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State must pay for phone records

Easterbrook

“When the District Attorney petitions the state court for an order compelling Ameritech to prepare and provide a terminating AMA report, Ameritech is entitled to insist that the state court follow federal law by attaching a price tag under sec. 2706(b)."

Hon. Frank H. Easterbrook Seventh Circuit

The Electronic Communications Privacy Act (ECPA) requires district attorneys to pay for the phone records they subpoena, the Seventh Circuit held on April 12.

Landline phone companies bill for outgoing calls only. The system for generating and retaining this information is called "automated message accounting" or AMA.

AMA information is stored on searchable media, but compiling a report about the origin of calls terminated (received) at a given number requires an hour or two of employees’ time to set up the data-processing request and turn the resulting raw data into a report, plus about 15 minutes of computer time per day covered by the report.

Ameritech Corporation wants to be compensated for the expense of producing these reports, pursuant to 18 U.S.C. 2706, but E. Michael McCann, District Attorney for Milwaukee County, has refused to pay.

Ameritech sued to require payment under the ECPA, but District Judge Rudolph T. Randa ruled that the litigation is foreclosed by principles of state sovereign immunity, because district attorneys in Wisconsin are officers of the state. Ameritech v. McCann, 176 F.Supp.2d 870 (E.D.Wis.2001).

The Seventh Circuit reversed, 297 F.3d 582 (2002), holding that, because the suit sought only prospective relief, the suit could go forward, under Ex parte Young, 209 U.S. 123 (1908).

18 U.S.C. 2706 provides:

"(a) Except as otherwise provided in subsection (c), a governmental entity obtaining the contents of communications, records, or other information under section 2702, 2703, or 2704 of this title shall pay to the person or entity assembling or providing such information a fee for reimbursement for such costs as are reasonably necessary and which have been directly incurred in searching for, assembling, reproducing, or otherwise providing such information. Such reimbursable costs shall include any costs due to necessary disruption of normal operations of any electronic communication service or remote computing service in which such information may be stored.

"(b) The amount of the fee provided by subsection (a) shall be as mutually agreed by the governmental entity and the person or entity providing the information, or, in the absence of agreement, shall be as determined by the court which issued the order for production of such information (or the court before which a criminal prosecution relating to such information would be brought, if no court order was issued for production of the information).

"(c) The requirement of subsection (a) of this section does not apply with respect to records or other information maintained by a communications common carrier that relate to telephone toll records and telephone listings obtained under section 2703 of this title. The court may, however, order a payment as described in subsection (a) if the court determines the information required is unusually voluminous in nature or otherwise caused an undue burden on the provider."

On remand, the district court opined that the district attorney must comply with sec. 2706 whenever it governs — but declined to say when it governs. 308 F. Supp. 2d 911 (E.D. Wis. 2004).

Ameritech appealed again, and the Seventh Circuit vacated the judgment, in a decision by Judge Frank H. Easterbrook.

The court first held that terminating AMA reports are not exempt from compensation as maintained records or information "that relate to telephone toll records." The court reasoned, "If state officials want ‘records’ — for example, bills and equivalent statements — that phone companies ‘maintain’ in the course of their phone business, they may have them for free; likewise if the state wants the raw ‘information.’ … But the district attorney does not want copies of customers’ bills or the raw data on 25 million calls a day. He wants reports that Ameritech does not ‘maintain’ but must create on demand. Because Ameritech does not ‘maintain’ terminating AMA reports, they are not covered by sec. 2706(c)’s exception."

The court next held that a State falls within sec. 2706(a)’s definition of "governmental entity," rejecting the District Attorney’s argument that "governmental entity" is limited to the federal government.

The court concluded, "’A governmental entity’ is considerably broader than ‘the federal government.’ The point of sec. 2706 is not to distinguish the federal government from other governments, but to distinguish the public from the private sector. Any private actor who wants information from a phone company will have to negotiate and pay for the service, when sec. 2702 allows disclosure at all. Governments have a power of compulsion, and sec. 2706 attaches a price tag to the use of that power, just as the Constitution’s takings clause requires compensation for other uses of governmental power to obtain private property."

Although the ECPA does not define, "governmental entity," the court found that use of the phrase in several sections make application to state and local governments "unmistakable."

The court noted that sec. 2703(b) (1)(B)(i) refers to "an administrative subpoena authorized by a Federal or State statute or a Federal or State grand jury or trial subpoena." In addition, three subsections refer to a "State warrant," and another refers to a "Federal or State grand jury or trial subpoena."

Finally, sec. 2703(d) distinguishes what "a Stat
e governmental authority" must do from how a federal governmental body proceeds. The court called the distinction "an odd reference indeed if the category ‘governmental entity’ does not include states."

What the court held

Case: Ameritech Corp. v. McCann, Nos. 04-2262, 04-2385, 04-4308 & 05-1002

Issue: Are states required to compensate phone companies for the expense of producing "terminating AMA reports"?

Holding: Yes. "Governmental entity," as used in the ECPA, includes States, as well as the federal government.

The court concluded, "The language of sec. 2703 and sec. 2706 taken together is enough to satisfy any plain-statement requirement for application of federal law to the states."

The court acknowledged that the Congressional Budget Office expressed an opinion that the law would not impose new costs on states, but found that this view cannot alter the plain meaning of the statute.

The court next held that sec. 2706 does not preempt state law, concluding, "state law that fails to provide for compensation when telephone companies disclose information is not inconsistent with a federal law that does require compensation; payment is compatible with both laws. Only a state law along the lines of ‘a District Attorney is entitled to records for free’ would pose a preemption issue, and there is no such law in Wisconsin. Thus the question is simply what sec. 2706 itself requires."

The court also rejected several constitutional arguments raised by the district attorney.

Addressing a commerce clause challenge, the court wrote, "The District Attorney might as well argue that he (and the state judiciary) may ignore the federal wiretap statutes (including sec. 2702), and the fourth amendment, when obtaining access to the contents of ‘local’ calls."

Related Links

7th Circuit Court of Appeals

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Case Analysis

The court also rejected the district attorney’s argument that the statute impinges unduly on state sovereignty by opening state courts to private suits, reasoning, "the District Attorney (which is to say the state itself), not a private party, is the plaintiff in state court. Once states open their courts to litigation, they must apply federal rules as well as those under state law. The supremacy clause gives no other alternative. … Thus when the District Attorney petitions the state court for an order compelling Ameritech to prepare and provide a terminating AMA report, Ameritech (as the respondent) is entitled to insist that the state court follow federal law by attaching a price tag under sec. 2706(b)."

Accordingly, the court vacated the judgment of the district court, and remanded the case with the following instructions: "Given Wisconsin’s longstanding noncompliance with sec. 2706, and its penchant for litigation, the declaratory judgment should provide that in the future the District Attorney must tender compensation as part of every request under Wis. Stat. Sec. 968.135 that Ameritech provide a terminating AMA report, and must agree to litigate the amount of compensation in state court if Ameritech deems the tender inadequate. Unless such an offer is made and included in the state court’s order, Ameritech need not provide the requested information. A provision of this kind will prevent the District Attorney from prolonging the guerilla warfare in which the state has been engaged for almost 20 years."

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David Ziemer can be reached by email.

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