Opinion
Nos. 95-5862 / 95-6625.
Argued February 6, 1996.
Decided and Filed June 17, 1996. Pursuant to Sixth Circuit Rule 24.
Ames Davis (argued and briefed), Nancy S. Jones, Waller, Lansden, Dortch Davis, Nashville, TN, for plaintiff-appellee.
Richard M. Humes (briefed), Paul P. Andrews, James A Brigagliano (argued and briefed), S.E.C., Washington, DC, for defendants-appellants.
On Appeal from the United States District Court for the Middle District of Tennessee.
Before: MERRITT, Chief Judge; and CONTIE and BOGGS, Circuit Judges.
BOGGS, J., delivered the opinion of the court, in which CONTIE, J., joined. MERRITT, C. J., delivered a separate dissenting opinion.
The Securities and Exchange Commission ("Commission") asks us to vacate two preliminary injunctions granted to John Doe in an action for injunctive relief against the Commission pursuant to Title III of the Omnibus Crime Control and Safe Streets Act, 18 U.S.C. §(s) 2510 et seq. ("Wiretap Act"). The first preliminary injunction, issued on May 10, 1995, enjoins the Commission from using information derived from a tape recording made by a private party in alleged violation of the Wiretap Act. The second preliminary injunction, issued on November 15, 1995, forbids the Commission from continuing an enforcement action that it filed against Doe in the United States District Court for the Central District of California. We vacate both injunctions.
I.
Doe left the following message in a friend's voice mailbox:
I sold all my stock Friday, and I'm going to short the stock, because I know it's going to go down a couple of points here in the next week, as soon as [the CEO] releases the information about next year's earnings.
An employee of the company for which Doe and the friend work ("Interceptor") retrieved the message without permission. Interceptor recorded the message with a hand-held tape recorder. Later she approached a co-worker ("Source") and told Source that she had "some material that she had gotten by less than honorable means . . . ." Source Dep. at 8 n. 2. Source must have expressed some interest in the material, for the next day, Source found a manila envelope on his chair that contained a microcassette and this message: "[Source], I know you'll know what to do with this." Id. at 8.
Unfortunately for Doe, his friend had written the password to her voice mailbox next to her telephone extension.
The Commission has not supplied Doe, the district court, or this court with transcripts of the investigatory depositions during which it became aware of the tape recording. Without these transcripts it has been difficult to piece together exactly why and how the original recording was made by Interceptor, or why and how it eventually ended up in the hands of the Commission. What little information we have is from an affadavit by an attorney who works for the Commission, Nancy S. Jones. Jones read these depositions and testified from her handwritten notes, which included a few excerpts from the original testimony. The Commission's choice not to supply Doe, the district court, or us with more information about these important matters is somewhat disturbing. Equally disturbing is the fact that even this inadequate information only appears in the Commission's filings to this court concerning the second of its two appeals (challenge to the second preliminary injunction). At least until the final stages of preparation for the second appeal, the crucial information was not made available to Doe or the district court. See Defendant's Response to Plaintiff's First Interrogatories, Requests for Admission and Requests for Production of Documents at 1-2 (asserting that sovereign immunity allows Commission to avoid answering Doe's interrogatories as to how the Commission acquired the information). The Commission filed the second set of briefs on December 29, 1995, almost one year after Doe filed the present action and made his initial discovery request.
After listening to the tape, Source called the United States Attorney's Office for the Central District of California. Source spoke with Assistant United States Attorney Bart Williams in Los Angeles. In his investigatory deposition, Source described the content of his conversation as follows:
. . . I told him that I had some information in the form of a tape recording that would, on the surface, seem to indicate possible illegal activity, in terms of trading of securities in a company. I told him that I did not know for certain that the tape was authentic, or that what was on the tape had actually happened. I explained to him the circumstances of how I had come by the tape, and that it had been left on my chair in an envelope. I then played the tape for him. He asked me to replay the tape probably, approximately four times, although I don't recall exactly how many times. He asked me questions, interspersed with playing the tape, regarding who the people were [who were mentioned on the tape] . . . .
