10th Circuit Rules on Civil Liability for Violation of Wiretap Act

April 22, 2003. The U.S. Court of Appeals (10thCir) issued its opinion in Quigley v. Rosenthal, a civil case involving application of the federal wiretap act to the monitoring of cordless telephone conversations, as well as defamation, invasion of privacy by intrusion, and false light invasion of privacy. The case addresses who can be held liable for illegal interception of wire or electronic communications, and when the First Amendment offers protection to those who make use of such intercepted communications.

The Appeals Court affirmed a District Court civil judgment against the Anti-Defamation League (ADL) for violation of the Wiretap Act, when it had not conducted the monitoring, but rather, had conspired with others who recorded the cordless telephone conversations, and then made use of the recordings.

The Appeals Court also rejected the ADL's argument that its use of the recordings was protected by the First Amendment. The Appeals Court distinguished the Supreme Court's recent opinion in Bartnicki v. Vopper, which held that a radio host who disclosed an illegally recorded cell phone conversation was protected by the First Amendment.

Also, while the facts of this case involve cordless phones, the underlying statute regulates the interception of many forms of communication, including wireline phones, cellular phones, and internet communications.

Statute. Congress amended the Wiretap Act in 1994. Among other things, it amended the definitions section to prohibit the recording of cordless telephone conversations. The statute is now codified at 18 U.S.C. § 2510 et seq. Currently, 18 U.S.C. § 2511 provides criminal and civil liability for any person who "intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication" or who "intentionally discloses, or endeavors to disclose, to any other person the contents of any wire, oral, or electronic communication, knowing or having reason to know that the information was obtained through the interception of a wire, oral, or electronic communication in violation of this subsection".

Background. The Court's recitation of the facts of the case is long and sordid. It describes the conduct of two feuding couples who were neighbors in an economically upscale suburb or Denver. It also describes how lawyers in private practice, prosecutors, and an interest group were quick to file a civil complaint, criminal complaint, and hold a press conference, without verifying the underlying facts, and without an understanding a key statute. The case involved technology because one set of neighbors monitored and recorded the cordless telephone conversations of the other set of neighbors.

While the neighborhood spat arose out of such mundane events as the conduct of pet dogs, one couple, the Aronsons went to ADL with claims of religious and ethnic discrimination by the other couple, the Quigleys. The ADL referred the matter to attorneys in private practice (Lozow and his associate Kornfeld). Lozow advised the Aronsons that their monitoring was legal, and advised that they contact District Attorney's (DA) office, which they did. They also continued to monitor the Quigleys, and deliver copies of recordings to their attorneys, and to an assistant DA.

The Aronsons also met with Lozow, Kritzer (a personal injury lawyer), Kornfeld (Lozow's associate), and an ADL representative. It was agreed that the Aronsons should continue monitoring. They also met a second time with Lozow, Kritzer, Kornfeld, and a second ADL representative. The Aronsons then entered into a contingent fee agreement with Lozow and Kritzer.

In December of 1994 (after the amendments to the Wiretap Act had taken effect) Lozow and Kritzer filed a civil complaint on behalf of the Aronsons and against the Quigleys that quoted from the monitored phone conversations. the complaint alleged ethnic discrimination in violation of Colorado law, violations of 42 U.S.C. §§ 1982 and 1985, and other claims. Then, Rosenthal (the head of ADL Denver office, and a defendant in the present action) and Kritzer and Lozow (the attorneys for the Aronsons) held press conference.

Also, latter in December of 1994, the DA's office filed criminal charges against Quigleys alleging ethnic intimidation, conspiracy to commit ethnic intimidation, and felony vehicular assault.

The Aronson's civil lawsuit, the criminal prosecution, and the associated publicity caused harm to Quigleys.

However, the Quigleys brought various claims via counterclaim and complaints, against Aronsons, their attorneys, the ADL and its attorneys, and DA's office. The DA's office investigated the criminal charges, which neither the Sheriffs Office, the ADL, nor the Aronsons' attorneys had done. It dismissed the criminal charges, and apologized in writing to the Quigleys. It wrote that it was not aware of any evidence proving that the Quigleys violated Colorado's laws against ethnic intimidation.

Lozow and Kritzer also settled with the Quigleys, by paying them money. The ADL paid their insurance deductibles. However, neither the ADL, nor Rosenthal, settled. Charges against them proceeded to trial.

District Court. While there was much litigation over many years, in the present action, the Quigleys filed a complaint in U.S. District Court (DColo) against Rosenthal and the ADL alleging violation of the wiretap act, defamation, invasion of privacy, and other claims.

