United States v. Haitao Xiang ( 2023 )

United States Court of Appeals
For the Eighth Circuit
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No. 22-1801
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United States of America
lllllllllllllllllllllPlaintiff - Appellee
v.
Haitao Xiang
lllllllllllllllllllllDefendant - Appellant
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Electronic Frontier Foundation; American Civil Liberties Union;
Knight First Amendment Institute at Columbia University;
Reporters Committee for Freedom of the Press
lllllllllllllllllllllAmici on Behalf of Appellant
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Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
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Submitted: January 12, 2023
Filed: May 5, 2023
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Before SMITH, Chief Judge, WOLLMAN and LOKEN, Circuit Judges.
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LOKEN, Circuit Judge.
“Congress, since the beginning of our Government, has granted the Executive
plenary authority to conduct routine searches and seizures at the border, without
probable cause or a warrant, in order to regulate the collection of duties and to
prevent the introduction of contraband into this country.” United States v. Flores-
Montano, 541 U.S. 149, 153 (2004) (quotation omitted). “[T]he rationale behind this
[border search] exception [to the Fourth Amendment’s warrant requirement] applies
with equal force to persons or objects leaving the country.” United States v. Udofot,
711 F.2d 831, 839 (8th Cir. 1983).
Haitao Xiang, a citizen of the People’s Republic of China and long-time
resident of the United States, conditionally pleaded guilty to conspiracy to commit
economic espionage in violation of 18 U.S.C. §§ 1831(a)(5).1 He appeals the
conviction and sentence. The principal issue is whether the district court2 erred in
denying Xiang’s motion to suppress evidence obtained by a warrantless seizure and
forensic search of Xiang’s digital devices as he was leaving Chicago’s O’Hare
International Airport, with Shanghai, China his final destination. Applying the
Fourth Amendment border search exception, the district court concluded that U.S.
Customs and Border Protection (“CBP”) officers had reasonable suspicion to conduct
non-routine forensic searches of Xiang’s electronic devices and acted reasonably in
doing so. We agree. We also conclude that Xiang waived his appeal of the $150,000
fine the district court imposed as part of his sentence. Accordingly, we affirm.
1
As relevant, the statute is violated by “[w]hoever, intending or knowing that
the offense will benefit any foreign government, foreign instrumentality, or foreign
agent, knowingly” conspires to “steal[], or without authorization . . . carr[y] away . . .
a trade secret.”
2
The Honorable Henry E. Autrey, United States District Judge for the Eastern
District of Missouri, adopting the Report and Recommendation of the Honorable John
M. Bodenhausen, United States Magistrate Judge for the Eastern District of Missouri.
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I. Background
From September 2008 to June 2017, Xiang was employed as an Advanced
Imaging Scientist with Monsanto Co., headquartered in St. Louis, Missouri. On May
25, 2017, Xiang tendered his resignation. On June 5 and June 8, Anne Luther, a
Senior Investigator for Monsanto’s Global Security Team, met with FBI Special
Agent Jaret Depke, who was then assigned to the Foreign Counterintelligence Squad
and was an officer with the Joint Terrorism Task Force at the FBI office in St. Louis.
Luther advised Agent Depke that Xiang was a senior research application engineer
who had been on Monsanto Security’s radar in 2008 for misrepresenting himself as
a University of Illinois student while attempting to acquire information about
hyperspectral imaging technology; that Xiang had submitted his resignation; and that
an exit interview was scheduled for June 9. Depke also talked to others at Monsanto.
He learned that Xiang had “conducted some suspicious Google searches” that
suggested a plan to send company documents to a third party; “sent packets of
information” to a Chinese competitor called NERCITA; and “sent confidential
Monsanto information from his work email to his personal email.” Xiang was also
known to be an associate of a former Monsanto employee named Jiunnren Chen, who
the FBI investigated after he took a job with China National Seed, a Monsanto
competitor; downloaded documents containing trade secrets; and sent emails
containing confidential information from his work account to a personal account.
Xiang was telling people that he planned to work for a potential Monsanto competitor
called Ag-Sensus, a remote-sensing agriculture start-up company with Lei Tian, his
former PhD advisor at the University of Illinois. Agent Depke considered this a
national security investigation involving potential theft of trade secrets.
On June 8, following his second meeting with Luther, Depke contacted CBP
Officer Art Beck, a fellow member of the Joint Terrorism Task Force and the
Counterintelligence Squad, to discuss what Depke learned from his Monsanto
contacts. Beck ran a check on Xiang, learning he was married with one child residing
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in St. Louis. A travel notification told Beck that Xiang planned to travel to Shanghai
on a one-way ticket without his family on June 10th, the day after his exit interview.
