High Court Puzzled by Warrantless Record Searches

The degree to which private businesses have an expectation to privacy was at issue on March 3, 2015, as the Supreme Court was asked to determine if laws designed to deter crime by allowing police to inspect records without notice or warrant violates the Fourth Amendment of the U.S. Constitution. While there was no question that business records are “property” protected against unreasonable searches, it appeared that the Court simply could not grasp the full implications of the ordinance or its place under the protections of the Fourth Amendment.

The case is City of Los Angeles v. Patel, U.S. Supreme Court, No. 13-1175.  The city calls the law in question crucial to reduce criminal activity especially in so-called "parking meter motels" that charge by the hour and are often used for prostitution and other crimes. Hotel operators challenged the law, saying that allowing searches without the benefit of judicial review is unconstitutional under any circumstance.  The outcome of this case may or may not impact the scrap recycling industry depending upon how the Court weighs in on the privacy question and the constitutionality of warrantless record search laws which are pervasive in the numerous metals theft laws across the country.

During oral arguments, some justices appeared supportive of the city while others were more sympathetic toward the hotel operators. Justice Anthony Kennedy, who often casts the deciding vote in close cases, said he was "just puzzled by this case" when questioning the hotel owners' lawyer. Justice Sonia Sotomayor signaled that she saw a problem with the ordinance under the Fourth Amendment and noted that if police are concerned about criminal activity, there are "a whole lot of law enforcement techniques that could be used" that would not require inspecting the records. However, in a sign that Justice Kennedy had some skepticism about the challengers' argument, Kennedy noted that hotel owners have been subject to government regulation for centuries and it seemed irrational for the government to have enough interest that it mandates recordkeeping while at the same time be unable to inspect those very records without delay.

In this case, neither party challenged the legality of requiring hotels to collect certain information on its guests so the question initially falls to whether the hotels have a reasonable expectation of the privacy of those records.  The question is not whether the industry should keep records, but whether law enforcement has the right to inspect those records anytime without a warrant. A ruling is due by the end of June.

Some of the major points highlighted in the arguments include the following:

Facial Challenge

The Supreme Court granted review of this case in part to determine whether a statute of any kind allowing for inspection of private records without pre-compliance judicial review (a warrant) is unconstitutional. Because the Fourth Amendment protects only against unreasonable searches and seizures, its protections do not apply when there is no expectation of privacy.  In a facial challenge, the particular facts as applied are irrelevant because the Court must determine whether the law is either constitutional or not regardless of circumstances (“on its face”).  Deciding a Fourth Amendment case on its face is disfavored by the Supreme Court, which ordinarily relies upon the concrete factual context of the individual case to make its decision.  As such, if the court affirms this facial challenge, it would most certainly impact future Fourth Amendment arguments.

• The outcome of this case could have widespread implications in an era when government is increasingly looking towards administrative warrantless searches to assist with criminal investigations. 
• The Ninth Circuit held that the ordinance was unconstitutional on its face because it subjects hotels to the “unbridled discretion” of officers in the field without adequate “procedural safeguard[s] against arbitrary or abusive inspection demands.” 
• As such, if the Supreme Court agrees, any commercial enterprise that has not been carved out by an exception to the rule could refuse record inspection requests that are unaccompanied by a warrant, even if a statute permits law enforcement to make the inspections without one.

Closely-Regulated Industry Exception

Over the past several decades, the Supreme Court has carved out a few exceptions to Fourth Amendment protections, including an exception outlined in the 1987 Berger v. New York case which determined that automobile junkyards are “closely-regulated” and therefore have a significantly reduced expectation of privacy in terms of Fourth Amendment searches. (U.S. v. Burger, 482 U.S. 691). 

• Whether hotels fit within the pervasively-regulated exception appeared to be a matter of contention among the justices during oral arguments in this case.  Citing centuries of “innkeeper” laws, the city argued that hotels have a reduced expectation of privacy because they are part of a historically “closely-regulated” industry.
• The Ninth Circuit specifically rejected the notion that hotels were “closely-regulated” indicating there was nothing in the facts of this case to support this assertion. 
• While not commenting on the lower court’s opinion or the hotel industry in particular, Justice Sotomayor indicated reluctance to rely on an exception that seemed overly broad.  Sotomayor stated that the “closely regulated” criteria is problematic because “every industry has some regulations” overseeing it so in theory the exception has become the rule.

