LOS ANGELES COUNTY DISTRICT ATTORNEY’S OFFICE LEGISLATIVE PROPOSAL

NAME: DONN HOFFMAN

DIVISION: HIGH TECHNOLOGY CRIME / CIRT

ADDRESS: 201 N. FIGUEROA, STE 1200 LOS ANGELES, CA 90012

TELEPHONE: 213/580-3378

FAX: 213-250-8769

Proposal to Modernize and Amend PC§1524.2,

Corp Code §§ 2105(a)(6)(B) and 17708.02 or 16959

1. Problem or deficiency in existing law:

Evidence such as text messages, email, mobile app data, IP logs, photos and documents stored in the cloud, and countless other kinds of electronically stored information have become vital sources of evidence for criminal prosecutions. This evidence is in the hands of third party companies that are often located outside of California. Fortunately, there are state and federal laws that work in tandem to give us authority not only to obtain this evidence but also to admit in it court expediently. Unfortunately, however, the enabling state statute has not kept up with the popularization of new forms of business associations and new methods for service of process. The California law applies to corporations but not to LLC’s. And the California law does not explicitly recognize electronic service of process other than by facsimile.

Federal law governs the collection of electronic communications1 from providers of electronic communications services (ECS) and remote computing services (RCS). The Stored Communications Act governs the collection of such evidence when it is in storage (i.e., in situations other than a wiretap)2. The SCA requires covered entities to honor

1 ECPA broadened the definition of “electronic communications” to include just about any electronically stored information, with a few exceptions. 18 U.S. Code § 2510(12) "electronic communication" means any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system that affects interstate or foreign commerce, but does not include [voice, tone-only pagers, tracking devices, electronic funds transfers].

2 18 U.S. Code § 2703

government requests to preserve and turn over information about subscribers and their transactions and stored communications.3 The SCA requires that a covered entity honor a properly issued search warrant from any state court of “general criminal jurisdiction” “authorized by the law of that State to issue search warrants”.4 The federal statute defines the entities to which it applies according to their activities.5 It does not limit the types of business associations to which it applies.

California has a complementary statute governing the collection of such evidence from remote computing and electronic communications services. Cal. Pen. Code § 1524.2 requires that California corporations and foreign Corporations qualified to business in our state honor search warrants for information about subscribers and their transactions and stored communications, wherever those records are stored.6 For good measure, Cal. Corp. Code § 2105 specifically requires foreign corporations to consent to service pursuant to PC§1524.2. Thus, the advantages of PC§1524.2 are not available when the foreign business does not fall under Corp Code §§ 102 or 2105. Many of the third parties that we rely on for crucial evidence are partnerships, not corporations.7 A second problem is that the statute’s definition of “properly served” is out-of-date. The following forms of service are permitted: “delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile…”.8 It is becoming increasingly common for ISP’s and others to insist on electronic service, either by email or via a web portal established for this purpose.9 The proposed legislation would (1) update the kinds of business associations covered by 1524.2 to include LLC’s and other entities formed for the purpose of conducting business; and (2) update the definition of “properly served” to comport with modern practices.

2. Describe your proposal in detail:

Our proposed legislation would amend Cal. Pen. Code § 1524.2 to include other forms of business associations.

3 18 U.S. Code § 2703(a), 18 U.S. Code § 2703(d) 4 18 U.S. Code § 2711(3)(B) 5 18 U.S. Code § 2711(2) the term "remote computing service" means the provision to the public of computer storage or processing services by means of an electronic communications system 6 Cal. Pen. Code § 1524.2. Cal. Corp. Code § 102. Cal. Corp. Code § 2105. 7 Verizon Wireless, for example, is a Delaware LLC. Interestingly, the law’s original author in 1999 cited out-of-state “corporations such AOL” as the object of the bill. AOL later converted to an LLP for several years. 8 PC§1524.2(a)(6) 9 Facebook and Ebay/PayPal are two companies that have established web portals for the exclusive use of law enforcement. Yahoo!, T-Mobile, Pinger, and CapitalOne are examples of the new norm, which is service by email.

a. PC§1524.2

i. Replace “corporation” with “business entity” throughout.10

ii. (a)(4): Insert “, any limited liability company as defined in subdivision (t) Section 17000 of the Corporations Code, excluding foreign limited liability companies, any limited partnership formed under the laws of this state, any business association formed under the laws of this state, and any other business entity organized under the laws of this state” at the end of the paragraph.

iii. (a)(5): Insert “, any business association formed under the laws of a foreign jurisdiction, any foreign limited liability company as defined in subdivision (j) of Section 17701.02, any limited partnership formed under the laws of a foreign jurisdiction, and any other business entity organized under the laws of a foreign jurisdiction.” at the end of the paragraph.