. . . .
I also asked him if he would like me to mail the tape to him. And at that time he said no, that he didn't want me to do that. He asked me to call him again in a few weeks. I have never spoken to him again. I did try to call him approximately twenty times.
Source Dep. at 47-50. Williams informed an FBI agent of Source's tip and the FBI agent informed the Pacific Regional Office of the Commission. Several months later, without the tape, the Commission issued a formal order of investigation against Doe. As part of this investigation, the Commission subpoenaed various persons and documents — including Source and the tape recording in question. See 15 U.S.C. § 78u(b) (Commission's authority to issue subpoena duces tecum).
When Doe learned that the Commission possessed the tape recording, he brought an action in the United States District Court for the Middle District of Tennessee under 18 U.S.C. Section(s) 2520 for equitable relief against a "person or entity" that uses or discloses a "wire communication" in a manner that violates 18 U.S.C. §(s) 2510 et seq. On Doe's motion for a preliminary injunction, the district court enjoined the Commission "from any use of the recording of the conversation in question or any information derived therefrom for any purpose." Memorandum Opinion, May 9, 1995, at 5. The court also stated:
According to the SEC, the tape is not the only evidence which may implicate the plaintiff's involvement in insider trading. Therefore, an injunction enjoining the use of the tape would not necessarily hinder the SEC's investigation of plaintiff[.]
Id. at 6.
The Commission filed an enforcement action against Doe in the United States District Court for the Central District of California, No. 95-6440. The Commission claims that it filed this action without using information derived from the recording. At the same time, however, the Commission intends to litigate in California the issue of whether it can use the tape. Memorandum Opinion, May 9, 1995, at 5 (citing Commission's pleadings).
After the Commission brought the enforcement action, Doe filed two motions in the district court in Tennessee. The first sought an expansion of the preliminary injunction to bar the Commission from proceeding in California. The second sought contempt sanctions against the Commission. The district court granted the first motion because litigation in California would "interfere with [the court's] ability to fully adjudicate the claims over which it . . . presides." Memorandum, November 15, 1995, at 4. The court stayed the contempt motion pending resolution of this appeal.
II.
The Commission first argues that it has sovereign immunity against an action for equitable relief under 18 U.S.C. §(s) 2520. The Commission cites cases such as FDIC v. Meyer, 510 U.S. 471, ___, 114 S.Ct. 996, 1000 (1994) ("Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit."), and Hancock v. Train, 426 U.S. 167, 179, 96 S.Ct. 2006, 2012-13, 48 L.Ed.2d 555 (1976) (Congress can waive sovereign immunity against actions for monetary relief from the federal fisc only by "clear and unambiguous" language). These cases, which explain when the federal government can be sued for money damages, are irrelevant to an action for injunctive relief because of the Administrative Procedure Act.
An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensable party. The United States may be named as a defendant in any such action, and a judgment or decree may be entered against the United States.
5 U.S.C. §(s) 702.
This important law, which the Commission relegates to the back of its brief, waives sovereign immunity in actions for equitable relief against a federal agency. There are two — and only two — exceptions. Both appear in Section(s) 701(a): if "(1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law." 5 U.S.C. §(s) 701(a). The Commission erroneously claims that both exceptions apply.
First, the Commission contends that Section(s) 2510 et seq. somehow re-establishes federal sovereign immunity. According to the APA, any such re-establishment must be clearly expressed in the text of a statute. 5 U.S.C. §(s) 559 ("Subsequent statute may not be held to supersede or modify . . . chapter 7 [judicial review] . . . except to the extent that it does so expressly"). The Commission cannot point to any express language. Instead, the Commission argues that the question of when sovereign immunity is re-established should be answered by applying the test for determining when Congress has precluded judicial review of an agency's adjudicative decision, described in United States v. Fausto, 484 U.S. 440, 108 S.Ct. 668, 98 L.Ed.2d 830 (1988) (the presumption favoring judicial review can be overcome by inferences of intent drawn from the statutory scheme).
