The Supreme Court of the United States: Law Enforcement Must Afford Hotel Owners Precompliance Review before Performing a Warrantless Search Pursuant to a Municipal Code

Jul 07, 2015   

July 7th, 2015

The provision of the Los Angeles Municipal Code (“LAMC”) that requires hotel owners to provide guest registries to law enforcement on demand is facially unconstitutional due to its failure to provide hotel owners precompliance review of law enforcement demands. On June 22, 2015, in a 5-4 vote, the Supreme Court of the United States issued its opinion in City of Los Angeles v. Patel, holding that Los Angeles Municipal Code § 41.49(3)(a)  is unconstitutional because “a hotel owner must be afforded an opportunity to have a neutral decision maker [sic] review an officer’s demand to search the registry before he or she faces penalties for failing to comply.” See Patel at 11.

1.Background

This case confronts the constitutionality of a provision in LAMC that allows law enforcement to search hotel owners’ records without a warrant. Pursuant to the LAMC, hotel owners are required to record information about their guests for a period of 90 days after their guests check out. Section 41.49(3)(a) states that the guest records “shall be made available to any officer of the Los Angeles Police Department for inspection,” provided that “[w]henever possible, the inspection shall be conducted at a time and in a manner that minimizes any interference with the operation of the business.” Under § 11.00(m), a general provision applicable to the entire LAMC, a hotel owner’s failure to provide his or her guest records to law enforcement is a misdemeanor punishable by up to six months in jail and a $1,000 fine.

In Patel, a group of motel operators and a lodging association (collectively “Hotel Owners”) sued the City of Los Angeles (collectively “the City”) in three connected cases claiming that § 41.49(3)(a)  was facially unconstitutional under the Fourth Amendment of the United States Constitution. The District Court ruled in favor of Los Angeles, and found that Hotel Owners lacked standing because they did not have a reasonable expectation of privacy in the guest records subject to inspection. On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the District Court’s ruling on the same grounds. However, the case was reheard before the entire Ninth Circuit en banc, and the Court reversed the District Court finding § 41.49(3)(a)  was facially unconstitutional. The City of Los Angeles appealed and the Supreme Court of the United States decided to review the case.

2.The Facial Challenge of § 41.49(3)(a)  under the Fourth Amendment

The issues the Supreme Court addressed were “whether facial challenges to statutes can be brought under the Fourth Amendment and, if so, whether [Section § 41.49(3)(a) ] of the Los Angeles Municipal Code is facially invalid.” See Patel at 1. The City of Los Angeles argued under the Court’s standard for granting facial relief, the party seeking facial relief “must establish that no set of circumstances exists under which the [statute] would be valid.” Id. at 7. Thus, because there are instances where warrantless searches are constitutional, the Hotel Owners’ challenge should have failed as a matter of law. In rejecting this argument, the Supreme Court in Patel found that it has both entertained facial challenges under the Fourth Amendment and declared statutes facially invalid under the Fourth Amendment in numerous cases. The Supreme Court in Patel found that the City’s argument was flawed because the standard, endorsed by the City, would preclude relief in every Fourth Amendment facial challenge to a statute authorizing warrantless searches. Instead, the Supreme Court noted that in facial challenges regarding the Fourth Amendment, “the proper focus of the constitutional inquiry is searches that the law actually authorizes, not those for which it is irrelevant.” Id. at 8. In other words, while exceptions to the warrants requirement exist, those recognized exceptions cannot serve as the basis for rejecting a facial challenge. Rather, for a warrantless search statute to pass constitutional muster, the statute must be constitutional in its application, i.e. the search at issue must have been authorized by the statute in question, not an exception to the warrants requirement.

3.Section 41.49(3)(a) constitutes an “administrative search” and thus is unconstitutional under the Fourth Amendment because it fails to provide for the opportunity to obtain precompliance review before a neutral decisionmaker

When examining the merits of the Hotel Owners’ claim, the Supreme Court in Patel held that § 41.49(3)(a)  was facially unconstitutional because the statute would constitute an administrative search under the Fourth Amendment but fails to provide hotel owners with an opportunity for precompliance review before law enforcement restricts their Fourth Amendment rights. The Supreme Court began by explaining the Fourth Amendment of the United States Constitution protects “[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures” and “no Warrants shall issue, but upon probable cause.” The Supreme Court has repeatedly found that all warrantless searches are presumptively unreasonable, subject to a few expressly established exceptions. However, the Court noted that where the “primary purpose” of the search is distinguishable from the general interest in crime control, no warrant is required. Here, the Court assumed that the searches authorized by § 41.49 served a “special need” other than criminal investigations, to wit: ensuring compliance with the record keeping requirements. Thus, the Court concluded that the searches authorized by § 41.49 would fall within the “administrative search” exception to the warrants requirement.

