It’s a big day in the copyright world.  Golan v. Holder was decided today by the Supreme Court.  See 2012 WL 125436.  Supreme Court oral arguments are at 2011 WL 4593952.  Find the “Petitions, Briefs, and Filings” links on either document for related court documents.

In addition, today is SOPA resistance day.  Several internet companies are protesting two anti-piracy bills by going dark:

The two bills are the “Stop Online Piracy Act” (HR 3261) and the “PROTECT IP Act” (S. 968) .  Westlaw/WestlawNext find citations to the bill documents are 2011 Cong US S 968 and 2011 Cong US HR 3261.

The President’s recent statement in response to “We the People Petitions on SOPA and Online Piracy” might generally summarize the opposition to these bills:

While we believe that online piracy by foreign websites is a serious problem that requires a serious legislative response, we will not support legislation that reduces freedom of expression, increases cybersecurity risk, or undermines the dynamic, innovative global Internet.

2012 wL 114502

Despite waning support for these bills, Nate Anderson of Ars Technica reported that November’s Congressional hearings were stacked ‘hugely’ in favor of those advocating adoption. The transcripts are interesting to read.  On Westlaw, try a query for, SOPA,  in the USPOLTRANS database.

Judge Rakoff Rejects CitiGroup SEC Settlement

On November 28 2011, Judge Rakoff of the Southern District of New York, rejected a $285M settlement between Citigroup Global Markets, Inc. (Citigroup) and the Securities and Exchange Commission (SEC). This order intrigued me because of the strong sentiment expressed by Judge Rakoff in no uncertain terms. This order is available on Westlaw at 1:11CV07387 in the DOCK-NY-SDCT database.  The SEC has filed a notice of appeal from this order to the United States Court of Appeals for the Second Circuit. See below for more background on this case.

SEARCHING FOR MAVERICK

Judge Rakoff has often been referred to as a Maverick Justice (See rakoff /10 maverick in ALLNEWSPLUS for several such reference).  Does Judge Rakoff deserve this reputation?  To find out, I went into the database PROFILER-WLD and in the name field typed in Rakoff and selected New York in the state selector drop down. Once you click into the link for Judge Rakoff, you will notice that there are multiple Profiler References on the left side followed by various types of reports.

Judicial Reversal Reports: A Judicial Reversal Report analyzes a judge’s appellate record. When the subject of the report is a trial court judge, the report analyzes the judge’s record of reversals, affirmances, and other dispositions on appeal. When the subject of the report is an appellate judge, the report analyzes the judge’s record in deciding cases appealed from lower courts and the judge’s own record on appeal.

Given the Judge’s maverick reputation, I was most interested in the Judicial Reversal Reports and found that over two-thirds of Judge Rakoff’s opinions appear to have been affirmed on appeal.

Judicial Motion Reports: A Judicial Motion Report analyzes a judge’s motion history. Judicial Motion Reports are useful to learn about a judge’s record in disposing of motions. This information is helpful to plan case strategy and make more informed decisions. It can also help with managing client expectations. Reports can be sorted by motion type:

Sort by Motion Type

Or, sort by any other number of criterion including time before deciding on motion, role of the filing party, and result of motions:

Result of Motions

To determine whether one might properly lable Judge Rakoff, a ‘maverick,’ compare these reports with reports for other Southern District of New York Judges found in Profiler:

• Baer, Hon. Harold, District Judge
• Batts, Hon. Deborah A., District Judge
• Berman, Hon. Richard M., District Judge
• Buchwald, Hon. Naomi Reice, District Judge
• Castel, Hon. P. Kevin, District Judge
• Cedarbaum, Hon. Miriam Goldman, District Judge
• Cote, Hon. Denise L., District Judge
• Cott, Hon. James Lloyd, Magistrate Judge
• Crotty, Hon. Paul A., District Judge
• Daniels, Hon. George Benjamin, District Judge
• Dolinger, Hon. Michael H., Magistrate Judge
• Duffy, Hon. Kevin T., District Judge
• Ellis, Hon. Ronald L., Magistrate Judge
• Engelmayer, Hon. Paul A., District Judge
• Forrest, Hon. Katherine B., District Judge
• Fox, Hon. Kevin N., Magistrate Judge
• Francis, Hon. James C., Magistrate Judge
• Freeman, Hon. Debra Carol, Magistrate Judge
• Gardephe, Hon. Paul G., District Judge
• Goldberg, Hon. Martin R., Magistrate Judge
• Gorenstein, Hon. Gabriel W., Magistrate Judge
• Griesa, Hon. Thomas P., District Judge
• Hellerstein, Hon. Alvin K., Judge
• Holwell, Hon. Richard J., District Judge
• Jones, Hon. Barbara S., District Judge
• Kaplan, Hon. Lewis A., District Judge
• Katz, Hon. Theodore H., Magistrate Judge
• Keenan, Hon. John F., District Judge
• Koeltl, Hon. John G., District Judge
• Leisure, Hon. Peter Keeton, Senior District Judge
• Maas, Hon. Frank, Magistrate Judge
• Marrero, Hon. Victor, District Judge
• McKenna, Hon. Lawrence M., District Judge
• McMahon, Hon. Colleen, District Judge
• Oetken, Hon. James Paul, District Judge
• Owen, Hon. Richard, District Judge
• Patterson, Hon. Robert P., District Judge
• Pauley, Hon. William H., District Judge
• Peck, Hon. Andrew J., Magistrate Judge
• Pitman, Hon. Henry B., Magistrate Judge
• Preska, Hon. Loretta A., Chief Judge
• Rakoff, Hon. Jed S., District Judge
• Sand, Hon. Leonard B., District Judge
• Scheindlin, Hon. Shira A., Senior Judge
• Stanton, Hon. Louis L., District Judge
• Stein, Hon. Sidney H., District Judge
• Sullivan, Hon. Richard J., District Judge
• Swain, Hon. Laura Taylor, District Judge
• Sweet, Hon. Robert W., District Judge
• Wood, Hon. Kimba M., District Judge

OTHER AVAILABLE REPORTS

Litigation History Reports: Litigation History Reports for judges may include the following sections:

• Caseload shows the total number of litigated cases in which the judge has participated, based on docketed cases and case law.
• Case Types displays dockets and opinions by practice area.
• Parties lists the names of each party in the cases over which a judge has presided.
• Industries identifies industries associated with the companies that are parties to litigation. Click an industry to filter the report on that industry.
• Law Firms lists law firms involved in the cases over which a judge has presided.
• Attorneys displays the attorneys of record in proceedings before a judge. Click an attorney’s name to filter the report on that attorney.

Expert Challenge Report: Another type of report that is available is an Expert Challenge report which tracks challenges to an expert witness testimony. It provides the names and citations of cases in which the expert’s testimony was challenged; the result of the challenge; whether the expert was retained by the plaintiff or the defendant; the attorney for the party for whom the expert testified; the type of case; the jurisdiction; the judge who heard the expert’s testimony; and links to court documents relating to the expert’s testimony. Expert Challenge reports are available for both experts and judges.

Profiler References: Westlaw Profiler provides a direct link between a case, a jury verdict or settlement summary, or an article you are viewing and profiles of the attorneys, judges, and expert witnesses who appeared in the case or authored the article.

BACKGROUND

On October 19 2011, the SEC filed a suit accusing Citigroup of securities fraud. Simultaneously, Citigroup presented the Court a consent judgment whish stated that Citigroup consents to the entry of the Consent Judgment without admitting or denying the allegations of the complaint. The Court did not approve the Consent Judgment stating that, “it cannot approve it, because the Court has not been provided with any proven or admitted facts upon which to exercise even a modest degree of independent judgment.” See the Court order dated November 28, 2011 in the above linked docket. Court further expressed its disapproval of being used as a mere rubber stamping tool and stated that, “it is clear that before a court may employ its injunctive and contempt powers in support of an administrative settlement, it is required, even after giving substantial deference to the views of the administrative agency, to be satisfied that it is not being used as a tool to enforce an agreement that is unfair, unreasonable, inadequate, or in contravention of the public interest.” The Court further stated that, “[a]pplying these standards to the case in hand, the Court concludes, regretfully, that the proposed Consent Judgment is neither fair, nor reasonable, nor adequate, nor in the public interest… when a public agency asks a court to become its partner in enforcement by imposing wide-ranging injunctive remedies on a defendant, enforced by the formidable judicial power of contempt, the court, and the public, need some knowledge of what the underlying facts are: for otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is deprived of ever knowing the truth in a matter of obvious public importance.”  Judge Rakoff went on to say that, “[a]n application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous. The injunctive power of the judiciary is not a free roving remedy to be invoked at the whim of a regulatory agency, even with the consent of the regulated.” I could go on quoting from Judge Rakoff’s opinion, each and every sentence in the opinion expresses the Court’s dissatisfaction with the process of such settlements and consent judgments. An opinion, in my opinion, certainly worth a read! In the last paragraph of the opinion, Judge Rakoff stated that, “[a]ccordingly, the Court refuses to approve the proposed Consent Judgment…and directs the parties to be ready to try this case on July 16, 2012.”