There is some appeal to the Commission's reliance on this doctrine, as both Fausto and the Commission's argument rest on interpretations of 559. A closer look, however, shows that Fausto and cases that apply it have little in common with this case. Fausto and similar cases concern federal court review of agency adjudicative proceedings, usually in areas where administrative law judges working for the agency had been given broad authority to provide the litigants full relief. Owens v. Brock, 860 F.2d 1363, 1367-69 (6th Cir. 1988) (the intent of Congress, evident in the statutory scheme, was to bar judicial review of ALJ's fee award). The furthest stretch of the Fausto rule is actually Fausto itself. Fausto held that the Civil Service Reform Act of 1978 (CSRA) precluded review of the Fish and Wildlife Service's suspension of an employee, even though the CSRA also barred the employee from bringing a wrongful termination claim before an administrative law judge. The Court held that the civil servant had recourse only to the Department of the Interior's internal grievance system, which, although providing a formal opportunity to be heard and to respond in writing to specific claims by the Secretary of the Interior, did not give the employee the right to an adversarial hearing. Fausto, 484 U.S. at 454-55, 108 S.Ct. at 677.
In contrast to the defendant in Fausto, Doe does not claim that an agency violated its congressionally delegated duty to adjudicate his claim fairly. Doe claims that an agency violated a substantive provision of a separate federal law. There is no authority for the proposition that Congress intended the Commission to adjudicate whether or not its officers violated the Wiretap Act. In its investigative and prosecutorial capacity, the Commission does not even "adjudicate" in any formal manner, as did the agencies in Fausto and in Owen. The Commission contains no National Government Surveillance Activities Board, for example, nor any other congressionally authorized procedure for dealing with such issues. Since injunctive relief would not constitute an unauthorized appeal of agency adjudicatory proceedings, Fausto is inapposite, and we will not create an exception to the APA's broad waiver of immunity.
Furthermore, even the Fausto test would provide no comfort for the Commission, because there is no evidence in the statutory scheme that the Commission intended to re-establish immunity. On the contrary, the Wiretap Act provides for relief against "any person or entity," and the legislative history of the Act states that "entity" "includ[es] governmental entities." S. Rep. No. 541, 99th Cong., 2d Sess. 43 (1986), reprinted in 1986 U.S.C.C.A.N. 3555, 3597. See also Organizacion JD LTDA v. Department of Justice, 18 F.3d 91, 93 (2d Cir. 1993) (federal agency can be sued by provider of communication system under 18 U.S.C. §(s) 2707 for wrongfully accessing a stored communication). In response, the Commission offers only irrelevant case law concerning actions for money damages. E.g., Asmar v. United States, 680 F. Supp. 248, 250 (E.D.Mich. 1987) (inclusion of "entity" in Wiretap Act does not constitute sufficiently clear waiver of sovereign immunity to allow an action for money damages).
We have applied Fausto in Owens, supra, 860 F.2d at 1267-69, to bar judicial review of EAJA fee awards in FECA proceedings without leave of the administrative law judge. In that case, evidence of congressional intent appeared in the text of the relevant statutes themselves. The FECA statute precluded review of the merits of the FECA action. 5 U.S.C. §(s) 8128(b). The EAJA statute stated that a party "may petition for leave to appeal" a fee award decision. 5 U.S.C. § 504(c)(2). Both of these provisions strongly suggest that review of fee awards without permission from the ALJ is inappropriate. Furthermore, the legislative history stated: "Review was made discretionary in order to prevent the inundation of the federal courts by routine appeals from fee determinations in agency adjudications. For similar reasons, the denial of a petition for leave to appeal is not reviewable." H.R. Rep. No. 1418, 96th Cong. 2d Sess. 16, reprinted in 1980 U.S.C.C.A.N. 4984, 4995.
