Opinion ID: 702509
Heading Depth: 2
Heading Rank: 2

Heading: The Extension Telephone Exemption--18 U.S.C. Sec. 2510(5)(a)

Text: 11 Our analysis begins with the recognition that Section 2511(l )(a) makes it unlawful for any person to intentionally intercept[ ] any wire, oral, or electronic communication[.] Sections 2510(4) and (5), read together, establish an exemption for certain devices, including extension telephones. Known as the telephone extension exemption or the business extension exemption, it places outside the reach of Title III the monitoring of communications carried out by certain types of equipment and done in the ordinary course of business. Williams v. Poulos, 11 F.3d 271, 279 (1st Cir.1993). 12 Section 2510(4) defines an interception as aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device[.] 13 Section 2510(5) defines an electronic, mechanical, or other device as 14 any device or apparatus which can be used to intercept a wire, oral, or other communication other than-- 15 (a) any telephone or telegraph instrument, equipment or facility, or any component thereof, (i) furnished to the subscriber or user by a provider of wire or electronic communication service in the ordinary course of its business and being used by the subscriber or user in the ordinary course of its business[.] ... 16 Following an extensive evidentiary hearing, the district court concluded that Section 2510(5)(a)(i) was intended to cover tape recorders attached to extension phones. Acknowledging that the Sixth Circuit had not yet ruled on that issue, the district court cited Simpson v. Simpson, 490 F.2d 803 (5th Cir.), cert. denied, 419 U.S. 897, 95 S.Ct. 176, 42 L.Ed.2d 141 (1974); United States v. Harpel, 493 F.2d 346 (10th Cir.1974); Anonymous v. Anonymous, 558 F.2d 677 (2d Cir.1977); Epps v. St. Mary's Hosp. of Athens, Inc., 802 F.2d 412 (11th Cir.), reh'g denied, 807 F.2d 999 (1986); and Newcomb v. Ingle, 944 F.2d 1534 (10th Cir.1991), cert. denied, 502 U.S. 1044, 112 S.Ct. 903, 116 L.Ed.2d 804 (1992), in support of his conclusion that the Radio Shack recording equipment, when combined with the extension telephone, came within the exemption. 17 We find better reasoning in three recent decisions: Deal v. Spears, 980 F.2d 1153 (8th Cir.1992), Williams v. Poulos, supra, and Sanders v. Robert Bosch Corp., 38 F.3d 736 (4th Cir.1994), reh'g and suggestion for reh'g en banc denied (January 24, 1995) (No. 93-2351, 93-2423). We shall follow them rather than the decisions of the Second, Fifth, Tenth and Eleventh Circuits relied upon by the district court.
18 In the Eighth Circuit case of Deal v. Spears, supra, the plaintiff, a former employee of the defendants, prosecuted a civil action seeking compensatory and punitive damages after the plaintiff learned that her employers, who lived in a mobile home adjoining the convenience store where she was employed, had intentionally intercepted and disclosed her telephone conversations. The defendants had suspected the plaintiff of providing inside information which facilitated an earlier burglary of the store. They installed a recording device on the extension phone in the mobile home and recorded 22 hours of Deal's conversations. One of the persons with whom Deal had extensive conversations was the co-plaintiff and the district court noted that much of the conversation was sexually provocative. The Deal court concluded: 19 Thus there are two essential elements that must be proved before this [the telephone extension exemption] becomes a viable defense: the intercepting equipment must be furnished to the user by the phone company or connected to the phone line, and it must be used in the ordinary course of business. The Spearses argue that the extension in their residence, to which the recorder was connected, meets the equipment requirement, and the listening-in was done in the ordinary course of business. We disagree. 20 First, we are not as easily convinced as is at least one of our sister circuits that an extension telephone is exempt equipment under section 2510(5)(a)(i) when a recording device is attached to the extension to record calls for later listening. See Epps v. Saint Mary's Hosp. of Athens, Inc., 802 F.2d 412, 415 (11th Cir.1986) (holding that the interception device was not the equipment used to record the conversation but the dispatch console to which the recorder was attached). The calls would not have been heard or otherwise acquired--that is, intercepted--at all but for the recording device, as the Spearses did not spend twenty-two hours listening in on the residential extension. When turned on, the recorder was activated automatically by the lifting of the handset of either phone, even though it was connected only to the extension phone. Further, Deal ordinarily would know (by the click on the line) when the residential extension was picked up while she was using the store phone; thus her calls likely would not have been intercepted if the recorder had not been in place. 