In an attempt to defend itself, the SEC Enforcement Director Robert Khuzami said in a statement that, “Judge Jed Rakoff made too much in a ruling Monday out of the fact that Citigroup was not required to admit any wrongful conduct in the deal… forcing Citigroup to give up its profits and the imposition of financial penalties and mandatory business reforms outweigh the absence of an admission.” See, 11/29/11 APLALERTNY 02:00:05. Following Judge Rakoff’s opinion, SEC Chairperson Mary Shapiro “sent a letter to a senator asking for Congress to expand the agency’s authority to fine companies and individuals. She is seeking to raise the limits on fines under current law and make other changes.” See 11/29/11 APALERTLEGAL 03:47:50. Given the current economic times, the global financial melt downs, the Wall Street Protests and now judicial expression of discontent on behalf of the public, it will be interesting to see how the legal processes and regulations alter and adapt to alleviate the current levels of dissatisfaction with the financial industry and its regulation.

Recently, I was listening to NPR and to Carl Richards, a financial adviser, telling his story regarding how he stopped making his mortgage payments. Given the current economic times, this is not a unique story. I was particularly struck by his remarks repeated here in the New York Times:

At first, I dismissed the idea of a short sale. Late that summer, I sat down with a really close friend in Las Vegas, someone I looked up to. He cut to the heart of the matter right away: Why, he wanted to know, were we still making the payments?

Because I have a moral obligation, I said. You pay your debts.

He proceeded to explain that I didn’t have a moral obligation to the bank. I had a moral obligation to my family. I had a contractual obligation to the bank, along with a clear moral obligation to be honest in my dealings. What he was asking was this: Which is more important? Your contractual obligation to the bank or your obligation to your family to preserve your ability to make a living?

His statement got me thinking of two separate issues – One, does the law impose a moral or ethical obligation for the continued performance of obligations under a contract or can we breach them intentionally without incurring punitive liability? Second, and perhaps an even more interesting question for attorneys:  does a corporate attorney or in-house counsel, given that a corporation’s underlying goal is maximizing shareholder value, have an affirmative ethical obligation to advise his/her corporate clients to intentionally breach a contract when it is economically advantageous for the corporation to breach and pay damages rather than continue performance under the contract?

MORAL OBLIGATIONS

In general (of course there are always exceptions) not only is it okay to intentionally breach agreements, but our legal tradition encourages this behavior under the well accepted doctrine of “Efficient Breach”. Under this principle, per Blacks’ Law Dictionary, the efficient breach theory provides, “[t]he view that a party should be allowed to breach a contract and pay damages, if doing so would be more economically efficient than performing under the contract.” I ran a search in the ALLCASES database:

INTENTIONAL! WILLFUL! +2 BREACH! /5 CONTRACT! AGREEMENT /P BAD-FAITH GOOD-FAITH /P MORAL! ETHICAL!

In a Western District of New York case, the Court stated that:

“mortgagor could not recover punitive damages for breach of contract under New York law absent proof of public wrong, moral turpitude or wanton dishonesty…” See, Katz v. Dime Sav. Bank, FSB, 992 F.Supp. 250 (W.D.N.Y., 1997). Another Court in New York held that, “Courts have consistently held punitive damages to be unavailable where the nature of the conduct amounted to nothing more than willful breach of contract, bad faith or simple negligence.”

See, Aniero Concrete Co., Inc. v. New York City Const. Authority, 2000 WL 863208, 30 (S.D.N.Y.,2000).

