Petition for Writ of Certiorari — Welliver v. United States

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Supreme Court, U.S.

FILED

| DEC 29 192

No. OFFICE OF THE CLERK

In The

Supreme Court of the United States

October Term, 1992

©) cy ons * -) .

wy r oF fF @ } |

: ; aR. ~<t q /

DENNIS WELLIVER,

Petitioner,

vs.

UNITED STATES OF AMERICA,

Respondent.

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

PETITION FOR WRIT OF CERTIORARI

LieBEN, DAHLK, WHITTED,

HOUGHTON, SLOWIACZEK & JAHN, P.C.

SANDRA L. DouGHErRTy* (16823)

100 Scoular Building

2027 Dodge Street

Omaha, Nebraska 68102

(402) 344-4000

Attorney for Petitioner

"Counsel of Record

COCKLE LAW BRIEF PRINTING CO, om 225-6964

OR CALL COLLECT (402) 342-283

QUESTIONS PRESENTED

Is a sole proprietor’s Fourth Amendment right

against a warrantless seizure of his property

destroyed because a government agency has a con-

tractual right of access to the business records?

Whether oral juror questions to witnesses during a

criminal trial are inherently prejudicial to the defen-

dant’s Fifth Amendment right to due process and

Sixth Amendment right to a fair and impartial jury?

PARTIES TO THE PROCEEDING

The caption of the case in this Court contains the

names of all parties to the proceeding in the United States

Court of Appeals for the Eighth Circuit (Supreme Court

Rule 14.1(b)).

TABLE OF CONTENTS

Page

ace as cuebscaveveonsandes i

rE NE ss acne ves eavasncssvsessas ii

Li has ha ed bn dacsesvedsesnvendeua iii

ES iv

ee SER Ein exis s9400.0-04s0004004048 1

Sa nk OT Sh oe. ue baeeaws 2

Constitutional Provisions Involved................. 2

ND os bb esp wanes dave bce ass ise 3

EI ee ee 3

B. Proceedings and Disposition in the District

OE SE A rene rena 5

NE I sss eccsessscccvnccsvens 9

Reasons for Granting the Writ..................... 12

I. A CONTRACTUAL RIGHT OF ACCESS TO

BUSINESS RECORDS DOES NOT AUTHORIZE

A WARRANTLESS SEIZURE OF THOSE

RECORDS BY THE GOVERNMENT ........... 13

I]. JUROR QUESTIONING IN CRIMINAL CASES IS

INHERENTLY PREJUDICIAL .................. 22

eh ge ik s kes a ken tecsenss ree

APPENDIX

Eighth Circuit Opinion, October 1, 1992........ A-1

District Court’s Oral Rulings.................. A-17

TABLE OF AUTHORITIES

Page

Cases

Camara v. Municipal Court, 387 U.S. 523 (1967)....... 16

Church of Scientology v. United States, 113 S. Ct. 447

I erat oo San en et Se 14

Colonnade Catering Corp. v. United States, 397 U.S.

a ah 16

DeBenedetto v. Goodyear Tire & Rubber Co., 754 F.2d

SER, DOW Se RAE TE hb dS uviswneseesvawes 23, 24

Duncan v. Louisiana, 391 U.S. 145, 156 (1968)........ 26

Hale o Hemel, Ti US. SS GIGS) «vc vccvnsevccessies 17

Marshall v. Barlow's, Inc., 436 U.S. 307 (1978)........ 16

Mason v. Pulliam, 557 F.2d 426, 429 (5th Cir. 1977)

: 66600 NE 0G 4 ees SERCO e 0 w CEN COAw CROCE ET AOE U EES 18, 19, 21

New York v. Burger, 482 U.S. 691 (1987)........... 16, 17

Pacific Improvement Co. v. Weidenfeld, 277 F. 224

Cee: Ca FOE sh ce nnwcrcdinduvpstewenbesvesder etek 25

People v. Heard, 388 Mich. 182, 200 N.W.2d 73

4: eens toe ee eer eee oy ey errs ne eee 23

People v. McAlister, 167 Cal. App.3d 633, 213 Cal.

oe i) rrr errr Terre Tree ee 23

See v. City of Seattle, 387 U.S. 541 (1967) ............ 16

Soldal v. Cook County, 61 U.S.L.W. 4019 (U.S.

te es errr rere rer reer 15

State v. Zima, 237 Neb. 952, 468 N.W.2d 377 (Neb.

| ne ee rrr ee rer Tre rr Terry 23

United States v. Callahan, 588 F.2d 1078, 1086 (5th

Cir.), cert. denied, 444 U.S. 826 (1979).............. 24

TABLE OF AUTHORITIES - Continued

Page

United States v. Chuang, 897 F.2d 646 (2nd Cir.

1990), cert. denied, 111 S. Ct. 77 (1991) ............ 21

United States v. Diswell, 406 U.S. 311 (1972) ......... 16

United States v. Johnson, 892 F.2d 707 (8th Cir. 1989)

eT eee er ee re et One ae 22, 25, 26

United States v. Land, 877 F.2d 17 (8th Cir.), cert.

denied, 493 U.S. 894 (1989)........... 0.0.00... 00e. 22

United States v. Leary, 846 F.2d 592 (10th Cir. 1988) .18, 21

United States v. Lewin, 900 F.2d 145 (8th Cir. 1990) ....22

United States v. Nivica, 887 F.2d 1110, 1123 (1st Cir.

1989), cert. denied, 494 U.S. 1005 (1990)............ 24

United States v. Polowichak, 783 F.2d 410, 413 (4th

Re re rr eo gene Be ne ae 23

United States v. Witt, 215 F.2d 580 (2nd Cir.), cert.

denied sub. nom. Talanker v. United States, 348

LE gk Ree Ae Sn Me Saar on Soueed MaNaaee 24, 25

In The

Supreme Court of the United States

October Term, 1992

DENNIS WELLIVER,

Petitioner,

vs.

UNITED STATES OF AMERICA,

Respondent.

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

PETITION FOR WRIT OF CERTIORARI

Dennis Welliver (“Petitioner”) petitions for a writ of

certiorari to review a judgment of the United States Court

of Appeals for the Eighth Circuit affirming his conviction

and the district court’s refusal to suppress evidence and

the district court’s procedure allowing jurors to ask wit-

nesses questions.

OPINIONS BELOW

The opinion of the Court of Appeals is reported at

976 F.2d 1148 (8th Cir. 19.2), and is reprinted at (A-1).

The oral rulings of the district court denying the Peti-

tioner’s motions to suppress are reprinted at (A-17).

JURISDICTION

The opinion of the Court of Appeals affirming Peti-

tioner’s conviction was entered on October 1, 1992. The

jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

CONSTITUTIONAL PROVISIONS INVOLVED

The Fourth Amendment of the United States Consti-

tution provides:

[ARTICLE IV]

The right of the people to be 57 ure in their

persons, houses, papers, and <ifects, against

unreasonable searches and seizures, shall not be

violated, and no Warrants shall issue, but upon

probable cause, supported by Oath or affirma-

tion, and particularly describing the place to be

searched, and the persons or things to be seized.

The Fifth Amendment of the United States Constitu-

tion provides:

[ARTICLE V]

No person shall be held to answer for a

capital, or otherwise infamous crime, unless on

a presentment or indictment of a Grand Jury,

except in cases arising in the land or naval

forces, or in the Militia, when in actual service

in time of War or public danger; nor shall any

person be subject for the same offense to be

twice put in jeopardy of life or limb; nor shall be

compelled in any criminal case to be a witness

against himself, nor be deprived of life, liberty,

or property, without due process of iaw; nor

shall private property be taken for public use,

without just compensation.

The Sixth Amendment of the United States Constitu-

tion provides:

[ARTICLE VI]

In all criminal prosecutions, the accused

shall enjoy the right to a speedy and public trial,

by an impartial jury of the State and district

wherein the crime shall have been committed,

which district shall have been previously ascer-

tained by law, and to be informed of the nature

and cause of the accusation; to be confronted

with the witnesses against him; to have com-

pulsory process for obtaining witnesses in his

favor, and to have the Assistance of Counsel for

his defense.

