Court Opinion

ID: 2969903
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:00:00.905172+00
Date Added: 2024-06-11T11:43:26.549344
License: Public Domain

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
            3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

    (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                )LOH 1DPH DS

81,7('67$7(6&28572)$33($/6
              )257+(6,;7+&,5&8,7
                BBBBBBBBBBBBBBBBB

                         ;
67(9(1 *8(67 '(1,6( %          
.(//(< 1(/'$ 6785*,//          
                                     1RV
'(%25$+ &800,1*6                
5$1'< %2:/,1* 5,&+$5'            !
                                 
( .5$0(5RQEHKDOIRI          
WKHPVHOYHVDQGDOORWKHUV        
VLPLODUO\VLWXDWHG              
         3ODLQWLIIV$SSHOODQWV 
                                 
                                 
            Y                   
                                 
6,021 / /(,6 -5              
+$0,/721 &2817<                  
6+(5,))¶6 '(3$570(17            
+$0,/721 &2817<                  
                                 
5(*,21$/ (/(&7521,&              
&20387(5 ,17(//,*(1&(            
7$6. )25&( '$/(                 
0(1.+$86 -$0(6                  
1(5/,1*(5 '$9,' /              
$86'(10225(                     
                                 
        'HIHQGDQWV$SSHOOHHV 
                                 
                                 
                                 
                                 

                            
       *XHVWHWDOY/HLVHWDO      1RV

                              
    0,&+$(/ 2¶%5,(1 12$+            
    2¶%5,(1 $17+21<                 
                                     
    %/$&.021 5$1'$//                
    '2''6 '$55(// 0&$92<           
    %5,$1 .$(331(5                  
           3ODLQWLIIV$SSHOODQWV    
                                     
              Y                     
                                     
                                     
    6,021 / /(,6 -5              
    +$0,/721 &2817<                  
    6+(5,))¶6 '(3$570(17            
    +$0,/721 &2817<                  
                                     
    5(*,21$/ (/(&7521,&              
    &20387(5 ,17(//,*(1&(            
    7$6. )25&( '$/(                 
    0(1.+$86 -$0(6                  
    1(5/,1*(5 '$9,' /              
    $86'(10225(                     
                                     
          'HIHQGDQWV$SSHOOHHV 
                                     
                                    1
         $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
        IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL
        1RV²+HUPDQ-:HEHU
                        'LVWULFW-XGJH
                     $UJXHG0DUFK
                 'HFLGHGDQG)LOHG-XO\
    %HIRUH.(,7+1255,6DQG'$8*+75(<&LUFXLW
                        -XGJHV
    *XHVWHWDOY/HLVHWDO             1RV          1RV              *XHVWHWDOY/HLVHWDO    

RIFRPPLWWLQJDFULPLQDORIIHQVH´86&DDD                                     BBBBBBBBBBBBBBBBB
	 E  7KH DUJXDEO\ 33$SURWHFWHG PDWHULDOV ZHUH
FRPPLQJOHGZLWKWKLVFULPLQDOHYLGHQFHRQFRPSXWHUVZKRVH                                            &2816(/
RZQHURURSHUDWRUZDVDFULPLQDOVXVSHFW7KHVHL]XUHRIWKH
33$ PDWHULDOV RFFXUUHG LQFLGHQWDOO\ WR WKH VHL]XUH RI WKLV         $5*8('3HWHU'.HQQHG\*(25*(	'21$/'621
HYLGHQFHSXUVXDQWWRDYDOLGZDUUDQWDQGSODLQWLIIVKDYHQRW              //3$XVWLQ7H[DV6FRWW7*UHHQZRRG*5((1:22'	
VKRZQWKDWWKHSURWHFWHGPDWHULDOVZHUHVHDUFKHG:HZLOO                 $662&,$7(6&LQFLQQDWL2KLRIRU$SSHOODQWV-RKQ:
QRWILQGOLDELOLW\XQGHUWKH33$XQGHUWKHVHFLUFXPVWDQFHV              +XVW 6&+52('(5 0$81'5(// %$5%,(5( 	
                                                                           32:(56&LQFLQQDWL2KLRIRU$SSHOOHHV21%5,()
                          9,&RQFOXVLRQ                                  3HWHU'.HQQHG\*(25*(	'21$/'621//3$XVWLQ
                                                                           7H[DV 6FRWW 7 *UHHQZRRG *5((1:22' 	
  )RU WKH IRUHJRLQJ UHDVRQV WKH MXGJPHQWV RI WKH GLVWULFW         $662&,$7(6&LQFLQQDWL2KLRIRU$SSHOODQWV-RKQ:
FRXUWDUHDIILUPHG                                                        +XVW 0LFKDHO ( 0DXQGUHOO /DZUHQFH (GZDUG %DUELHUH
                                                                           6&+52('(50$81'5(//%$5%,(5(	32:(56
                                                                           &LQFLQQDWL 2KLR +XJK 2ZHQ )URVW ,, &LQFLQQDWL 2KLR
                                                                           'RQDOG ( +DUGLQ +$5',1 /()721 /$=$586 	
                                                                           0$5.6//&&LQFLQQDWL2KLRIRU$SSHOOHHV
                                                                                                BBBBBBBBBBBBBBBBB
                                                                                                    23,1,21
                                                                                                BBBBBBBBBBBBBBBBB
                                                                              $/$1(1255,6&LUFXLW-XGJH,QWKH+DPLOWRQ
                                                                           &RXQW\ 2KLR 5HJLRQDO (OHFWURQLF &RPSXWHU ,QWHOOLJHQFH
                                                                           7DVN)RUFH5(&,ZDVLQYHVWLJDWLQJRQOLQHREVFHQLW\DQG
                                                                           VHL]HGWZRFRPSXWHUEXOOHWLQERDUGV\VWHPV7KHILUVWV\VWHP
                                                                           VHL]HG ZDV WKH &LQFLQQDWL &RPSXWHU &RQQHFWLRQ %XOOHWLQ
                                                                           %RDUG6\VWHP&&&%%66HYHUDOXVHUVRIWKHV\VWHPILOHG
                                                                           D FODVV DFWLRQ RQ EHKDOI RI VXEVFULEHUV DJDLQVW 5(&, WKH
                                                                           VKHULIIDQGKLVGHSDUWPHQWDOOHJLQJYLRODWLRQVRIWKH)LUVWDQG
                                                                           )RXUWK$PHQGPHQWVWKH(OHFWURQLF&RPPXQLFDWLRQV3ULYDF\
                                                                           $FW (&3$ DQG WKH 3ULYDF\ 3URWHFWLRQ $FW 33$ DQG
                                                                           VHWWLQJRXWVWDWHODZDQGFRPPRQODZFODLPV7KHVHFRQG
                                                                           V\VWHP VHL]HG LQ WKH VDPH JHQHUDO LQYHVWLJDWLRQ ZDV WKH
                                                                           6SDQLVK,QTXLVLWLRQ%XOOHWLQ%RDUG6\VWHP6,%%67KH
                                                                           V\VWHP¶VXVHUVRSHUDWRUDQGFRPSXWHURZQHU EURXJKWVXLW
                                                                         DJDLQVWWKHVDPHGHIHQGDQWVDOOHJLQJWKHVDPHYLRODWLRQVDVLQ
      %HFDXVH ZH KDYH GHWHUPLQHG WKDW WKH GLVWULFW FRXUW GLG QRW HUU LQ
                                                                           WKH&&&%%6VXLW
JUDQWLQJ VXPPDU\ MXGJPHQW LQ IDYRU RI GHIHQGDQWV ZH QHHG QRW UHDFK
GHIHQGDQWV¶ FODLP WKDW WKH\ DUH LPPXQH IURP OLDELOLW\ XQGHU WKH (OHYHQWK
$PHQGPHQW
        *XHVWHWDOY/HLVHWDO           1RV         1RV                  *XHVWHWDOY/HLVHWDO      

