the[ ] contents [of the wiretaps] in a civil proceeding to which the government was not a party. Id. at 53. [20] We affirmed the district court, noting that, while § 2517(3) had been amended in 1970 to permit disclosure of materials in civil as well as criminal proceedings, turning Title III into a general civil discovery mechanism would simply ignore the privacy rights of those whose conversations are overheard. Id. at 54. We emphasized that the suit at issue, between NBC and Newton, was not a civil enforcement proceeding, which Congress had in mind in passing the amendment, and found that Congress surely had not intended the amendment to Title III to make the fruits of wiretapping broadly available to all civil litigants who show a need for them. Id. [21] While NBC stands for the proposition that a civil litigant cannot force the government to disclose Title III materials in an ordinary civil case for the simple expedient of aiding its defense, it does not govern the instant case. NBC is distinguishable in two fundamental ways. First, it dealt with whether a court could order the government to disclose previously undisclosed wiretap recordings against its wishes in a civil proceeding unrelated to the government's criminal case. In the instant case, on the other hand, the government has disclosed these materials to a party pursuant to § 2517(2), and the question is whether or not the court can order that party to disclose the materials in the interest of the civil discovery principle of equal knowledge. Second, there was no relevant informational imbalance in NBC, as Newton did not have access to these materials either. Here, in contrast, Appellants have free access to the materials to prepare their defense in the SEC action. [22] Therefore, while NBC establishes that Title III is not meant to make wiretap materials a repository of information available from the government by subpoena to civil litigants for use in private disputes, it does not address the legitimacy of ordering the discovery from a private litigant of Title III materials that have already been disclosed to that litigant by the government, in order to create a level playing field between a civil enforcement agency and that litigant. Finally, while NBC makes clear that Title III does not make wiretap materials in the government's possession freely available to civil litigants, it does not support the proposition that discovery of such materials from anyone, made under any circumstances, is forbidden. Indeed, the result in NBC is entirely compatible with the balancing approach set forth in Newsday. Under the circumstances present in NBC, the interests weighing against disclosure were overpowering. In addition to the privacy interests of those who had been overheard, the government's strong interest in the confidentiality of a criminal investigation strongly counseled against disclosure. See NBC, 735 F.2d at 52 (noting that the government opposed disclosure, in part, because the wiretap applications contained descriptive data regarding confidential informants). Moreover, absent any new criminal prosecution, there was no reason to believe that the wiretap materials that had not been disclosed at the related criminal trial would ever be disclosed to anyone outside the government. On the other side of the balance, NBC sought materials that might or might not ultimately be relevant or admissible at trial, and that no other party to the civil litigation possessed. Under such circumstances, disclosure of the wiretap materials was clearly unwarranted. It does not follow that the balance will come out the same way in all other cases. Appellants' reliance on New York Times, 577 F.3d at 406, for the proposition that there is a strong presumption against disclosure of the fruits of wiretap applications, is also misplaced. Id. (emphasis omitted). In New York Times, we concluded that because The New York Times was not an aggrieved person it could not show the requisite good cause to release applications under Title III regarding wiretaps of the prostitution ring once patronized by former Governor Eliot Spitzer. Id. at 408. New York Times, however, dealt with the disclosure of wiretap applications, not contents. [23] In fact, in New York Times, we expressly distinguished Newsday by noting (among other reasons) that at issue in Newsday were the fruits of the wiretaps, which are governed by 18 U.S.C. § 2517, not the wiretap applications, which are governed by § 2518(8)(b). Id. at 407 n. 3; see also id. at 408. In any event, even if there is a presumption against disclosure of wiretap contents that would be relevant to this case, an issue we need not decide, the analysis set forth above is still appropriate, as that presumption could be overcome with a sufficient showing of need based on a Newsday -type balancing. In short, Appellants have failed to point us to any case law establishing that Title III prohibits the disclosure of wiretap materials in a situation such as this one: where the government has previously disclosed the contents of wiretaps to a party, and a civil enforcement agency seeks access to those contents from that party, not from the government.