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Does Louisiana’s “secondhand dealer law” violate the Fourth amendment to the Unites States Constitution?  In addition to banning cash transactions, Louisiana’s Revised Statute 37:1861 et seq. poses a myriad of problems including a potential violation of the U.S. Constitution by allowing for and even requiring unlawful searches and seizures.  R.S. 37:1861 et seq. regulates those considered secondhand dealers, however, the definition of a secondhand dealer is so broad that it may encompass anyone from Amazon.com to a housewife trading used baby clothing.  A secondhand dealer is defined as “… Anyone, other than a non-profit entity, who buys, sells, trades in or otherwise acquires or disposes of junk or used or secondhand property more frequently than once per month from any other person, other than a non-profit entity, shall be deemed as being in the business of a secondhand dealer. ”

The Fourth Amendment to the United States constitution reads- “The right of the people to be secure in their persons, house, papers and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” (U.S. Const. Amend. IV)

The Fourth Amendment protects citizens from unwarranted and unreasonable search and seizures when such actions are conducted by governmental entities/agents.  Generally, if a citizen has an expectation of privacy, and this expectation of privacy is “reasonable” according to societal expectations, then the government must issue a warrant backed by probable cause prior to initiating a search or seizure.  If no warrant is issued, the governmental search or seizure may only be appropriate in light of certain exceptions to the warrant requirement (ie. Search incident to arrest, automobile search, emergency search, inventory search, consent, plain view, stop and frisk or valid administrative searches).

Most business people fully understand that business records and customer lists are private proprietary business assets, and their value is due in large part to the information remaining private. Additionally, both society and the law protect and value the privacy of contracts and the particulars of private business transactions.  Economic privacy and the protection of personal papers and effects is a long standing tradition in the United States.

LA R.S. 37:1861 et seq. and the recent additions made to this part of the law by Louisiana House Bill 195 (Act 389), require that secondhand dealers turn over their business records to local law enforcement on a daily basis for transactions where the secondhand dealer purchases any used or secondhand property.  In the name of tracking stolen goods and criminals, the state has created a system in which to conduct business a secondhand dealers must collect their clients personal information (Name, Picture, Address, Driver’s License #, ect.), a detailed description of the merchandise purchased and transaction information, and then turn this information over to the government. Regardless if there is any probable cause that the item(s) purchased are stolen or the seller is involved in any criminal activity, a secondhand dealer must allow for a search and seizure of their private business records by the state or face criminal consequences.  Failure to collect and deliver this private transaction information is prima facie evidence that the purchaser is buying items with knowledge that they are stolen goods.

Has the state of Louisiana now attempted to extend the notion that transacting in used or secondhand property is sufficient probable cause to suspect criminal activity?

Not only may the secondhand dealer be subject to an unreasonable search and seizure of their proprietary business asset, an individual selling their property is subject to having their personal information and business records delivered to the government by the purchaser. Although the purchaser is technically not a governmental actor, they are required to essentially act like an agent of the government.

Private Citizens Acting As Government Agents

U.S. courts have long held that private citizens can be acting as a government agent in violation of the Fourth Amendment. The extent of the private citizen’s involvement is the crucial inquiry. If the involvement is too great, the private individual’s actions can be considered in kind to a governmental agent. Factors that courts consider include: 1. whether the government knew and acquiesced in the intrusive conduct, and 2. whether the party performing the search intended to assist law enforcement efforts or to further his own ends.

Louisiana’s secondhand dealer law mandates that for a secondhand dealer to purchase used or secondhand property, they are required to obtain a seller’s personal information and to deliver this along with the business transaction information to the police.  A seller of used or secondhand property is simply not afforded the right to contract for confidentiality with the secondhand dealer in the sale of their property.  Reasonable minds may inquire if this type of action may be viewed as a government action though a private citizen.

As a closing point of inquiry, consider the consequences of an environment where the state can require that any private business must gather and disclose their business relationships, transactions and private papers as a prerequisite to completing  transactions, and where an individual’s transaction history is tracked and stored by the government.  Should Walmart have to disclose their business transactions simply because it is possible that the items or medium of payment could have at some point been stolen?  Should the state make Walmart an agent of the government that is required by law to assist law enforcement in tracking all transactions even in the absence of  probable cause?

 

The enrolled version of Act 389 of the 2011 Louisiana legislative session can be found HERE

 

Thad D. Ackel, Jr. serves as lead counsel at Ackel & Associates L.L.C., Broker of Tribute Real Estate and works as a legislative lobbyist with The Liberty Lobbying Group.  He may be reached by email @ thadackel@gmail.com

 

 

 

Copyright © 2011 by Ackel& Associated L.L.C.  All rights reserved.  You may share using our article tools and linking.  Please don’t cut articles from ackelandassociates.com and redistribute by email or post to the web.

