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Rod Smith

Courts: FBI Can't Force Casinos to Reveal Records

30 September 2004

LAS VEGAS – A federal judge Wednesday tossed out provisions of the Patriot Act that the FBI used to force casinos and airlines to turn over customer records for thousands of Las Vegas visitors in December.

In a hard-hitting, 120-page ruling, U.S. District Judge Victor Marreo for the Southern District of New York struck down as unconstitutional sections of the anti-terrorist Patriot Act that allow the FBI to compel companies to turn over customer records without court approval. The ruling also overturns provisions that prohibit companies from disclosing that federal officials requested information under the federal act.

The American Civil Liberties Union challenged the law in federal court in April, especially the provisions giving the FBI the power to demand confidential records from companies, including casinos, as part of its terrorism investigations. The challenge came in a "John Doe" case filed on behalf of an unidentified Internet company from which the FBI sought customer information.

However, the only companies that were ever publicly identified as having surrendered confidential customer information under the Patriot Act are the local casino operators, airlines and other companies in Las Vegas named by the Review-Journal last winter.

Executives from most Las Vegas casino companies were called to a December meeting by FBI and local law enforcement authorities where they were told to turn over customer records for an indefinite period of time.

Civil liberties advocates hailed Wednesday's decision as a "landmark" victory for companies interested in protecting customer privacy.

Gary Peck, executive director of the American Civil Liberties Union in Nevada, said the decision goes precisely to the First and Fourth amendment issues raised when hotels and other businesses in Las Vegas were forced to turn over customer records.

Las Vegas hotel operators and airlines serving McCarran International Airport were required by the FBI to turn over all guest and passenger names and personal information during last year's winter holiday period.

Peck said the Las Vegas investigation, which rounded up records on about 350,000 holiday visitors, represented the deepest and broadest instance of FBI database mining ever reported to the ACLU.

"And we have no idea how deeply the government went into the financial records of those individuals, because the investigation was conducted under the cloak of secrecy," Peck said.

Hotel-casino operators said the information provided to federal officials included guest and passenger names, addresses and personal identification information, but not casino records or guest gambling information.

Hotel operators said similar information was demanded by federal authorities for about six months following the Sept. 11, 2001, terrorist attacks on the World Trade Center towers in New York City and the Pentagon outside Washington, D.C.

Jameel Jaffer, lead ACLU attorney in the New York case, said Wednesday's decision should encourage casino operators and other companies served with FBI demands for customer information to question the agency and challenge similar demands they believe may be unconstitutional or invade the privacy rights of customers.

Jaffer said the ACLU has obtained a six-page list from the Justice Department under the Freedom of Information Act identifying all companies the FBI compelled to produce customer information, all of which has been blacked out. He said the broad search authority has been used in dozens, and possibly hundreds, of cases.

Robert Stewart, spokesman for Caesars Entertainment, one of the gaming companies that turned over customer information, said his company has worked hard to find the right balance between protecting the privacy of customers and cooperating with federal authorities dealing with threats to national security.

"These are not easy calls. In light of today's court decision, our legal department will take another look at our policy," he said.

Rob Stillwell, spokesman for Boyd Gaming Corp., agreed federal demands for customer information involves a delicate balancing act.

"The more discretion we have with regard to our customers' privacy, the better for us. Obviously, with this ruling just coming out today, our legal department over the next few days will be reviewing our policies," he said.

MGM Mirage spokesman Alan Feldman, however, said before his company reviews its privacy policies, the government will have to first be given a chance to appeal or amend the Patriot Act.

"As for us or anyone else, we comply with the law. If the law changes, we will change accordingly," he said.

Other companies, which asked not to be named because of concerns about possible retaliation from enforcement authorities, agreed demands for customer information raise difficult issues and said their policies are under review.

When the casino executives were ordered to turn over the customer records last winter, many balked at the demand and requested the FBI first obtain national security letters compelling the release of the information. When they were presented with the letters, all the casino companies complied with the FBI demands but said they felt coerced to do so.

The judge ruled that such national security letters, which under the authority of the Intelligence Authorization Act passed in December made court-approved subpoenas for the information unnecessary, are coercive and deter court challenges to the propriety of demands for national security information.

Marreo ruled that the availability of judicial review is essential to protecting the constitutional rights of companies such as casino operators, and that the permanent ban on releasing information on the companies involved represents unconstitutional prior restraint of free speech.

Jaffer said the ACLU lawsuit filed in New York was a broad challenge to the constitutionality of the Patriot Act.

While Marreo called national security of "paramount value" in his decision, he said personal security is "especially prized in our system of justice," and must be given equal weight.

The judge said the Patriot Act violates the Fourth Amendment because it bars or deters any judicial challenge to the government searches, and violates the First Amendment because its permanent ban on disclosure is a prior restraint on speech.

He noted that the Supreme Court recently said that a "state of war is not a blank check for the president when it comes to the rights of the nation's citizens."

In a footnote to his ruling, Marreo cited words he wrote two years ago in another case to warn that courts must apply "particular vigilance to safeguard against excess committed in the name of expediency."

"The Sept. 11 cases will challenge the judiciary to do Sept. 11 justice, to rise to the moment with wisdom equal to the task, its judgments worthy of the large dimensions that define the best Sept. 11 brought out of the rest of American society."

Marreo's ruling blocks the government from issuing any new requests or enforcing the non-disclosure provision "in this or any other case," pending the 90-day stay and any possible government appeals.

Megan L. Gaffney, a spokeswoman for the federal prosecutor's office in Manhattan, said the government was reviewing the decision and had no immediate comment.

The ACLU's Peck said he was confident the government would lose any appeal of the ruling.