United States District Court, N.D. California
ORDER SUPPRESSING ELECTRONIC SURVEILLANCE EVIDENCE
COLLECTED AT SAN MATEO COUNTY COURTHOUSE
CHARLES R. BREYER, UNITED STATES DISTRICT JUDGE
move to suppress over 200 hours of audio recordings that the
FBI surreptitiously collected, without judicial
authorization, at the San Mateo County Courthouse.
See Motion (dkt. 58). The government responds that
Defendants did not have a reasonable expectation of privacy
at the courthouse because they were attending public
foreclosure auctions held in an open area outside the
building’s entrance. See Opp’n (dkt.
144). The Court-after holding days of evidentiary hearings,
reviewing multiple rounds of briefing, and analyzing the
relevant authorities on this question-concludes that the
government has utterly failed to justify a warrantless
electronic surveillance program that recorded private
conversations spoken in hushed tones by judges, attorneys,
and court staff entering and exiting a courthouse. Even
putting aside the sensitive nature of the location here,
Defendants have established that they believed their
conversations were private and that they took reasonable
steps to thwart eavesdroppers. The Fourth Amendment prohibits
the introduction of evidence that was gathered in violation
of a defendant’s constitutional rights. Accordingly,
the Court GRANTS the motion to suppress the disputed
electronic surveillance evidence.
FACTUAL AND PROCEDURAL BACKGROUND
factual background draws from evidence presented by the
parties over three separate days of evidentiary hearings. The
Court made a number of factual findings on the record,
see Hearing Trs. (dkts. 94, 102, 129), and makes
additional factual findings below. See United States v.
Mejia, 69 F.3d 309, 315 (9th Cir. 1995).
Background and Location of the San Mateo Foreclosure Auctions
public real estate foreclosure auctions-also known as trustee
sales-that gave rise to this case took place in 2009 and 2010
at the San Mateo County Courthouse in Redwood City,
California. See Feb. 11 Tr. (dkt. 94) at
183:15-184:4. The auctions typically began around 12:30 PM in
front of an employee entrance to the courthouse. Id.
at 187:17-19. Participants arrived at the location a few
minutes before the auction began, and six to sixteen people
usually attended. Id. at 187:14-16; April 5 Tr. (dkt
129) at 31:21-32:4. Between five and ten properties were
auctioned at a typical trustee sale. Feb. 11 Tr. at
198:12-15. Anyone could participate in the auctions.
Id. at 197:22-25; April 5 Tr. at 52:3-5.
auction site roughly extended from the wall of the courthouse
to the curb, a distance of about 26 feet. See Feb.
11 Tr. at 189:18-24. The area was not enclosed-people could
enter and exit the site without restriction, but pillars in
the auction area sometimes obscured participants’ lines
of sight. See Feb. 29 Tr. (dkt. 102) at 59:14-17;
April 5 Tr. at 30:1-10, 53:1-15. Courthouse employees and
others using the sidewalk often walked by the auction site.
See Feb. 11 Tr. at 110:8-13, 194:20-195:7.
Auctioneers would generally stand in three areas at the
courthouse: to the left of a pillar against the courthouse
wall; on a bench next to a sprinkler box against the wall;
and to the right of the bench near a planter box. See
id. at 188:9-189:4. Bidders moved around these areas.
Id. at 189:5-14.
Investigates Bid-Rigging and Fraud at San Mateo Auctions
October 2009, the FBI began investigating allegations of
bid-rigging and fraud at the foreclosure auctions held at the
San Mateo courthouse. See Feb. 11 Tr. at 64:20-25.
Several auction participants contacted the Department of
Justice Antitrust Division and reported corruption.
Id. at 181:2-11. The FBI opened an investigation.
the individuals who reported the alleged bid-rigging
cooperated with the FBI. Id. at 65:9-14, 181:12-14.
One of these cooperators told the FBI that he had
participated in corrupt auctions and deals with a group of
regular auction participants. Id. at 57:14-58:22,
65:19-66:14. These regulars included Defendants Joe Giraudo,
Ray Grinsell, and Kevin Cullinane along with alleged
co-conspirators Mo Rezaian and Dan Rosenbledt. Id.
