NMSC: No Reasonable Expectation of Privacy in Bank Records

The New Mexico Supreme Court issued an opinion today on the interesting question of whether the New Mexico Constitution protects banking records from being subpoenaed by the state. In an opinion written by Justice Barbara Vigil, the Court held that New Mexico does not recognize a reasonable expectation of privacy in banking records.

Factual and Legal Background

The facts are straightforward. State and federal law enforcement suspected the defendants of being involved in drug trafficking, and grand juries subpoenaed and obtained five years of banking records. The defendants unsuccessfully moved to suppress these records. The court of appeals granted interlocutory appeal in the issue and certified the question to the supreme court.

Everyone is familiar with the Fourth Amendment to the U.S. constitution, which protects against unreasonable searches and seizures. The Fourth amendment comes into play when a person has a reasonable expectation of privacy in the place being searched or the thing being seized. In practice, this means that the person must subjectively believe that she had an expectation of privacy, and this expectation must be one that society is willing to recognize as reasonable.

What is less well known is that Article II, section 10 of the New Mexico constitution contains a similar amendment that protects the same interests. What’s more, the New Mexico constitution can provide greater protection than the federal constitution.

When a party argues that the state constitution provides greater protection than the U.S. constitution, the court analyzes the question using the “interstitial approach.” Here, that approach required the court needed to decide three questions: (1) whether the right asserted by the defendants is protected by the Fourth Amendment of the U.S. constitution; (2) whether the defendant preserved the state constitutional claim; and (3) whether one of three established reasons justify diverging from federal precedent.

As to the first question, the Court concluded that the U.S. constitution does not provide a reasonable expectation of privacy in bank records. This was easy, since the U.S. Supreme Court directly decided the issue in United States v. Miller, 425 U.S. 435 (1976). Perhaps in light of this well-settled rule, the defendants did not assert that the bank records were protected by the Fourth Amendment.

The second issue was similarly easy to resolve. Preservation is a doctrine that requires an issue to have been raised below for it to be considered on appeal. It reflects a policy that all issues should be raised at trial, and that the trial court is in the best position to decide matters in the first instnace. It also produces better records for review on appeal. The preservation requirement is an excellent reason to get appellate counsel involved during the trial phase. At times, a party who wishes to argue that the New Mexico Constitution provides greater protection does not realize this until the appeal (when it is too late). Here, however, the defendants’ entire argument was that the records should be suppressed under the state constitution, so the issue was preserved.

There Was No Reason to Depart from Federal Precedent

The third factor is usually the most interesting. Under the interstitial approach, there are three reasons to depart from federal precedent: (1) a flawed or undeveloped federal analysis; (2) structural differences between federal and New Mexico government; or (3) distinctive state characteristics that support the departure. The first and third reasons were at issue in this case.

Defendants first argued that the result in Miller was flawed. Miller, the U.S. Supreme Court case holding that bank records were not protected, has over the years been criticized by scholars, state courts, and even supreme court justices. Several states, including Pennsylvania and Utah, have protected bank records under their state constitutions. Others, however, have rejected arguments that bank records should be protected.

Nevertheless, the Court reaffirmed the doctrine as recently as 2018 in United States v. Carpenter, where it found that there was a reasonable expectation of privacy in location data from cell phones. Carpenter distinguished between information that is kept to oneself and information that one chooses to share with others. Following that distinction, our supreme court concluded that bank records, which are shared with and obtained from third parties and are business records of banks that are not owned or possessed by the defendant and are exposed in the ordinary course of business, are not confidential. Accordingly, the Court did not view the federal analysis as flawed.

Defendants also sought to persuade the Court that distinctive state characteristics justified increased privacy in bank records versus the federal standards. Although it is not entirely clear, Defendants appear to have based this argument on the not insignificant number of other cases in which New Mexico has provided greater protection. In particular, the defendants analogized to cases which have found an expectation of privacy in items placed in trash containers. The Court was not persuaded. While the facts in the garbage cases involved information hidden from view, the bank records were routinely exposed to bank employees in the ordinary course of business.

The Result Is Narrow

After concluding that the bank records are not protected, the Court carefully limited its results to the facts of the case. It expressly left for another day the question of whether more sophisticated bank records, perhaps ones that reveal a person’s familial, political, professional, religions, and sexual associations, might be protected. Perhaps in light of the great skepticism about this doctrine and the fast pace that privacy issues move at these days, the Court did not think it wise to issue a more sweeping holding on the facts of this case.

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