Provided by Gregory P. Palmer, Esq., James R. Touchstone, Esq., & Veronica R. Donovan, Esq.
The Ninth Circuit Court of Appeals has recently reaffirmed a decades old California state appellate court decision that held that the massage industry is closely regulated and a warrantless administrative inspection of massage parlors under ordinances that meet certain factors do not violate the Fourth Amendment.
This Ninth Circuit case, Killgore v. City of S. El Monte (2021), analyzed whether massage parlors were closely regulated and whether the City of South El Monte’s (“City”) ordinance and Conditional Use Permit (“CUP”) conditions. The Killgore court found that both the ordinance and CUP conditions illustrated the City’s heavy regulation of this industry and the diminished expectation of privacy of massage establishment owners.
Warrantless Searches of Business in Closely Regulated Industries
“[W]arrantless searches ‘are per se unreasonable under the Fourth Amendment—subject only to a few specifically established and well-delineated exceptions.” Katz v. United States (1967) 389 U.S. 347, 357. This general prohibition against warrantless searches extends to commercial businesses. United States v. 4,432 Mastercases of Cigarettes (2006) 448 F.3d 1168, 1176. “The United States Supreme Court, however, has carved out a limited number of contexts within which a warrant is not required,” such as administrative searches of “’closely regulated’ industries.” Id.
To determine whether an industry is “closely regulated,” a court would look to “the pervasiveness and regularity of the . . . regulation and the effect of such regulation upon an owner’s expectation of privacy.” Id. “We do not require a warrant in such situations because the . . . regulatory presence is sufficiently comprehensive and defined that the owner of the commercial property cannot help but be aware that his property will be subject to periodic inspections undertaken for specific purposes.” Id.
Over 30 years ago, a California state appellate court held that the massage industry is pervasively regulated and that an ordinance permitting warrantless inspections of massage parlors did not violate the Fourth Amendment. Kim v. Dolch (1985) 173 Cal. App. 3d 736. Concluding “that the expectation of privacy that the owner of commercial property enjoys . . . differs significantly from the sanctity accorded an individual’s home, and that this privacy interest may, in certain circumstances, be adequately protected by regulatory schemes authorizing warrantless inspections,” the court upheld the “comprehensive” ordinance as reasonable. Id. at 250-51.
Since Dolch, California has enacted the Massage Therapy Act (the “Act”), a comprehensive certification and regulatory scheme adopted in 2014, which sets forth several requirements and authorizes local governments to establish their own regulations. Cal. Bus. & Prof. Code §§ 4600-21. The Act, which builds upon a more than 40-year-old licensing system in California, vests local governments with the power to “manage [massage] establishments in the best interests of the individual community.” Id. § 4600.5(b).
The Killgore court affirmed that the massage industry is “closely regulated.” The court also found that the massage parlor at issue was regulated by the Act and further regulated by the City’s ordinance and CUP conditions, conditions the court found to be reasonable.
The Killgore court then applied the Burger test to determine whether a warrantless inspection of a commercial business in a “closely regulated” industry is reasonable under the Fourth Amendment. New York v. Burger (1987) 482 U.S. 691. Under Burger, these warrantless searches must meet three conditions: (1) “there must be a substantial government interest that informs the regulatory scheme pursuant to which the inspection is made;” (2) “the warrantless inspections must be necessary to further [the] regulatory scheme;” and (3) “the statute’s inspection program, in terms of the certainty and regularity of its application, [must] provid[e] a constitutionally adequate substitute for a warrant.” Id. at 702-03.
The Killgore court found that all three Burger requirements were met. First, there is no question that curtailing prostitution and human trafficking is a substantial governmental interest. Second, the warrant exception is necessary to further the regulatory scheme considering the potential ease of concealing violations. The Act, Ordinance, and CUP conditions contain a variety of internal facility requirements, including a prohibition on unlicensed massage therapists, signage requirements, hygiene standards, a prohibition on sexual activities on the premises, and restrictions on permissible attire. The court noted that these sorts of violations could go easily undetected, and a warrant requirement would only frustrate the government’s ability to discover them. See 4,432 Mastercases of Cigarettes, 448 F.3d at 1179 (noting that “advance notice of inspections could permit those violating [the regulations] ‘to temporarily correct violations and frustrate enforcement efforts'”; Argent Chem. Lab’ys, Inc. 93 F.3d at 576 (“[F]orcing inspectors to obtain a warrant before inspection might frustrate the purpose of the Act by alerting owners to inspections.”).
HOW THIS AFFECTS YOUR AGENCY
Warrantless administrative searches of businesses in closely regulated industries, including massage parlors, are reasonable under the Fourth Amendment if there is a substantial government interest; the warrantless search is necessary to further the regulatory scheme; and the inspection program, in terms of certainty and regularity, provides an adequate substitute for a warrant. Agencies are encouraged to contact their legal advisor prior to engaging in warrantless searches, however, given the substantial liability exposure associated with an incorrect determination on this issue.
As always, if you wish to discuss this matter in greater detail, please feel free to contact Greg Palmer or Jim Touchstone at
(714) 446–1400, or via email, at email@example.com or firstname.lastname@example.org, respectively
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