21 It seems far more plausible to us that the recording device, and not the extension phone, is the instrument used to intercept the call. We do not believe the recording device falls within the statutory exemption. The recorder was purchased by Newell Spears at Radio Shack, not provided by the telephone company. Further, it was connected to the extension phone, which was itself the instrument connected to the phone line. There was no evidence that the recorder could have operated independently of the telephone. 22 We hold that the recording device, and not the extension phone, intercepted the calls. But even if the extension phone intercepted the calls, we do not agree that the interception was in the ordinary course of business. Deal v. Spears, 980 F.2d at 1157-58. 7 23 The First Circuit case of Williams v. Poulos, supra, was one of several bankruptcy and civil actions which arose from the demise of Consolidated Auto Recyclers, Inc. (CAR). Without reviewing the entire factual scenario, suffice to say that CAR principals, trying to get a $1,000,000 monthly telephone bill under control, decided to install a telephone surveillance system which would monitor a single, pre-selected telephone at CAR headquarters. Shortly thereafter, control of the financially-strapped CAR was transferred to Allied Capital Corporation (Allied), a venture capital firm. In a short time, the relationship between the new CEO, Ralph Dyer, and CAR's principals soured. CAR's principals wanted to regain control of CAR. They began to target their surveillance equipment on Dyer's conversations as well as on conversations between Allied personnel at CAR and Allied headquarters. Eventually, CAR's principals, attempting to gain an advantage in their quest to regain control, disclosed the fact of their telephone taping and some of the damaging information the tapes revealed. Allied filed an action alleging violations of federal and state wiretapping laws. Dyer intervened. Ultimately, plaintiff prevailed in the case, following a six-day bench trial. The district court ruled that the CAR principals violated the wiretap statutes. Cross-appeals were taken on various issues. The First Circuit affirmed the district court. The Williams court described the monitoring system utilized by CAR as alligator clips attached to a microphone cable at one end and an interface connecting [a] microphone cable to a VCR and a video camera on the other. Williams v. Poulos, 11 F.3d at 280 (internal quotes omitted). The court concluded that the monitoring device was not a telephone or telegraph instrument, equipment or facility, or a[ ] component thereof[.] Id. (internal quotes and footnote omitted). The court stated that it [is] self evident that the CAR system, far from being the type of exempt equipment contemplated by the authors of the business extension exception, is precisely the type of intercepting device Congress intended to regulate heavily when it enacted Title III. Id. 24 The Fourth Circuit case of Sanders v. Robert Bosch Corp., supra, involved a plaintiff who was a security officer whose employer, Guardmark, Inc., contracted to provide security services to Robert Bosch Corp. (Bosch). Sanders was assigned to work at Bosch, where she answered telephones in the security office. Bosch, allegedly because it had received bomb threats, installed a tape recording device known as a voice logger to record all telephone conversations. Sanders filed suit against Bosch alleging that Bosch had violated her rights under Title III by recording, without her knowledge, all of her telephone conversations. The district court held that Bosch unlawfully intercepted Sanders' conversations because Bosch could not enjoy the business extension exemption. On appeal, the Fourth Circuit stated that recording of a telephone conversation alone constitutes an 'aural ... acquisition' of that conversation. Sanders v. Robert Bosch Corp., 38 F.3d at 740 (footnote and citations omitted). Thus, the recording of conversations was an interception unless the recordings were not effected 'through the use of any electronic, mechanical, or other device.'  Id. Although Bosch's argument was that its voice logger was not an electronic, mechanical, or other device because it fell within the business-use exception, the court of appeals affirmed the district court's holding to the contrary. Citing both Deal v. Spears and Williams v. Poulos, the Fourth Circuit concluded that Bosch's voice logger did not meet the two prongs of the test for the exception: First, the voice logger must constitute a 'telephone or telegraph instrument, equipment or facility, or a[ ] component thereof,' either provided by, and installed by, BellSouth in the ordinary course of its business or, equivalently, supplied by Bosch for connection to BellSouth facilities; second, Bosch's use of the voice logger must fall within the ordinary course of its business. Id. 25 We are convinced that Deal, Williams, and Sanders are the best expressions of the law. Therefore, we conclude that the recording mechanism (a tape recorder connected to extension phones in Mrs. Murdock's home) does not qualify for the telephone extension (or business extension) exemption. 26