The cooperator agreed to wear a wire at several auctions and
recorded conversations with Defendants. Id. at
66:15-20. The FBI used video cameras and agents to visually
surveil the auctions. See id. at 65:4-8; Def. Ex. 6
¶ 2; Def. Ex. 1 at 2. An undercover agent posing as an
investor for one of the cooperators also wore a wire and made
audio and video recordings of Defendants on a number of
occasions. See Feb. 11 Tr. at 66:21-67:6, 181:15-25.
These investigatory techniques do not require judicial
authorization, nor are they viewed as a infringing on a
defendant’s constitutional rights in this context.
FBI’s Initial Success Investigating Through Cooperating
Witnesses, Undercover Agents, and In-Person Audio Recordings
to the lead FBI agent assigned to this case, the FBI’s
(1) interviews with cooperators, (2) initial audio recordings
collected by individuals wearing wires, and (3) video
surveillance were all “working very well, ”
id. at 67:7-12, had captured “evidence of the
direct payoffs, ” id. at 207:9-17, and
“were succeeding, ” id. at 71:10-12.
In-person wire recordings made by the cooperator and the
undercover agent captured multiple allegedly illegal payments
involving a Daly City, California property. Id. at
67:13-17, 160:13-18; Def. Ex. 6 ¶ 6(a). These recordings
also allegedly captured Defendants “engaging in
discussions to arrange the details of their bid rigging and
fraudulent conduct.” See Def. Ex. 6 ¶
6(b). According to the FBI, these conventional investigative
techniques “basically corroborated almost, almost
everything that the cooperators said in the initial part of
the investigation.” See Feb. 11 Tr. at
207:9-17, 183:5-14. An investigating FBI agent testified that
he could not have sworn an affidavit stating that the FBI had
tried traditional investigative procedures and failed to
collect evidence of suspected bid-rigging and fraud.
Id. at 73:9-13. This testimony suggests that a Title
III wiretap application pursuant to 18 U.S.C. §
2518(1)(c) could not have been successfully obtained.
However, it does not raise any impediment to obtaining a
search warrant pursuant to the Fourth Amendment.
Conversations that Defendants Shielded from the FBI
the FBI’s initial success using cooperators, undercover
agents, body wires, and video surveillance, Defendants’
relationship with the cooperator “soured.”
See Feb. 11 Tr. at 56:16-23. According to FBI
agents, Defendants decided they “definitely did not
want the [cooperating] source to overhear [their]
conversation[s].” See Feb. 11 Tr. at
155:13-17. An agent stated that it became “typical
behavior” for Defendants and the alleged
co-conspirators to hold conversations “separate[ly]
from [the] informant and from [the] undercover agent, and it
was unlikely that [the FBI] [was] going to capture . . .
[further] bid rigging using them.” Id. at
145:16-146:5, 148:11-25, 153:2-11. The lead FBI agent went so
far as to testify that “the key observation made in the
early part of the case” was that the cooperator and
undercover agent “could not hear”
Defendants’ conversations. Id. at
point in the investigation, Defendants would “routinely
would walk away from a larger group, stand close to the
individuals with whom [they] [were] speaking, cease
conversations when others approached, try to speak out of
earshot of other people, or speak quietly or whisper.”
Def. Exs. 66-69 ¶ 7. The lead FBI investigator described
Defendants as “talking among themselves, ”
“talking together, ” and “separately
speak[ing]” around this time period. See Def.
Ex. 9 (12:34 pm; 1:07 pm; 1:16 pm). Defendants and other
alleged co-conspirators whispered in each other’s ears
during numerous conversations. See Def. Ex. 9 (1:59
pm; 12:23 pm - 13:10 pm). They would also break off into
small groups to confer. See Def. Ex. 41 (12:59 pm);
Def. Ex. 42 (12:34 pm; 13:05 pm). Defendant Grinsell, for
example, testified that he would keep a close eye on the
people near him, speak in a lower voice or stop talking when
strangers approached, and do “everything possible to
make sure nobody else heard [his] conversation[s].”
