The United States Supreme Court issued its decision in City of Los Angeles v. Patel on June 22, 2015. This is a significant case for protection of private information from the government by a third party. It may be subject to extension to other businesses facing government regulation requiring the stockpiling of private customer information and provision of such information to a government.

The Basics

Los Angeles has a municipal ordinance which gives police the ability to inspect upon request and with no advance notice the registration records of hotels being operated within the city limits. The appellant Patel is an operator of a hotel in Los Angeles. Hotel operators who do not maintain the required information and do not allow it to be viewed by any police officer can be arrested and prosecuted for a misdemeanor punishable by up to six months in jail. The ordinance meant any police officer could walk into any hotel in the city and look at the registration records with no paperwork, no prior approval, no supervisory approval, and no paper trail.

Patel and a group of other hotel operators mounted their challenge twelve years ago. They alleged that the inspection regime constituted an unreasonable search under the Fourth Amendment. The trial court (a federal district court) and the initial panel for the Ninth Circuit ruled for the city. An en banc panel of the Ninth Circuit reversed.

The Ruling

The Supreme Court opinion was written by Justice Sotomayer.

The opinion accepts that a compelled government inspection of commercial records is a search encompassed by the Fourth Amendment. This is important because the lower courts had ruled that this was not a search because they said the hotel operators had no reasonable expectation of privacy in their records.

The court describes these searches of commercial records as administrative searches, whether the search is for criminal or other purposes.

A business owner confronted with an administrative search to inspect their premises or records must have some opportunity to question the reasonableness of the subpoena before suffering any penalties for refusing to comply.

There may be exceptions to this holding. Pre-compliance review will not be required for certain intrinsically dangerous industries. Such review is not required in certain exigent circumstances. This does not have to be a very onerous system. The agency can issue an administrative subpoena which is subject to review by an administrative law judge upon the request of the person or entity subject to the subpoena.

The Consequences

The ruling will certainly require some adjustment of state and local laws to reflect the process laid out by the Supreme Court.

It is worth noting that hotel operators and other commercial businesses are not required to protect your privacy. For instance, the national chain Motel 6 reportedly turns over their guest registration information in Rhode Island to police every day as well as their “do not rent” list.

If your privacy matters to you, it is worth finding out which businesses that you deal with are willing to protect your private information from the government.