27 We discuss this issue, even though we have concluded as a threshold matter, that the Radio Shack equipment did not meet the Section 2510(5)(a)(i) requirements. Assuming that the Second, Fifth, Tenth and Eleventh Circuits are correct in their analysis and that we are in error to follow the First, Fourth and Eighth Circuits on the threshold issue, the second issue is whether Mrs. Murdock was intercepting and recording the telephone calls in the ordinary course of her business as a subscriber or user of the telephone extension. 28 Mrs. Murdock testified that her purpose was to check on her husband's business dealings related to their mutual funeral business and also to check on his possible marital infidelities. 29 A substantial body of law has developed on the subject of ordinary course of business in the employment field where employees have sued their employers. See, e.g., Deal v. Spears, supra; Epps v. St. Mary's Hosp. of Athens, Inc., supra; Watkins v. L.M. Berry & Company, 704 F.2d 577 (11th Cir.1983); Briggs v. American Air Filter Co., Inc., 630 F.2d 414 (5th Cir.1980). These cases have narrowly construed the phrase ordinary course of business. The Briggs court declined to consider whether a general practice of random monitoring of employee phone calls could ever be justified under the provisions of Section 2510(5)(a)(i), but did declare that when an employee's supervisor has particular suspicions about confidential information being disclosed to a business competitor, has warned the employee not to disclose the information, has reason to believe that the employee is continuing to disclose the information and knows that a particular phone call is to an agent of the competition, it is within the ordinary course of business to listen in on an extension phone for at least as long as the call involves the type of information the supervisor fears is being disclosed. The Deal court found that the indiscriminate recording of 22 hours of calls and subsequently listening to them was beyond the ordinary course of business. The Watkins court held that a personal call may not be intercepted in the ordinary course of business under the exemption in Section 2510(5)(a)(i), except to the extent necessary to guard against unauthorized use of the telephone or to determine whether or not a call is personal. The St. Mary's Hospital court followed the reasoning of Watkins and found that the intercepted call was not personal but did relate to the business of the employer and was thus intercepted in the ordinary course of the hospital's business. 30 We find that the indiscriminate recording of both incoming and outgoing calls by Mrs. Murdock does not constitute conduct within the ordinary course of the funeral home business in which she had an interest as a part owner. 31 This case is unique, however, in that Mrs. Murdock had a dual purpose in recording the phone calls. She was also concerned about her marriage and the alleged conduct of Murdock that threatened the marriage. As previously noted, the Sixth Circuit does not recognize a spousal immunity or exception to Title III. United States v. Jones, supra. The area of domestic disputes, along with the area of employment litigation, has been a fertile field for civil actions alleging a violation of Title III. 32 The issue that emerges is whether the telephone extension exemption is applicable under any set of circumstances in this circuit given the decision in Jones that Title III does apply to interspousal wiretapping within the marital home. The district court opined that the efforts of Mrs. Murdock in taping her husband's conversations fell within the ordinary course of business and cited the Simpson and Anonymous courts as support. The Simpson court had stated that it is clear that Congress did not intend to prohibit a person from intercepting a family member's telephone conversations by use of an extension telephone in the family home, Simpson v. Simpson, 490 F.2d at 809, and the district court appeared to rely on that citation to find that Mrs. Murdock's indiscriminate taping of conversations fell within the ordinary course of business. 