  7KH GLVWULFW FRXUW JUDQWHG VXPPDU\ MXGJPHQW IRU                    IRU GRFXPHQWV RQ D FRPSXWHU LW ZLOO RIWHQ EH GLIILFXOW RU
GHIHQGDQWVLQHDFKFDVHDQGSODLQWLIIVDSSHDO:HDIILUP               LPSRVVLEOHSDUWLFXODUO\ZLWKRXWWKHFRRSHUDWLRQRIWKHRZQHU
                                                                           WR VHSDUDWH WKH RIIHQGLQJ PDWHULDOV IURP RWKHU ³LQQRFHQW´
                           ,%DFNJURXQG                                   PDWHULDO RQ WKH FRPSXWHU  7KH 33$ GRHV QRW H[SOLFLWO\
                                                                           DGGUHVV WKH TXHVWLRQ RI OLDELOLW\ IRU D VHL]XUH RI
    $&LQFLQQDWL&RPSXWHU&RQQHFWLRQ%XOOHWLQ%RDUG6\VWHP               FRPPXQLFDWLYH PDWHULDO WKDW LV WHFKQLFDOO\ GLIILFXOW WR
                                                                           VHSDUDWH IURP WKH HYLGHQFH RI D FULPH ZKRVH VHL]XUH LV
  ,Q HDUO\  WKHUH ZDV D FRPSODLQW ORGJHG ZLWK WKH            DXWKRUL]HGE\DYDOLGZDUUDQW
+DPLOWRQ &RXQW\ 6KHULII¶V 'HSDUWPHQW DERXW RQOLQH
REVFHQLW\DQG5(&,DGLYLVLRQRIWKHVKHULII¶VGHSDUWPHQW                 ,I ZH ZHUH WR XQGHUVWDQG WKH VWDWXWH WR PHDQ WKDW WKH
EHJDQLQYHVWLJDWLQJVHYHUDOHOHFWURQLFEXOOHWLQERDUGV\VWHPV             SUHVHQFHRIVRPHSURWHFWHGPDWHULDOVRQWKHFRPSXWHUH[WHQGV
LQFOXGLQJ WKH &&& %%6  7KH &&& %%6 FRPSXWHUV ZHUH                WKH33$SURWHFWLRQVWRDOOPDWHULDOVHYHQHYLGHQFHRIDFULPH
RSHUDWHGE\5REHUW(PHUVRQLQ8QLRQ7RZQVKLS&OHUPRQW                     ORFDWHGRQWKHFRPSXWHUWKHVWDWXWHZRXOGSUHYHQWSROLFHLQ
&RXQW\2KLR7KHV\VWHPDFFRUGLQJWRSODLQWLIIVLQFOXGHG             PDQ\ FDVHV IURP VHL]LQJ HYLGHQFH ORFDWHG RQ D FRPSXWHU
³WKRXVDQGVRIVXEVFULEHUVIURPWKH*UHDWHU&LQFLQQDWLDUHD                &ULPLQDOV ZRXOG EH DEOH WR LQVXODWH DQ\ RI WKHLU
WKH8QLWHG6WDWHVDQGHYHQRYHUVHDV´*XHVW%ULHIDW8VHUV            HOHFWURQLFDOO\KHOGFULPLQDOUHFRUGVRUHYLGHQFHE\LQFOXGLQJ
FRXOGZLWKDSDVVZRUGVHQGHPDLOWRVXEVFULEHUVRUWRRWKHUV            RQ WKHLU FRPSXWHU FRPPXQLFDWLYH PDWHULDOV WKDW TXDOLI\ DV
RQ WKH LQWHUQHW  7KH\ FRXOG DOVR SDUWLFLSDWH LQ FKDW URRP       ZRUNSURGXFWRUGRFXPHQWDU\PDWHULDOVXQGHUWKH33$:H
FRQYHUVDWLRQVRQOLQHJDPHV DQGFRQIHUHQFHVZKHUHWKH\                 KROG WKDW ZKHQ SURWHFWHG PDWHULDOV DUH FRPPLQJOHG RQ D
FRXOGSRVWRUUHDGPHVVDJHVRQPDQ\WRSLFVDQGWKH\FRXOG                 FULPLQDOVXVSHFW¶VFRPSXWHUZLWK FULPLQDOHYLGHQFHWKDWLV
GRZQORDGILOHVVXFKDVFRPSXWHUSURJUDPVDQGSLFWXUHV                     XQSURWHFWHG E\ WKH DFW ZH ZLOO QRW ILQG OLDELOLW\ XQGHU WKH
                                                                           33$ IRU VHL]XUH RI WKH 33$SURWHFWHG PDWHULDOV  :H
   5(&,RIILFHUVDVVXPHGDQXQGHUFRYHULGHQWLW\DQGREWDLQHG               HPSKDVL]HWKRXJKWKDWSROLFHPD\QRWWKHQVHDUFKWKH33$
DFFHVVWRWKHDGXOWSDUWRIWKHEXOOHWLQERDUGV\VWHPZKHUH               SURWHFWHG PDWHULDOV WKDW ZHUH VHL]HG LQFLGHQWDOO\ WR WKH
WKH\GRZQORDGHGVDPSOHLPDJHV$GHWHFWLYHSUHVHQWHGPRUH                 FULPLQDOHYLGHQFH
WKDQ RQH KXQGUHG RI WKHVH LPDJHV WR D +DPLOWRQ &RXQW\
PXQLFLSDOFRXUWMXGJHZKRGHWHUPLQHGWKDWIRUW\ILYHRIWKHP                 ,QWKHLQVWDQWFDVHVZHZLOODVVXPHZLWKRXWGHFLGLQJWKDW
ZHUHREVFHQH5(&,RIILFHUVWKHQSUHSDUHGDVHDUFKZDUUDQW               WKHUH ZHUH 33$SURWHFWHG PDWHULDOV RQ WKH V\VWHPV  7KH
ZKLFKLGHQWLILHGWKHIRUW\ILYHREVFHQHLPDJHV7KHDIILGDYLW             WDUJHWHGILOHV²REVFHQHLPDJHVRUSLUDWHGVRIWZDUH²ZRXOG
DWWDFKHG WR WKH ZDUUDQW OLVWHG WKH RIIHQVHV LQ TXHVWLRQ DV        QRW TXDOLI\ DV SURWHFWHG ZRUN SURGXFW RU GRFXPHQWDU\
SDQGHULQJ REVFHQLW\ 2+,2 5(9 &2'(   DQG                    PDWHULDOEHFDXVHERWKGHILQLWLRQVH[FOXGH³SURSHUW\GHVLJQHG
SRVVHVVLQJ FULPLQDO WRROV 2+,2 5(9 &2'(                   RULQWHQGHGIRUXVHRUZKLFKLVRUKDVEHHQXVHGDVWKHPHDQV

                                                                              
      %HFDXVH SODLQWLIIV KDYH QRW PHQWLRQHG WKHLU VWDWH ODZ FODLPV RQ
                                                                                  3ODLQWLIIV UHO\ DJDLQ RQ 6WHYH -DFNVRQ *DPHV  ) 6XSS 
DSSHDO ZH FRQVLGHU WKH LVVXHV IRUIHLWHG   7KH\ KDYH H[SOLFLWO\ ZDLYHG
                                                                           7KDW FDVH LQ ZKLFK WKH FRXUW DZDUGHG 33$ GDPDJHV WR D FRPSDQ\ EXW QRW
WKHLU VWDWXWRU\ FODLP XQGHU  86&  
                                                                           WR EXOOHWLQ ERDUG VXEVFULEHUV DIWHU WKH 6HFUHW 6HUYLFH VHL]HG DQG VHDUFKHG
                                                                           WKUHH RI WKH FRPSDQ\¶V FRPSXWHUV LV GLVWLQJXLVKDEOH IURP WKH LQVWDQW
     
      (PHUVRQ LV QRW D PHPEHU RI WKH SODLQWLII FODVV +H ZDV LQGLFWHG LQ   FDVHV 7KH RZQHU RI WKH FRPSXWHUV ZDV QRW D FULPLQDO VXVSHFW DQG WKH
&OHUPRQW &RXQW\ 2KLR LQ  DQG SOHDGHG JXLOW\ WR VL[ FRXQWV RI         FRXUW IRXQG WKDW WKH DJHQWV KDG UHDG WKH HOHFWURQLF FRPPXQLFDWLRQV DQG
DWWHPSWHG SDQGHULQJ RI REVFHQLW\                                          GHOHWHG VRPH GRFXPHQWV ,G DW 
    *XHVWHWDOY/HLVHWDO               1RV     1RV                *XHVWHWDOY/HLVHWDO     

  %'LVFXVVLRQ                                                         5(&,VKRZHGWKHZDUUDQWWRDWWRUQH\VLQWKH+DPLOWRQ&RXQW\
                                                                        SURVHFXWRU¶V RIILFH DQG HGLWHG LW DIWHU WKLV PHHWLQJ  7KH
   'HIHQGDQWVDUJXHWKDWPRVWRIWKHSODLQWLIIVODFNVWDQGLQJ           UHYLVHGZDUUDQWDXWKRUL]HGWKHVHDUFKDQGVHL]XUHRIFRPSXWHU
LQWKHVHFDVHVEHFDXVHRQO\WKHRSHUDWRURIWKHEXOOHWLQERDUG          KDUGZDUH VRIWZDUH ILQDQFLDO DQG FRPSXWHU UHFRUGV DQG
V\VWHPV ³SRVVHVVHG´ WKH PDWHULDOV DW LVVXH LQ WKHVH FDVHV      SHUVRQDO FRPPXQLFDWLRQV OLPLWLQJ WKH LWHPV VHDUFKHG RU
+RZHYHU WKH VWDWXWH FUHDWHV D FDXVH RI DFWLRQ IRU DQ\         VHL]HG WR WKRVH WKDW KDG EHHQ XVHG LQ WKH RIIHQVH  5(&,
³DJJULHYHGSHUVRQ´³$SHUVRQDJJULHYHGE\DVHDUFKIRURU             RIILFHUV WKHQ SUHVHQWHG WKH ZDUUDQW WR D &OHUPRQW &RXQW\
VHL]XUHRIPDWHULDOVLQYLRODWLRQRIWKLVFKDSWHUVKDOOKDYHD          PXQLFLSDOFRXUWMXGJHZKRVLJQHGWKHZDUUDQWGLUHFWLQJLWWR
FLYLOFDXVHRIDFWLRQIRUGDPDJHVIRUVXFKVHDUFKRUVHL]XUH            WKH SROLFH FKLHI RI 8QLRQ 7RZQVKLS ORFDWHG LQ &OHUPRQW
´ 86&DDDFI86&            &RXQW\
GHILQLQJ³DJJULHYHGSHUVRQ´XQGHU(&3$7LWOH,DV³DSHUVRQ
ZKRZDVDSDUW\WRDQ\LQWHUFHSWHGZLUHRUDORUHOHFWURQLF               2Q -XQH   PHPEHUV RI 5(&, DQG WKH 8QLRQ
FRPPXQLFDWLRQ RU D SHUVRQ DJDLQVW ZKRP WKH LQWHUFHSWLRQ          7RZQVKLS 3ROLFH 'HSDUWPHQW ZHQW WR WKH KRPH RI 5REHUW
ZDVGLUHFWHG´$FFRUGLQJO\SODLQWLIIVKDGVWDQGLQJWREULQJ          (PHUVRQWRH[HFXWHWKHZDUUDQW7KHRIILFHUVDVNHG(PHUVRQ
D33$FODLPEHFDXVHWKH\ZHUH³DJJULHYHG´E\WKHVHL]XUHRI             WRORFDWHWKHREVFHQHLPDJHVRQKLVV\VWHPVRWKDWWKH\FRXOG
WKHLUFRPPXQLFDWLRQV                                                   VHL]HRQO\WKRVHILOHV(PHUVRQGHQLHGNQRZOHGJHRIREVFHQH
                                                                        LPDJHV RQ WKH FRPSXWHU DQG SODFHG D FDOO WR KLV ODZ\HU
   7KHVWDWXWH¶VSURWHFWLRQRIGRFXPHQWVKHOGE\SXEOLVKHUV             :KLOHHYHU\RQHZDLWHGIRUWKHDWWRUQH\WRUHWXUQWKHFDOOWKH
VXFKDVPDLQVWUHDPQHZVSDSHUVPD\EHVWUDLJKWIRUZDUGEXW               8QLRQ7RZQVKLSRIILFHUVOHIWWKHKRXVH(PHUVRQHYHQWXDOO\
LQWHUSUHWDWLRQ RI WKH DFW SUHVHQWV SDUWLFXODU FKDOOHQJHV LQ D   VWDWHGWKDWKHGLGQRWNQRZ ZKHUHWKHLPDJHVZHUHRQWKH
VLWXDWLRQXQIRUHVHHQE\WKHGUDIWHUVWKDWRIDFRPSXWHUVHDUFK        FRPSXWHU6HYHUDOKRXUVDIWHUWKHSROLFH¶VDUULYDOZLWKVWLOO
$VZHKDYHH[SODLQHGZKHQSROLFHH[HFXWHDVHDUFKZDUUDQW              QR ZRUG IURP WKH ODZ\HU WKH 5(&, RIILFHUV EHJDQ
                                                                        GLVPDQWOLQJWKHFRPSXWHUV\VWHPWRWDNHLWDZD\(PHUVRQ
                                                                        WKHQVDLGWKDWWKHLPDJHVZHUHRQWKHODUJHILOHVHUYHU7KH
                                                                        RIILFHUVVNHSWLFDORIKLVVWDWHPHQWVHL]HGWKHODUJHDQGVPDOO
        UHODWH 3URYLGHG KRZHYHU >W@KDW D JRYHUQPHQW RIILFHU
                                                                        ILOHVHUYHUVDQGWRRNWKHPWRWKHSROLFHVWDWLRQ
        RU HPSOR\HH PD\ QRW VHDUFK IRU RU VHL]H VXFK PDWHULDOV
        XQGHU WKH SURYLVLRQV RI WKLV SDUDJUDSK LI WKH RIIHQVH WR
        ZKLFK WKH PDWHULDOV UHODWH FRQVLVWV RI WKH UHFHLSW
                                                                          'HSXW\ 6KHULII $XVGHQPRRUH H[SODLQHG WKH ZD\ WKH
        SRVVHVVLRQ FRPPXQLFDWLRQ RU ZLWKKROGLQJ RI VXFK               FRPSXWHU VHDUFK SURFHHGHG DW WKH VWDWLRQ  +H VDLG WKDW KH
        PDWHULDOV RU WKH LQIRUPDWLRQ FRQWDLQHG WKHUHLQ EXW VXFK        XVHGDFRPSXWHUSURJUDPWRORFDWHWKHIRUW\ILYHREVFHQHILOHV
        D VHDUFK RU VHL]XUH PD\ EH FRQGXFWHG XQGHU WKH                  DFFRUGLQJWRWKHILOHQDPHVOLVWHGLQWKHZDUUDQWDQGKHDOVR
        SURYLVLRQV RI WKLV SDUDJUDSK LI WKH RIIHQVH FRQVLVWV RI
                                                                        VHDUFKHGIRUXQOLFHQFHGVRIWZDUH+HWHVWLILHGWKDWRQFHKH
        WKH UHFHLSW SRVVHVVLRQ RU FRPPXQLFDWLRQ RI
        LQIRUPDWLRQ UHODWLQJ WR WKH QDWLRQDO GHIHQVH FODVVLILHG
                                                                        KDGORFDWHGWKHLPDJHILOHVKHGLGQRWUHYLHZWKHUHVWRIWKH
        LQIRUPDWLRQ RU UHVWULFWHG GDWD XQGHU WKH SURYLVLRQV RI         VHL]HG SURSHUW\  3ODLQWLIIV RQ WKH RWKHU KDQG DOOHJH WKDW
        >FHUWDLQ IHGHUDO ODZV@ RU LI WKH RIIHQVH LQYROYHV WKH          GHIHQGDQWVUHDGHPDLORQWKHVHL]HGV\VWHP
        SURGXFWLRQ    SRVVHVVLRQ    UHFHLSW  PDLOLQJ    VDOH
        GLVWULEXWLRQ VKLSPHQW RU WUDQVSRUWDWLRQ RI FKLOG               2Q $XJXVW   SODLQWLIIV ILOHG WKLV VXLW DJDLQVW WKH
        SRUQRJUDSK\ WKH VH[XDO H[SORLWDWLRQ RI FKLOGUHQ RU WKH
        VDOH RU SXUFKDVH RI FKLOGUHQ XQGHU VHFWLRQ 
                                                                        +DPLOWRQ &RXQW\ 6KHULII¶V 'HSDUWPHQW 5(&, +DPLOWRQ
        $  RU $ RI 7LWOH     
                                                                        &RXQW\ 6KHULII 6LPRQ /HLV DQG 'HSXW\ 6KHULIIV 'DOH
                                                                        0HQNKDXV-DPHV1HUOLQJHUDQG'DYLG$XVGHQPRRUH7KH
 86&  DDD
      *XHVWHWDOY/HLVHWDO          1RV        1RV                 *XHVWHWDOY/HLVHWDO       