STATEMENT OF THE CASE

A. Summary.

Petitioner Dennis Welliver was the sole proprietor

and president of Omaha All Risk Insurance Services

(“OAR”), and of Nebraska Computer Financial Services, a

company that did the accounting and computer work for

OAR. In 1988, an employee of Petitioner, after initially

refusing, seized business and computer records of Peti-

tioner at the express direction and instigation of a gov-

ernment agent for the Office of the Inspector General of

the United States Department of Agriculture. The govern-

ment agent did not have a warrant or subpoena for

Petitioner’s records. The seized records were admitted

into evidence over Petitioner’s objection by the United

States District Court for the District of Nebraska at the

criminal trial of Petitioner. The first trial resulted in a

hung jury. At the second trial, over Petitioner’s objec-

tions, the district court again admitted the records seized

at the government’s request, without a warrant. Also at

the second trial, the court permitted the jurors to become

participants in the trial by allowing them to ask questions

out loud in the courtroom of five witnesses who testified

at the trial.

Petitioner was convicted at the second trial of three

counts of mail fraud, and two counts each of wire fraud,

making a false statement, and theft. The government

claimed and, the jury found, that Petitioner used the

mails and telephone wires to submit false information to

Crop Hail Insurance Actuarial Association (“CHIAA”), a

non-government entity, to improperly obtain premature

reimbursement on two claims and premature administra-

tive expense monies from the Federal Crop Insurance

Corporation (“FCIC”).

The United States Court of Appeals for the Eighth

Circuit affirmed Petitioner’s conviction holding that Peti-

tioner did not have a reasonable expectation of privacy in

his business records and that the district court did not

“plainly err” in allowing juror interrogation of witnesses.

B. Proceedings and Disposition in the District

Court.

Petitioner had been an employee of the FCIC for

many years. In 1983, he founded OAR. He operated OAR

and Nebraska Computer and Financial Services, a com-

pany that did the accounting and computer work for

OAR, as a sole proprietor at all times. OAR became the

managing general agent for two Mutual of Omaha sub-

sidiaries. The two subsidiaries had entered into standard

reinsurance agreements with the FCIC. By 1984-85, OAR

was writing over $18,000,000 in farmers’ premiums for

crop insurance.

Petitioner was an outspoken critic about the inade-

quacies of the FCIC operation and the costly delays in

responding to the needs of the American farmer and the

crop insurance industry. He testified before Congress in

1986 and 1987, at the invitation of Nebraska Congresswo-

man Virginia Smith, criticizing FCIC management. He

also wrote numerous letters to officials within the FCIC

complaining about its bureaucratic problems.

In 1987 and 1988, after his Congressional testimony,

Welliver became the subject of an extensive FCIC investi-

gation, including three audits. In May of 1988, after more

than a year of fruitless investigation, a government agent

employed by the Inspector General of the United States

Department of Agriculture contacted one of Petitioner’s

computer programmers, Evelyn Tuma (“Tuma”), a 20

year old, outside of the office at her home. She initially

refused to meet with him, but he called her again and

arranged a meeting. At the meeting, he showed her his

badge and gave her a piece of paper identifying the

penalties for aiding and abetting a felony, i.e., five to 15

years. He told her she did not need a lawyer. He ques-

tioned her about Petitioner’s operation and she told him

about some accounting procedures. The agent then asked

Tuma to retrieve documentation of the accounting pro-

cedures. She had serious reservations about taking Peti-

tioner’s property without his permission, so she

consulted another law enforcement officer, a county dep-

uty sheriff. He recommended that she follow the federal

agent’s instructions, which she did.

The next night, at the direction of the federal agent,

Tuma went to OAR’s offices after business hours. The

federal agent followed her and waited in the parking lot.

Tuma took records from her supervisor’s desk and gave

them to the agent. On a second occasion, at the request of

the same government agent, Tuma seized additional

records by printing out computer programs that were in

Petitioner’s computer, i.e., no hard copy existed. She also

gave these documents to the government agent who

turned them over to the FCIC.

At no time did the FCIC utilize the contractual

remedies in the reinsurance agreements to resolve its

dispute with Petitioner. Instead of arbitrating the ques-

tion of the propriety of Petitioner’s accounting methods,

as the reinsurance agreement provided, the FCIC used

Tuma’s statements and the records she seized at the gov-

ernment’s request to obtain search warrants which were

executed on four OAR branch offices and Petitioner’s

personal residence on October 25, 1988.

Petitioner was indicted in 1989 and tried for the first

time in 1990. Following the first trial which resulted in a

hung jury for Petitioner, and the acquittal of a co-defen-

dant, Petitioner was tried for a second time in 1991. In

general, the government claimed, and the jury found, that

Petitioner used the mails and telephone wires to submit

false information to CHIAA, a non-government entity, to

improperly obtain premature reimbursement on two

claims and premature administrative expense monies

from the FCIC.

Specifically, the government claimed that Petitioner

gave directions to submit false information by “doubling”

the premiums paid and the losses claimed on two policies.

Because the evidence was that OAR deleted the “doub-

ling” shortly after it occurred, and before the FCIC inves-

tigation, the government only proved that Petitioner

obtained premature reimbursement on government

money, having the value of approximately $700.00 of lost

interest for a period of time.

The government also claimed, and the jury found,

that the Petitioner caused 1986 policy information on

certain files to be “rolled over” and submitted to FCIC as

1987 policy information. Again, because OAR later cor-

rected the 1987 information prior to any investigation, the

government only proved that Petitioner obtained prema-

ture reimbursement of government money, having a

value of approximately $7,000 of lost interest for a period

of time. Significantly, the government did not contend

that Petitioner was not ultimately entitled to the money

he supposedly obtained from these accounting pro-

cedures; only that he received it prematurely. There was

evidence at trial that the FCIC was behind in its pay-

ments to Petitioner at that time in sums that far exceeded

the amounts the government contended he obtained pre-

maturely.

The government’s case against Petitioner centered

around the business records Tuma seized at the govern-

ment agent’s request prior to the search warrant, her

testimony, and the testimony of Terry Anderson, Tuma’s

supervisor regarding these records. Anderson was the

head of the computer department and the records that

Tuma seized at the agent’s request were in Anderson’s

desk and in Petitioner’s computer. Petitioner moved to

suppress and objected to the admission of the documents

Tuma seized, the two witnesses’ testimony about the

business records, and all the fruits of this evidence.

The district court denied the motions to suppress

holding that Petitioner had no reasonable expectation of

privacy in the records and that Tuma was not an agent of

the government when she procured the records for the

government agent. (A-18, 19). The district court ruled

that Petitioner had no reasonable expectation of privacy

in his own business records because some of the informa-

tion contained in the records would have been revealed

to some outside person or company or agency. (A-18).

The records Tuma seized at the government’s request,

prior to the search warrants, were admitted into evidence

at the trial, and the basis of his conviction.

Throughout the trial, the district court invited the

jurors to ask questions of each of the witnesses who

testified. In response to the court’s invitation, the jury

asked questions of five of the witnesses in this case. The

individual jurors asked these questions out loud in open

court. At no time did Petitioner’s trial counsel interpose

an objection for fear of offending individual jurors by

objecting to their questions. On two occasions when a

juror asked a question that was favorable to the defense,

the court refused to allow the question to be answered.

(A-14).

The jury in the second trial initially indicated that

they were at an impasse and that all twelve jurors were

certain of their opinions and felt their minds could not be

changed. The district court directed them to deliberate

further and changed its previously announced decision to

allow the jury a four day holiday on the Fourth of July.

Instead, the jury was required to return on Friday, July 5,

1991, and before noon, the jury found Petitioner guilty on

all counts.!

C. Court of Appeals.

The Court of Appeals affirmed the denial of the

suppression motions. The appellate court found it unnec-

essary to address Petitioner’s subjective expectation of

privacy because the government did not challenge Peti-

tioner’s subjective expectation and because there was

evidence in the record to support a subjective expectation

of privacy finding. (A-9). However, the appellate court

stated that the determinative issue was “whether the

1 Petitioner was placed on probation for three years, with

six months of home confinement and ordered to perform 600

hours of community service, pay restitution of the lost interest

to the government of $7,724.87 and a fine three times the

amount of the restitution.

subjective expectation of privacy was reasonable.” (A-9).

The Court of Appeals did not base its holding on the

same ground as the district court. The appellate court

held that Petitioner had no reasonable expectation of

privacy in his own property because of a provision in the

reinsurance agreement between the FCIC and the two

Mutual of Omaha companies for which Petitioner was

managing general agent. (A-10, 11).2 The agreement,

which Petitioner did not sign, states in relevant part as

follows:

Access to records and operations.

The Company [Mutual of Omaha subsid-

iary] must provide FCIC, USDA, and the Comp-

troller General of the United States and their

authorized representatives, for the purpose of

investigation, audit, or examination, access to

any record or operation of the Company. The

Company must keep records that fully disclose

all matters pertaining to this Agreement, includ-

ing premiums and claims paid or payable under

this Agreement. Records relating to premiums

must be retained and available for three (3)

years after final adjustment of such premiums,

and records relating to reinsurance claims shall

be retained and available for three (3) years

after final adjustment of such claims.

