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Fourth Amendment Protects Hotel Records: U.S. Supreme Court Rules

  • July 2, 2015
  • Clayton Rice, Q.C.

On June 22, 2015, the Supreme Court of the United States released its ruling in City of Los Angeles v. Patel et al, 576 U.S. _ (2015) that: (1) facial constitutional challenges can be brought under the Fourth Amendment; and, (2) the ordinance in the Los Angeles Municipal Code requiring hotel operators to make their registries available to the police on demand was unconstitutional because it penalized them for refusal without giving them an opportunity for precompliance review.

The story began in 2003 when a group of motel operators sued the City of Los Angeles challenging the constitutionality of s. 41.49(3)(a) of the Municipal Code. They sought a declaration and injunctive relief. The sole issue was a facial constitutional challenge under the Fourth Amendment. The District Court found in favour of the City holding that the motel operators did not have a reasonable expectation of privacy in the records. A divided panel of the Ninth Circuit affirmed on the same grounds. But, on rehearing en banc, the Court of Appeals reversed.

The Court of Appeals held that a police officer’s nonconsensual inspection of hotel records is a Fourth Amendment search because, “[t]he business records covered by s. 41.49 are the hotel’s private property” and the hotel thus “has the right to exclude others from prying into the[ir] contents.” Relying on Donovan v. Lone Steer, Inc., 464 U.S. 408 (1984), and See v. Seattle, 387 U.S. 541 (1967), the court held that the section was facially unconstitutional “as it authorizes inspections” of hotel records “without affording an opportunity to ‘obtain judicial review of the reasonableness of the demand prior to suffering penalties for refusing to comply’.” Failure to make the records available for police inspection exposed the operators to a misdemeanour punishable by up to six months in jail and a $1,000 fine.

When a law violates the Constitution of the United States, a plaintiff in a civil action or a defendant in a criminal case has two options. First, they may bring a “facial challenge” to the law as a whole. This kind of argument will generally assert that the law will always be unconstitutional irrespective of how it is applied in practice. Second, the plaintiff or defendant may wait and bring an “as-applied challenge” and argue that the law is unconstitutional as applied to their specific situation. The same procedural options are available to litigants in Canada. In criminal cases, facial challenges are usually brought for a declaration of invalidity under s. 24(1) of the Charter of Rights (Constitution Act, 1982).

In the 5-4 majority opinion, Justice Sonia Sotomayor first clarified, slip op., at p. 4, that “facial challenges under the Fourth Amendment are not categorically barred or especially disfavored” and went on to conclude:¬†“While such challenges are ‘the most difficult…to mount successfully,’ United States v. Salerno, 481 U.S. 739, 745 (1987), the Court has never held that these claims cannot be brought under any otherwise enforceable provision of the Constitution…Fourth Amendment challenges to statutes authorizing warrantless searches are no exception.”

Justice Sotomayor assumed that the searches authorized by the ordinance serve a “special need” other than conducting criminal investigations. They ensure compliance with the record keeping requirement, which in turn deters criminal conduct on hotel premises. This kind of search is called an “administrative search”. In considering whether the section fell within the administrative search exception, Justice Sotomayor concluded as follows, slip op., at pp. 9-11:

“Turning to the merits of the particular claim before us, we hold that s. 41.49(3)(a) is facially unconstitutional because it fails to provide hotel operators with an opportunity for precompliance review.

The Court has held that absent consent, exigent circumstances, or the like, in order for an administrative search to be constitutional, the subject of the search must be afforded an opportunity to obtain precompliance review before a neutral decision maker. See, 387 U.S., at 545; Lone Steer, 464 U.S., at 415 (noting that an administrative search may proceed with only a subpoena where the subpoenaed party is sufficiently protected by the opportunity to ‘question the reasonableness of the subpoena, before suffering any penalties for refusing to comply with it, by raising objections to an action in district court’). And, we see no reason why this minimal requirement is inapplicable here.