The second exception to the APA's waiver of sovereign immunity applies when a matter has been committed to agency discretion by law. The Commission argues that this exception governs Wiretap Act challenges to Commission investigations because "Congress has granted the Commission broad authority to conduct investigations `in its discretion.'" The Commission's position is extreme. Congress may have given the Commission the discretion to decide whether or not to investigate someone, but Congress certainly did not give the Commission the discretion to decide whether to violate federal law. Since Heckler v. Cheney, 470 U.S. 821, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985), it has been clear that judicial review is precluded by the exception for matters committed to agency "discretion" only when "a court would have no meaningful standard against which to judge the agency's exercise of discretion." Id. at 830, 1654. Obviously, we have such a standard against which to judge the Commission's use of the tape recording: the Wiretap Act.
III.
18 U.S.C. §(s) 2511(c) and (d) makes it illegal for a person to use or disclose the contents of any protected communication if that person knew or had reason to know that the information was obtained in violation of the Wiretap Act. The Commission argues that, despite the general language and broad scope of this prohibition, Doe has no chance to succeed on the merits of his case, and the district court erred in issuing both of the preliminary injunctions. The Commission was not prepared at oral argument to contend that the use of a hand-held tape recorder to obtain the contents of a voice mail message is not an illegal "interception" of a "wire communication" under the Act. Instead, the Commission argues that a federal agency can use and disclose the contents of an illegal wiretap provided to it by a private individual, as long as the agency did not encourage or participate in the wiretapping itself. We agree.
A district court's discretion to grant a preliminary injunction is guided by four factors, none of which is definitive: (1) plaintiff's likelihood of success on the merits, (2) whether the plaintiffs could suffer irreparable harm without the injunction, (3) whether granting the injunction will cause substantial harm to others, and (4) the impact of the injunction on the public interest. when a district court contemplates these factors, we review its conclusions of law de novo, and its findings of fact for clear error. Performance Unlimited v. Questar Publishers, Inc., 52 F.3d 1373, 1381 (6th Cir. 1995). If the district court made no material mistake in determining the applicable factors, we then review the court's weighing of these factors for an abuse of discretion. CSX Transp. v. Tennessee Bd. of Equalization, 964 F.2d 548, 554 (6th Cir. 1992).
The Commission asks that we remand for consideration of whether the making of the recording was an interception if we decide against the Commission on the other issues now before us.
In United States v. Murdock, 63 F.3d 1391 (6th Cir. 1995), Murdock's wife made an illegal recording of his telephone calls for use during a divorce proceeding. Some of the conversations contained evidence that Murdock, then President of the Detroit School Board, had accepted a bribe in exchange for his award of a milk contract to a local dairy. Murdock's wife mailed a recording of the conversation to a dairy whose bid for the milk contract had been rejected. The dairy sent the recording to a newspaper. Federal agents read the newspaper, obtained a recording of the conversation, and prosecuted Murdock for tax evasion. The district court allowed the federal government to offer the recording as evidence at Murdock's trial on the theory that, since the government did not encourage or participate in the illegal interception, the government had "clean hands." Id. at 1401. We affirmed, holding that the government could introduce as evidence in a criminal proceeding tape recordings of a telephone conversation made by a private individual, even though the making of those recordings violated the Act.
[T]he government here got a `lucky break.' It was in no way involved in Mrs. Murdock's tape recording activities and the defendant makes no claim that Mrs. Murdock was an agent of the government. Suppression of the evidence would have no deterrent effect.
Id. at 1402.