(A-10, 11).

According to the Court of Appeals, Petitioner had no

reasonable expectation of privacy in his own business

2 The district court had found that the reinsurance agree-

ment “doesn’t amount to or need not amount to a consent.”

(A-18).

OOOO

records because under the provision in the reinsurance

agreement, “the FCIC and other federal government enti-

ties had the right to inspect any company records.” (A-11)

(Emphasis in original). The court reasoned that Peti-

tioner’s expectation was clearly unreasonable because

“he was obligated to give the FCIC ‘access to any record

or operation of the company’ ‘for the purpose of investi-

gation, audit or examination.’” (A-11). Although it was

undisputed that Petitioner was not a party to the rein-

surance agreement in question, the Court of Appeals

found that he was bound by the same rules and regula-

tions as the reinsured Mutual of Omaha companies.

(A-11).9

Regarding the juror questioning procedure, the Court

of Appeals noted that previous decisions of the Court of

Appeals had raised strong concerns about juror question-

ing of witnesses. “These decisions in which seven, now

eight of the judges of this court have joined make evident

that juror interrogation of witnesses presents substantial

risk of reversal and retrial.” (A-14). Notwithstanding this

disapproval and its previous opinions, the Court of

Appeals found no plain error in allowing the jury to ask

questions at Petitioner’s trial because it found no preju-

dice resulted from the trial court’s procedure of allowing

the jury to ask questions out loud and directing that two

questions, favorable to the defense, not be answered.

(A-14).

3 The district court made no such finding and the Court of

Appeals independently made this determination.

REASONS FOR GRANTING THE WRIT

The questions presented by this case are of undenia-

ble importance in the criminal justice system. The first

issue will recur with increasing frequency as the investi-

gation of alleged white-collar crime becomes more and

more aggressive. Federal agencies and law enforcement

officials need clear guidelines as to what seizures they

can lawfully undertake; lower courts as well need this

Court’s guidance to assess the legality of those seizures.

The decision of the Court of Appeals in this case, creates

a new exception to the Fourth Amendment protection

from warrantless seizures and conflicts with the decisions

of this Court. It is also contrary to decisions of other

courts of appeal on this important question of federal

law, and requires review by this Court. If left to stand, the

holding in this case will authorize any federal agent to

seize private business records without a warrant merely

if the federal agency has the contractual right to ask to

see the records.

The second issue, juror interrogation of witnesses, is

equally important. Allowing jurors to become advocates

and possible antagonists of the witnesses does not, on its

face, result in a fair trial and is inherently prejudicial. The

present case provides this Court an opportunity to direct

circuit courts and district courts to adhere to the com-

mand of the Fifth and Sixth Amendments, and prevent a

distortion of the adversary system.

Petitioner respectfully requests this Court to grant

certiorari on these important issues.

A CONTRACTUAL RIGHT OF ACCESS TO BUSINESS

RECORDS DOES NOT AUTHORIZE A WARRANT-

LESS SEIZURE OF THOSE RECORDS BY THE GOV-

ERNMENT.

Petitioner’s property, i.e., certain business records

including computer programs, was seized by one of his

employees at the instigation and direction of a govern-

ment agent who had no warrant. The Court of Appeals

ruled that Petitioner, a sole proprietor, had no reasonable

expectation of privacy in his business records because the

two Mutual of Omaha insurance companies for which he

was a managing general agent had contractually agreed

to provide the FCIC and two other federal entities access

to certain of its records. (A-11).4 In making the assess-

ment of a reasonable expectation of privacy depend

solely on one factor - the existence of a contract obliga-

tion to provide access — the Court of Appeals created new

and erroneous Fourth Amendment law. Its holding

squarely conflicts with the decisions of this Court and

other courts of appeal.

The Court of Appeals’ decision in this case is con-

trary to Supreme Court precedent in a number of impor-

tant respects. In the first instance, the government's right

to examine business records does not destroy an owner's

4 The Court of Appeals did not determine whether the

employee was an agent of the government when she procured

the records for the agent, because of its holding that petitioner

had no reasonable expectation of privacy in his business

records. (A-11). Clearly the employee's seizure constituted a

government seizure due to the agent’s instructions, instigation,

and participation.

privacy right. In Church of Scientology v. United States, 113

S. Ct. 447 (1992) this Court considered whether compli-

ance with an IRS summons enforcement order rendered

the party’s appeal from the order moot. In holding that

the fact that the records had been turned over did not

render the appeal moot, the Court noted that the Secre-

tary of Treasury had authority “to examine any books,

papers, records, or other data” which may be relevant or

material to determining the liability of any person for any

internal revenue tax. 113 S. Ct. at 449, n.2. Notwithstand-

ing the Secretary’s right to examine, this Court in Church

of Scientology stated:

Taxpayers have an obvious possessory interest

in their records. When the government has

obtained such materials as a result of an unlaw-

ful summons, that interest is violated and a court

can effectuate relief by ordering the government

to return the records. Moreover, even if the gov-

ernment retains only copies of the disputed

materials, a taxpayer still suffers injury by the

government’s continued possession of those

materials, namely, the affront to the taxpayer's

privacy. A person’s interest in maintaining the

privacy of his ‘papers and effects’ is of sufficient

importance to merit constitutional protec-

tion. . . . Even though it is now too late to

prevent, or to provide a fully satisfactory rem-

edy for, the invasion of privacy that occurred when

the IRS obtained the information on the tapes, a

court does have power to effectuate a partial

remedy... .

113 S. Ct. at 450. (Emphasis added).

Explicit in Church of Scientology, supra, is the funda-

mental principle that an individual’s or company’s right

SS...

to privacy in his or its records is not automatically extin-

guished simply because the government has a right to

examine the records.

Second, the Court of Appeals’ total reliance on an

expectation of privacy determination in this case, which

clearly involves the seizure of Petitioner’s property, is

seriously called into question by the Court’s recent deci-

sion in Soldal v. Cook County, 61 U.S.L.W. 4019 (U.S.

December 8, 1992). In Soldal, this Court reaffirmed that

the Fourth Amendment protects property even where

privacy or liberty is not implicated. Moreover, the

amendment protects seizures even though no search

within its meaning had taken place. Thus, in the instant

case, where a seizure of Petitioner’s property clearly

occurred, the Fourth Amendment applies. “What matters

is the intrusion on the people’s security from govern-

mental interference. Therefore, the right against unrea-

sonable seizures would be no less transgressed if the

seizure of the house was undertaken to collect evidence,

verify compliance with the housing regulation, effect an

eviction by the police, or on a whim, for no reason at all.”

61 U.S.L.W. at 4026.

In this case then, the dispositive issue for determina-

tion was whether the seizure of Petitioner’s property was

reasonable under all the circumstances, not whether the

Petitioner’s expectation of privacy was objectively rea-

sonable. Thus, the Court of Appeals’ analysis is fatally

flawed and cannot remain uncorrected.

Third, this Court has repeatedly acknowledged that

the right to examine records, even if statutorily conferred,

does not authorize warrantless searches and seizures of

business records, except in a very limited number of

highly regulated industries. It is well settled that the U.S.

Constitution applies to government access to commercial

premises and records. This Court has recognized that a

search of private commercial property without private

consent is unreasonable under the Fourth Amendment

unless the search is authorized by a valid search warrant.

Camara v. Municipal Court, 387 U.S. 523 (1967); See v. City

of Seattle, 387 U.S. 541 (1967); Marshall v. Barlow’s, Inc., 436

U.S. 307 (1978). An owner or operator of a business thus

has an expectation of privacy in commercial property,

which society is prepared to consider to be reasonable.

New York v. Burger, 482 U.S. 691 (1987).

An exception to the warrant requirement is recognized,

however, in certain industries in which government regula-

tion is pervasive. Colonnade Catering Corp. v. United States, 397

U.S. 72 (1970) (sale of alcoholic beverages); United States v.

Diswell, 406 U.S. 311 (1972) (sale of fire arms); New York v.

Burger, supra, (vehicle dismantling businesses).

The Court of Appeals’ decision in this case is directly

contrary to the above-cited Supreme Court precedent.

Indeed, it creates a new exception to the warrant require-

ment for government seizures and inspections. Notwith-

standing the fact that there was absolutely no

government claim that the FCIC had a statutory right to

inspect Petitioner’s records or that Petitioner’s business

was highly regulated,> the Court of Appeals held that if a

government entity had a contractual right of access to

5 In fact, at trial the FCIC never identified a single regula-

tion or rule promulgated by the FCIC relevant to Petitioner’s

case.

business records, a business owner could never challenge

the warrantless seizure of his records because he had no

reasonable expectation of privacy. Such a holding is

clearly invalid in light of this Court’s Fourth Amendment

cases.