FODVV RI &&& %%6 XVHUV ZDV FHUWLILHG RQ -XO\          EDUV VHL]XUH RI ³GRFXPHQWDU\ PDWHULDOV´ ZKLFK LQFOXGH
6RPHWLPH GXULQJ WKH SHQGHQF\ RI WKH VXLW GHIHQGDQWV            PDWHULDOVOLNHQRWHVSKRWRJUDSKVRUWDSHVRWKHUWKDQWKLQJV
UHWXUQHGWKHFRPSXWHUHTXLSPHQWWR(PHUVRQ2Q0DUFK              SRVVHVVHGIRUXVHLQDFULPLQDORIIHQVH7KHSROLFHPD\VWLOO
 WKH PDJLVWUDWH MXGJH LVVXHG D UHSRUW DQG                  DFFHVVGRFXPHQWDU\PDWHULDOVZLWKDVXESRHQDDQRSWLRQQRW
UHFRPPHQGDWLRQ WR JUDQW WKH GHIHQGDQWV¶ PRWLRQV IRU              DYDLODEOH IRU ZRUN SURGXFW PDWHULDOV  6HH  86&
VXPPDU\MXGJPHQWRQWKH(&3$)RXUWK$PHQGPHQWDQG                    DDE
FRUROODU\2KLRFRQVWLWXWLRQDOFODLPVDQGWRJUDQWTXDOLILHG
LPPXQLW\ WR WKH LQGLYLGXDO GHIHQGDQWV RQ WKH )RXUWK                7KH SROLFH FDQ DYRLG WKH FRQVWUDLQWV RI WKH DFW LQ VRPH
$PHQGPHQW FODLP  7KH GLVWULFW FRXUW DGRSWHG WKH                FLUFXPVWDQFHVZKHQWKHSHUVRQSRVVHVVLQJWKHPDWHULDOVLVD
UHFRPPHQGDWLRQRQ6HSWHPEHUDQGODWHUJUDQWHG                FULPLQDO VXVSHFW UDWKHU WKDQ DQ LQQRFHQW WKLUG SDUW\  7KH
GHIHQGDQWV¶ UHQHZHG PRWLRQ IRU TXDOLILHG LPPXQLW\ DQG            PDWHULDOVH[HPSWHGE\WKLV³VXVSHFWH[FHSWLRQ´PXVWUHODWHWR
VXPPDU\MXGJPHQWRQWKHUHPDLQLQJFODLPVGLVPLVVLQJWKH               WKH RIIHQVH DQG WKH RIIHQVH PXVW QRW LQYROYH WKH
FDVHRQ$XJXVW                                               FRPPXQLFDWLRQRIWKHPDWHULDOV
    %6SDQLVK,QTXLVLWLRQ%XOOHWLQ%RDUG6\VWHP
  7KH6,%%6ZDVDVPDOOHUEXOOHWLQERDUGV\VWHPWKDQWKH                        LQFOXGH PHQWDO LPSUHVVLRQV FRQFOXVLRQV RSLQLRQV
                                                                                RU WKHRULHV RI WKH SHUVRQ ZKR SUHSDUHG SURGXFHG
&&&%%6DQGLWZDVUXQE\DWHHQDJHURQKLVIDWKHU¶VKRPH                      DXWKRUHG RU FUHDWHG VXFK PDWHULDO
FRPSXWHU  2QO\ RQH XVHU FRXOG ORJ RQ DW D WLPH DQG WKH
FRQQHFWLRQ WR WKH LQWHUQHW ZDV PRUH UXGLPHQWDU\ WKDQ WKH        86&  DDE
&&& %%6¶V FRQQHFWLRQ  7KH 6, %%6 LQFOXGHG D SRVWHG
                                                                           
GLVFODLPHURQSULYDF\                                                      'RFXPHQWDU\ PDWHULDO HQFRPSDVVHV

    3XUVXDQWWRWKH(OHFWURQLFDQG&RPPXQLFDWLRQV3ULYDF\                  PDWHULDOV XSRQ ZKLFK LQIRUPDWLRQ LV UHFRUGHG DQG LQFOXGHV EXW
    $FWRI7LWOH86&RGHDQGIROORZLQJDOO                LV QRW OLPLWHG WR ZULWWHQ RU SULQWHG PDWHULDOV SKRWRJUDSKV
                                                                           PRWLRQ SLFWXUH ILOPV QHJDWLYHV YLGHR WDSHV DXGLR WDSHV DQG
    XVHUVDUHKHUHE\QRWLILHGWKDWWKHUHDUH12SURYLVLRQVIRU             RWKHU PHFKDQLFDOO\ >PDJQHWLFDOO\@ RU HOHFWURQLFDOO\ UHFRUGHG
    SULYDWH PHVVDJHV RQ WKLV ERDUG  7KLV LV 758(                  FDUGV WDSHV RU GLVFV EXW GRHV QRW LQFOXGH FRQWUDEDQG RU WKH
    QRWZLWKVWDQGLQJ WKH IDFW WKDW WKH V\VWHP VRIWZDUH                IUXLWV RI D FULPH RU WKLQJV RWKHUZLVH FULPLQDOO\ SRVVHVVHG RU
    LQGLFDWHVWRWKHXVHUWKDWKHRUVKHPD\DQGFDQPDNHD                SURSHUW\ GHVLJQHG RU LQWHQGHG IRU XVH RU ZKLFK LV RU KDV EHHQ
    PHVVDJH ³SULYDWH´  $OO PHVVDJHV PD\ EH UHDG E\ WKH           XVHG DV WKH PHDQV RI FRPPLWWLQJ D FULPLQDO RIIHQVH

    6\V2S>V\VWHPVRSHUDWRU@DQGKLVDVVLJQV>@                         86&  DDD

2¶%ULHQ-RLQW$SSHQGL[-$DW1HUOLQJHU'HSDW              
                                                                             7KH ³VXVSHFW H[FHSWLRQ´ SURYLGHV

  7KH6,%%6LQYHVWLJDWLRQEHJDQDIWHUDSDUHQWUHSRUWHGWR                >7@KLV SURYLVLRQ >EDUULQJ VHDUFK DQG VHL]XUH RI ZRUN SURGXFW
SROLFH WKDW KLV VRQ DQG D IULHQG ZHUH YLHZLQJ FKLOG               PDWHULDOV@ VKDOO QRW LPSDLU RU DIIHFW WKH DELOLW\ RI DQ\
SRUQRJUDSK\  5(&, RIILFLDOV LQWHUYLHZHG VHYHUDO RI WKH             JRYHUQPHQW RIILFHU RU HPSOR\HH SXUVXDQW WR RWKHUZLVH
MXYHQLOHV LPSOLFDWHG DQG DQDO\]HG WKHLU FRPSXWHUV ZKLFK             DSSOLFDEOH ODZ WR VHDUFK IRU RU VHL]H VXFK PDWHULDOV LI²
GLVFORVHGFKLOGDQGDGXOWSRUQRJUDSK\DQGILOHVLQGLFDWLQJ
                                                                                 WKHUH LV SUREDEOH FDXVH WR EHOLHYH WKDW WKH SHUVRQ
XQDXWKRUL]HGDFFHVVWRFRPSXWHUV\VWHPV5(&,WUDFHG                     SRVVHVVLQJ VXFK PDWHULDOV KDV FRPPLWWHG RU LV
WKH ODWWHU ILOHV FDOOHG +3$&9                                              FRPPLWWLQJ WKH FULPLQDO RIIHQVH WR ZKLFK WKH PDWHULDOV
       *XHVWHWDOY/HLVHWDO              1RV      1RV                *XHVWHWDOY/HLVHWDO      