Murdock did not address whether the government, which is allowed to offer the contents of an illegal interception into evidence in a criminal proceeding if it has "clean hands," is nevertheless forbidden from using such information during a preliminary investigation. The issue is easy to resolve, however. Use during a preliminary investigation, assuming no inappropriate disclosure on the part of the authorities (forbidden by the Act), is less public, intrusive, and damaging than admission at trial. In the vast majority of such cases, the preliminary information will prove worthless. In others, it will lead to stronger evidence, and the government will use this stronger evidence at trial. In still other circumstances, the information itself will be the best evidence available, and the government will use the contents of the illegal interception at trial. Murdock allows the third type of use; and that type of use is clearly not less intrusive than the other two. See Forsyth v. Barr, 19 F.3d 1527, 1541-45 (5th Cir. 1994) (category of illegally intercepted evidence that is admissible at trial is narrower than category of illegally intercepted evidence that can be used in an investigation). We therefore are bound by our decision in Murdock.
We note in passing, however, that Murdock is supported by both the text and legislative history of the Wiretap Act, analyzed in Forsyth, 19 F.3d at 1541-45, and Fourth Amendment doctrine generally. Fourth Amendment law does not let the federal government avoid the restriction on the admission of the fruits of an illegal search by asking a private individual to search on the government's behalf. E.g. United States v. Mekjian, 505 F.2d 1320, 1328 (5th Cir. 1975). However, if a private individual conducts what would be an illegal search without government participation, and subsequently gives the government the fruits of the search, the fruits are admissible. United States v. Koenig, 856 F.2d 843, 851 (7th Cir. 1988). There are problems, of course, with using the Fourth Amendment, which deters only law enforcement officers and only searches and seizures, to help interpret a statute that deters everyone from searches and seizures and use and disclosure. Nevertheless, "2515 was not intended `generally to press the scope of the suppression role beyond present search and seizure law.'" Murdock, 63 F.3d at 1402 (citing S. Rep. No. 1097, 90th Cong., 2d Sess. 96 (1968), reprinted in 1968 U.S.C.C.A.N. 2112, 2185). Not to apply Murdock now would result in just such an expansion of the scope of the right to suppress "clean hands" evidence.
Some other courts have disagreed with Murdock's application of the "clean hands" defense to the suppression of evidence in a criminal proceeding, e.g., United States v. Vest, 813 F.2d 477, 480-82 (1st Cir. 1987), but no circuit court has held that the government is forbidden from using "clean hands" information from an illegal interception in other ways. The government can use such information to impeach the testimony of a defendant at trial. United States v. Echavarria-Olarte, 904 F.2d 1391 (9th Cir. 1990); Forsyth v. Barr, 19 F.3d 1527, 1541 (5th Cir. 1994); Vest, 813 F.2d at 483-84; Anthony v. United States, 667 F.2d 870 (10th Cir. 1981), cert. denied, 457 U.S. 1133, 102 S.Ct. 2959, 73 L.Ed.2d 1350 (1982). The government can also use such information to catch the person who made the illegal recording in the first place. United States v. Underhill, 813 F.2d 105, 112 (6th Cir. 1987) (tape illegally made by defendant admissible against him and co-conspirator); S. Rep. No. 1097, 90th Cong., 2d Sess., reprinted in 1968 U.S.C.C.A.N. 2112, 2188 ("use and disclosure would be necessary in the investigation and prosecution of an illegal wiretapper himself"). Finally, the Fifth Circuit has addressed the precise issue before us. It held that Section(s) 2517(1) and (2) of the Act give government officials a "clean hands" defense to a civil action alleging use and disclosure of illegally intercepted information during a preliminary investigation. Forsyth, 19 F.3d at 1543-45.
Doe's case is distinguishable from Murdock in one respect. In Murdock, the contents of the recording had already been published in a newspaper. In this case, Interceptor had passed the recording only to Source. The Commission's subpoena, therefore, added a marginally greater amount of disclosure than did the government's subpoena in Murdock. The difference in marginal disclosure is important because, by forbidding "use and disclosure" as well as "interception," the Act implies that an invasion of privacy is not over when the interception occurs, but increases in seriousness when the contents of the interception are disclosed to others. Vest, 813 F.2d at 481.