Additionally, this is not a case where a corporate

officer is claiming a right of privacy in corporate records.

This case involves a sole proprietor who did not operate

his businesses as corporations. The distinction between

corporate and individual enterprise is one of the deepest

in our constitutional law. In Hale v. Henkel, 201 U.S. 43

(1906), the Court stated:

. we are of the opinion that there is a

clear distinction in this particular between an

individual and a corporation, and that the latter

has no right to refuse to submit its books and

papers for an examination at the suit of the

State. The individual may stand upon his constitu-

tional rights as a citizen. He is entitled to carry on

his private business in his own way. His power

to contract is unlimited. He owes no duty to the

State or to his neighbors to divulge his business,

or to open his doors to an investigation, so far as

it may tend to criminate him.

201 U.S. at 74-75. (Emphasis added).

Petitioner had an objectively reasonable expectation

of privacy in his business records so as to require a search

warrant or an administrative subpoena before allowing

his records to be seized by a government agent. As a sole

proprietor, Petitioner’s expectation of privacy in his busi-

ness records is precisely the type of right that society

recognizes as reasonable. See New York v. Burger, supra,

482 U.S. at 699. These records were not required by

statute to be kept nor were they subject to inspection by

statute. This case clearly does not fall within the excep-

tions recognized by this Court for warrantless searches

and seizures in highly regulated industries.

The Court of Appeals’ decision in this case also con-

flicts with the Court of Appeals for the Tenth Circuit in

United States v. Leary, 846 F.2d 592 (10th Cir. 1988). it is

also inconsistent with the Fifth Circuit’s decision in

Mason v. Pulliam, 557 F.2d 426, 429 (Sth Cir. 1977). The

Court of Appeals’ premise in this case is that Petitioner

lacked the requisite expectation of privacy in his own

business records because the FCIC “had the right to

inspect any company records.” (A-11) (emphasis in origi-

nal). The implicit suggestion is that somehow any privacy

interest in the records was waived by the Petitioner or

that he consented to the seizure. The “expectation was

clearly unreasonable, as he was obligated to give the

FCIC ‘access to any operation of the company’ ‘for the

purpose of investigation, audit, or examination.’ ” (A-11).

The Court of Appeals ignored the district court’s finding

that the reinsurance agreement “doesn’t amount to or

need not amount to a consent,” and deleted this language

from its quote of the district court’s conclusion. (A-9, 10,

18). In addition, the Court of Appeals erroneously equa-

ted a contractual right of access with a right of seizure

without a warrant.

In United States v. Leary, supra, two officers of an

exporting company challenged a search warrant pursuant

to which 20 boxes of business records were seized. The

government argued that either the individuals waived

their Fourth Amendment rights or consented to the

search because they had adopted an “open door policy,”

inviting government agents to inspect their business

records. Id. at 597. The Court found that the company’s

“open door” policy did not negate the defendants’ expec-

tation of privacy. “There is a distinction of constitutional

significance between the company’s policy, which invited

government agents to ‘visit . . . and ask for any file or

information they want or need,’” and a seizure and

removal of 20 boxes of files. Id. The Court specifically

noted that the defendants invited the government agents

to inspect and copy records, not to seize them. Id. at 599.

The Court held that even if the defendants’ policy could

be characterized as an ongoing consent to government

searches, the government had exceeded the scope of that

consent by seizing the records. Id. at 599. Similarly, in

Mason v. Pulliam, supra, the Fifth Circuit held that when

the basis for a search or seizure is consent, the govern-

ment must conform to the limitations placed upon the

right granted to search, seize or retain the papers or

effects. 557 F.2d at 429.

Contrary to the above cases, in the instant case, the

Court of Appeals held that the Petitioner had no constitu-

tional right to challenge the warrantless seizure of his

records simply because he had contractually agreed to

provide access to those records. In the first place, it must

be noted that Petitioner was not a party to the contract in

question; it was a contract between the FCIC and the two

Mutual of Omaha companies for which the Petitioner was

just the managing general agent. The records that the

FCIC had the right of access to were Mutual of Omaha

records, not Petitioner’s. Secondly, even if the Court of

Appeals was correct in accepting the claim that Petitioner

was bound as a managing general agent by its principal’s

contractua! provision,® only access to records was agreed

to, not permission to seize them. Petitioner, at all times,

retained control over his premises and records and had

given instructions to keep them confidential. He clearly

had the authority to restrict the government’s access to

his business records, notwithstanding the contractual

obligation. In fact, the contract itself provided for arbitra-

tion or administrative appeals for disputes.

The Court of Appeals improperly transformed Peti-

tioner’s contractual obligation to provide access, which

he was free to breach, into a right of the government to

seize business records without a warrant. Certainly Peti-

tioner would have been entitled to expect that his records

would not be taken from him without the government

first requesting access. The reinsurance agreement relied

upon by the Court of Appeals, contained other provi-

sions, of which Petitioner was aware, which stated what

action the FCIC could take against a company not in

compliance with the provisions of the agreement. In addi-

tion to the usual remedies available to the FCIC for

breach of contract, the agreement provided that the FCIC

could rescind or deny liability for reinsurance, deny pay-

ment of a share of a premium or of an expense reimburse-

ment payable, or refuse to assume any further

reinsurance agreements. The agreement also allowed for

example of how the Court of Appeals mischaracterized the facts

in a number of respects in its opinion ard drew faulty conclu-

sions as a result.

arbitration or administrative appeal of any misunder-

standing or dispute arising between the company and the

FCIC. Thus, the very agreement relied upon by the Court

of Appeals to destroy Petitioner’s expectation of privacy,

contains other provisions authorizing FCIC actions, none

of which included warrantless seizures or even adminis-

trative subpoenas.

Clearly, the Petitioner did not unequivocally consent

to the seizure of his business records, as a result of the

contract provision which arguably obligated him to pro-

vide access to his business records.” If Petitioner con-

sented to anything it was that the government could ask

and look at his records; he did not give them his permis-

sion to take his records. The decision in this case cannot

be squared with the decisions of the Tenth Circuit in Leary

and with the Fifth Circuit opinion in Mason. However, it

is arguable that the Court of Appeals’ decision in this

case is in line with the Second Circuit opinion in United

States v. Chuang, 897 F.2d 646 (2nd Cir. 1990), cert. denied,

111 S. Ct. 77 (1991) (Bank president did not have a legiti-

mate expectation in privacy in bank documents examined

by the office of the Comptrolier of the Currency

(“OCC”)). Although the holding in Chuang is more defen-

sible because the defendant was a corporate officer of a

bank, which is a heavily regulated industry and the OCC

must conduct regular audits, its rationale is similar to the

Court of Appeals in this case. Significantly, these four

courts of appeals’ decisions evidence a split of authority

7 The district court found that the provision did not amount

to a consent. (A-17, 18).

in the important area of Fourth Amendment jurispru-

dence that demonstrates a clear need for Supreme Court

consideration.

Il.

JUROR QUESTIONING IN CRIMINAL CASES IS

INHERENTLY PREJUDICIAL.

The question whether to permit jury questioning of

witnesses during criminal trials, and if so, under what

circumstances is an issue ripe for Supreme Court review.

Numerous circuits have grappled with this issue with

varying standards of review and results. For example, in

the instant case the Court of Appeals applied the “plain

error” standard of review and held that the district court

had not committed plain error in allowing oral jury ques-

tions in the absence of a contemporaneous objection.

(A-14). See also United States v. Land, 877 F.2d 17 (8th Cir.),

cert. denied, 493 U.S. 894 (1989) (court held that, absent a

contemporaneous objection, jury questioning, though a

“somewhat troubling” procedure as implemented in that

jurors stated their questions, as here, from the box with-

out prior consideration by the coursi, could only be

reviewed for plain error which was absent in that case).

In United States v. Johnson, 892 F.2d 707 (8th Cir. 1989), the

majority opinion found no plain error. However, Chief

Judge Lay wrote a concurring opinion, joined by Judge

McMillian, addressing the serious constitutional ques-

tions arising from the practice of jury interrogation of

witnesses, particularly of the defendant in criminal cases.

Additionally, in United States v. Lewin, 900 F.2d 145 (8th

Cir. 1990), the court found no plain error per se in jury

interrogation and reviewed the jury questions for abuse

of discretion by the trial court.

Other circuits have considered the question and their

opinions evidence a lack of uniformity.® In United States v.

