Bankruptcy court says it will monitor U.S. Trustee in Countrywide case to insure Fourth Amendment not violated by subpoenas

In the Countrywide Home Loans bankruptcy case, the debtor challenged the trustee’s powers to broadly use subpoenas, invoking the Fourth Amendment. The court held that it was be watchful for potential abuse, but none apparently had occurred yet. In re Countrywide Home Loans, 384 B.R. 373 n. 18, 49 Bankr. Ct. Dec. 215 (W.D. Pa. Bankr. 2008):

The Fourth Amendment protection against unreasonable searches and seizures applies to commercial buildings and corporations as well as to individuals. See Marshall v. Barlow’s, Inc., 436 U.S. 307 (1978). Thus, cause and concern for possible abuse if the UST were given completely free rein to proceed under Rule 2004 is justified. Courts have recognized in similar contexts, that the mere possibility of abuse cannot be used to thwart legitimate government inquiry. For instance, in United States v. Bisceglia, 420 U.S. 141 (1975) the Court found that the Internal Revenue Service had the statutory authority to issue a “John Doe” summons to a bank to discover the identity of a person engaged in bank transactions suggesting the possibility of liability for unpaid taxes. In so holding, the Court recognized that “investigations” pursued by the IRS do involve some invasion of privacy and “may be abused, as all power is subject to abuse.” However, the Court held that the solution to that possibility was not to restrict the IRS’s authority. The Court noted:

Substantial protection is afforded by the provision that an Internal Revenue Service summons can be enforced only by the courts…. Once a summons is challenged it must be scrutinized by a court to determine whether it seeks information relevant to a legitimate investigative purpose and is not meant ‘to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any further purpose reflecting on the good faith of the particular investigation.’…The cases show that the federal courts have taken seriously their obligation to apply this standard to fit particular situations, either by refusing enforcement or narrowing the scope of the summons.

420 U.S. at 146 (citations omitted). This Court is adopting the same approach with respect to Rule 2004 examinations by the UST. If the UST’s effort in that regard is challenged, as it has been here, the Court will scrutinize the effort to ensure that the UST is acting with a legitimate purpose and not abusing her power.

Offensive collateral estoppel could not be invoked by plaintiff because the underlying state case had (1) no determination of probable cause because the case was dismissed on other grounds and (2) no mutuality. White v. Pelland, 2008 U.S. Dist. LEXIS 30219 (E.D. Mich. April 14, 2008).*

Parolee’s 1983 action was dismissed against parole officials for searches of his house. After he refused a drug test they got one from him at home and used a drug dog to go through the house. Handcuffing him while inside was also permissible. Bratton v. New York State Div. of Parole, 2008 U.S. Dist. LEXIS 30250 (N.D. N.Y. April 14, 2008).*

There was valid third party consent by defendant’s wife to search the premises, and the subjective intent of the officers for the search was irrelevant since it was objectively reasonable. United States v. Wattree, 544 F. Supp. 2d 1262 (D. Kan. 2008).*

Reasonable suspicion justified defendant’s detention after his traffic stop, and the use of a flashlight to see a handgun in the car was reasonable. United States v. Lopez, 2008 U.S. Dist. LEXIS 29964 (S.D. Cal. April 8, 2008).*