The difference in the marginal scope of disclosure may be important to the victim of the illegal interception. It cannot, however, serve as a basis to hold the government liable for a private citizen's violation of the Act. Regardless of the number of people who knew of the recording's contents, Source's handing over of the recording to the government was a voluntary act — as voluntary as the classic example of anonymously mailing a recording to the police. We do not find it important that the government initially declined the information, and later obtained it by the force of an administrative subpoena. Nothing in the record indicates that Source, who testified to calling his contact at the United States Attorney's Office twenty times unsuccessfully, was unwilling to disclose the information to the government, or that, absent a subpoena, such disclosure would not have occurred.
We note that the situation might be different if Source had been unwilling to disclose the information to the government, but had done so simply because of the government's subpoena. In such a situation, it would be difficult to say that "evidence literally [fell] into [the government's] hands." Murdock, 63 F.3d at 1403. Especially troublesome would be the situation when the interceptor has not disclosed the contents of the information to anyone — but is forced to surrender the information to the government under the threat of contempt sanctions. Obviously, this issue is not before us and we do not resolve it now.
The Act sets two limits on the government's use of such information. First, the government may only use the information in a manner "appropriate to the proper performance of its duties." 18 U.S.C. §(s) 2517(1) and (2). Disclosure of the contents of the communication must be no broader than absolutely necessary to serve legitimate investigative or prosecutorial interests. Disclosure becomes a violation of the Wiretap Act whenever such legitimate purposes expire. See generally United States v. Daniel, 667 F.2d 783, 784 (9th Cir. 1982) (proper performance of duties requirement "designed to protect the public from unnecessarily widespread dissemination . . . and wholesale use of such information . . . by an officer . . . for personal or illegal purposes" (citation omitted)). In the case before us, Doe has not claimed that the Commission handled the information in an improper manner. Given the sensitive nature of this information, however, Doe would be justified in seeking relief against the Commission should improper use or disclosure of the tapes occur.
Second, use by the government of illegally intercepted information is a violation of the Wiretapping Act, and warrants civil relief, if the government helped or encouraged the illegal interception. In the case before us, Doe does not allege that the Commission encouraged the initial intercept.
Applying Murdock, we hold that Doe has no chance of success on the merits of his action, at least on the facts as they now appear in the record. He does not allege that the government participated in the illegal interception, or that it used protected information in an inappropriate manner under 18 U.S.C. Section(s) 2517(1) or (2).
The Commission also argues that the district court erred by awarding a preliminary injunction when Doe had a legitimate alternative remedy: a suppression hearing. Given our discussion of the "clean hands" defense, we do not think resolution of this issue is necessary.
IV.
The Commission also challenges the subject matter jurisdiction of the district court to issue the November 15 order enjoining the Commission from prosecuting the enforcement action in California. A federal court clearly has the authority under its contempt power to enjoin disobedience to a preliminary order. But the district court in this case did not find the Commission in contempt for using the tapes in the California action. In fact, the court stayed the motion for contempt. The court enjoined prosecution of the California action simply because the Commission announced its intention to raise in the California court issues that the court below was already in the process of deciding. The court held:
This Court was first to assert jurisdiction over this matter when it issued a preliminary injunction enjoining the SEC's use of the tape. The Court has before it Plaintiff's pending motion for summary judgment [on the Wiretap Act civil suit] wherein they argue that the SEC's entire investigation was derived from the tape. Also pending in the Sixth Circuit is Defendant's appeal of the Court's preliminary injunction order. If the present enforcement action is allowed to proceed in California, faced with essentially the same issues that are presently pending in this Court, it will interfere with this Court's ability to fully adjudicate the claims over which it currently presides. Principles of comity and judicial economy favor an injunction against the SEC's further prosecution of the California action.
Order, ___ at ___.