Reasonableness Balancing Test

There is another exception to the warrant requirement that is universally accepted but narrow in scope which deals with administrative inspections but only if the searches are considered reasonable.  The question of whether the Los Angeles ordinance was criminal or administrative in nature was discussed at length during oral arguments. The manner in which the justices view the ordinance is going to be a pivotal factor in determining the constitutionality of this search under the Fourth Amendment.

• If the ordinance is deemed administrative in nature it will likely escape the more stringent scrutiny involved with Fourth Amendment protections involving criminal investigations. The city’s position is that the ordinance is not for the purpose of criminal investigations – which would certainly invoke a warrant requirement under the Fourth Amendment – but instead is a simple reasonable administrative tool to ensure the proper records are being maintained under an authorized regulatory scheme designed to deter crime. 
• The reasonableness balancing test came under fire during oral arguments as both parties sparred over the specific enforcement needs and privacy guarantees of the ordinance. Whether a search is considered reasonable is based on review of the specific circumstances and weighing the government interest with the property owner’s expectation of privacy. 
• Significant debate was heard on whether requiring a warrant added any measurable benefits that would outweigh the public safety interests of the ordinance. It was said that the city ordinance and dozens of others like it around the United States are vital tools for law enforcement when investigating such issues as illegal drugs, prostitution, gambling, and even suspected militant activity. 
• Justice Sotomayor expressed frustration with the whole balancing analysis in this case when she offered that there “is always an exception” but it “does not eliminate the need for a warrant.”  In her opinion, this case is “a process issue: are [the hotels] entitled to a subpoena for a warrant or are they not.” 

Alternatives to a Physical Intrusion

Relativity of the availability of alternatives to a physical inspection and the threat delay may cause from requiring a warrant was a point of contention during oral arguments. It is within this discussion of alternatives that the justices seemed to struggle with the need for a warrant against the actual physical intrusion on the hotels property rights. 

• Referencing a 1978 Supreme Court decision in Marshall v. Barlow’s Inc. (436 U.S. 307), Justice Alito commented that most businesses can be expected in the normal course to consent to inspection without a warrant so the need to require a warrant seemed negligible. 
• Lawyers for the hotel owners said that it is the prospect of being able to go to a judge which keeps law enforcement “in check” without which, they argue, there is increased risk of harassment and abuse by law enforcement. 
• Justices Alito and Scalia, however, seemed to reject this notion indicating that law enforcement already has the right to be present and observe the hotel at any time which offers no more or less opportunity for harassment than would spot-check inspections without a warrant.

Threat of Harassment

The potential for abuse came under scrutiny as both parties attempted to tap into an emotional aspect that has fueled Fourth Amendment challenges in the past. The threat of law enforcement harassment was commonly referred to and challenged as rationale for requiring a warrant to search the business records. 

• The hotel owners claim a “loss of tranquility” by the fact that law enforcement has the right to intrude on their operations at any time without probable cause.  Justice Kagan sympathized with that summation mentioning that harassment is the real concern behind the need for a warrant.
• Justice Alito said he fails “to see the harassment scenario” since are authorized to “show up at any time” and request records, and Chief Justice Roberts pointed out the Fourth Amendment “does not protect tranquility.”

Summary

The Supreme Court appeared conflicted on the constitutionality of the ordinance on its face upon hearing the city’s position that the ordinance was merely an administrative means to ensure compliance with recordkeeping requirements designed to deter crime.  The likelihood the Court will rule the ordinance is unconstitutional on its face seems distant based on the line of questioning and differing views offered by the justices.  If the Court does deem this case to be a question of procedure, however, Justice Sotomayor may ultimately write the opinion as evidenced by her stark uninhibited expression of belief that this case is ripe for a facial challenge.  Which way the decision will go is a matter known only to the justices, as they appeared split on the issue during oral arguments. The implications of this case on the scrap recycling industry will likely depend on the outcome of the facial challenge.  A ruling is due by the end of June.