UHFRUGVZHUHVHDUFKHGLQWKHFDVH,GDW$FFRUGLQJ              KDFNHUSKUHDNHUDQDUFK\FUDFNLQJYLUXVILOHVWRWKH6,%%6
WR WKH 6HQDWH 5HSRUW WKH 33$ ZDV HQDFWHG WR DIIRUG ³WKH         EXWWKHGHWHFWLYHVZHUHXQDEOHWRJDLQDFFHVVWRWKHEXOOHWLQ
SUHVVDQGFHUWDLQRWKHUSHUVRQVQRWVXVSHFWHGRIFRPPLWWLQJ                ERDUGV\VWHP7KH\REWDLQHGDZDUUDQWRQWKHEDVLVRIWKHLU
DFULPHZLWKSURWHFWLRQVQRWSURYLGHGFXUUHQWO\E\WKH)RXUWK              LQWHUYLHZV ZLWK WKH MXYHQLOHV DQG H[DPLQDWLRQ RI WKHLU
$PHQGPHQW´65HS1RDWUHSULQWHGLQ                 FRPSXWHUVZKLFKLQGLFDWHGWKDWWKH6,%%6ZDVXVHGWRWDS
86&&$1                                                    SKRQH OLQHV UHFRYHU GHELW FDUG QXPEHUV DFTXLUH SLUDWHG
                                                                           VRIWZDUH DQG GRZQORDG FKLOG SRUQRJUDSK\  7KH ZDUUDQW
  7KH 33$ SURKLELWV WKH JRYHUQPHQW IURP VHL]LQJ FHUWDLQ             ERUURZHG WKH &&& %%6 ZDUUDQW ODQJXDJH DXWKRUL]LQJ WKH
PDWHULDOVFDOOHG³ZRUNSURGXFWPDWHULDOV´WKDWDUHLQWHQGHG              VHL]XUH RI DOO HTXLSPHQW GRFXPHQWDWLRQ DQG SHUVRQDO
IRUSXEOLFDWLRQ                                                           FRPPXQLFDWLRQVWKDWZHUHXVHGLQWKHRIIHQVHVOLVWHG7KH
                                                                           VXSSRUWLQJ DIILGDYLW OLVWHG WKUHH RIIHQVHV  LOOHJDO XVH RI D
  1RWZLWKVWDQGLQJDQ\RWKHUODZLWVKDOOEHXQODZIXOIRUD                PLQRU LQ QXGLW\RULHQWHG PDWHULDO 2+,2 5(9 &2'(
  JRYHUQPHQWRIILFHURUHPSOR\HHLQFRQQHFWLRQZLWKWKH                   XQDXWKRUL]HGXVHRISURSHUW\2+,2 5(9 &2'(
  LQYHVWLJDWLRQ RU SURVHFXWLRQ RI D FULPLQDO RIIHQVH WR            DQGSRVVHVVLQJFULPLQDOWRROV2+,2 5(9 &2'(
  VHDUFKIRURUVHL]HDQ\ZRUNSURGXFWPDWHULDOVSRVVHVVHG                 7KHZDUUDQWIRUDVHDUFKRIWKHRZQHU¶VKRPHLQ
  E\ D SHUVRQ UHDVRQDEO\ EHOLHYHG WR KDYH D SXUSRVH WR            %XWOHU &RXQW\ ZDV LVVXHG E\ WKH %XWOHU &RXQW\ &RXUW RI
  GLVVHPLQDWHWRWKHSXEOLFDQHZVSDSHUERRNEURDGFDVW                  &RPPRQ 3OHDV    DQG GLUHFWHG WR WKH 3ROLFH &KLHI RI 8QLRQ
  RU RWKHU VLPLODU IRUP RI SXEOLF FRPPXQLFDWLRQ LQ RU             7RZQVKLS
  DIIHFWLQJLQWHUVWDWHRUIRUHLJQFRPPHUFH
                                                                             2Q$XJXVW5(&,H[HFXWHGWKHVHDUFKZDUUDQWIRU
86&DDD                                                     WKH 6, %%6  $IWHU XQVXFFHVVIXO DWWHPSWV WR FRQWDFW WKH
                                                                           FRPSXWHU¶VRZQHUGHIHQGDQWVUHPRYHGFRPSXWHUHTXLSPHQW
  :RUNSURGXFWPDWHULDOPHDQVPDWHULDOVRWKHUWKDQSURSHUW\               DQG GLVNV  8QLRQ 7RZQVKLS SROLFH DFFRPSDQLHG 5(&,
XVHG WR FRPPLW D FULPLQDO RIIHQVH WKDW DUH WR EH                 RIILFLDOVDQGUHPDLQHG SUHVHQWXQWLO5(&,RIILFLDOVOHIWWKH
FRPPXQLFDWHG WR WKH SXEOLF DQG FRQWDLQ WKH DXWKRUV¶                SUHPLVHV
LPSUHVVLRQVRSLQLRQVFRQFOXVLRQVRUWKHRULHV 7KHDFWDOVR
                                                                              7KLVODZVXLWZDVILOHGRQ0DUFKE\IRXULQGLYLGXDO
                                                                           PHPEHUVRIWKH6,%%6WKHRSHUDWRURIWKH6,%%6DQGWKH
                                                                          RZQHU RI WKH FRPSXWHU WKDW KRXVHG WKH V\VWHP  3ODLQWLIIV
      :RUN SURGXFW PDWHULDOV DUH GHILQHG E\ WKH VWDWXWH DV
                                                                           DOOHJHGWKHVDPHYLRODWLRQVRIODZLQWKLVVXLWDVLQWKH&&&
     PDWHULDOV RWKHU WKDQ FRQWUDEDQG RU WKH IUXLWV RI D FULPH RU WKLQJV   %%6 VXLW EXW WKH FRXUW GHQLHG FODVV FHUWLILFDWLRQ  2Q
     RWKHUZLVH FULPLQDOO\ SRVVHVVHG RU SURSHUW\ GHVLJQHG RU LQWHQGHG
                                                                           1RYHPEHU   WKH GLVWULFW FRXUW JUDQWHG VXPPDU\
     IRU XVH RU ZKLFK LV RU KDV EHHQ XVHG DV WKH PHDQV RI
     FRPPLWWLQJ D FULPLQDO RIIHQVH DQG²
                                                                           MXGJPHQW RQ WKH (&3$ )RXUWK $PHQGPHQW DQG
                                                                           FRUUHVSRQGLQJ 2KLR FRQVWLWXWLRQDO FODLPV DQG IRXQG WKH
            LQ DQWLFLSDWLRQ RI FRPPXQLFDWLQJ VXFK PDWHULDOV WR          LQGLYLGXDOGHIHQGDQWVHQWLWOHGWRTXDOLILHGLPPXQLW\RQWKH
           WKH SXEOLF DUH SUHSDUHG SURGXFHG DXWKRUHG RU                FRQVWLWXWLRQDOFODLPV2Q$XJXVWWKHFRXUWJUDQWHG
           FUHDWHG ZKHWKHU E\ WKH SHUVRQ LQ SRVVHVVLRQ RI WKH
           PDWHULDOV RU E\ DQ\ RWKHU SHUVRQ

                                                                               
            DUH SRVVHVVHG IRU WKH SXUSRVHV RI FRPPXQLFDWLQJ                  7KLV DSSHDUV WR KDYH EHHQ WKH IRUPHU QDPH RI WKH :HVW &KHVWHU
           VXFK PDWHULDOV WR WKH SXEOLF DQG                               3ROLFH 'HSDUWPHQW ORFDWHG LQ %XWOHU &RXQW\ QRWZLWKVWDQGLQJ D 8QLRQ
                                                                           7RZQVKLS SROLFH IRUFH LQ &OHUPRQW &RXQW\
     *XHVWHWDOY/HLVHWDO            1RV         1RV                  *XHVWHWDOY/HLVHWDO      