The Commission admits that a federal court has the authority to issue an order protecting its own jurisdiction, once that jurisdiction has been properly exercised. Commission Brief (No. 95-6625) at 13 (citing Fernandez-Roque v. Smith, 671 F.2d 426, 431 (11th Cir. 1982) ("A district court possesses inherent powers of equity sufficient to enable it to preserve the status quo until the question of its jurisdiction can be resolved.") (citing United States v. Mine Workers of America, 330 U.S. 258, 67 S.Ct. 677, 91 L.Ed. 884 (1947))). This authority includes the power to enjoin the prosecution of a second action raising the same issues in another federal district court, Kerotest Manufacturing Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 72 S.Ct. 219, 96 L.Ed. 200 (1952) (where alleged patent infringer seeks declaratory relief against patentee, and patentee brings suit against infringer in another district, court hearing original action can enjoin second action until it resolves the issues before it), although the Commission does not admit as much. See also American Horse Protection Ass'n v. Lyng, 690 F. Supp. 40 (D.D.C. 1988) (federal district court can enjoin party to an action challenging agency rules from bringing second action in another district court challenging related rules).
The Commission is partly correct, however, to assert that the district court exceeded this special subject matter jurisdiction. The district court's subject matter jurisdiction to enter such an order is found in the Wiretap Act at 18 U.S.C. §(s) 2520(b)(1) (authority to award "preliminary and other equitable or declaratory relief as may be appropriate"), and in the All Writs Act at 28 U.S.C. §(s) 1651(a) (authority to "issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law."). In either event, subject matter jurisdiction is limited to "appropriate" circumstances. We believe that these circumstances arise only when the prosecution of the second action threatens the first court's ability to resolve the specific issues before it. When a party seeks to raise other issues in another forum, no injunction is normally necessary to protect the ability of the first court to do its business.
For these reasons, the court had jurisdiction at most to enjoin the Commission from raising in the California court the issue of the Commission's use of the recording. If the court found that prosecution of any part of the California action would harm the court's ability to decide Doe's case, it could enjoin the entire action. In addition, the court could enjoin the California action if it determined that prosecution of the action constituted contempt of its first preliminary injunction. Without either of these determinations, however, subject matter jurisdiction to enjoin the litigation of other issues in another federal court does not exist. Before we even review the merits of the second order, therefore, it must be vacated in regard to all matters other than whether the government can use the tape recordings.
As to the part of the order that the court had subject matter jurisdiction to issue — forbidding litigation concerning use of the recordings — the simple existence of subject matter jurisdiction does not render the order proper. An injunction prohibiting a party's right to proceed before another federal court is not a matter to be taken lightly. Ours is not a system where the proper venue for complex cases is determined by asking which federal judge first planted his flag in the fertile field of a particular litigation. As with any preliminary injunction, a court must balance the harm avoided, the harm caused, and the public interest in efficient resolution of disputes. CSX Transp. v. Tennessee Bd. of Equalization, 964 F.2d 548, 554 (6th Cir. 1992). We do not need to analyze the district court's balancing of these factors in this case, however. The second injunction, like the first, rests on the erroneous conclusion that Doe is likely to succeed on the merits of his case. We will vacate it on this ground.
V.
The Commission is certainly not entitled to sovereign immunity against a claim for injunctive relief under the Act. However, since Doe does not allege that the Commission encouraged the illegal interception, or that it used the protected information in an inappropriate manner under 18 U.S.C. §(s) 2517(1) or (2), his action is barred by the "clean hands" defense in Murdock. We therefore VACATE the district court's two preliminary injunctions and REMAND the case for further proceedings in light of this opinion.
The statute which resolves the question before us could not be more clear and conclusive:
Whenever any wire or oral communication has been intercepted, no part of the contents of such communication and no evidence derived therefrom may be received in evidence in any trial, hearing, or other proceeding in or before any court, grand jury, department, officer, agency, regulatory body, legislative committee, or other authority of the United States, a State, or a political subdivision thereof if the disclosure of that information would be in violation of this chapter.