Another California Court elaborating on policy considerations stated:

“The traditional goal of contract remedies is compensation of the promisee for the loss resulting from the breach, not compulsion of the promisor to perform his promises. Therefore, ‘willful’ breaches have not been distinguished from other breaches … The restrictions on contract remedies serve purposes not found in tort law. They protect the parties’ freedom to bargain over special risks and they promote contract formation by limiting liability to the value of the promise. This encourages efficient breaches, resulting in increased production of goods and services at lower cost to society … Because of these overriding policy considerations, the California Supreme Court has proceeded with caution in carving out exceptions to the traditional contract remedy restrictions.”

See, Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal.4th 85, 98, 900 P.2d 669, 676-677, 44 Cal.Rptr.2d 420, 427 – 428 (Cal.,1995).

Another California Court, citing to an article, stated that:

“One commentator, in lamenting the rather unpersuasive rationales offered by courts, noted that “the unexplained judicial reluctance to impose tort liability upon those who, in bad faith, breach contractual obligations is not only understandable but reflects a perceived awareness of, and faithfulness to, one of the most poorly kept secrets in legal history: Bad faith breach of contract, if defined as an intentional breach motivated by crass economic self-interest, has been, despite a clamoring of moral credos to the contrary, a judicially accepted staple of our system of commercial law…. [A] close scrutiny of commercial law doctrine, and the briefest scrutiny of commercial practice, makes it transparently clear that our system not only sanctions such bad faith breaches, but, with limitations, actually encourages them…. The social policy begins with a recognition that if breaches are too harshly sanctioned, there will be deterrence not only of breach but of the execution of contracts. Therefore, damages must not be so oppressive as to discourage the formation of binding commercial agreements. But far more important is an awareness that intentional breaches of contract often promote the economic efficiency of society. To the extent the promisor’s pecuniary gains from breach exceed the promisee’s pecuniary injuries, the costs of production have been reduced. Were legal liability to exceed the promisee’s pecuniary injuries, an efficient reallocation of resources would be discouraged at societal expense.” (Diamond, The Tort of Bad Faith Breach of Contract: When, If at All, Should It Be Extended Beyond Insurance Transactions? (1981) 64 Marq.L.Rev. 425, 433, 436–437, fns. omitted.)”

See, Rogoff v. Grabowski, 200 Cal.App.3d 624, 629, 246 Cal.Rptr. 185, 188 (Cal.App. 2 Dist.,1988).

I also ran a search in the ALLCASES database for efficient breach casaes: EFFICIENT /3 BREACH. Looking through some of these cases, it appears that the principle of “Efficient Breach” is well recognized in our legal system and we as a society are indeed okay with intentional breaches of agreements even if they are simply for no reason other than financial benefit to the breaching party. In pure economic terms, “If the net gain to the breacher exceeds the loss to the non-breaching party, the result is efficient, because the world is wealthier.” CONTRACTS-HB § 14.36. But then, what about the tortuous interference with a contract cause of action? A Utah Court framed the issue well by stating:

“We are persuaded by the efficient breach arguments discussed above. When an efficient breach occurs, a breaching party may retain its profits in excess of a plaintiff’s losses as long as the plaintiff is made whole. As was stated in Lake River Corp. v. Carborundum Co., 769 F.2d 1284, 1289 (7th Cir.1985), such a standard is beneficial to both parties because the nonbreaching party receives what it bargained for and the breaching party is able to retain its profits made through its more efficient business practices. In the realm of tortious interference with contract or economic relations, “[i]t would be inconsistent to require the party inducing the breach to disgorge its excess profits while permitting the breaching party to retain its excess profits.” Marcus, Stowell & Beye Gov’t Secs., 797 F.2d at 232.” TruGreen Companies, L.L.C. v. Mower Brothers, Inc. 199 P.3d 929, 935 (Utah,2008)

DUTY to BREACH

So, do corporate attorneys, general-counsels and other attorneys representing corporations have an affirmative duty to advise their corporate clients based on the doctrine of efficient breach to affirmatively breach contracts? The available materials were scant.  But, I did uncover the following:

A recent Delaware Court stated, “corporation’s purpose is to maximize the value of the company’s shares, subject to the constraint that the corporation must meet all its legal obligations…” See, In re Massey Energy Co., 2011 WL 2176479, 20 (Del.Ch.) (Del.Ch.,2011). Given this fundamental purpose for a corporation’s existence, do attorneys have an affirmative duty to advocate efficient breaches of contracts when representing corporate clients? “An attorney has an obligation to act in his or her client’s best interests. It is possible to imagine situations where breaching a settlement may be in the client’s best interests, as when the breach is efficient.” See, Kusters, Civil Liability for Attorneys to Adverse Parties when a Settlement Agreement is Breached in California, 56 Hastings L.J. 1277, 1293 (2005). In another article, the author wrote that, “[t]he court viewed the defense lawyers’ decision to conceal the medical report not as a violation of legal duty to an opposing party, but rather as a tactical or strategic move similar to advising a client in a particular situation concerning “efficient breach”–that breaking a contract in a particular situation would be less costly than performing.” See Camton and Knowles, Professional Secrecy and its Exceptions: Spaulding v. Zimmerman Revisited, 83 Minn. L. Rev. 63, 75 (1998).

The United States Supreme Court heard oral arguments on November 8, 2011 in the case of US v. Jones.  The oral arguments are available at UNITED STATES, Petitioner, v. Antoine JONES. 2011 WL 5360051. The issue presented in the case is an interesting one regarding Fourth Amendment’s protection against unreasonable searches: “Whether the warrantless use of a GPS tracking device on a vehicle to monitor its movements on public streets violates the Fourth Amendment.” See the Electronic Frontier Foundation’s (EFF) Amicus Brief: United States of America v. Jones, 2011 WL 4590838.

You can retrieve the briefs filed in this case by going into the database SCT-BRIEF-ALL and running a search such as: da(2011) & GPS & TI(JONES). I have also set up a WestClip in the SCT database to be notified when the Supreme Court issues an opinion in this case. My search for this clip is: TI(JONES) & GPS.

This is an interesting case and I have been following its developments. On May 11, 2011, defendant Rajaratnam was convicted of fourteen counts of securities fraud and conspiracy. In October 2011, the District Court for the Southern District of New York imposed a Judgment in this case according to which Rajaratnam is to serve 132 months concurrently in the FCC Butner Facility of the Bureau of Prisons. He is to pay $10,000,000.00 in criminal monetary penalties and is to forfeit his interest in $53,816,434.00.  To see the judgment, you can pull up the docket on Westlaw by clicking on this link, USA V. RAJARATNAM ET AL, 1:09-CR-01184. To follow up on any further developments in this case, click on “Track this Docket” once you are in the docket. An appeal to the United States Court of Appeals for the Circuit has been filed in the case. The Second Circuit of Appeals docket in this case is available on Westlaw in the DOCK-CTA2 database and you can find it by clicking on this link: CN(11-4416).

On May 11, 2011, defendant Rajaratnam was convicted of fourteen counts of securities fraud and conspiracy. On August 11, 2011, the court denied Rajaratnam’s renewed motion pursuant to Federal Rule of Criminal Procedure 29 for a judgment of acquittal on all counts. See, U.S. v. Rajaratnam, 2011 WL 3585075. On August 9, 2011, a sentencing memorandum seeking leniency was filed on behalf of Rajaratnam in the Southern District of New York. See, UNITED STATES OF AMERICA, v. Raj RAJARATNAM, Defendant., 2011 WL 3473376. If you would like to track this docket as well, you can pull up the docket by clicking on this link, USA V. RAJARATNAM ET AL, 1:09-CR-01184 and then click on “Track this Docket” to follow up on the developments in this case.

It has been in the news for some time now that the United States Postal Office (USPO) is struggling to stay afloat. Given the financial struggles of our Post Office and the imminent likelihood of thousands of jobs being eliminated, will the legal community’s presumption of reliability of the postal service continue to be prudent? Or are we going to have to update some of these well grounded legal principles?

