Tenth Circuit Appears to endorse Police-Assisted Private Searches of Employee Residences by Employers

I don't want to work for Iomed, Inc. In a recent 10th Circuit opinion, the court describes how Iomed, Inc. sought and obtained an ex parte order in state court, directing local police, with the assistance of Iomed, to execute a search of Iomed former employee Jamal Yanaki's residence. The action was taken in furtherance of a suit by Iomed against Yanaki, alleging misappropriation of trade secrets and breach of a confidentiality agreement.

According to the court:

Iomed filed an ex parte motion seeking an order permitting immediate discovery to prevent the destruction of evidence (the "Search Order"). On April 12 lawyers for Iomed appeared before a state court judge ex parte and argued the motion. The court granted Iomed's motion and issued the Search Order which, in relevant part, directed the Salt Lake County Sheriff's Office, with the assistance of Iomed, to execute the Search Order at Yanaki's home and take into custody all hard drives and other electronic storage media. On the morning of April 15 Justin Matkin, a lawyer for Iomed, arrived at Yanaki's home accompanied by Salt Lake County Deputy Sheriff Heinz Kopp. Moss (the ex-employee's roommate) answered the door and was served with the Search Order. Moss refused to allow Matkin and Kopp into the home because Yanaki was not present at the time. After she refused them entry, Mr. Matkin, an Iomed attorney, said: "We can come in now, or we can come in later. Deputy Sheriff Kopp, to support Matkin's statement and to intimidate Moss, said: 'we can kick in this door.' Kopp remained outside the home while Matkin returned to the state court judge to secure an ex parte writ of assistance. The judge issued a Supplemental Order in Aid of Enforcement (the "Enforcement Order") which directed and authorized the Salt Lake County Sheriff's Office to enter Yanaki's residence and to use reasonable force, if necessary and appropriate, to execute the Search Order.

Matkin returned to Yanaki's home with the Enforcement Order, and Matkin and Kopp, along with Mary Crowther and Scott Johnson, entered Yanaki's home and commenced the search. Shortly thereafter a second police officer, Sergeant Kendra Herlin, arrived to assist. Pursuant to the Search Order, officers seized Moss and Yanaki's computer and other materials belonging to them, including Yanaki's University of Utah Executive MBA Program materials, various other papers and effects Yanaki had packed upon leaving Iomed, and a CD-ROM belonging to Ceramatec, Inc., a client of Yanaki's consulting business.

In granting the Defendants' 12(b)(6) motion throwing the Plaintiffs' 1983 action out of court, the majority states that "The involvement of the police in executing the court-ordered search, without more, does not convert Defendants' abuse of state law into conduct attributable to the state for purposes of § 1983 liability." Without a challenge to the constitutionality of the underlying state laws or any suggestion of a conspiracy between Defendants and the police, the actions of the police in discharging their official duties do not distinguish Plaintiffs' claims from the claim rejected in previous Supreme Court precedent.

I think I am going to have to go along with the dissenting opinion on this one. It should be noted that neither the district court nor the 10th Circuit panel in this case ever addressed the merits of Iomed's claims upon which the search was based because, as the majority ruled, the employer's and state's actions simply cannot be challenged in federal court under Section 1983. The court held that the state's actions in threatening to kick in the employee's door, conducting the search, and seizing the former employee's belongings did not amount to state action. Under the Court's reasoning, this outcome is mandated because the state was merely assisting a private entity. The degree of assistance was not relevant to the majority. If you take the opinion to its logical extreme, the decision would not have been different if the officer had held the employee at gunpoint during the course of the search or even shot him. Here is the full opinion: Yanaki v. Iomed Inc., No. 04-4051 (10th Cir. July 26, 2005).

While companies sometimes use baseless or near-baseless claims of misappropriation of trade secrets and breach of a confidentiality agreements to harass former employees who may wish to continue working in the same industry (and therefore be possible competition for his or her former employer), corporate conduct such as what is alleged in this case is, at least in my experience, rare. Hopefully this is not an indication of a new general direction by companies in this regard.