18 U.S.C. §(s) 2515 (emphasis added). The statute does not merely prohibit illegal interceptions. It forbids the act of "any person who . . . intentionally uses, or endeavors to use, the contents of any wire . . . communication, knowing or having reason to know that the information was obtained through the interception of a wire . . . communication in violation of this subsection . . . ." 18 U.S.C. §(s) 2511 (emphasis added). The SEC does not argue that the contents of the voice mail message were acquired pursuant to any of the provisions of the statute which allow law enforcement legally to wiretap. The wiretap was wholly illegal, and the statute provides for equitable relief against persons or entities who have violated the statute, including "any employee, or agent of the United States." 18 U.S.C. §(s) 2520, 2510(6).
The SEC asks the Court to allow it to violate the statute because in United States v. Murdock, 63 F.3d 1391 (6th Cir. 1995), we allowed the government to use illegal evidence in a criminal case. The Court should recognize that Murdock was wrongly decided and should not extend it. In Murdock, the Court allowed the defendant to be convicted of tax evasion entirely on the basis of illegal wiretap evidence obtained from a private individual. In doing so, the Murdock court misinterpreted the legislative history of the statute and relied on an inapposite case. For these reasons, this Court should point out the serious error in the Murdock opinion and should refuse to extend the reasoning of Murdock to the case at bar.
The Court's assertion that Murdock is supported by the legislative history of the wiretap act is inaccurate. The legislative history of 2515 says that this section, applies to suppress evidence directly (Nardone v. United States, 58 S.Ct. 275, 302 U.S. 379 (1937)) or indirectly obtained in violation of this chapter. . . . The provision thus forms an integral part of the system of limitations designed to protect privacy. Along with the criminal and civil remedies, it should serve to guarantee that the standards of the new chapter will sharply curtail the unlawful interception of wire and oral communications.
S. Rep. No. 1097, 90th Cong., 2d Sess. (1968), reprinted in 1968 U.S.C.C.A.N. 2112, 2185. It is a gross exaggeration to suggest that one sentence in the committee report — "[n]or [does the committee intend] generally to press the scope of the suppression role beyond the present search and seizure law" — overrides the language of the statute and allows this Court to grant itself the authority to create exceptions to the comprehensive statutory scheme Congress constructed. See id. As the First Circuit noted in United States v. Vest (a case the Murdock panel refused to follow), "if Congress had intended to commit to the courts general authority to create exceptions to section 2515 in the same manner as the courts might develop future exceptions to the fourth amendment exclusionary rule, Congress could certainly have said so more clearly." 813 F.2d 477, 482 (1st Cir. 1987). In addition, the Murdock case created a direct conflict in the circuits in the interpretation of Section(s) 2515 which this case simply exacerbates by extending the holding of Murdock.
The only other basis for the ruling in Murdock is United States v. Underhill, 813 F.2d 105 (1987). The Murdock court cited Underhill as precedent authorizing the government to base a prosecution on illegal wiretap evidence. Underhill held that illegally obtained wiretapping materials can be admitted in the prosecution of the offending wiretapper. It borders on the absurd to suggest that such evidence could not have been admitted to prosecute the wiretapper himself. How else could anyone be prosecuted for violating the statute? The Underhill case provides no support for the notion that the government may use illegally obtained wiretap materials in the prosecution of the victim of an illegal wiretapper. The one statement in the Court's opinion with which I can agree is that: "There are problems . . . with using the Fourth Amendment, which deters only law enforcement officers and only searches and seizures, to help interpret a statute that deters everyone from searches and seizures and use and disclosure." Slip. op at 13.
Therefore, this Court should decline to apply the holding in Murdock to this civil case. In addition, the Court's opinion vacates the second injunction imposed by the Tennessee District Court on the ground that the government is entitled to use the wire tap evidence. Obviously if the Court is wrong on this point, the primary basis for its reversal of the district court on the second injunction is also in error.