GHIHQGDQWV¶ PRWLRQ IRU TXDOLILHG LPPXQLW\ DQG VXPPDU\              WKXVDJRYHUQPHQWDOHQWLW\PD\QRWYLRODWHWKDWVXEVHFWLRQE\
MXGJPHQWRQWKHUHPDLQLQJFODLPV                                       VLPSO\DFFHVVLQJLQIRUPDWLRQLPSURSHUO\´
                    ,,)RXUWK$PHQGPHQW                                    ,Q WKHLU EULHI SODLQWLIIV PHQWLRQ LQ SDVVLQJ  86&
                                                                           ZKLFK SURKLELWV LQWHQWLRQDO XQODZIXO DFFHVV WR DQ
   3ODLQWLIIV DUJXH WKDW WKH GLVWULFW FRXUW HUUHG LQ JUDQWLQJ    HOHFWURQLF FRPPXQLFDWLRQ VHUYLFH LI WKH RIIHQGHU ³REWDLQV
TXDOLILHGLPPXQLW\DQGVXPPDU\MXGJPHQWWRWKHGHIHQGDQWV                DOWHUVRUSUHYHQWVDXWKRUL]HGDFFHVVWRDZLUHRUHOHFWURQLF
RQ WKH )RXUWK $PHQGPHQW FODLPV  :H UHYLHZ D JUDQW RI          FRPPXQLFDWLRQZKLOHLWLVLQHOHFWURQLFVWRUDJH´86&
VXPPDU\ MXGJPHQW LQFOXGLQJ VXPPDU\ MXGJPHQW RQ WKH                D6XFKDFFHVVLVDJDLQH[FXVHGLILWRFFXUVSXUVXDQW
JURXQGVRITXDOLILHGLPPXQLW\GHQRYR0F&ORXGY7HVWD               WR WKH DSSURYHG    SURFHGXUHV ZKLFK LQFOXGH WKH XVH RI D
)GWK&LU6XPPDU\MXGJPHQWLV                 ZDUUDQW7KHUHZDVQRYLRODWLRQRIWKH(&3$LQWKHVHFDVHV
DSSURSULDWH ZKHUH YLHZLQJ WKH HYLGHQFH LQ WKH OLJKW PRVW
IDYRUDEOHWRWKHQRQPRYLQJSDUW\WKHUHLV³QRJHQXLQHLVVXH                               93ULYDF\3URWHFWLRQ$FW
DVWRDQ\PDWHULDOIDFWDQGWKHPRYLQJSDUW\LVHQWLWOHGWR
DMXGJPHQWDVDPDWWHURIODZ´)(' 5 &,9 3F%LUJHO             $7KH6WDWXWH
Y%GRI&RPP¶UV)GWK&LU
                                                                            3ODLQWLIIV FODLP WKDW WKH GHIHQGDQWV VHL]HG PDWHULDOV
   4XDOLILHG LPPXQLW\ VKLHOGV JRYHUQPHQW RIILFLDOV IURP             LQWHQGHG IRU SXEOLFDWLRQ DQG WKXV YLRODWHG WKH 3ULYDF\
OLDELOLW\DVZHOODVIURPVXLWLIWKHLURIILFLDOFRQGXFW³GRHV         3URWHFWLRQ$FW33$DQDFWSURKLELWLQJSROLFHVHDUFKHVIRU
QRWYLRODWHFOHDUO\HVWDEOLVKHGVWDWXWRU\RUFRQVWLWXWLRQDOULJKWV       FHUWDLQ W\SHV RI GRFXPHQWV LQWHQGHG IRU SXEOLFDWLRQ  7KH
RIZKLFKDUHDVRQDEOHSHUVRQZRXOGKDYHNQRZQ´+DUORZY               VWDWXWHZDVSDVVHGLQUHVSRQVHWR=XUFKHUY6WDQIRUG'DLO\
)LW]JHUDOG86:HUHYLHZLVVXHVRI               86LQZKLFKWKH6XSUHPH&RXUWKHOGWKDW
TXDOLILHG LPPXQLW\ XVLQJ D WZRVWHS LQTXLU\  )LUVW ZH          WKH )RXUWK $PHQGPHQW GLG QRW SURKLELW SROLFH IURP
GHWHUPLQHZKHWKHUWKHSODLQWLIIKDVGHPRQVWUDWHGWKHYLRODWLRQ           XQGHUWDNLQJVHDUFKHVDQGVHL]XUHVRIGRFXPHQWDU\HYLGHQFH
RIDFRQVWLWXWLRQDOO\SURWHFWHGULJKW%UHQQDQY7RZQVKLSRI           KHOGE\LQQRFHQWWKLUGSDUWLHVVXFKDVWKHQHZVSDSHUZKRVH
1RUWKYLOOH)GWK&LU,IWKHUHLV
VXFKDYLRODWLRQWKHQZHH[DPLQH³ZKHWKHUWKHULJKWLVVR
µFOHDUO\ HVWDEOLVKHG¶ WKDW D µUHDVRQDEOH RIILFLDO ZRXOG                
XQGHUVWDQG WKDW ZKDW KH LV GRLQJ YLRODWHV WKDW ULJKW¶´  ,G         :H GR QRW ILQG SHUVXDVLYH D IHGHUDO GLVWULFW FRXUW GHFLVLRQ LQ 7H[DV
TXRWLQJ$QGHUVRQY&UHLJKWRQ86               FLWHG E\ SODLQWLIIV $00 $90;0 -DFNVRQ *DPHV ,QF Y 8QLWHG 6WDWHV 6HFUHW
                                                                         6HUYLFH  ) 6XSS  :' 7H[  DII¶G RQ GLIIHUHQW LVVXH E\
                                                                          )G  WK &LU  ,Q 6WHYH -DFNVRQ *DPHV WKH GLVWULFW FRXUW
  3ODLQWLIIV DUJXH WKDW GHIHQGDQWV GLG QRW KDYH WKH OHJDO        DZDUGHG GDPDJHV XQGHU WKH (&3$ DIWHU 6HFUHW 6HUYLFH DJHQWV VHDUFKHG
DXWKRULW\ WR FRQGXFW D VHDUFK DQG VHL]XUH RXWVLGH RI WKHLU      WKH FRPSXWHUV RI D SXEOLVKLQJ FRPSDQ\ WKDW DOVR RSHUDWHG D EXOOHWLQ ERDUG
+DPLOWRQ&RXQW\MXULVGLFWLRQWKDWGHIHQGDQWVH[FHHGHGWKH            V\VWHP ,G DW  7KH FRXUW DSSHDUHG WR DVVXPH WKDW WKH SURYLVLRQV RI
VFRSH RI WKH ZDUUDQWV WKDW WKH VHDUFK ZDUUDQWV ZHUH QRW        WKH (&3$ UHTXLUH QRWLFH WR VXEVFULEHUV HYHQ ZKHQ SROLFH DUH RSHUDWLQJ
VXIILFLHQWO\ SDUWLFXODUL]HG WKDW WKH ZDUUDQWV GLG QRW VWDWH      ZLWK D YDOLG ZDUUDQW DQ XQGHUVWDQGLQJ ZH GR QRW ILQG VXSSRUWHG E\ WKH

SUREDEOH FDXVH IRU WKH VHL]XUH RI HPDLO DQG VXEVFULEHU          VWDWXWH ,G

LQIRUPDWLRQDQGWKDWGHIHQGDQWVZHUHQRWHQWLWOHGWRTXDOLILHG              
LPPXQLW\EHFDXVHWKH\ZHUHJRYHUQPHQWDOXQLWV'HIHQGDQWV                     6HFWLRQ  SURYLGHV WKDW WKH EDQ RQ REWDLQLQJ DOWHULQJ RU
                                                                         SUHYHQWLQJ DFFHVV GRHV QRW DSSO\ LI WKH DFFHVV LV DXWKRUL]HG ³LQ VHFWLRQ
FKDOOHQJHSODLQWLIIV¶VWDQGLQJWRDVVHUWWKH)RXUWK$PHQGPHQW             >ZDUUDQW DGPLQLVWUDWLYH VXESRHQD JUDQG MXU\ RU WULDO VXESRHQD
FODLPV                                                                  FRXUW RUGHU@  RU  RI WKLV WLWOH´  86&  F
       *XHVWHWDOY/HLVHWDO             1RV        1RV               *XHVWHWDOY/HLVHWDO     

GLUHFWHG WR WKH SURYLGHU RI DQ HOHFWURQLF FRPPXQLFDWLRQ                $6WDQGLQJ
VHUYLFHQRWWRWKHJRYHUQPHQWDQGVWDWHVWKDWVXFKDSURYLGHU
PD\RQO\JLYHVXEVFULEHULQIRUPDWLRQWRWKHJRYHUQPHQWLIWKH                  'HIHQGDQWV DUJXH WKDW SODLQWLIIV GR QRW KDYH VWDQGLQJ WR
JRYHUQPHQWKDVDZDUUDQWFRXUWRUGHURUVXEVFULEHUFRQVHQW                DVVHUW)RXUWK$PHQGPHQWFODLPVLQWKHVHFDVHV,QRUGHUWR
ZLWKDQH[FHSWLRQIRUWHOHPDUNHWLQJIUDXG                               FKDOOHQJH D VHDUFK RU VHL]XUH DV D YLRODWLRQ RI WKH )RXUWK
                                                                            $PHQGPHQWDSHUVRQPXVWKDYHKDGDVXEMHFWLYHH[SHFWDWLRQ
  :HFRQFOXGHWKDWSODLQWLIIVKDYHQRWVWDWHGDFODLPXQGHU                 RISULYDF\LQWKHSODFHRUSURSHUW\WREHVHDUFKHGZKLFKZDV
WKH(&3$7KHUHLVQRYLRODWLRQRIDERUFLI               REMHFWLYHO\UHDVRQDEOH0LQQHVRWDY2OVRQ86
DFFHVVLVSXUVXDQWWRDZDUUDQWDQGWKHRIILFLDOVLQWKLVFDVH             +RPHRZQHUVZRXOGRIFRXUVHKDYHDUHDVRQDEOH
KDG D YDOLG ZDUUDQW  0RUHRYHU  F DSSOLHV WR WKH          H[SHFWDWLRQ RI SULYDF\ LQ WKHLU KRPHV DQG LQ WKHLU
VHUYLFHSURYLGHUDQGQRWWRWKHJRYHUQPHQW6HH7XFNHUY                  EHORQJLQJV²LQFOXGLQJFRPSXWHUV²LQVLGHWKHKRPH%XOOHWLQ
:DGGHOO)GWK&LU³>7@KHODQJXDJH                  ERDUG XVHUV ZRXOG QRW VKDUH WKH VDPH LQWHUHVW LQ VRPHRQH
RIFGRHVQRWSURKLELWDQ\JRYHUQPHQWDOFRQGXFWDQG                HOVH¶V KRXVH RU FRPSXWHU VR WKH\ ZRXOG QRW EH DEOH WR
                                                                            FKDOOHQJH WKH VHDUFK RI WKH KRPHV DQG WKH VHL]XUH RI WKH
                                                                            FRPSXWHUVDVSK\VLFDOREMHFWV7KHLULQWHUHVWLQWKHFRPSXWHU
               LL REWDLQV D FRXUW RUGHU IRU VXFK GLVFORVXUH               FRQWHQWSUHVHQWVDGLIIHUHQWTXHVWLRQDQGZRXOGGHSHQGRQ
               XQGHU VXEVHFWLRQ G RI WKLV VHFWLRQ                        WKHLUH[SHFWDWLRQVRISULYDF\LQWKHPDWHULDOV,QWKH2¶%ULHQ
                                                                            FDVH WKH 6, %%6 SRVWHG D GLVFODLPHU VWDWLQJ WKDW SHUVRQDO
           H[FHSW WKDW GHOD\HG QRWLFH PD\ EH JLYHQ SXUVXDQW WR
           VHFWLRQ  RI WKLV WLWOH
                                                                            FRPPXQLFDWLRQVZHUHQRWSULYDWH7KLVGLVFODLPHUGHIHDWV
                                                                            FODLPVWRDQREMHFWLYHO\UHDVRQDEOHH[SHFWDWLRQRISULYDF\IRU
 86&  DE 3DUDJUDSK E UHTXLUHV WKH FRPPXQLFDWLRQ WR     WKH6,%%6XVHUV6HH8QLWHG6WDWHVY6LPRQV)G
KDYH EHHQ HOHFWURQLFDOO\ WUDQVPLWWHG E\ D VXEVFULEHU RU FXVWRPHU IRU WKH     WK &LU  ILQGLQJ QR SULYDF\ LQWHUHVW LQ DQ
SXUSRVH RI VWRUDJH RU SURFHVVLQJ DQG WKH SURYLGHU PXVW QRW EH DXWKRUL]HG   HPSOR\HH¶VLQWHUQHWVHDUFKUHFRUGVZKHQDQHPSOR\HUSRVWHG
WR DFFHVV WKH FRPPXQLFDWLRQV IRU RWKHU SXUSRVHV  86&  E
                                                                            DSULYDF\GLVFODLPHUUHJDUGLQJFRPSXWHUILOHV$FFRUGLQJO\
                                                                           WKH 2¶%ULHQ XVHUSODLQWLIIV GR QRW KDYH VWDQGLQJ WR DVVHUW
      6XEVHFWLRQ F SURYLGHV LQ UHOHYDQW SDUW
                                                                            )RXUWK$PHQGPHQWFODLPV
     $ SURYLGHU RI HOHFWURQLF FRPPXQLFDWLRQ VHUYLFH RU UHPRWH
     FRPSXWLQJ VHUYLFH VKDOO GLVFORVH D UHFRUG RU RWKHU LQIRUPDWLRQ
                                                                               7KH *XHVW XVHUSODLQWLIIV¶ VWDQGLQJ ZRXOG WXUQ RQ WKH
     SHUWDLQLQJ WR D VXEVFULEHU WR RU FXVWRPHU RI VXFK VHUYLFH QRW         PDWHULDOVWKH\KDGRQWKH&&&%%68VHUVZRXOGORJLFDOO\
     LQFOXGLQJ WKH FRQWHQWV RI FRPPXQLFDWLRQV FRYHUHG E\ VXEVHFWLRQ         ODFN D OHJLWLPDWH H[SHFWDWLRQ RI SULYDF\ LQ WKH PDWHULDOV
     D RU E RI WKLV VHFWLRQ WR D JRYHUQPHQWDO HQWLW\ RQO\ ZKHQ WKH     LQWHQGHGIRUSXEOLFDWLRQRUSXEOLFSRVWLQJ6HH8QLWHG6WDWHV
     JRYHUQPHQWDO HQWLW\²
                                                                            Y 0D[ZHOO  0-   &$$)   7KH\
           L REWDLQV D ZDUUDQW LVVXHG XQGHU WKH )HGHUDO 5XOHV RI
                                                                            ZRXOGORVHDOHJLWLPDWHH[SHFWDWLRQRISULYDF\LQDQHPDLO
           &ULPLQDO 3URFHGXUH RU HTXLYDOHQW 6WDWH ZDUUDQW                  WKDWKDGDOUHDG\UHDFKHGLWVUHFLSLHQWDWWKLVPRPHQWWKHH
                                                                            PDLOHU ZRXOG EH DQDORJRXV WR D OHWWHUZULWHU ZKRVH
           LL REWDLQV D FRXUW RUGHU IRU VXFK GLVFORVXUH XQGHU             ³H[SHFWDWLRQRISULYDF\RUGLQDULO\WHUPLQDWHVXSRQGHOLYHU\´
           VXEVHFWLRQ G RI WKLV VHFWLRQ >RU@                             RIWKHOHWWHU8QLWHG6WDWHVY.LQJ)GWK
           LLL KDV WKH FRQVHQW RI WKH VXEVFULEHU RU FXVWRPHU WR
                                                                            &LUFLWDWLRQVRPLWWHGVHHDOVR0D[ZHOO0-DW
           VXFK GLVFORVXUH                                                :KHWKHU WKH XVHUV KDG PRUH SULYDWH PDWHULDO RQ WKH
                                                                            V\VWHP WKDW HQWLWOHG WKHP WR VWDQGLQJ LV QRW D TXHVWLRQ ZH
 86&  F%
    *XHVWHWDOY/HLVHWDO           1RV         1RV                  *XHVWHWDOY/HLVHWDO        