See April 5 Tr. at 46:14-20; see also id.
explained Defendants’ behavior, testifying that it was
critical for bidders to shield certain sensitive
conversations from eavesdroppers at the auctions because
bidders were surrounded by competitors. See April 5
Tr. at 40:14-20 (“There were private conversations
going on while the auctions were being conducted.”). If
a bidder “talked openly about what they were going to
bid, the condition of the property or anything else, it would
work contrary to their interests in getting the
property.” Id. at 43:19-44:1. It was thus
“difficult” and “rare” to overhear
another bidder’s conversation. Id. at
FBI Institutes an Electronic Surveillance Program After
Defendants Shield Their Privacy
Defendants took steps to protect the private nature of their
conversations, FBI agents concluded that they “needed
some new technique, ” Feb. 11 Tr. at 72:13-73:4, if
they were going to “capture additional evidence,
” Def. Ex. 6 ¶ 7. The FBI adopted a new technique:
agents bugged the courthouse. The FBI used hidden microphones
to establish an electronic surveillance program that
collected more than 200 hours of audio recordings over nine
months, capturing the conversations of anyone who entered or
exited the employee entrance of the courthouse. Regardless of
whether that person was a defendant, a county employee, an
attorney, a judge, or a member of the public. The FBI never
sought judicial authorization for this program. See
Feb. 11 Tr. at 36-38, 145:9-19, 182:20-24; Def. Ex. 2.
planted stationary microphones in four locations around the
courthouse: in a sprinkler box, in a planter box, in unmarked
police vehicles parked on the street in front of the
courthouse, and in a backpack. Feb. 11 Tr. at 115:9-20;
36:3-16. The sprinkler box was located to the left of a bench
against the wall, about ten to thirteen feet from where the
auctions typically took place. Def. Ex. 5; Def. Ex. 57; Feb.
11 Tr. at 113:24-114:7, 206:4-8. The planter box was located
eight to ten feet from where the auctioneer typically stood.
Feb. 11 Tr. at 114:9-13, 205:6-14. The unmarked
vehicles-which concealed two recording devices, one recording
both audio and video and one recording only audio,
id. at 203:23-204:4, were parked approximately
thirty feet from where the auctions took place, id.
at 205:2-5. The FBI backpack microphone was dropped off in
the auction area near a mailbox to “capture a different
side of the auction.” Feb. 29 at 214:1-9. The presence
of these microphones “was unknown to anybody but the
case agent.” Feb. 11 Tr. at 220:4-10.
microphones themselves were “small digital
recorders” known as Knowles EM-23069s, were
“one-and-a-half inch square, ” and were
“specifically designed for” law enforcement.
Id. at 140:21-24, 199-200. The device is also used
in hearing aids. Id. at 200:19-22. The parties here
did not present expert testimony regarding the effectiveness
of the devices, but they generally agreed that the
microphones were no more effective than the human ear.
See id. at 141:14-142:11, 214:8-25. The government
declined Defendants’ request to test the effectiveness
of the devices. See Def. Br. (dkt. 136) at 13 n.9.
December 2009 and September 2010, the FBI activated these
stationary microphones on at least twenty-eight days.
See Def. Ex. 2; Feb. 11 Tr. at 38:12-20, 47:16-20,
207:18-209:16; Feb. 29 Tr. at 246:20-21. Sometimes the FBI
used the devices’ internal timers and sometimes it
manually activated them. Feb. 11 Tr. at 104:6-24. Agents
frequently turned on the devices “well before the
auction start[ed]” and left them running until
“well after the auction . . . ended.”
Id. at 109:9-16. The devices often recorded
activities at the courthouse entrance for several hours, in
some cases for up to five hours continuously. See
Def. Ex. 2; Feb. 11 Tr. at 105:11-14. At no time did the
agents monitor the recordings in real time to ensure that
they were not recording privileged or private conversations.
Feb. 11 Tr. at 103:21-24, 105:15-18; Feb. 29 Tr. at
246:22-247:7. Nor did the agents make any effort to record
only those individuals who were participating in the
auctions. Feb. 29 Tr. at 210:12-15. The FBI recorded
approximately 214 hours of conversations over nine months.
Id. at 156:11-15; Feb. 11 Tr. at 43:17-21, 47:3-15.
Captures Private Conversations Through Electronic
electronic surveillance program at issue here recorded
private conversations to which Defendant and others were
parties. The Court finds-based on the evidence outlined
below-that the stationary microphones captured conversations