33 Simpson recognized what is generally referred to as the interspousal exemption with respect to wiretapping in the marital home. The case involved a civil suit by a former wife against her former husband who had used a wiretap and recording device to capture her conversations with another man that were described as mildly compromising. The opinion focused on the inadequacy of the legislative history as to whether interspousal wiretapping was a target of Title III and then pointed to the telephone extension exception contained in Section 2510(5)(a)(i), along with the presence of criminal penalties for a violation of Title III, to support its conclusion that there was no federal cause of action for the redress of the former wife's grievances against her former husband. It is noteworthy that Simpson did not make the declaration that the husband's conduct fell within the Section 2510(5)(a)(i) exception, but rather that the exemption was indicative of Congress's intention to abjure from deciding a very intimate question of familial relations: that of the extent of privacy family members may expect within the home vis-a-vis each other. 34 Two years later in United States v. Jones, supra, this circuit rejected Simpson to the extent it could be read as proclaiming a broadly-based interspousal exemption for wiretapping. Jones had been indicted for intercepting telephone conversations with his estranged wife and using the contents of the intercepted communications in violation of 18 U.S.C. Sec. 2511(1)(a) and (d). The district court, in reliance on Simpson, dismissed the indictment. The government appealed and the dismissal was reversed. Jones, like the former husband in Simpson, had placed a bug on the telephone and intercepted his wife's conversations. The Jones court, like the court in Simpson, referred to the legislative history and then opined: 35 The Simpson Court noted that the majority of the legislative history dealt with electronic surveillance by law enforcement officials and found the discussion of private surveillance to be inconclusive on the desired scope of the Act's prohibitions. 490 F.2d at 807. However, the legislative history leaves no doubt that the Act was intended to reach private electronic surveillance and that Congress was aware that a major area of use for surveillance techniques was the preparation of domestic relations cases. Professor Robert Blakey, publicly credited with being the author of Title III, testified before the Subcommittee on Administrative Practice and Procedure of the Senate Judiciary Committee that: 36 [P]rivate bugging in this country can be divided into two broad categories, commercial espionage and marital litigation.Congressional awareness that the Act's prohibition of private surveillance would be applicable to domestic relations investigations is reflected in the comments of Senator Hruska, one of the co-sponsors of the bill, which were joined by Senators Dirksen, Scott and Thurmond: 37 A broad prohibition is imposed on private use of electronic surveillance, particularly in domestic relations and industrial espionage situations. 38 Our review of the legislative history of this section, testimony at congressional hearings, and debates on the floor of Congress, inescapably lead to the conclusion that 18 U.S.C. Sec. 2511(1)(a) establishes a broad prohibition on all private electronic surveillance and that a principal area of congressional concern was electronic surveillance for the purposes of marital litigation. 39 The Simpson Court was privy to many of the same materials which were reviewed by this Court. See 490 F.2d at 806-809 nn. 8-16. However in Simpson their importance was discounted because the Court distinguished between unaided surveillance by a spouse and surveillance involving a third-party, even if instigated by the spouse. 490 F.2d at 809. This distinction has been seized upon in a subsequent case. See Remington v. Remington, 393 F.Supp. 898, 901 (E.D.Pa.1975). In our view, it is a classic distinction without a difference. For purposes of federal wiretap law, it makes no difference whether a wiretap is placed on a telephone by a spouse or by a private detective in the spouse's employ. The end result is the same--the privacy of the unconsenting parties to the intercepted conversation has been invaded. It is important to recognize that it is not just the privacy of the targeted spouse which is being violated, but that of the other party to the conversation as well. 40 United States v. Jones, 542 F.2d at 668-670 (footnotes omitted). 