CA9: OFAC seizure violated Fourth Amendment; special needs exception did not apply despite OFAC’s “vital mission”

OFAC violated due process and the Fourth Amendment in its seizure of an Islamic foundation’s assets under an Executive Order without a warrant claiming the special needs exception, held not to apply. Al Haramain Islamic Found. v. United States Dep’t of the Treasury, 686 F.3d 965 (9th Cir. 2012):

AHIF-Oregon argues that OFAC’s failure to obtain a warrant supported by probable cause violated its Fourth Amendment right to be free of unreasonable seizures. “In the ordinary case, the [Supreme] Court has viewed a seizure of personal property as per se unreasonable within the meaning of the Fourth Amendment unless it is accomplished pursuant to a judicial warrant issued upon probable cause and particularly describing the items to be seized.” United States v. Place, 462 U.S. 696, 701 (1983). In most circumstances, searches and seizures conducted without a warrant are “per se unreasonable under the Fourth Amendment—subject only to a few specifically established and well-delineated exceptions.” Katz v. United States, 389 U.S. 347, 357 (1967). Here, OFAC argues that its seizure falls within one of those well-delineated exceptions to the warrant requirement: the “special needs” exception.

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In any event, OFAC has not given us any reason why it could not have obtained a warrant here. We hold that the “special needs” exception does not apply to the seizure of AHIF-Oregon’s assets by OFAC under EO 13,224. See Kind-Hearts II, 647 F. Supp. 2d at 879-82 (holding that the “special needs” exception did not apply to very similar facts).

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Most of our reasoning above, concerning the special needs exception, applies equally here. The cases in which the Court has found warrantless searches to be reasonable all involve very special circumstances and greatly diminished privacy interests—a point repeatedly emphasized by the Court. For instance, in Flores-Montano, 541 U.S. at 154, the Court held that a person’s privacy interest in the interior of an automobile’s gas tank is not sufficient to overcome the government’s interest in preventing drug smuggling at the border. Similarly, in Samson and Knights, the Court explained at length that probationers and parolees, who are subject to a clearly disclosed search condition of parole or probation, have greatly diminished expectations of privacy such that warrantless searches survived Fourth Amendment scrutiny. Samson, 547 U.S. at 850-52; Knights, 534 U.S. at 119-21. Here, however, as we have explained, the reach of OFAC’s authority extends to all persons and entities, without limitation. Nothing diminishes the privacy expectation of persons and entities potentially subject to seizure by OFAC because that class includes everyone.

We reiterate that OFAC’s interest in preventing terrorism is extremely high. But we cannot accept OFAC’s contention that its blocking orders are per se reasonable in all circumstances, solely by virtue of that vital mission. As we noted above, an exception to the warrant requirement would permit OFAC to seize assets without obtaining a warrant in some situations. But, because there is no diminished expectation of privacy and because nothing prevents OFAC from obtaining a warrant in the normal course, we reject OFAC’s argument that its blocking orders are per se reasonable under the “general reasonableness” approach.

In summary, no exception applies to OFAC’s warrantless seizure of AHIF-Oregon’s assets and the seizure is not justified under a “general reasonableness” test. We therefore hold that OFAC violated AHIF-Oregon’s Fourth Amendment right to be free of unreasonable seizures. Because the district court did not reach the issue of remedy and because the parties did not brief that issue before us, we remand to the district court to determine, in the first instance, what remedy, if any, is available.