25 February 2013

MLATs and Government Seizure Of Financial Records

Interesting case of out of the Southern District of Florida that deals with the issue of whether the Justice Department can turn over a company's financial records to a foreign government under a Mutual Legal Assistance in Criminal Matters Treaty ("MLAT").

In Palmat Int'l, Inc. v. Holder, No. 12-20229 (S.D. Fla. Feb. 14, 2013), the Court held that the Fifth Amendment of the Constitution does not provide a cognizable right to privacy for bank records when those records are held by a third party bank. The Palmat court held that even if the Constitution did provide such a right, the United States' interests in fulfilling its obligations under a MLAT "far outweighed" any interests in keeping the records private.
 
Interestingly, the Palmat court acknowledged that it had federal question jurisdiction over the constitutional claim (that is, whether a treaty obligation comported with the Constitution), and also acknowledged that there exists a constitutional interest "in avoiding disclosure of personal matters." It stated, however: 
Neither the Parties nor the Court has found a case addressing the issue of whether the "right of confidentiality" strand applies to financial records held by a third party. However, in U.S. v. Miller, 425 U.S. 435 (1976), the Supreme Court held, in the context of the Fourth Amendment, that a bank customer has no protected interest in the copies of checks and other records retained by his bank, and therefore could not assert a challenge to a grand jury subpoena to the bank for those records. The Court determined that bank records are not the account holder's private papers but rather "the business records of the banks," in which a customer "can assert neither ownership nor possession." Based on the foregoing authority, no constitutionally protected privacy interest exists for Petitioners' bank account records held by [the] Bank. Moreover, even assuming that such an interest exists, it is outweighed by the United States' compelling interests in fulfilling its treaty obligations. (internal citations omitted).
As the Court stated, since Miller, it has become a given that there is no constitutional expectation of privacy over bank records held by a third party bank.
 
But what about other records that are now increasingly held by third parties such as Google or Apple, for example, e-mails? 
 
The Sixth Circuit, in United States v. Warshak, 631 F.3d 266 (6th Cir. 2010), was the first court that held that there is a reasonable expectation of privacy under the Fourth Amendment in the content of e-mails even if they are stored on third party servers of an internet service provider ("ISP"). The Warshak court specifically distinguished Miller by ruling that Miller involved simple business records, while the emails at issue in Warshak were confidential and concerned a wide variety of topics. And unlike the third party bank in Miller (which used the records in the ordinary course of business), the third party ISP was an intermediary, not the intended recipient of the records. 
 
Some interesting questions: Would the United States' interests in fulfilling its obligations under a MLAT "far outweigh" any interests in keeping private e-mails or other electronic records that are stored on a third party ISP's server? Would a subpoena be sufficient to obtain these records from the third party, or would the Government require a search warrant (or show probable cause)? What if the United States' obligations under the Constitution differed from the MLAT agreements?
 
The issue of MLATs and privacy is an interesting one. I hope to revisit the topic in more depth in the coming months.

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