Court Opinion

ID: 6958980
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:42:15.646074+00
Date Added: 2024-06-11T16:08:22.125113
License: Public Domain

MERRITT, Circuit Judge,
dissenting.
The original panel decision in this case vacated the two injunctions entered by.District Judge Nixon on May 9 and November 15, 1995. The panel decision held on the merits that the SEC could use as evidence the tape obtained illegally in violation of the Wiretapping Act. I dissented reasoning that the Act expressly prohibits government agents from using the tape or any evidence derived from it. The full court voted to rehear the case en banc.
The main preliminary injunction was issued by the District Court on May 9. That injunction simply enjoins the SEC from using the information obtained from the illegal wiretap. Judge Boggs’ opinion now holds that this injunction “has become moot” because “Smith’s conviction [in California] collaterally estops him” from further claiming that he is entitled to the injunction (op. p. 361-362, ¶ 35).
Both res judicata and mootness principles go back a long way in our legal history, but legal history has never before heard of a doctrine that “collateral estoppel” or issue preclusion can simply make another case “moot.” Rather, collateral estoppel, an affir*365mative defense, is a principle of finality of judgments which bars the further prosecution of a cause of action previously litigated by the parties. It prevents parties from repeatedly relitigating the same issue. Heretofore, the law has not confused or conflated it with the doctrine of mootness which serves an entirely different purpose — ie., to avoid hypothetical disputes that are no longer “live controversies.” Judge Boggs’ opinion cites no authority for using “collateral estoppel” to trigger mootness in another case.
In the present case, neither collateral es-toppel nor mootness apply to bar the action from proceeding on the merits under the Wiretap Act. The controversy between Smith, the inside trader, and the SEC over the use of the tape by the SEC remains very much alive. The SEC continues to threaten to use it together with evidence derived from it in other proceedings. The federal District Court in California in the criminal case against Smith agreed with Judge Nixon below that the government prosecutors should not be able to use the tape and the evidence derived from it in the criminal proceeding, and the California court, therefore, suppressed its use in that criminal ease. But the California court had no civil jurisdiction under the Wiretap Act to issue and did not issue an injunction against the SEC’s use of the tape. Thus, the issue of the SEC’s use of the tape and the evidence derived from it is still alive. Our Court should, therefore, reach the merits of the issue under the Wiretap Act that the panel decision wrongly decided. With respect to the November 15 injunction prohibiting the SEC from proceeding with a civil, insider-trading, enforcement action in California, I believe the injunction is basically sound but should be modified so that it simply enjoins the SEC from using the illegal tape and evidence derived from it in civil enforcement proceedings. At the present time the injunction is overbroad because it implies that the SEC may not go forward with any enforcement proceeding, and so it should be narrowed and modified to limit its reach to the use of the illegal wiretap tape and evidence derived from it.
Accordingly, I would reach the merits of the injunction issues presented and argued to us at our December 4, 1996, oral argument. I would affirm the District Court’s injunctive orders as modified, and I would hold that the issues debated in the District Court and before our panel and before the en banc Court are still alive and are not moot.