The jury found in favor of the Quigleys on several claims, including defamation against Rosenthal and the ADL based on statements made by Rosenthal during a press conference and media appearance; false light invasion of privacy against Rosenthal and the ADL; invasion of privacy by intrusion against the ADL based on the interception and/or use of private phone calls by an ADL representative, Lozow, and/or Kritzer, acting as the ADL's agents or co-conspirators; and violation of the federal wiretap act against the ADL based agency or co-conspiracy.

The jury awarded Mr. Quigley damages: $900,000 in economic damages; $100,000 in non-economic damages; state law punitive damages of $500,000 against Rosenthal and $250,000 against the ADL; and federal law punitive damages of $5,000,000 against the ADL. The jury awarded Mrs. Quigley damages: $500,000 in non-economic damages; state law punitive damages of $500,000 against Rosenthal and $250,000 against the ADL; and federal law punitive damages of $2,500,000 against the ADL. The District Court made some reductions in the damages awards, and entered judgment. This appeal followed.

Court of Appeals. The Appeals Court largely upheld the District Court. It reversed the judgment on the invasion of privacy by intrusion and false light invasion of privacy claims. It affirmed the judgment on the other claims, and affirmed the damages awards in full.

Much of the Appeals Court's opinion addresses non technology related issues, such as the standard for proving defamation where the defamatory statements are asserted to be of "public concern". The Appeals Court held that the statements were a "private", not a "public concern".

The ADL argued that the District Court erred in instructing the jury that the ADL could be found liable on plaintiffs' federal wiretap claims for having conspired with attorneys Lozow and Kritzer (the Aronsons' attorneys). The Appeals Court rejected this argument, in part because the ADL did not raise this in the trial court, but also because it found that "the ADL has failed to cite any case that holds that a person or entity cannot violate the federal wiretap act by joining with others in a conspiracy. In contrast, plaintiffs have cited a handful of cases that at least suggest or imply that it is possible for a person or entity to violate the federal wiretap act by conspiring with others." (Citations omitted.)

The ADL also raised the issue of agency on appeal. The District Court's judgment was based upon a finding that there was a principal agent relationship between the ADL and the Aronsons' attorneys. The ADL challenged both the jury instructions, and whether there were sufficient facts to submit the issue to the jury. The Appeals Court found no error in the jury instructions, and that it was appropriate to submit the factual issue of whether there was a principal agent relationship to the jury. The Appeals Court noted that the ADL had paid the insurance deductable for the Aronsons' attorneys when they settled with Quigleys, and evidence that these attorneys served the interests of the ADL, rather than the Aronsons.

Finally, the Appeals Court addressed the interaction of the wiretap act and the First Amendment's free speech clause. The ADL argued that its use of the recorded conversations was protected by the First Amendment, relying on Bartnicki v. Vopper, 532 U.S. 514 (2001).

In that case, the Supreme Court held that a radio host cannot be sued for playing an audio recording of a cellular telephone conversation, despite the federal wiretap act, which made illegal both the interception of the conversation, and its disclosure by the radio host. The majority reasoned that the case pitted statutes banning disclosure of illegally obtained electronic communications against the First Amendment freedom of speech claims of persons with illegally obtained recordings to disclose them if their content pertains to a public issue. In that case, the conversation pertained to ongoing collective bargaining negotiations between a teachers' union and the local school board -- a matter of public interest. See also, TLJ story titled "Supreme Court Diminishes Electronic Privacy", May 21, 2001.

In the present case, the Court of Appeals held that the facts are distinguishable from those in Bartnicki. First, the recorded conversations in the present case were a matter of private, not public, concern. Second, the radio host in Bartnicki accurately portrayed the contents of the recording, while the ADL in the present case did not accurately portray the contents of the conversations. Finally, the radio host played no role in the recording of the conversations, while the ADL knew all along that the recordings were being made.

The interception of cordless, cellular or wireline phone conversations, or electronic communications (without authority) is clearly illegal. This case, and Bartnicki, address the issue of when third parties who use illegally recorded communications may also be sued. Perhaps these cases stand for the proposition that when illegally obtained communications, that are of public concern, fall into the hands of journalists, who accurately report them, then the First Amendment offers the journalists protection from prosecution or civil liability; however, when lawyers or interest groups are involved in the illegal interception of wire communications by others, and then selectively and inaccurately use the communications to advance their own interests, the First Amendment offers them no protection.

There is, of course, a huge grey area of potential factual scenarios that lie somewhere between the facts of Bernicki and the present case.