My concern with the struggles of the USPO is that both statutory and common law place a great deal of faith in the reliability of the postal service and many of our legal rights, obligations, and procedural rules are based on a presumption of reliability of the postal service. A Connecticut court held that, “’[the] mailbox rule,’ a general principle of contract law, provides that a properly stamped and addressed letter that is placed into a mailbox or handed over to the United States Postal Service raises a rebuttable presumption that it will be received.” Butts v. Bysiewicz, 5 A.3d 932.  In a recent Western District of Pennsylvania case, “The Court notes that under the common-law mailbox rule, ‘[i]f a document is properly mailed, the court will presume the United States Postal Service delivered the document to the addressee in the usual time,” i.e., three business days. In another case, the Ninth Circuit Court of Appeals stated that, “Section 7502 of the Internal Revenue Code and its accompanying regulation 26 C.F.R. § 301.7502-1(a) provide that if the envelope containing the petition has a United States Post Office postmark date which falls within the ninety-day period, the petition is deemed timely filed, even if actually received after that period.” Marquardt v. C.I.R., 9 F.3d 1552. In another case the Tenth Circuit stated that, “[m]ark of private delivery service would not be treated as United States Postmark, when determining whether taxpayer’s petition for redetermination of income tax deficiencies was timely, where petition had been mailed via certified mail.” Gibson v. C.I.R., 264 Fed.Appx. 760. The Federal Rules of Civil Procedure also rely on the USPO. A District of Colorado Court held that, “Service by mail is proper and is deemed completed upon mailing. Rule 5(b), Fed.R.Civ.P.”, Lash v. City of Trinidad, 2006 WL 3054305.

From a research perspective, you may find the following Westlaw Next searches useful:

Content set: All states and all federal, MAIL-BOX-RULE /S U.S. UNITED-STATES /5 POST!

USCA: SD(U.S. UNITED-STATES /2 MAIL! POST-BOX POST-OFFICE POSTAL)

News: DA(after 8/2011) & (U.S. UNITED-STATES /2 POST!) U.S.P.O. /50 STRUGG! DEFAUL! BANKRUPT! AFLOAT LAY-OFF (ELIMINAT! /5 JOB POSITION)

Other References

KeyNumbers:  Topic 378 is time.  Mailbox Rule Keynumber is 378k8.5.  Sundays and Nonjudicial Days is 378k10.

The US-RULESCOMM database contains documents released by the five advisory committees to the Judicial Conference of the United States.  Try these Westclips

(U.S. UNITED-STATES /5 POST! MAIL) U.S.P.O. or

(U.S. UNITED-STATES /5 POST! MAIL) (U.P.S. /5 MAIL! PARCEL) (PRIVAT! /7 MAIL COURIER PARCEL) U.S.P.O. FEDERAL-EXPRESS UNITED-PARCEL-SERVICE GLOBAL-MAIL AIRBORNE

As most of you are aware, Congress passed the Leahy-Smith America Invents Act.  Today, President Obama signs this legislation into law during a visit to the Thomas Jefferson High School for Science and Technology in Virginia. The enrolled version can be found at 2011 CONG US HR 1249. This Act significantly reforms US Patent Law.  Plenty has been written but PLI has a great overview of these changes.  See 1058 PLI/Pat 503.  We will, from time to time cover the research angle.  Or, feel free to submit patent reform research questions to west.referenceattorneys@thomson.com.

One of the primary changes relates to the priority system, changing the US Patent system from “First-to-Invent” priority system to a “First-to-File” system.  Of course, this isn’t the first time Congress considered aligning our priority rules with the rest of the world.  Simple queries got in the FED-LH database got us as far back as 1971.  Here are the comments of H. Dale Grubb, NASA’s Assitant Administrator for Legislative Affairs:

…In commenting on this original bill, we indicated that we believe the major features to be abolishment of the one-year grace period ; issuance of a patent to the first to file an application, together with the complete elimination of interference practice ; institution of a preliminary application procedure; mandatory publication of applications during pendency ; provision for art more broadly so as to encompass use and sale outside the United States and all disclosure of knowledge in tangible form ; streamlining the judicial process for patent infringement litigation; the making of computer programs unpatentable; and the provision for optional deferred examination of applications in the Patent Office. Now, some four years later, it appears that each of these major features has been completely discarded or significantly modified.

Hearings before the Subcommittee on Patents, Trademarks, and Copyrights, May 13, 1971.  (Our search was “first to file” /10 patent in the FED-LH database).

Also, to review the progress of first-to-file over the past 5 years, try thse searches in the Congressional Bills and Legislative History databases.

patent /5 reform! & first /3 file invent (LH) 13 documents

patent /5 reform! & first /3 file invent (CONG-BILLTXT-ALL) 23 documents

USA v. Whatcott is an ongoing federal case regarding mortgage fraud that poses an interesting question regarding the scope of the Fifth Amendment in the digital age.  In Whatcott, the prosecutors wanted defendant Ramona Fricosu to decrypt her laptop to make the contents of the laptop available to the government. Defendant claims that this would violate her Fifth Amendment rights against self-incrimination.