Polowichak, 783 F.2d 410, 413 (4th Cir. 1986) the Fourth

Circuit disapproved of the district court “inviting juror

questioning . . . as well as permitting a juror to state his

question within the hearing of the other jurors,” but

found no prejudice upon which to base a reversal. Id. at

413. Shortly before Polowichak was decided, the Fourth

Circuit considered the question in a civil case and

exhaustively described the dangers inherent in allowing

juror questions. DeBenedetto v. Goodyear Tire & Rubber Co.,

754 F.2d 512, 516 (4th Cir. 1985). The dangers in the

practice of allowing juror questions according to the

Fourth Circuit are as follows: (1) Judicial system is

founded upon the presence of a neutral fact finder to

discern the truth from the positions presented by adverse

parties. Only relevant and admissible evidence should be

put before the neutral fact finder. Jurors are not trained in

the law and do not know what is legally relevant and

what is legally admissible. Thus, there is a much greater

risk of improper or prejudicial questions from jurors. (2)

An oral question whether answered or unanswered may

8 The state courts have also addressed this issue with

inconsistent holdings. See State v. Zima, 237 Neb. 952, 468

N.W.2d 377 (Neb. 1991) (jury questioning prohibited); People v.

Heard, 388 Mich. 182, 200 N.W.2d 73 (1972) (juror questioning is

permitted within discretion of trial court); People v. McAlister,

167 Cal. App.3d 633, 213 Cal. Rptr. 271 (1985) (procedure

allowed for juror to submit written questions, subject to review

by the court and counsel).

influence the perceptions of the other jurors. (3) Even if

the court takes remedial steps after an improper question

is asked, the questioning juror may feel his or her pursuit

of the truth has been thwarted. (4) Since questions are

from one or more jurors, the possibility that the jury will

attach more significance to the answers to these jury

questions is great. DeBenedetto, supra, 754 F.2d at 517.

Notwithstanding these dangers the Fourth Circuit did not

reverse because it found no prejudice. Id.

In United States v. Callahan, 588 F.2d 1078, 1086 (5th

Cir.), cert. denied, 444 U.S. 826 (1979), the trial court

allowed one written jury question to be asked. The defen-

dant appealed and the court of appeals said “proper

handing of juror questions [was] a matter within the

discretion of the trial judge.” (Citations omitted). The

Fifth Circuit Court of Appeals held that there was no

error committed in allowing the one question to be asked

and that the procedure employed of requiring jurors to

put their questions in writing and clear their relevancy

first with the court was not an abuse of the court’s

discretion. Id.

Yet, in United States v. Nivica, 887 F.2d 1110, 1123 (1st

Cir. 1989), cert. denied, 494 U.S. 1005 (1990), the Court of

Appeals for the First Circuit held that it was within the

trial court’s discretion to deny the defendant’s request to

allow jury interrogation, but generally disparaged the

practice. “It seems foolhardy to suggest that a judge ina

multiple defendant criminal case must freely allow jurors

to question a witness... . ” Id.

In United States v. Witt, 215 F.2d 580 (2nd Cir.), cert.

denied sub. nom. Talanker v. United States, 348 U.S. 887

(1954), some jurors put questions to witnesses and

received answers. The Second Circuit Court of Appeals

held that the matter was within the judge’s discretion,

like witness-questioning by the judge himself. Id. at 584.

However, the Witt opinion failed to discuss Pacific

Improvement Co. v. Weidenfeld, 277 F. 224 (2nd Cir. 1921), in

which the court stated that “a jury should listen to evi-

dence, counsel should elicit, and the court should dis-

courage, and, if necessary, suppress, such idly curious

jurors as this record displays.” Id. at 227.

Thus, the courts of appeals that have considered the

question are not in accord. Some courts discourage juror

questioning but allow the practice within the discretion

of the trial court, and only review for prejudice. Some

courts review only for plain error. One court did not

allow any juror questioning. In contrast, some courts

allow the jurors to submit written questions to the court,

subject to review by the court and counsel.

Oral juror questioning is inherently prejudicial and

the technique suggested by those jurisdictions that permit

written questions, does not cure the problem because it

does not deal with the fundamental question of what

effect juror questioning may have, or may appear to have

on juror impartiality. “The fundamental problem with

juror questions lies in the gross distortion of the adver-

sary system and the misconception of the role of the jury

as a neutral fact finder in the adversary process.” United

States v. Johnson, 892 F.2d at 713 (Lay, C.J., concurring).

Due process requires a fair trial before a fair and

impartial jury. Criminal convictions should be based on

evidence elicited by counsel which is heard, evaluated

and acted upon by jurors who have no investment in

obtaining answers to questions they have posed. Permit-

ting juror questions puts the jury in the adversary process

and disrupts neutrality. Our system of justice depends on

a neutral jury. As Chief Judge Lay said in his concurring

opinion in Johnson, supra, 892 F.2d at 715, “when the jury

becomes an advocate or inquisitor in the process it for-

sakes its role of arbiter between the government and its

citizens.” Similarly, this Court has noted:

The framers of the constitutions strove to

create an independent judiciary but insisted

upon further protection against arbitrary action

[of government]. Providing an accused with the

right to be tried by a jury of his peers gave him

an inestimable safeguard against the corrupt or

overzealous prosecutor and against the compli-

ant, bias, or eccentric judge. If the defendant

preferred the common-sense judgment of a jury

to the more tutored but perhaps less sympa-

thetic reaction of the single judge, he was to

have it.

Duncan v. Louisiana, 391 U.S. 145, 156 (1968).

The issue of whether juror interrogation is proper

reaches constitutional dimensions in a criminal case. A

criminal defendant is constitutionally entitled to due pro-

cess under the Fifth Amendment and to a trial by a fair

and impartial jury under the Sixth Amendment. Jury

questioning is inherently prejudicial and infringes upon

the defendant’s constitutional right of due process and

right to an impartial jury.

As a matter of law, jurors should not be permitted to

become participants in the trial at which they are the sole

judge of the facts. A defendant is prejudiced by allowing

jurors to ask questions, because such conduct unfairly

benefits the government by reopening direct examination

and augmenting the government’s case-in-chief. Jurors

should not be allowed to assist the government in satisfy-

ing its burden of proof by adducing additional evidence

through their questions which produce answers admissi-

ble against a defendant. The opportunity given the jury to

ask questions creates a very great risk that inadmissible

evidence may be adduced against the defendant. To the

detriment of a defendant, jurors who are allowed to ask

questions have a tendency to begin making up their mind

before they have retired to the jury room and before they

have begun discussing the evidence with the other jurors.

As a direct result of the district court inviting jury ques-

tions, a defendant is prejudiced by being forced to risk

alienating jurors by having to object to preserve the

record or to allow the questioning to proceed. Lastly, the

Federal Rules of Civil and Criminal Procedure and the

Federal Rules of Evidence restrict the interrogation of

witnesses to the parties and to the Court. The Court of

Appeals in this case simply ignores the constitutional

aspects of this prejudicial practice of allowing jurors to

ask questions.

CONCLUSION

The Petitioner respectfully requests this Court to

grant certiorari to address the important Fourth Amend-

ment issue raised in the Petition. The decision of the

Court of Appeals creates a new exception to the require-

ment of a warrant for government seizures in the com-

mercial setting that is in conflict with this Court’s prior

holdings and will continue to cause confusion in the

circuits.

The Petition for Certiorari should be granted on the

issue of juror questioning because numerous courts, both

federal and state, have considered the question with con-

flicting results. In the criminal case, this practice takes on

constitutional dimensions and is inherently prejudicial.

The lower courts need guidance on this important ques-

tion and Petitioner respectfully urges the Court to grant

his Petition.

Dated: December 24 1992.

Respectfully submitted,

LigBeN, DAHLK, WHITTED,

HOUGHTON, SLOWIACZEK & JAHN, P.C.

SANDRA L. DoucGHERTy* (16823)

100 Scoular Building

2027 Dodge Street

Omaha, Nebraska 68102

(402) 344-4000

Attorney for Petitioner

“Counsel of Record

A-1

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 91-3794

United States of America, Appeal from the

a United States

Plaintiff — Appellee, ‘ District Court

v. , for the

Dennis Welliver District of Nebraska.

Defendant - Appellant.

Submitted: May 15, 1992

Filed: October 1, 1992

Before MCMILLIAN, JOHN R. GIBSON, and BEAM, Cir-

cuit Judges.

JOHN R. GIBSON, Circuit Judge.

Dennis Welliver was charged with a multi-count

indictment in connection with the filing of certain

accounting reports with the Federal Crop Insurance Cor-

poration (FCIC). A jury convicted him of two counts of

mail fraud, in violation of 18 U.S.C.A. § 1341 (West Supp.