Beck considered this information and the fact that Xiang was leaving Monsanto to
work for a start-up company to be suspicious “red flags.” He decided to subject
Xiang to a CBP inspection at O’Hare Airport on June 10 and advised Agent Depke
of CBP’s inspection, interview, and border search capabilities.3 Beck put in a CBP
“Record Lookout” alerting O’Hare officials that a secondary inspection of electronic
devices might be needed, based on national security concerns such as theft of trade
secrets. See Directive 3340-049, § 5.3, Detention and Review in Continuation of
Border Search of Information. Because the port of entry decides whether to inspect,
Beck advised CBP Officer Swiatek in Chicago of the reasons for Beck’s suspicions
(“the articulables,” as he described them at the suppression hearing).
After Xiang’s June 9 exit interview, Monsanto personnel told Agent Depke that
Xiang was “extremely nervous” and “sweating” when asked about the suspicious
Google searches. Luther gave Depke a copy of Xiang’s signed termination in which
he agreed he would have no devices, records, data, notes, etc. in his possession that
belonged to Monsanto and would not share confidential information with any third
parties. Monsanto personnel described Xiang as extremely nervous while reviewing
3
See CBP Directive 3340-049, Border Searches of Electronic Devices
Containing Information, § 5.1, Border Searches (Aug. 20, 2009). This Directive was
in effect when Xiang’s devices were searched in 2017. CBP issued Directive 3340-
049A in January 2018, which superseded Directive 3340-049. Section 5.1.4 of the
later Directive expressly provides that “an Officer may perform an advanced search
of an electronic device,” which includes forensic searches, if “there is reasonable
suspicion of activity in violation of the laws enforced or administered by CBP, or in
which there is a national security concern.” Directive 3340-049 did not address this
issue. The government has argued to many of our sister circuits that reasonable
suspicion is not required, with mixed results. Our decision in this case is consistent
with the current Directive. We need not decide whether reasonable suspicion was
required under the prior Directive, on which there is circuit conflict.
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those provisions and assessed him as “blatantly deceptive.” Monsanto provided
Depke a copy of Xiang’s “suspicious Google searches” that included searches for
“company information to the third party,” “I don’t want it to be an evidence,” and “as
evidence to accuse me.”
Xiang rented a car in St. Louis on June 9 and drove to Chicago. At O’Hare on
June 10, CBP Agents conducted an interview and initial border search of Xiang’s
checked and carry-on baggage prior to his flight. Based on the interview and prior
information, CBP seized a cell phone, laptop computer, SD card, and a SIM card from
Xian’s baggage for a secondary inspection. Xiang boarded his flight and left. Officer
Swiatek took custody of the seized devices and advised Officer Beck of the seizure.
Beck alerted FBI Agent Depke. Because Monsanto’s trade secret personnel are in St.
Louis and Depke had an established relationship with Monsanto, Depke had “a better
chance of quickly and expediently identifying anything that would be of interest or
potentially identified as that company’s trade secrets.” Therefore, exercising
Chicago’s extended CBP border search authority, Beck had the devices sent to St.
Louis for “subject matter expertise review” by an assisting federal agency. See
Directive 3340-049, § 5.3.2.3.
Depke received the devices on June 13. The FBI Chief Division Counsel
confirmed that Depke could, within the authority of CBP, review the electronic
devices. The devices were opened and examined by a Computer Analysis Response
Team (“CART”) on June 14, 2017. CART created forensic images, and Depke began
a preliminary search on June 20. He identified six documents believed to be
Monsanto trade secrets or intellectual property, which Monsanto confirmed that day
or on June 21. At that point, CBP transferred its seizing authority to the FBI. See
Directive 3340-049, § 5.4.2.3. On July 27, the FBI applied for and obtained a warrant
to search the electronic devices.
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II. Motion to Suppress Issues
After the district court denied his motion to suppress, Xiang entered a
conditional plea of guilty, reserving the right to appeal that ruling. See Fed. R. Crim.