PXVWUHDFKVLQFHZHFRQFOXGHEHORZWKDWWKHUHZDVQR)RXUWK             FKDSWHU´86&D7KHVDPHVHFWLRQSURYLGHVD
$PHQGPHQWYLRODWLRQLQWKLVFDVH                                       VWDWXWRU\ JRRG IDLWK GHIHQVH D GHIHQGDQW¶V ³JRRG IDLWK
                                                                        UHOLDQFHRQDFRXUWZDUUDQWRURUGHU´SURYLGHV³DFRPSOHWH
  %/HJDO$XWKRULW\                                                   GHIHQVH WR DQ\ FLYLO RU FULPLQDO DFWLRQ EURXJKW XQGHU WKLV
                                                                        FKDSWHURUDQ\RWKHUODZ´86&H
   3ODLQWLIIV DOOHJH WKDW GHIHQGDQWV ZHUH RXWVLGH RI WKHLU
MXULVGLFWLRQDQGWKHUHIRUHGLGQRWKDYHWKHOHJDODXWKRULW\WR             ,QWKHLUFRPSODLQWSODLQWLIIVDOOHJHGYLRODWLRQVRIWKH(&3$
FRQGXFWWKHVHDUFKRUVHL]XUHLQTXHVWLRQ6XFKDQH[WUDOHJDO         UHTXLUHPHQWV IRU DFFHVV WR VWRUHG FRPPXQLFDWLRQV DQG
VHL]XUHVD\SODLQWLIIVZDVD)RXUWK$PHQGPHQWYLRODWLRQ              VXEVFULEHULQIRUPDWLRQDVVHWIRUWKLQ86&D
DQG GHIHQGDQWV ZHUH QRW HQWLWOHG WR TXDOLILHG LPPXQLW\           EDQGF6XEVHFWLRQDSURYLGHVWKDWWKHJRYHUQPHQWPD\
EHFDXVH WKHLU ODFN RI MXULVGLFWLRQ UHQGHUHG WKHP SULYDWH         KDYHDFFHVVWRWKHFRQWHQWVRIHOHFWURQLFFRPPXQLFDWLRQVWKDW
FLWL]HQV                                                               KDYHEHHQVWRUHGGD\VRUOHVVRQO\E\XVLQJDZDUUDQW
                                                                        6XEVHFWLRQEDOORZVWKHJRYHUQPHQWWRDFFHVVFRQWHQWVWKDW
  2KLR ODZ GRHV QRW SHUPLW D SROLFH RIILFHU WR H[HFXWH D      KDYHEHHQVWRUHGPRUHWKDQGD\VLIWKHJRYHUQPHQWXVHV
VHDUFKZDUUDQWRXWVLGHKLVMXULVGLFWLRQXQOHVVDQRIILFHURIWKH        D ZDUUDQW VXESRHQD RU D FRXUW RUGHU  6XEVHFWLRQ F LV
MXULVGLFWLRQZKHUHWKHZDUUDQWLVH[HFXWHG³DFFRPSDQLHVWKH
RWKHU RIILFHUV DQG UHPDLQV SUHVHQW DW DOO WLPHV´  6WDWH Y
0LOOHU1R:/DW
2KLR&W$SS-DQ                  
                                                                             6XEVHFWLRQV D DQG E SURYLGH
XQSXEOLVKHGRSLQLRQVHHDOVR6WDWHY+DUULVRQ
2KLR0LVF1(G&W&RPP                      D &RQWHQWV RI HOHFWURQLF FRPPXQLFDWLRQV LQ HOHFWURQLF
3OHDV,QWKH2¶%ULHQFDVHWKHZDUUDQWZDVGLUHFWHGWR              VWRUDJH²$ JRYHUQPHQWDO HQWLW\ PD\ UHTXLUH WKH GLVFORVXUH E\

8QLRQ 7RZQVKLS SROLFH ZKR DFFRPSDQLHG WKH GHIHQGDQWV                 D SURYLGHU RI HOHFWURQLF FRPPXQLFDWLRQ VHUYLFH RI WKH FRQWHQWV
                                                                            RI DQ HOHFWURQLF FRPPXQLFDWLRQ WKDW LV LQ HOHFWURQLF VWRUDJH LQ
GXULQJ WKH HQWLUH VHDUFK DQG VHL]XUH DW WKH 2¶%ULHQ KRPH          DQ HOHFWURQLF FRPPXQLFDWLRQV V\VWHP IRU RQH KXQGUHG DQG HLJKW\
7KHUH ZDV WKHUHIRUH QR YLRODWLRQ RI WKH VHDUFK UXOH LQ WKH        GD\V RU OHVV RQO\ SXUVXDQW WR D ZDUUDQW LVVXHG XQGHU WKH )HGHUDO
2¶%ULHQFDVH                                                               5XOHV RI &ULPLQDO 3URFHGXUH RU HTXLYDOHQW 6WDWH ZDUUDQW    

  ,QWKH*XHVWFDVHWKHKRPHWREHVHDUFKHGZDVLQ8QLRQ                   E &RQWHQWV RI HOHFWURQLF FRPPXQLFDWLRQV LQ D UHPRWH

7RZQVKLS WKH VHDUFK ZDUUDQW ZDV DGGUHVVHG WR 8QLRQ                  FRPSXWLQJ VHUYLFH² $ JRYHUQPHQWDO HQWLW\ PD\ UHTXLUH D
                                                                            SURYLGHU RI UHPRWH FRPSXWLQJ VHUYLFH WR GLVFORVH WKH FRQWHQWV RI
7RZQVKLSRIILFLDOVDQG8QLRQ7RZQVKLSSROLFHDFFRPSDQLHG                   DQ\ HOHFWURQLF FRPPXQLFDWLRQ WR ZKLFK WKLV SDUDJUDSK LV PDGH
WKH GHIHQGDQWV EXW OHIW EHIRUH WKH DFWXDO VHL]XUH RI WKH           DSSOLFDEOH E\ SDUDJUDSK  RI WKLV VXEVHFWLRQ²
FRPSXWHU HTXLSPHQW RFFXUUHG  $OWKRXJK WKHLU GHSDUWXUH
YLRODWHG WKH UXOH VWDWHG LQ 0LOOHU DQG +DUULVRQ WKLV                   $ ZLWKRXW UHTXLUHG QRWLFH WR WKH VXEVFULEHU RU
FRQFOXVLRQ GRHV QRW HQG RXU LQTXLU\  :H PXVW VWLOO DVN               FXVWRPHU LI WKH JRYHUQPHQWDO HQWLW\ REWDLQV D ZDUUDQW
                                                                                LVVXHG XQGHU WKH )HGHUDO 5XOHV RI &ULPLQDO 3URFHGXUH
ZKHWKHU WKH IDLOXUHWRFRPSO\ZLWKDVWDWHUXOHULVHVWRWKH                  RU HTXLYDOHQW 6WDWH ZDUUDQW
OHYHORIDFRQVWLWXWLRQDOYLRODWLRQ
                                                                                % ZLWK SULRU QRWLFH IURP WKH JRYHUQPHQWDO HQWLW\ WR
  7KH )RXUWK $PHQGPHQW SURWHFWV DJDLQVW XQUHDVRQDEOH                       WKH VXEVFULEHU RU FXVWRPHU LI WKH JRYHUQPHQWDO HQWLW\²
VHDUFKHVDQGVHL]XUHV6HHHJ8QLWHG6WDWHVY5DPLUH]
86VWDWLQJWKDWDUHDVRQDEOHQHVVVWDQGDUG                       L XVHV DQ DGPLQLVWUDWLYH VXESRHQD DXWKRUL]HG
                                                                                     E\ D )HGHUDO RU 6WDWH VWDWXWH RU D )HGHUDO RU
JRYHUQV WKH H[HFXWLRQ RI ZDUUDQWV  7KH 2KLR &RXUW RI                      6WDWH JUDQG MXU\ RU WULDO VXESRHQD RU
$SSHDOV GHFOLQHG WR ILQG D FRQVWLWXWLRQDO YLRODWLRQ XQGHU
    *XHVWHWDOY/HLVHWDO          1RV        1RV               *XHVWHWDOY/HLVHWDO    