 

Sign the Online Petition HERE

Public outrage towards Louisiana lawmakers banning cash transactions is spreading far and wide.  Individuals and business throughout the state and the U.S. have contacted us to voice their concerns.  Our team of attorneys at Ackel & Associates and The Foundation for Economic and Civil Liberty are initiating actions to see House Bill 195, Act 389 repealed, and to further support the initiative to amendment the Louisiana constitution in such a way as to restrict the state or any of its political subdivisions from banning cash transactions.  Some lawmakers in Louisiana have contacted our firm to voice their opposition to Act 389, and have also committed themselves to seeking positive change through legislative action. The Foundation for Economic and Civil Liberty is coordinating with its members and supporters to educate Louisiana citizens about Act 389, and to mobilize the citizenry towards local involvement in repealing the law.   The Foundation for Economic and Civil Liberty is also supporting a drive to amend the Louisiana constitution in a way that would protect an individual’s right to transact in cash.

 
Government Takes Private Property Without Due Process

By: Thad D. Ackel, Jr. Esq.

This summer, the State Legislature and Governor of Louisiana passed a law that bans individuals and businesses from transacting in cash if they are considered a “secondhand dealer”.  House Bill 195 of the 2011 Regular Session (Act 389) broadly defines a secondhand dealer to include   “… Anyone, other than a non-profit entity, who buys, sells, trades in or otherwise acquires or disposes of junk or used or secondhand property more frequently than once per month from any other person, other than a non-profit entity, shall be deemed as being in the business of a secondhand dealer. ” The law then states that “A secondhand dealer shall not enter into any cash transactions in payment for the purchase of junk or used or secondhand property.  Payment shall be made in the form of check, electronic transfers, or money order issued to the seller of the junk or used or secondhand property…”  The broad scope of this definition can essentially encompass everyone; from your local flea market vendors and buyers to a housewife purchasing goods on ebay or craigslist, to a group of guys trading baseball cards, they could all be considered secondhand dealers. Lawmakers in Louisiana have effectively banned its citizens from freely using United States legal tender.

The law goes further to require secondhand dealers to turn over a valuable business asset, namely, their business’ proprietary client information.  For every transaction a secondhand dealer must obtain the seller’s personal information such as their name, address, driver’s license number and the license plate number of the vehicle in which the goods were delivered.  They must also make a detailed description of the item(s) purchased and submit this with the personal identification information of every transaction to the local policing authorities through electronic daily reports.  If a seller cannot or refuses to produce to the secondhand dealer any of the required forms of identification, the secondhand dealer is prohibited from completing the transaction.

This legislation amounts to a public taking of private property without due process or compensation.  Regardless of whether or not the transaction information is connected with, or law enforcement is investigating a crime, individuals and businesses are forced to report routine business activity to the police.  Can law enforcement not accomplish its goal of identifying potential thieves and locating stolen items in a far less intrusive manner?  And of course, there are already laws that prohibit stealing, buying or selling stolen goods, laws that require businesses to account for transactions and laws that penalize individuals and businesses that transact in stolen property. Why does the Louisiana State Legislature need to enact more laws infringing on personal privacy, liberties and freedom?

Motivating the introduction of this legislation was an increase in criminal activity, necessitating law enforcement to develop additional tools in tracking potential criminals. Thefts of copper and other precious metals have risen recently with higher commodity prices and mounting pressures from the economic downturn.  The added restrictions under this recent legislation have come about under the pretense of cracking down on crime and helping the government take care of you, all at the cost of your individual privacy, economic, civil liberty and freedom.

Interestingly enough, although Pawnshops are still required to obtain clients personal information and transmit their client database information to law enforcement, they are exempt from the restriction of cash payments.  A jeweler next door to a pawnshop cannot offer clients the same payment method offered by its competing pawnshop neighbor.

Act 389 passed by unanimous consent of the Louisiana House of Representatives and only mustered one nay vote (Senator Neil Riser) from the State Senate.  The governor signed the legislation into law on July 1, 2011.  The enrolled version of Act 389 can be found HERE

 

Thad D. Ackel, Jr. serves as lead counsel at Ackel & Associates L.L.C. and Broker of Tribute Real Estate.  He may be reached by email @ thadackel@gmail.com

 

 

 

Copyright © 2011 by Ackel& Associated L.L.C.  All rights reserved.  You may share using our article tools and linking.  Please don’t cut articles from ackelandassociates.com and redistribute by email or post to the web.

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