1992), two counts of making false statements to the FCIC,

in violation of 18 U.S.C.A. § 1014 (West Supp. 1992), two

counts of theft, in violation of 18 U.S.C. § 641 (1988), and

three counts of wire fraud, in violation of 18 U.S.C.A.

A-2

§ 1343 (West Supp. 1992). Welliver appeals, claiming that:

(1) the district court erroneously allowed illegally

obtained evidence; (2) the evidence was insufficient to

support his conviction; (3) the district court should not

have allowed the jurors to question witnesses; and (4) he

was the victim of selective prosecution. We affirm the

judgment of the district court.!

The FCIC, an agency of the United States Department

of Agriculture, provides farmers with multiple peril crop

insurance through reinsurance agreements with private

insurance companies. The private companies sell and ser-

vice the crop insurance policies, collect premiums, and

settle claims. The FCIC reimburses the companies for

their administrative expenses and for losses paid out to

farmers. Reimbursements are based on monthly reports

the private insurance companies are required to compile,

certify as “complete and correct,” and send to Crop Hail

Insurance Actuarial Association. Crop Hail processes the

reports for the FCIC, edits them for accuracy, and notifies

the company of any errors. Crop Hail creates a monthly

accounting report, and sends it to the company, which in

turn sends it to the FCIC to receive payment.

Omaha Indemnity Company and Omaha Property

and Casualty Company entered into standard reinsurance

agreements with the FCIC. Welliver, the sole proprietor of

Omaha All Risk Insurance Services in Lexington,

Nebraska, was the managing general agent for these com-

panies, and was responsible for conducting all daily

1 The Honorable Warren K. Urbom, Senior United States

District Judge for the District of Nebraska.

A-3

transactions with the insureds and the FCIC. Managing

general agents are bound by all the FCIC rules and regu-

lations applicable to the reinsured companies themselves.

Welliver was also the sole proprietor of Nebraska

Computer and Financial Services, a company that did the

accounting and computer work for Omaha All Risk. Terry

Anderson was Welliver’s director of computer opera-

tions. Evelyn Tuma, a computer programmer for

Nebraska Computer and Financial Services, created,

maintained, and tested computer programs and assisted

with various computer operations and Crop Hail trans-

missions.

In May 1987, Welliver met with Tuma and Anderson

to discuss the delayed entry of Omaha All Risk’s 1987

premium information into their computer system, which

delayed reporting to the FCIC and held up reimburse-

ment. Welliver asked them to “roll over” 1986 premium

information and submit it to Crop Hail as current 1987

information. Welliver asked Anderson to maintain a list-

ing of the rolled over policies. Tuma wrote a program and

rolled over the policies as Welliver had instructed.

In March 1988, Welliver again met with Tuma and

Anderson and discussed “doubling” approximately

$80,000 of losses on Crop Hail reports by changing the

“seed code.” This could be done by running an existing

reported loss that had cleared the Crop Hail edits

through the system a second time under a different code

to report it as a senarate, additional loss. Anderson dou-

bled a loss from a California insurance policy, and Tuma

also doubled losses at Welliver’s direction, including two

from Colorado and California policies in April 1988.

A-4

In 1988, Gary Diers, a special agent for the Office of

the Inspector General of the United States Department of

Agriculture, began investigating Omaha All Risk regard-

ing a matter unrelated to this case. He contacted Evelyn

Tuma and met with her on May 26, 1988. Diers showed

Tuma his badge and a piece of paper listing the penalties

for aiding and abetting. He told her she was not in any

trouble, she did not need a lawyer, and he simply wanted

to ask her some questions about Omaha All Risk. Tuma

eventually told Diers about the rollovers and described

certain documents at Omaha All Risk that would consti-

tute evidence of the practice. Diers asked Tuma to

retrieve these documents for him, but Tuma had reserva-

tions. Diers assured her that as long as the documents

were not under “lock and key” and were not “something

[she] shouldn’t be looking at any way,” she had a right to

obtain them.

Tuma, still unsure about the propriety of taking the

documents out of the office, contacted the local county

sheriff, who told her that he thought it was within her

rights to take the documents. Tuma went to Omaha All

Risk and retrieved a number of documents from Terry

Anderson’s desk drawer, which both she and Anderson

used. Tuma also later gave additional documents to

Diers. These documents were used to prepare search

warrants for Omaha All Risk’s Nebraska and Texas

offices, which were executed October 25, 1988.

A grand jury charged Welliver and Paul Buchanan jr.,

Omaha All Risk’s Texas branch manager, with various

counts of mail fraud, wire fraud, false statements, theft,

and conspiracy in connection with their dealings with the

FCIC. At trial, Welliver moved to suppress the records

A-5

Tuma turned over to Agent Diers. The district court

denied the motion, concluding that Tuma was not an

agent of the government and Welliver had no expectation

of privacy in the documents. The jury acquitted

Buchanan, but could not reach a unanimous verdict

against Welliver. The district court dismissed the conspir-

acy count against Welliver and declared a mistrial on the

remaining counts.

At his second trial, Welliver again moved to suppress

the documents Tuma had taken, and the district court

denied the motion. The jury convicted Welliver on all

counts. The district judge sentenced Welliver to three

years probation and six months of home confinement. He

ordered Welliver to perform 600 hours of community

service, pay a fine of $23,174.61, and make restitution in

the amount of $7,724.87. Welliver filed this appeal.

Welliver argues that the district court erred in deny-

ing his motion to suppress the business records? Tuma

seized and all the testimony concerning the records

because the seizures violated his Fourth Amendment

? The records at issue are as follows: An internal Omaha All

Risk computer print-out which Anderson created and used to

change the seed code for doubling losses; Tuma’s handwritten

notes on the policies she used to double losses; a computer

print-out Tuma created of the raw data pertaining to doubling; a

print-out of the program Tuma created to roll over 1986 policies

into the 1987 year; computer print-outs of policies that Tuma

rolled over and sent to Crop Hail Insurance; and a computer

print-out containing a comprehensive listing of the policies

Omaha All Risk rolled over.

A-6

rights. One claiming a Fourth Amendment violation must

show that: (1) he had a legitimate expectation of privacy,

and (2) that expectation was invaded by government

action. Smith v. Maryland, 442 U.S. 735, 740 (1979).

We first consider whether Welliver had a legitimate

expectation of privacy in the records Tuma seized. This is

a two-part inquiry: (1) whether Welliver asserted a sub-

jective expectation of privacy, a question of fact; and (2)

whether Welliver’s subjective expectation is objectively

reasonable, a question of law. United States v. Kiser, 948

F.2d 418, 423 (8th Cir. 1991), cert. denied, 112 S. Ct. 1666

(1992) (relying on Smith, 442 U.S. at 740, and California v.

Ciraolo, 476 U.S. 207, 211 (1986)). The Supreme Court first

enunciated this test in Katz v. United States, 389 U.S. 347,

351, 353 (1967).

Under Katz, the first question involves determining

whether the person, by her conduct, has demonstrated an

actual expectation of privacy, id. at 361 (Harlan, J., con-

curring), or sought to preserve something as private. Id.

at 351-52. The second question involves deciding whether

the individual’s asserted privacy interest is legitimate,

i.e., “one that society is willing to recognize as ‘reason-

able.’ ” Id. at 361 (Harlan, J., concurring). In United States

v. Hendrickson, 940 F.2d 320 (8th Cir.), cert. denied, 112 S.

Ct. 610 (1991), we stated that “[t]he test for legitimacy is

not whether an individual chooses to conceal his or her

activity, but instead ‘whether the government's intrusion

infringes upon the personal and societal values protected

by the Fourth Amendment.’ ” Id. at 322 (quoting Ciraolo,

476 U.S. at 212). We concluded that this “ultimate ques-

tion under Katz ‘is a value judgment.’” Id. (citations

omitted).

A-7

The district court relied on two cases involving

employees who have turned their immediate employer's

business records over to the government: United States v.

Ziperstein, 601 F.2d 281 (7th Cir. 1979), cert. denied, 444 U.S.

1031 (1980), and United States v. Miller, 800 F.2d 129 (7th Cir.

1986). In Ziperstein, the defendant owned medical clinics that

received Medicare and Medicaid funding and two com-

panies that handled the Medicare and Medicaid billing. 601

F.2d at 284. He argued that the district court erred in failing

to suppress certain records he claimed one of his employees,

a pharmacist, had “stolen” and turned over to the govern-

ment.? Id. at 288. The Seventh Circuit heid that the defendant

had no legitimate expectation of privacy in the documents.