Absent an opportunity for precompliance review, the ordinance creates an intolerable risk that searches unauthorized by it will exceed statutory limits, or be used as a pretext to harass hotel operators and their guests. Even if a hotel has been searched 10 times a day, every day, for three months, without any violation being found, the operator can only refuse to comply with an officer’s demand to turn over the registry at his or her own peril.”

Under Fourth Amendment doctrine, if a law authorizes a warrantless search, such a search is unreasonable and therefore unconstitutional unless it falls within an exception. One exception is for “highly regulated” businesses where the Supreme Court has held that operators do not have a reasonable expectation of privacy and therefore receive less protection. Justice Antonin Scalia, in dissent, agreed with the City, slip op., at pp. 4-5, that entrepreneurs voluntarily subject themselves to the “full arsenal of government regulation” and so a warrantless search to enforce those regulations is not unreasonable and the ordinance was facially valid under the more relaxed standard that applies to searches of this category of businesses. On this narrow issue, Justice Sotomayor concluded that the dissent was wrong on both counts, slip op, at p. 14:

“Over the past 45 years, the Court has identified only four industries that ‘have such a history of government oversight that no reasonable expectation of privacy…could exist for a proprietor over the stock of such an enterprise,’ Barlow’s, Inc., 436 U.S., 313. Simply listing those industries refutes petitioner’s argument that hotels should be counted among them.” She went on to observe that, unlike liquor sales, mining or running an automobile junkyard, nothing inherent in the operation of hotels poses a “clear and significant risk to the public welfare”.¬†Moreover she wrote, ‘[t]he clear import of our cases is that the closely regulated industry…is the exception.’ Barlow’s, Inc., 436 U.S.., at 313. To classify hotels as pervasively regulated would permit what has always been a narrow exception to swallow the rule.”

Even if the majority was to have found that hotels are “pervasively regulated”, the ordinance would have to satisfy three additional criteria under the Fourth Amendment: (1) there must be a substantial government interest that informs the regulatory scheme pursuant to which the inspection is made; (2) the warrantless inspections must be necessary to further the regulatory scheme; and, (3) the statute’s inspection program, in terms of the certainty and regularity of its application, must provide a constitutionally adequate substitute for a warrant. Justice Sotomayor concluded, slip op., at p. 16, that the ordinance failed the second and third prongs of the test.

The ruling in Patel was welcomed by the Electronic Frontier Foundation (EFF) which filed an amicus brief. In an article titled Supreme Court Strikes Down Warrantless Searches of Hotel Records, Reaffirms Fourth Amendment Facial Challenges dated June 22, 2015, Stephen Stanwood said, at p. 2: “The Court adopted EFF’s position, writing that ‘facial challenges under the Fourth Amendment are not categorically barred or especially disfavored.’ This means that moving forward, individuals like the Patels can continue to identify laws that infringe on their constitutional rights and challenge them in court. It’s also good news for EFF’s cases about unconstitutional surveillance, since these often take the form of Fourth Amendment facial challenges.” Although this is also good for the liberty interests protected by the First Amendment, the due process clause and the equal protection clause, it not the end of the story.

I have complained before on this blog about the high cost of litigation in Canada and how the courts frequently impose that burden on parties least able to pay. The criminal case is the classic imbalance between the limitless resources of the state and the finite abilities of the citizen. It has been said before. The defendant is presumed innocent until proven broke. Shifting the burden of proof to claimants is one of the more egregious means used by the judiciary and law makers to limit the tax payers’ access to a justice system they pay for. The comments of Justice Sotomayor in Patel reflect these realities in Canada. The facial constitutional challenge is an efficient and cost effective means of getting a case to court whether by way of an application for a declaration, injunction or other remedy. In Canada, potential remedies under s. 24(1) of the Charter of Rights are only limited by the imagination of the lawyers who bring them. That is a good thing. But, as Justice Sotomayor said, slip op, at p. 4, facial challenges are “the most difficult…to mount successfully.” That is a bad thing. In the final analysis, it is the judiciary that is the guardian of the citizens’ access to justice. Governments are not known for enhancing the means of the governed to sue them. The majority opinion on the broader question in Patel is a good reminder that rules about facial constitutional challenges should be expanded and not contracted.

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