41 Anonymous v. Anonymous, supra, became the third case to examine whether Title III applied to interspousal wiretaps used in preparation for divorce litigation. Anonymous, like Simpson, involved a civil suit brought by an ex-wife who contended that her ex-husband had taped her telephone conversations with her eight-year-old daughter while the daughter was in the exclusive custody of the ex-husband. The district court dismissed the complaint and the decision was affirmed on appeal. The Anonymous court declared that it would have been lawful for the father to have listened to mother-daughter phone calls on a telephone extension because it would have constituted a use in the ordinary course of business sanctioned by Section 2510(5)(a)(i). The court concluded that the taping of the phone calls constituted a distinction without a difference. Anonymous v. Anonymous, 558 F.2d at 679 (citing Simpson, 490 F.2d at 809). The Anonymous court observed that the extension telephone exemption was not available in the Jones case and further noted that the defendant in Jones invaded the privacy of innumerable persons, known and unknown[,] Id., a fact which, in the Anonymous court's view, removed that case from the province of mere domestic conflicts. The court then concluded that the Jones court had correctly held that the federal wiretap statutes proscribed the defendant's alleged conduct. 42 Heggy v. Heggy, 944 F.2d 1537 (10th Cir.1991), cert. denied, 503 U.S. 951, 112 S.Ct. 1514, 117 L.Ed.2d 651 (1992), provided the Tenth Circuit with the opportunity to examine whether Title III civil actions were subject to an interspousal wiretapping exemption. The district court rejected the holdings of Simpson and Anonymous and joined the Fourth, Sixth and Eighth Circuits in holding that spousal wiretapping is actionable under Title III. The defendant-appellant husband had installed a recording device on the extension telephone located in a barn adjacent to the marital home at a time when he and the plaintiff-appellee wife were living together and prior to their eventual divorce. The husband used the wiretap to record his wife's conversations for nearly three months and played at least one of the conversations for his secretary. The husband was the Director of the Oklahoma Bureau of Narcotics and Dangerous Drugs. He testified at trial that he had been receiving death threats by telephone and wanted to record them. The opinion recites that the jury rejected the husband's explanation for the taping and awarded substantial compensatory and punitive damages. The opinion focuses on what is described as the appellant's central argument, i.e., that the district court erred in ruling that Title III applies to interspousal wiretapping within the marital home by failing to follow Simpson. The Heggy opinion rejected Simpson and opined: 43 We reject not only the Simpson court's method of statutory analysis but also its interpretation of the legislative history. Instead, we agree with the district court that the legislative history of Title III evinces a congressional awareness of the widespread use of electronic eavesdropping in domestic relations cases and an intent to prohibit such eavesdropping. See Remarks of Sen. Long, Hearings on Invasions of Privacy Before the Subcomm. on Admin. Practice and Procedure of the Sen. Comm. on the Judiciary, 89th Cong. 1st Sess., part 5 at 2261 (1965-66) (The three large areas of snooping in this [non-governmental] field are (1) industrial (2) divorce cases, and (3) politics. So far, we have heard no real justification for continuance of snooping in these areas.). 44 Professor Robert Blakey, generally credited as the architect of Title III, testified that private bugging in this country can be divided into two broad categories, commercial espionage and marital litigation. Hearings on the Right to Privacy Act of 1967 Before the Subcomm. on Admin. Practice and Procedure of the Sen. Comm. on the Judiciary, 90th Cong., 1st Sess., part 2 at 413 (1967). Senator Hruska, a co-sponsor of the bill, commenting on the scope of the statute, noted that [a] broad prohibition is imposed on private use of electronic surveillance, particularly in domestic relations and industrial espionage situations. S.Rep. No. 1097, 90th Cong., 2d Sess., reprinted in 1968 U.S.Code Cong. & Admin.News 2110, 2112, 2274. 45 Moreover, and in light of the split of judicial authority, had it been the intent of Congress to keep interspousal wiretapping beyond the reach of Title III, Congress could have expressly excluded such wiretapping when it overhauled Title III in the Electronic Communications Privacy Act of 1986, Pub.L. No. 99-508, 100 Stat. 1848. Although the Privacy Act amendments touched nearly every section of Title III, Congress did not codify the judicially created exception for interspousal wiretapping found in Simpson. 46