Id. at 289. The court relied on Marshall v. Barlow’s, Inc., 436

U.S. 307 (1978), which states that “[{w]hat [employees]

observe in their daily functions is undoubtedly beyond the

employer’s reasonable expectation of privacy.” Ziperstein, 601

F.2d at 315. The court in Ziperstein reasoned that phar-

maceutical prescriptions came within the pharmacist’s daily

observations, and accordingly, there was no impropriety in

his “obtaining control over the records which serve[d] as the

basis of his daily activities.” Id. at 289.

° The defendant also claimed that the pharmacist was act-

ing as an agent of the government in obtaining these records.

601 F.2d at 288. The Seventh Circuit rejected this theory because

the employee initiated contact with the government to report

evidence of wrongdoing in one of defendant's clinics, obtained

the documents legitimately, and gave the documents to the FBI

on his own volition. Id. at 289. Our disposition of Welliver’s case

on the grounds of legitimate expectation of privacy, see infra at

10 [A-11], makes it unnecessary to discuss the government

agent issue.

A-8

Seven years later, the Seventh Circuit faced a similar

issue in Miller. An employee, refusing his employer’s

request that he hide business records at his home, con-

tacted the authorities and suggested that they imme-

diately come to the clinic, ask for the records, and have a

subpoena. Miller, 800 F.2d at 131-32. The authorities did

so. Id. at 132-33. The district court in Miller found that all

the clinic employees had access to the records and none

of the records were kept in restricted or private areas. Id.

at 131. Further, the employee had access to the

employer’s premises, permission to use all the records

there, and did, in fact, use many of them on a regular

basis. Id. at 131-32. The district court denied the defen-

dant’s motion to suppress. Id. at 133.

In its Fourth Amendment inquiry, the Seventh Circuit

focused on whether the employee was the custodian of

the records. Id. Discussing agency principles of actual and

apparent authority, the court cited Marshall regarding

“what ‘employees observe in their daily functions.’ ” Id.

at 134 (quoting Marshall, 436 U.S. at 315). The court held

that the district court’s findings of fact indicated that the

employee had actual authority to turn over the records.

Id. The court pointed out, however, that the employer’s

order to hide the records expressly limited the

employee’s authority. Id. at 134-35. It acknowledged that

the employer asserted a subjective expectation of privacy

in the documents, but held that his order to the employee

constituted an unacceptable request to obstruct justice. Id.

at 135. The court upheld the district court’s denial of the

motion to suppress, concluding that the employee’s

authority to dispose of the records defeated the

employer’s Fourth Amendment claim. Id.

A-9

Although both Ziperstein and Miller relied on Mar-

shall, we are not convinced it is dispositive of the issue

before us. Certainly, Marshall mentions that the observa-

tions of employees in their daily functions are beyond an

employer’s reasonable expectation of privacy, 436 US. at

315, but it does not treat this issue in detail. It is also true

that neither Ziperstein nor Miller analyzed the facts under

the two part subjective and objective expectation of pri-

vacy Katz test.

The district court in this case did not specifically

discuss Welliver’s subjective expectation of privacy. This,

however, is similar to California v. Ciraolo, 476 U.S. at 211,

in which the Supreme Court found it unnecessary to

address the subjective expectation of privacy question

because the finding on that issue had not been chal-

lenged. Likewise, although the district court made no

finding on this issue and seems to have assumed it, the

government has not challenged Welliver’s subjective

expectation, and there is evidence in the record to sup-

port a subjective expectation of privacy finding.

The determinative issue, however, is whether the

subjective expectation of privacy was reasonable, and in

this respect, the district court concluded:

I think it’s true that there was no reasonable

expectation of privacy in the information con-

tained in these documents. It was expected that

the information contained in these documents,

or much of it, would be sent to [Crop Hail]. . . .

The fact that not all of the information

would likely go any place doesn’t retain for the

whole the expectation of privacy. As far as I can

tell it’s probably true that the only information

A-10

on the documents that would not be revealed to

some outside person or company or agency was

the fact that this really was 1986 information

rather than 1987. . . . But the rest of it was

expected to go some place, whether in detailed

form or in summary form. I think that ruins the

claim of a reasonable expectation of privacy.

The presence of the reinsurance agreement

is not irrelevant. .. . [I]t has to do with whether

there was a reasonable expectation that these

documents, information in the documents

would be kept private. And it militates in the

direction of nonprivacy.

Suppression Hearing Transcript at 123-24. We are con-

vinced that the district court did not err in ruling that

Welliver had no objectively reasonable expectation of pri-

vacy in the documents. Therefore, under Ciraolo, which

accepted and assumed a subjective expectation of privacy

but found that it was not objectively reasonable, 476 U.S.

at 212-15, we must reject Welliver’s argument that the

evidence should have been suppressed.

Much testimony at the suppression hearing focused

on whether the documents were for internal purposes

only or whether they would be sent to Crop Hail and the

FCIC. The reinsurance agreement resolves the issue. A

provision of the agreement states:

Access to Records and Operations

The Company must provide FCIC, USDA, and

the Comptroller General of the United States

and their authorized representatives, for the

purpose of investigation, audit, or examination,

access to any record or operation of the Com-

pany. The Company must keep records that

A-11

fully disclose all matters pertaining to this

Agreement, including premiums and claims

paid or payable under this Agreement. Records

relating to premiums must be retained and

available for three (3) years after final adjust-

ment of such premiums, and records relating to

reinsurance claims shall be retained and avail-

able for three (3) years after final adjustment of

such claims.

Under this provision, the FCIC and other federal govern-

ment entities had the right to inspect any company

records. Although Welliver argues that his company, as

merely a managing general agent, was not a party to the

reinsurance agreement with the FCIC, Timothy Hoffman,

the FCIC’s director of the Kansas City, Missouri compli-

ance office, testified that managing general agencies are

bound by the same rules and regulations as the reinsured

companies. Even if Welliver subjectively asserted his

expectation of privacy in the documents at issue, that

expectation was clearly unreasonable, as he was obli-

gated to give the FCIC “access to any record or operation

of the Company” “for the purpose of investigation, audit,

or examination.” Because of this holding, we need not

determine whether Tuma was an agent of the government

when she procured the records for Agent Diers. We con-

clude that the district court did not err in denying Well-

iver’s motion to suppress.

Il.

Welliver argues that the evidence was insufficient to

support his conviction. Although he admits that he “does

not challenge the fact that the government evidence.

A-12

established that the ‘doubling’ and ‘rollover’ did occur,”

he contends that there was insufficient evidence of his

criminal intent.

In reviewing the denial of a motion for acquittal, we

view the evidence in the light most favorable to the

government, giving it the benefit of all reasonable infer-

ences from that evidence. Glasser v. United States, 315 U.S.

60, 80 (1942); United States v. Long, 952 F.2d 1520, 1524-25

(8th Cir. 1991). We will reverse only if the jury must have

entertained reasonable doubt as to the defendant’s guilt.

United States v. Jones, 880 F.2d 55, 64 (8th Cir. 1989).

Welliver’s argument hinges on witness credibility

and slight inconsistencies in the testimony of Evelyn

Tuma and Terry Anderson. Our review of the record

shows that there was sufficient evidence to demonstrate

Welliver’s intent to commit the rollovers and doubling.

Both Tuma and Anderson testified that in May 1987 they

met behind closed doors with Welliver, who asked them

to roll over the 1986 premium information and submit it

to Crop Hail as current 1987 information. Both of them

recalled that Welliver had gotten the idea from other

companies that were employing the process. They said

that Welliver wanted to get premium information

reported sooner so “we could get our commission, our

money back sooner.” Tuma wrote the program and used

it to roll over policies at “Dennis’s instructions.”

Although Welliver argues that problems getting

information to pass through Crop Hail’s edits motivated

the rollovers, both Tuma and Anderson testified that the

situation was created by Omaha All Risk’s own inability

to process information so it could be reported to Crop

A-13

Hail. Tuma testified that Welliver had stated that he did

not believe the rollover process was “quite Kosher.”

When the rollover process created a large error list, Well-

iver commented to Anderson and Tuma that they

“couldn’t even cheat right.”

Anderson testified that in March 1988 Welliver met

with him and Tuma and discussed how to double certain

losses on Crop Hail reports by changing the seed code.

Welliver specifically told them that he wanted to double

approximately $80,000 of losses. Although Tuma could

not specifically recall a meeting taking place in March

1988, she remembered a number of meetings regarding

doubling. She doubled losses several times after discus-

sions with Welliver and specifically recalled doubling

certain Colorado and California losses in April 1988 at his

direction.