VHL]XUH RI ERRNV DQG QR VKRZLQJ WKDW WKH VHL]XUH ZDV        VLPLODUFLUFXPVWDQFHVLQ6WDWHY.OHPP2KLR$SSG
GHVLJQHGWRKDOWWKHGLVWULEXWLRQRIPDWHULDOV&RXUWVKDYHQRW      1(G&W$SS,Q.OHPPWKH
UHTXLUHGDGYHUVDULDOGHWHUPLQDWLRQVRIREVFHQLW\WRSUHFHGH           FRXUWFRQVLGHUHGWKHDSSOLFDWLRQRIWKHH[FOXVLRQDU\UXOHZKHQ
VLPLODUFRPSXWHUVHDUFKHV6HHHJ8QLWHG6WDWHVY+DOO         &LQFLQQDWL SROLFH FRQGXFWHG D VHDUFK RXWVLGH RI WKHLU
 )G   WK &LU  UHMHFWLQJ D )LUVW         MXULVGLFWLRQ(YHQWKRXJKWKHSROLFHYLRODWHGVWDWHODZWKH
$PHQGPHQWFKDOOHQJHWRDVHDUFKRIGHIHQGDQW¶VFRPSXWHU               YLRODWLRQ GLG QRW PDNH WKH VHDUFK XQUHDVRQDEOH LQ D
EHFDXVH WKH ZDUUDQW OLPLWHG WKH VHDUFK WR LWHPV UHODWHG WR   FRQVWLWXWLRQDOVHQVHEHFDXVHWKHVHDUFKZDUUDQWZDVVXSSRUWHG
FKLOGSRUQRJUDSK\                                                   E\SUREDEOHFDXVH,GVHHDOVR8QLWHG6WDWHVY*UHHQ
                                                                      )GWK&LU³7KH)RXUWK$PHQGPHQW
  $OWKRXJKGLFWDLQWKH+HOOHUFDVHVXJJHVWWKDWSROLFHPXVW          LVVDWLVILHGZKHUHDVKHUHRIILFHUVREWDLQDZDUUDQWJURXQGHG
UHWXUQ PDWHULDO LI WKH VHL]XUH ZRXOG RWKHUZLVH LPSHGH          LQSUREDEOHFDXVHDQGSKUDVHGZLWKVXIILFLHQWSDUWLFXODULW\
SXEOLFDWLRQWKH6XSUHPH&RXUWQRWHGWKDWLWZDVXSWRWKH            IURPDPDJLVWUDWHRIWKHUHOHYDQWMXULVGLFWLRQDXWKRUL]LQJWKHP
PDWHULDOV¶RZQHUWRUHTXHVWWKHUHWXUQRIWKHPDWHULDOVDQGWR        WRVHDUFKDSDUWLFXODUORFDWLRQHYHQLIWKRVHRIILFHUVDUHDFWLQJ
PDNHDVKRZLQJWRWKHWULDOFRXUWWKDWWKHVHL]XUHSUHYHQWHGD        RXWVLGH WKHLU MXULVGLFWLRQ DV GHILQHG E\ VWDWH ODZ´  7KH
)LUVW$PHQGPHQWDFWLYLW\3ODLQWLIIVLQWKLVFDVHKDYHIDLOHG        WHFKQLFDOYLRODWLRQWKDWRFFXUUHGLQWKH*XHVWFDVHZKHQWKH
WRHVWDEOLVKWKDWWKH\UHTXHVWHGUHWXUQRIWKHLUPDWHULDOV,Q       8QLRQ7RZQVKLSRIILFHUVGHFLGHGWROHDYHWKHKRPHGLGQRW
IDFWWKHGLVWULFWFRXUWFRQFOXGHGLQWKH*XHVWFDVHWKDWWKH         UHQGHUWKHVHDUFKDQGVHL]XUHXQUHDVRQDEOHLQFRQVWLWXWLRQDO
PDWHULDOV KDG EHHQ UHWXUQHG DQG LQ WKH 2¶%ULHQ FDVH WKDW    WHUPV
³3ODLQWLIIV>GLG@QRWDOOHJHWKDWGHIHQGDQWVFRQWLQXH>G@WRKROG
PDWHULDOV WKDW EHORQJ WR WKHP´  2¶%ULHQ 'LVW &W 2UGHU     &([FHHGLQJWKH6FRSHRIWKH:DUUDQW
1RYDW:KLOHWKH2¶%ULHQSODLQWLIIVFKRVHWR
FRQWHVWWKDWFRQFOXVLRQDWRUDODUJXPHQWRQDSSHDOWKH\KDYH           3ODLQWLIIVFODLPWKDWGHIHQGDQWVH[FHHGHGWKHVFRSHRIWKH
QRWDOOHJHGWKDWWKH\SUHVHQWHGWKHFODLPWRWKHGLVWULFWFRXUW       ZDUUDQW E\ VHL]LQJ DQG UHDGLQJ HPDLO DQG PHPEHUV¶
RUUHTXHVWHGWKHLUPDWHULDOVIURPWKHGHIHQGDQWV:HOHDYH           VXEVFULEHULQIRUPDWLRQ7KHZDUUDQWVDXWKRUL]HGWKHVHDUFK
WKH TXHVWLRQ VXJJHVWHG E\ +HOOHU¶V GLFWD IRU DQRWKHU FDVH     DQGVHL]XUHRI
ZKHUHSODLQWLIIVKDYHPDGHDVKRZLQJWKDWWKH\UHTXHVWHGDQG
ZHUHUHIXVHGUHWXUQRIH[SUHVVLYHPDWHULDOV:HILQGQR)LUVW          >D@Q\ GRFXPHQWDWLRQ DQGRU QRWDWLRQV UHIHUULQJ WR WKH
$PHQGPHQW YLRODWLRQ LQ WKHVH FDVHV EHFDXVH GHIHQGDQWV             FRPSXWHUWKHFRQWHQWVRIWKHFRPSXWHUWKHXVHRIWKH
VHL]HGPDWHULDOVDVHYLGHQFHLQFULPLQDOSURVHFXWLRQVSXUVXDQW          FRPSXWHU RU DQ\ FRPSXWHU VRIWZDUH DQGRU
WRYDOLGZDUUDQWV                                                      FRPPXQLFDWLRQV$OOLQIRUPDWLRQZLWKLQWKHDERYHOLVWHG
                                                                        LWHPVLQFOXGLQJEXWQRWOLPLWHGWRPDFKLQHUHDGDEOHGDWD
      ,9(OHFWURQLF&RPPXQLFDWLRQV3ULYDF\$FW                        DOO SUHYLRXVO\ HUDVHG GDWD DQG DQ\ SHUVRQDO
                                                                        FRPPXQLFDWLRQVLQFOXGLQJEXWQRWOLPLWHGWRHPDLOFKDW
  3ODLQWLIIV DVVHUW WKDW 5(&, VHDUFKHG WKHLU HOHFWURQLF           FDSWXUHFDSWXUHILOHVFRUUHVSRQGHQFHVWRUHGLQHOHFWURQLF
FRPPXQLFDWLRQVDQGVXEVFULEHULQIRUPDWLRQDQGWKXVYLRODWHG             IRUP DQGRU FRUUHVSRQGHQFH H[FKDQJH LQ HOHFWURQLF
WKH(OHFWURQLF&RPPXQLFDWLRQV3ULYDF\$FW(&3$7LWOH,,             IRUP$OOLWHPVWREHVHDUFKHGDQGRUVHL]HGKDYLQJ
RI WKH (&3$ UHJXODWHV WKH GLVFORVXUH RI HOHFWURQLF               EHHQ XVHG LQ WKH REWDLQLQJ PDLQWHQDQFH DQGRU DV
FRPPXQLFDWLRQV DQG VXEVFULEHU LQIRUPDWLRQ   86&             HYLGHQFHRIVDLGRIIHQVH.
6HFWLRQSURYLGHVDFLYLOFDXVHRIDFWLRQ
DJDLQVWDSHUVRQZKRLV³DJJULHYHGE\DQ\YLRODWLRQRIWKLV           Guest J.A. at 69-70; O’Brien J.A. at 242-43.
   *XHVWHWDOY/HLVHWDO        1RV       1RV                *XHVWHWDOY/HLVHWDO     

  1. Seizure of Computer Contents                                 EHFDXVH WKH ODFN RI D SUHVHL]XUH KHDULQJ ULVNHG WKH
                                                                  ³DEULGJPHQW RI WKH ULJKW RI WKH SXEOLF LQ D IUHH VRFLHW\ WR
  The warrant authorized the seizure of personal                  XQREVWUXFWHGFLUFXODWLRQRIQRQREVFHQHERRNV´$4XDQWLW\
communications related to the offense. Although there were        RI&RSLHV86DW
presumably communications on the computers that did not
relate to the offenses, "[a] search does not become invalid          7KHUH LV QRW KRZHYHU DQ DEVROXWH ULJKW WR D SULRU
merely because some items not covered by a warrant are            DGYHUVDULDOKHDULQJLQFDVHVZKHUHDOOHJHGO\REVFHQHPDWHULDO
seized." United States v. Henson, 848 F.2d 1374, 1383 (6th        LV VHL]HG WR SUHVHUYH HYLGHQFH LQ D FULPLQDO SURVHFXWLRQ
Cir. 1988). In Henson, a case affirming convictions involving     +HOOHUY1HZId. at
1383-84; see also Davis v. Gracey, 111 F.3d 1472, 1481 (10th        >L@IVXFKDVHL]XUHLVSXUVXDQWWRDZDUUDQWLVVXHGDIWHUD
Cir. 1997) (finding no Fourth Amendment violation when              GHWHUPLQDWLRQRISUREDEOHFDXVHE\DQHXWUDOPDJLVWUDWH
defendants seized a bulletin board system computer that             DQG IROORZLQJ WKH VHL]XUH D SURPSW MXGLFLDO
contained personal communications unrelated to the crime            GHWHUPLQDWLRQ RI WKH REVFHQLW\ LVVXH LQ DQ DGYHUVDU\
under investigation); United States v. Hay, 231 F.3d 630, 637-      SURFHHGLQJLVDYDLODEOHDWWKHUHTXHVWRIDQ\LQWHUHVWHG
38 (9th Cir. 2000) (finding no Fourth Amendment violation           SDUW\WKHVHL]XUHLVFRQVWLWXWLRQDOO\SHUPLVVLEOH
in the search and seizure of a computer system in a child         ,G DW   7KH &RXUW HPSKDVL]HG WKDW 0DUFXV DQG $
pornography investigation); United States v. Upham, 168 F.3d      4XDQWLW\RI&RSLHV³FRQFHUQHGWKHVHL]XUHRIODUJHTXDQWLWLHV
532, 536 (1st Cir. 1999) (same). In the instant cases, when       RIERRNVIRUWKHVROHSXUSRVHRIWKHLUGHVWUXFWLRQ´,GDW
the seizures occurred, defendants were unable to separate         ³>:@KHUHDOOHJHGO\REVFHQHPDWHULDOLVVHL]HGSXUVXDQWWRD
relevant files from unrelated files, so they took the computers   ZDUUDQW WR SUHVHUYH WKH PDWHULDO DV HYLGHQFH LQ D FULPLQDO
to be able to sort out the documents off-site. Because of the     SURVHFXWLRQ´ WKHUH LV QR DEVROXWH )LUVW RU )RXUWHHQWK
technical difficulties of conducting a computer search in a       $PHQGPHQWULJKWWRDSULRUDGYHUVDU\KHDULQJ,GDW,Q
suspect’s home, the seizure of the computers, including their     GLFWDWKH&RXUWZDUQHGWKDWLIWKHH[KLELWRUPDGHDVKRZLQJ
content, was reasonable in these cases to allow police to         WRWKHWULDOFRXUWWKDWKHGLGQRWKDYHRWKHUFRSLHVRIWKHILOP
locate the offending files.                                       DYDLODEOH ³WKH FRXUW VKRXOG SHUPLW WKH VHL]HG ILOP WR EH
                                                                  FRSLHGVRWKDWVKRZLQJFDQEHFRQWLQXHGSHQGLQJDMXGLFLDO
  2. E-mail Search                                                GHWHUPLQDWLRQ RI WKH REVFHQLW\ LVVXH LQ DQ DGYHUVDU\
                                                                  SURFHHGLQJ2WKHUZLVHWKHILOPPXVWEHUHWXUQHG´,GDW
   Plaintiffs also allege that defendants read their e-mail, an   IRRWQRWHVRPLWWHG
allegation defendants deny. Plaintiffs rely for evidence on the
following. A plaintiff testified as an expert witness that          ,QWKHLQVWDQWFDVHV5(&,WRRNWKHFRPSXWHUVWRHVWDEOLVK
certain log records were missing from the Guest CCC BBS           HYLGHQFHRIFULPLQDOYLRODWLRQVDVLQ+HOOHU7KH\RSHUDWHG
computers when the computers were returned; these logs            ZLWKDZDUUDQWDQGDSULRUGHWHUPLQDWLRQRIREVFHQLW\E\D
normally keep a record of the use of the computer, and the        PDJLVWUDWH XQOLNH WKH 0DUFXV FDVH  7KHUH ZDV QR PDVV
       *XHVWHWDOY/HLVHWDO                1RV               1RV              *XHVWHWDOY/HLVHWDO   