In addition, our proposal would amend the definition of “properly served” in PC§1524.2(a)(6) to reflect the common and increasingly prevalent practice of communications and computing service companies to insist on electronic service of process. Such policies may request that service be by email, or that process be effected via a web portal provided by the company.

a. PC§1524.2

i. (a)(6): Insert “, or any other means agreed upon by the parties, including electronic mail or submission via a web portal which the recipient has designated for the purpose of service of process” at the end of the paragraph.

b. CC§2105(a)(6)(B)

i. Insert “, or any other means agreed upon by the parties, including electronic mail or submission via a web portal which the recipient has designated for the purpose of service of process” at the end of the paragraph.

c. CC§17708.2 or CC§16962 or CC§1695911

i. Add subsection in an appropriate place: “Consent under this paragraph extends to service of process directed to the foreign

10 Alternative: “any entity or association” 11 We have identified these three hooks for the revised language. We recommend seeking guidance from the Department of Corporations or other experts.

corporation's agent in California for a search warrant issued pursuant to Section 1524.2 of the Penal Code, or for any other validly issued and properly served search warrant, for records or documents that are in the possession of the foreign corporation and are located inside or outside of this state. This subparagraph shall apply to a foreign corporation that is a party or a nonparty to the matter for which the search warrant is sought. For purposes of this subparagraph, "properly served" means delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed in Section 16962 of the Corporations Code, or any other means agreed upon by the parties, including electronic mail or submission via a web portal which the recipient has designated for the purpose of service of process.”

3. Estimate the number of cases in our office which would be affected by your proposal:

The proposed changes affect both the legal and investigative sides of the office. The legal side depends on PC§1524.2 to authenticate ISP evidence in court without the difficulty and expense of out-of-state witnesses. The investigations side relies on PC§1524.2 to serve warrants expeditiously.

Our Bureau of Investigation served several hundred search warrants on ISP’s, ECS’s and RCS’s in 2013. Outside agencies that file with us served many more such warrants. Our prosecutors increasingly rely on electronic evidence from third parties, and the prevalence of such evidence can be expected to grow dramatically.

4. Facts / Case Law / Statistics / Reports / Studies in support of your proposal:

This proposal was inspired by difficulties CIRT has encountered in gaining cooperation from hosting companies located outside of California. One particularly recalcitrant company is organized as an LLC. Without the authentication provisions in PC§1524.2 we would anticipate great difficulty in securing a live witness to authenticate evidence obtained from them. In addition, because the Stored Communications Act requires “a state warrant, issued using state warrant procedures”12 the current limitation to “corporations” could provide a determinedly uncooperative ISP a means to challenge the validity of the warrant. Historically, ISP’s have been cooperative with law enforcement. That is changing. Post-Snowden, ISP’s are responding to consumer sentiment and litigation-anxiety by scrutinizing law enforcement request more carefully. ISP’s face potential civil liability for violations of the Stored Communications Act, and in the current climate

12 18 U.S. Code § 2703(a) and (b)

they can be expected to reject a warrant they perceive as facially invalid in order to preserve their access to the law’s safe harbor provision.13

5. Are there alternatives to your proposal, either legislative or non-legislative, which might accomplish the same objective? If so, why is your proposal a better alternative?

None. It is possible that case law could cure both issues, but that is a risky and uncertain remedy.

6. Are you aware of any constitutional issues raised by your proposal? If so, briefly discuss.

None. PC§1524.2 burdens intrastate and interstate commerce equally. No recipient of a PC§1524.2 warrant has challenged the law in any published case.

7. Fiscal impact: How much will your proposal cost? Will your proposal result in any cost savings to our office, to other entities, or to the state?

No costs to the state.

Our office and other police and prosecutorial agencies may save money. There is the possibility of substantial savings in investigation travel and other expenses related to obtaining and executing out-of-state search warrants, and bringing out-of-state witnesses to court.

8. Support: Please list individuals and organizations likely to support your proposal:

Law enforcement, police and prosecutors will likely support the proposal. Possible support from affected businesses that would likely welcome the statutory recognition of their preferred modes for service of process.

9. Opposition: Please list individuals and organizations likely to oppose your proposal:

Civil liberties and privacy advocates may oppose the changes based on reflex to oppose any perceived expansion of government’s ability to obtain electronic communications and other electronically stored information.

Anti-government groups may oppose the changes based on reflex to oppose any law they perceived as business regulation, however it is unlikely any businesses that would actually be affected by the change would oppose it. Legitimate ECS and RCS businesses currently comply voluntarily with PC§1524.2 regardless of their structure, and as noted

13 18 U.S. Code § 2707

above would likely welcome the statutory recognition of their preferred modes for service of process.

10. Urgency: Is there a need for speed? How fast must this matter move?

This matter is not urgent.

11. Prior legislation: Has there been any prior legislation in this area? If so, please provide bill author, the year the legislation was introduced, and whether the legislation was enacted?

Sen. Leno proposed SB 467 in 2013. That bill was a major overhaul of 1524.2 but did not address either of the technical issues our proposal is aimed at.

12. Will you be available for consultation and, if necessary, to travel to Sacramento to testify regarding this legislation between February 1 and September 1 of next year?

Yes.

13. ATTACHMENTS:

A copy of the proposed language is attached.