Even if Welliver properly blames the Crop Hail edit

system for his resort to doubling losses, his argument is

premised on the assumption that he was entitled to sub-

mit false information to FCIC through Crop Hail to com-

pensate for processing problems. The reinsurance

agreement, which Welliver was bound by, clearly forbade

such a practice, as it required that all reports submitted to

the FCIC be “complete and correct.”

Regardless of Welliver’s stated motivations, there

was sufficient evidence for the jury to conclude that he

intentionally directed his employees to submit false infor-

mation to Crop Hail and the FCIC and, therefore, suffi-

cient evidence to support his conviction.

A-14

IIl.

Welliver also argues that the district court erred in

allowing the jurors to question the witnesses at trial.

Welliver, however, failed to make a single objection dur-

ing the jury questioning. Accordingly, we review only for

plain error. United States v. Land, 877 F.2d 17, 19 (8th Cir.),

cert. denied, 493 U.S. 894 (1989).

Welliver makes lengthy policy arguments against

allowing the practice of jury questioning. His specific

complaints, however, involve the court’s refusal to allow

witnesses to answer two questions that Welliver claims

were favorable to his defense. The district court rejected

both of these questions on relevancy grounds. We must

therefore conclude that the district court did not plainly

err in allowing juror interrogation of witnesses.

Nevertheless, we state once again that we have

strong concerns about juror questioning of witnesses. In

this case, the potential for error was magnified as the

questions were propounded before other jury members.

In at least three cases, members of this court have voiced

strong objections to this practice. United States v. Gray,

897 F.2d 1428, 1429-30 n.1 (8th Cir. 1990) (Judges Bow-

man, Beam, and Henley); United States v. Johnson, 892 F.2d

707, 711-15 (8th Cir. 1989) (Judges Lay and McMillian

concurring and stating that juror questioning is “inher-

ently prejudicial and should not be condoned”); United

States v. Land, 877 F.2d at 19 (Judges Arnold, Bowman,

and Magill). These decisions in which seven, now eight,

of the judges of this court have joined make evident that

juror interrogation of witnesses presents substantial risk

of reversal and retrial. Where a record is properly made

A-15

and the record permits a conclusion that prejudice

occurred, this will be the inevitable result.

IV.

Finally, Welliver claims the district court erred in

failing to grant him a hearing on his motion to dismiss on

the ground of selective prosecution. A defendant has a

heavy burden in proving a selective prosecution claim,

United States v. Eklund, 733 F.2d 1287, 1290 (8th Cir. 1984),

cert. denied, 471 U.S. 1003 (1985), and must meet a two-

part test for a prima facie claim. Id. The defendant must

first show that the government has singled him out for

prosecution, while failing to prosecute others similarly

situated who engaged in similar conduct. Id. Second, he

must show that the government based its discriminatory

selection on an impermissible ground such as religion,

race, or exercising the right of free speech. Id.

A district court should grant a hearing on a defen-

dant’s selective prosecution claim if the defendant alleges

“sufficient facts to take the question past the frivolous

state,” United States v. Catlett, 584 F.2d 864, 866 (8th Cir.

1978), and raises a reasonable doubt about the prosecu-

tor’s purpose. Id. Without these showings, it is presumed

that the government prosecuted the case in good faith

and in a nondiscriminatory way pursuant to its duty to

bring offenders to justice. Eklund, 733 F.2d at 1291.

The district court determined that Welliver met the

first part of the prima facie test, but failed the second.

Specifically, Welliver’s claims that the government pros-

ecuted him because he criticized the FCIC were unsup-

ported by factual allegations sufficient to raise a

A-16

reasonable doubt as to the government’s motives. The

record demonstrates that the district court did not err in

so holding, and we affirm its denial of Welliver’s motion

to hold a hearing on this matter.

We affirm the district court’s judgment.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

takeing

A-17

DISTRICT COURT’S ORAL RULINGS

THE COURT: It is a very interesting subject

and I wish I had more time to work on it. But I have to do

the best I can with our limited amount of time.

Of course, we’re governed by the Fourth Amendment

and, which is to say that no unreasonable searches or

seizures will be made. And there’s a number of questions

arise under that constitutional amendment as to the (sic)

whether there was a seizure, whether there’s a search,

whether whatever was done was unreasonable if there

was a search or a seizure.

The only two cases that I’ve been able to find that

have similarity are United States versus Miller, M-i-l-l-e-r,

800 Federal 2nd 129, Seventh Circuit, 1986, and United

States versus Ziperstein, Z-i-p-e-r-s-t-e-i-n, 601 Federal

2nd 1281, 1979.

First, with respect to Mr. Naylor’s argument that you

can’t say Mr. Welliver gave a consent, I think consent is

not the issue. Question under constitutional analysis is

rather in this situation whether there was an expectation

of privacy. A reasonable expectation of privacy, which is

different from consent. And, related, but they’re different.

And, of course, consent would end the inquiry. But there

also is the issue of reasonable expectation of privacy.

I don’t think I can say there was consent in ihe sense

that Mr. Welliver knew that these documents, these par-

ticular exhibits were going to be sent to somebody. That

would be unrealistic.

A-18

On the other hand, | think it’s true that there was no

reasonable expectation of privacy in the information con-

tained in these documents. It was expected that the infor-

mation contained in these documents, or much of it,

would be sent to CHIAA. CHIAA would send it back and

then at least a recap of it would be sent to FCIC.

The fact that not all the information would likely go

any place doesn’t retain for the whole the expectation of

privacy. As far as I can tell it’s probably true that the only

information on the documents that would not be revealed

to some outside person or company or agency was the

fact that this really was 1986 information rather than

1987. That’s true, I think. Not expected to go any place.

But the rest of it was expected to go some place, whether

in detailed form or in summary form. | think that ruins

the claim of a reasonable expectation of privacy.

The presence of the reinsurance agreement is not

irrelevant. [sic] Doesn’t amount to or need not amount to

a consent. But I don’t think it’s irrelevant either. | think

you, again, it has to do with whether there was a reason-

able expectation that these documents, information in the

documents would be kept private. And it militates in the

direction of nonprivacy.

If there was no reasonable expectation of privacy

then it doesn’t matter whether Miss Tuma was an agent

of the government or whether she was her own private

person and an employee of Mr. Welliver’s company only.

I don’t think she was an agent of the government.

I think it’s true that she was, she was impelled by

two separate considerations, connected but separate, in

A-19

that either could operate independently, but they both

operated at once in her instance.

One was that she expected that something was afoul

and thought it was the right thing to do to turn the

records over to an investigator. And second, that she

thought that she might be accused or suspected or

charged with some impropriety herself and that this

would be for her own good interest to turn these things

over and help her side.

And I think both those interests impelled her. I don’t

know which one was predominant. I think they worked

together.

Does that make her an agent of the government? |

don’t think so. I don’t think someone who cooperates

with the government in the sense of turning over infor-

mation thereby becomes an agent of the government.

It’s true that she did not turn over the information on

her own. I mean without any participation in that deci-

sion by the government agent. Indeed, she received some

encouragement from him. He requested that she return,

turn this information over to him. And she did so accord-

ingly. But I don’t think that makes her an agent of the

government.

The result of that, as I see it, is that there was no

seizure or search by the government. I think I shall stop

there.

It seems to me I don’t need to make any further

findings or declarations. Wonderfully interesting ques-

tion. But I shall, I’m comfortable with the decision and |

shall stand by it. The motion to suppress is denied.

A-20

Oh, I might, so that you don’t think I overlooked it,

Exhibit 77 may be different. And that’s true, it may be

different. I mean by that there was less expectation of

dissemination of it. Let me think about that a moment.

Mr. Welliver’s testimony was that he thought that

kind of information, not that very document, would be

transmitted to CHIAA. I think the document itself was

kept, as Mr. Naylor pointed out, for internal use. That’s

what actually happened to it. And it was particularly for

Ms. Tuma’s use.

There is in one of these cases cited a discussion of the

matter of telling an employee not to turn over, not to take

out, or I think in that instance it was just the opposite, do

take out these documents so that the authorities don’t get

them.

And the Seventh Circuit said that won’t fly as an

exception to the idea that the employer can limit the

authority of the employee to turn over records. And

under that kind of a declaration by the employer, the

employee, employee’s turning over the records was per-

fectly justifiable.

Which I suppose has to do with if the reason you are

seeking nondissemination is that you want this to be a

covering of impropriety then you’re going to be unsuc-

cessful in your Fourth Amendment argument. And this

may be said to be akin to that.

Exhibit 77 is a tougher one all right. But | think I shall

stand by my ruling that the documents are admissible.

And the motion is denied.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.