In analyzing administrative searches, the Court noted that absent exigent circumstances or consent, for an administrative search to be constitutional, the search must be subject to precompliance review before law enforcement restricts a party’s Fourth Amendment rights by demanding records. The Court defined precompliance review as “an opportunity to have a neutral decisionmaker review an officer’s demand to search [a party’s] registry before he or she faces penalties for failing to comply.” See Patel at 11. Though the Court acknowledged that it has never prescribed exactly what type of precompliance review is sufficient to withstand constitutional muster, it found that the City did not even attempt to argue that § 41.49(3)(a)  granted the Hotel Owners any opportunity for review. Instead, the Court found that if hotel owners refuse to comply, law enforcement can arrest them on the spot. The Court thus determined that hotel owners cannot reasonably decide between relinquishing their records and arrest, and without review, law enforcement can also harass hotel owners by repeatedly and serially demanding the owners’ registries, and hotel owners would have no reasonable choice but to comply.

In finding § 41.49(3)(a) unconstitutional, the Court did provide guidance on what revisions would be needed to make the law constitutionally compliant. For instance, the Supreme Court in Patel found that if law enforcement obtained an administrative subpoena and then performed a search of a hotel’s records, Hotel Owners would be afforded precompliance review. A subpoena is issued by a neutral decision maker and allows a subpoenaed party to “question the reasonableness of the subpoena, before suffering any penalties for refusing to comply with it, by raising objections in an action in district court,” thus, providing for sufficient precompliance review. See Patel at 10.

4.Hotels are not considered a “highly regulated industry.” Thus, a more relaxed search standard does not apply.

In his dissent, Justice Scalia argued that the hotel industry is highly regulated and § 41.49(3)(a)  is facially valid under the relaxed standard that applies to searches of highly regulated industries. However, the majority in Patel pointed out that the Supreme Court has only identified four industries that “have such a history of government oversight that no reasonable expectation of privacy . . . could exist for a proprietor over the stock of such an enterprise[:]” liquor stores, firearms dealing, mining, and automobile junkyards. See Patel at 14. The Supreme Court in Patelfound that, unlike those businesses, hotels do not pose a “clear and significant risk to public welfare.” Id. Therefore, there is no relaxed standard that applies to the search of the hotel industry because, without a “clear and significant risk to public welfare,” the hotel industry should not be considered a highly regulated industry. Id.

Even if the Supreme Court found that hotels are highly regulated, according to the Supreme Court in Patel, § 41.49(3)(a)  would need to meet three additional criteria for the statute to be reasonable under the Fourth Amendment. (1) “[T]here must be a ‘substantial’ government interest that informs the regulatory scheme pursuant to which the inspection is made”; (2) “the warrantless inspections must be ‘necessary’ to further [the] regulatory scheme”; and (3) “the statute’s inspection program in terms of the certainty and regularity of its application, [must] provid[e] a constitutionally adequate substitute for a warrant.” Id. at 16. Here, the Supreme Court found that the second and third criteria were not met, and the statute was facially invalid under the Fourth Amendment.

The second criteria was not met because warrantless inspections of hotel registries are not absolutely necessary. For instance, if law enforcement intends to protect the contents of the registries, they can perform a surprise inspection by obtaining a warrant without giving notice to the hotel owner, and they can guard the registry pending a hearing if a hotel owner objects to a subpoena. Additionally, the third criteria was not met because the statute does not limit the inspection to any certainty and regularity requirements. Section 41.49(3)(a) does not sufficiently limit law enforcement discretion as to the location, time, frequency, or circumstances of the search. Therefore, regardless of the level of regulation of the hotel industry, § 41.49(3)(a)   is not facially valid because the warrantless search of hotel registries are not absolutely necessary and the statute does not constrain the search to any certainty and regularity requirements. The Supreme Court in Patel agreed with the Ninth Circuit that § 41.49(3)(a) is facially invalid because it fails to provide hotel owners an opportunity for precompliance review before the owner must relinquish their guest registry to law enforcement for inspection.

5.Impact on the Industry

With the Court’s decision in Patel, the LAMC and similarly worded governmental codes must be revised to provide for some measure of precompliance review prior to requiring the disclosure of records to law enforcement. Whether Los Angeles adopts the Supreme Court’s recommendation of using the administrative subpoena scheme to create a constitutionally compliant statute remains to be seen. Regardless of the precompliance review mechanism chosen, the requirement of precompliance review should provide hotel owners with a level of due process to combat what owners may feel are harassing, burdensome, and irrelevant searches of their business records.

The attorneys at Fuerst Ittleman David & Joseph have extensive experience in the areas of complex administrative litigation and white collar criminal defense at both the state and federal levels. Should you have any questions or need further assistance, please contact us by email at contact@fidjlaw.com or telephone at 305.350.5690.