  F. Qualified Immunity                                                               expert testified that defendants must have deleted the log files
                                                                                      or prevented them from generating. The Guest plaintiffs also
  According to plaintiffs, "Defendants Leis, Hamilton County                          refer to a paper printout of the computer directories, which
Sheriff’s Department and RECI cannot assert qualified                                 showed defendants’ check marks next to several directory
immunity" as "political subdivisions." Guest Br. at 46.                               names, including a directory labeled "e-mail."
Qualified immunity may be asserted by government officials
sued in their individual capacity. Harlow, 457 U.S. at 807.                              The printout and absence of log files are not evidence that
As the district court granted qualified immunity only to the                          the defendants read private communications. Plaintiffs are
individual defendants, plaintiffs’ objections about immunity                          essentially relying on an assumption that because defendants
for the sheriff’s department and RECI are unfounded. Sheriff                          could have read e-mail, there is evidence that they did read e-
Leis was sued in his individual capacity (as well as in his                           mail. Defendants may legitimately have checked to see that
official capacity), so he may properly assert the defense in his                      the contents of the directories corresponded to the labels
individual capacity. Because we have concluded that there                             placed on the directories. Suspects would otherwise be able
were no Fourth Amendment violations, the individual                                   to shield evidence from a search simply by "misfiling" it in a
defendants are all entitled to qualified immunity on the Fourth                       directory labeled "e-mail." In the Guest case, defendants had
Amendment claims asserted against them in their individual                            a list of file names and thus could conduct their search by
capacities.                                                                          reviewing the file names in a directory, without actually
                                                                                      opening the files and viewing the contents. While we
                          ,,,)LUVW$PHQGPHQW                                        construe the facts on summary judgment in the light most
                                                                                      favorable to the nonmoving party, "[t]he mere existence of a
   3ODLQWLIIV DOOHJH WKDW WKH GHIHQGDQWV YLRODWHG WKHLU )LUVW                  scintilla of evidence in support of the plaintiff’s position will
$PHQGPHQWULJKWVE\VHL]LQJDQGVKXWWLQJGRZQWKHEXOOHWLQ                            be insufficient; there must be evidence on which the jury
ERDUG V\VWHPV WKXV HIIHFWLQJ D SULRU UHVWUDLQW RQ VSHHFK                    could reasonably find for the plaintiff." Mitchell v. Toledo
7KH\UHO\RQWZR6XSUHPH&RXUWFDVHVZKLFKHVWDEOLVKHGD                              Hosp., 964 F.2d 577, 581 (6th Cir. 1992) (quoting Anderson
JHQHUDO UXOH WKDW SROLFH FDQQRW PDNH PDVV VHL]XUHV RI                         v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). Plaintiffs’
DOOHJHGO\REVFHQHPDWHULDOZLWKRXWDSULRUDGYHUVDULDOMXGLFLDO                       assumptions are insufficient to establish a genuine issue of
GHWHUPLQDWLRQ RI REVFHQLW\  6HH $ 4XDQWLW\ RI &RSLHV RI                     fact regarding an e-mail search.
%RRNV Y .DQVDV  86   0DUFXV Y 6HDUFK
:DUUDQWV  86    ,Q $ 4XDQWLW\ RI &RSLHV                      3. Search of Subscriber Information
SROLFHVHL]HGFRSLHVRIQRYHOVDIWHUH[SDUWHMXGLFLDO
H[DPLQDWLRQ RI VHYHQ RI WKH DOOHJHGO\ REVFHQH ERRNV  $                        Plaintiffs argue that defendants violated the Fourth
4XDQWLW\RI&RSLHV86DW,Q0DUFXVSROLFH                            Amendment by accessing bulletin board subscriber
VHL]HG DSSUR[LPDWHO\  FRSLHV RI  SXEOLFDWLRQV                         information. These records include information such as
ZLWKRXWDSULRUMXGLFLDOGHWHUPLQDWLRQRIREVFHQLW\0DUFXV                         subscribers’ names, addresses, birthdates, and passwords. As
86DW6XFKVHL]XUHVYLRODWHGWKH)LUVW$PHQGPHQW                          we have noted above, a person must have a reasonable
                                                                                      expectation of privacy in the matter searched in order to
     
                                                                                      challenge a search under the Fourth Amendment. Individuals
     3ODLQWLIIV   DUJXH   WKDW   GHIHQGDQWV   DUH   QRW   HQWLWOHG   WR   TXDOLILHG   generally lose a reasonable expectation of privacy in their
LPPXQLW\ EHFDXVH WKH RIILFHUV GLG QRW IROORZ WKH DGYLFH RI WKH SURVHFXWRUV
                                                                                      information once they reveal it to third parties. See United
ZKR UHYLHZHG WKH ZDUUDQW         6LQFH ZH KDYH IRXQG QR FRQVWLWXWLRQDO
YLRODWLRQ WKH DGYLFH RI WKH SURVHFXWRUV LV LUUHOHYDQW WR RXU GHFLVLRQ
                                                                                      States v. Miller, 425 U.S. 435, 443 (1976), limited by statute.
   *XHVWHWDOY/HLVHWDO         1RV       1RV              *XHVWHWDOY/HLVHWDO   

A bank customer, for instance, does not have a legitimate            D. Particularity
expectation of privacy in the information that he or she has
conveyed to the bank; by placing the information under                Plaintiffs argue that the warrant failed to describe with
control of a third party, the customer assumes the risk that the   sufficient particularity the things to be seized. They seem to
bank will convey the information to the government. Id.            base this argument on the warrant’s failure to particularly
Courts have applied this principle to computer searches and        identify communications or subscriber information. A search
seizures to conclude that computer users do not have a             warrant must particularly describe the things to be seized, but
legitimate expectation of privacy in their subscriber              the description, whose specificity will vary with the
information because they have conveyed it to another               circumstances of the case, will be "valid if it is as specific as
personthe system operator. See Maxwell, 45 M.J. at 418;           the circumstances and the nature of the activity under
United States v. Kennedy, 81 F. Supp. 2d 1103, 1110 (D. Kan.       investigation permit." Henson, 848 F.2d at 1383 (quoting
2000) (rejecting a privacy interest in subscriber information      United States v. Blum, 753 F.2d 999, 1001 (11th Cir. 1985)).
communicated to an internet service provider); United States
v. Hambrick, No. 99-4793, 2000 WL 1062039, at *4 (4th Cir.           In the instant cases, the warrants required that the
Aug. 3, 2000) (unpublished) (holding that defendant                communications and computer records pertain to the listed
destroyed any privacy interest in his subscriber information       offenses. Defendants could not have obtained more specific
when he conveyed it to an internet service provider) (citing       identification of e-mails and subscriber data, which were not
Miller, 425 U.S. at 442). We conclude that plaintiffs in these     accessible to them. The description was thus particular
cases lack a Fourth Amendment privacy interest in their            enough as the circumstances permitted for these items.
subscriber information because they communicated it to the         Moreover, since plaintiffs have not established that their
systems operators. In addition, in the O’Brien case,               communications were searched, there would be no harm from
subscriber information would be that of the users, who do not      an alleged defect in the warrant regarding any of the
have Fourth Amendment standing.                                    communications.

  4. Software Search                                                 E. Probable Cause

  Plaintiffs also assert that defendants exceeded the scope of        Plaintiffs assert that the warrants did not state "probable
the warrant when they searched for unlicenced software. The        cause to believe that the Plaintiffs’ public and private
only individual with a privacy interest in the software would      communications, and their subscriber information, was
be the person possessing the software, i.e., the computer’s        evidence of a crime." Guest Brief at 43. Plaintiffs do not
owner or the system operator. In the Guest case, the owner         dispute in their briefs that defendants had probable cause to
and bulletin board operator, Robert Emerson, is not a party to     search for evidence of crimes on the computers. As we have
the case. In the O’Brien case, although the owner and              already determined, the difficulty of locating and extracting
operator are parties, the warrant listed the offense of            these images meant that a seizure of the whole computer
"possession of unlicenced property," so the search for             system was not unreasonable, so long as there was probable
unlicenced software in that case was clearly authorized by the     cause to conclude that evidence of a crime would be found on
warrant.                                                           the computer. An analysis of probable cause to search the
                                                                   materials is unnecessary since plaintiffs have failed to
                                                                   establish that their communications were searched, and they
                                                                   lack a privacy interest in their subscriber information.