EFF filed an amicus trial brief “to help the Court apply the Fifth Amendment privilege against self-incrimination in a manner that ensures the constitutional rights of those who use this technological measure [encryption] to protect their privacy and security.”  See entry 172 at 1:10CR00509.

EFF stated that their interest in this case, “is the sound and principled application of the Fifth Amendment to encryption passwords and encrypted information stored on computers.” “EFF submits in this brief that “Fricosu will be made a witness against herself if she is forced to supply information that will give prosecutors access to files they speculate will be helpful to their case but cannot identify with any specificity.”  On Page 9 the EFF argues, “The Act of Entering a Password or Otherwise Decrypting Data on a Computer is a Compelled Testimonial Act Protected By The Fifth Amendment.” EFF further argues that “forcing an individual to supply a password necessary to decrypt data is more like revealing the combination to a wall safe than to surrender a key.” The Government replied that, “[t]he privilege against self-incrimination must be interpreted narrowly and is not a mechanism to protect abstract privacy.” See, docket entry 177.

In an order dated July 26, 2011, the Court stated that, “Unless the government establishes by at least a preponderance of the evidence that the laptop that is the subject of the application belonged to defendant, requiring her to provide the password thereto would force her to admit ownership of the laptop, in ostensible violation of the Fifth Amendment.” See docket entry 182. The court scheduled a hearing in this matter for October 19, 2011.

To track this docket to follow up on all the developments in this case, Find the docket by going into the Dockets for the District Court of Colorado database (DOCK-CO-DCT on Westlaw) and run the docket number 1:10CR00509 or simply click on this link:  DN(1:10CR00509). For WestlawNext, click here.

Once you have accessed the docket for this case, you can click on “Track this Docket” (Westlaw) or “Track” (WestlawNext) to keep abreast of the developments in this case:

Click to Enlarge

Other Research References

For general state of the law on this subject, try these traditional boolean searches:

CASES: In ALLCASES, try 

(FIFTH VTH /2 AMEND!) SELF-INCRIMINAT! /P PASSWORD (DIGITAL! ELECTRONIC! /5 KEY ACCESS!) ENCRYPT! DECRYPT! USER-NAME

SECONDARY SOURCES: In TP-ALL, try

 (FIFTH VTH /2 AMEND!) SELF-INCRIMINAT! /25 PASSWORD (DIGITAL! ELECTRONIC! /5 KEY ACCESS!) ENCRYPT! DECRYPT! USER-NAME

TRIAL FILINGS: In FILING-ALL, try

 (FIFTH VTH /2 AMEND!) SELF-INCRIMINAT! /25 PASSWORD (DIGITAL! ELECTRONIC! /5 KEY ACCESS!) ENCRYPT! DECRYPT! USER-NAME

and 

 BRIEF-ALL: (FIFTH VTH /2 AMEND!) SELF-INCRIMINAT! /25 PASSWORD (DIGITAL! ELECTRONIC! /5 KEY ACCESS!) ENCRYPT! DECRYPT! USER-NAME

NEWS: In ALLNEWSPLUS, try

 (FIFTH VTH /2 AMEND!) SELF-INCRIMINAT! /25 PASSWORD (DIGITAL! ELECTRONIC! /5 KEY ACCESS!) ENCRYPT! DECRYPT! USER-NAME

We recently made several changes to our Key Number System. West’s Attorney-editors reclassified approximately 400,000 headnotes. Most significant changes are to Criminal Law (110) and Arrest (35). In the topic Criminal Law, the Key Number System has been substantially revised in several areas relating to the admissibility of evidence, such as “other crimes” evidence, statements and confessions, and evidence wrongfully obtained.  In the topic Arrest, major changes have been made with respect to police stops, among other issues.

Any former key numbers will continue to exist on Westlaw beside the new key numbers, but will be tagged as “formerly.”  So, the former key numbers will remain searchable. To search for former topic and key numbers, go to the appropriate database and try a search such as: TO(FORMERLY +5 110K1)

Thanks to my colleague Susan R. for providing this information.