P. 11(a)(2). When reviewing the denial of a motion to suppress, we review findings
of fact for clear error and conclusions of law de novo. See United States v. Taylor,
519 F.3d 832, 833 (8th Cir. 2008) (standard of review).
A. Xiang’s primary argument on appeal is that the government needed a
warrant to search his electronic devices “because the forensic search did not fall
within the Fourth Amendment border search exception,” and therefore the general
rule applies that, “[i]n the absence of a warrant, a search is reasonable only if it falls
within a specific exception to the warrant requirement.” See Riley v. California, 573
U.S. 373, 382 (2014). As the opening paragraph of this opinion hopefully makes
clear, it blinks at reality to assert that CBP’s seizure and search of the electronic
devices Xiang was about to carry abroad was not a “border search” of the type
conducted by the Executive throughout our nation’s history. Xiang’s argument is that
“electronic devices are different,” as the Supreme Court recognized in Riley, and
therefore the government must get a warrant to even open them up at a port of entry,
when all other property is subject to “routine searches and seizures at the border,
without probable cause or a warrant.” Flores-Montano, 541 U.S. at 153. Riley
involved a different Fourth Amendment exception, searches incident to arrest. No
Circuit has held that the government must obtain a warrant to conduct a routine
border search of electronic devices. The First Circuit carefully explained why
Xiang’s broad argument “rests on a misapprehension of the applicability” of Riley.
Alasaad v. Mayorkas, 988 F.3d 8, 16-19 (1st Cir. 2021); see United States v.
Wanjiku, 919 F.3d 472, 484-85 (7th Cir. 2019). We agree.
Xiang further argues that the search of his electronic devices was outside the
scope of the border search exception because it was “not tethered to any border search
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justifications.” The Ninth Circuit has stated that “[a] border search must be
conducted to enforce importation laws, and not for general law enforcement
purposes.” United States v. Cano, 934 F.3d 1002, 1013 (9th Cir. 2019) (quotation
omitted); see United States v. Aigbekaen, 943 F.3d 713, 721 (4th Cir. 2019).
Conversely, the Second Circuit has stated, more sensibly in our view, that CBP
officers “have the authority to search and review a traveler’s documents and other
items at the border when they reasonably suspect that the traveler is engaged in
criminal activity, even if the crime falls outside the primary scope of their official
duties.” United States v. Levy, 803 F.3d 120, 124 (2d Cir. 2015). But regardless of
whether there is any limitation on using border searches “to investigate general
criminal wrongdoing,” the assertion that the search of Xiang’s electronic devices was
“not tethered to any border search justifications” is absurd. Congress passed the
Economic Espionage Act of 1996 because:
There can be no question that the development of proprietary economic
information is an integral part of America’s economic well-being.
Moreover, the nation’s economic interests are a part of its national
security interests. Thus, threats to the nation’s economic interest are
threats to the nation’s vital security interests.
H.R. Rep. No. 104-788, at 4 (1996), as reprinted in 1996 U.S.C.C.A.N. 4021, 4023;
see United States v. Hsu, 155 F.3d 189, 194-95 (3d Cir. 1998).
Xiang’s additional assertion that the Fourth Amendment does not permit border
searches for mere evidence of criminal activity was rejected by the Supreme Court
over fifty years ago, see Warden v. Hayden, 387 U.S. 294, 300-02 (1967), and more
recently by circuit courts in this context, see Alasaad, 988 F.3d at 20.
The real issue in this case is not whether the border search exception applies,
but whether the extended border search conducted by CBP officers, with technical
assistance from the FBI and Monsanto, is consistent with the Fourth Amendment’s
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overriding purpose to protect “against unreasonable searches and seizures.” In
United States v. Montoya de Hernandez, the Supreme Court held that when a routine
border search becomes non-routine -- in that case, the 16-hour detention of an
arriving traveler -- “customs agents, considering all the facts surrounding the traveler
and her trip, [must] reasonably suspect that the traveler is smuggling contraband in
her alimentary canal.” 473 U.S. 531, 541 (1985).
Many of our sister circuits have distinguished between “routine” and “non-
routine” border searches of electronic devices. Most have concluded that a seizure
at the port of entry, followed by a forensic or “advanced” search, particularly if time
consuming and conducted away from the port of entry, becomes a non-routine border
searches requiring some level of reasonable, individualized suspicion, but not
probable cause or a warrant.4 As discussed, see note 3 supra, Directive 3340-049A
adopted this fact-intensive approach. We think it is an appropriate standard,
particularly given the heightened personal privacy interest in electronic devices
recognized in Riley. But like the Seventh Circuit in Wanjiku, we need not decide
today whether reasonable suspicion is required for an advanced or forensic border
search of electronic devices because we agree with the district court that CBP officers
had reasonable suspicion for the forensic search they conducted.
B. Xiang argues that, if the border search exception does apply, the CBP
officers lacked the requisite reasonable suspicion. “Reasonable suspicion exists when
an officer is aware of particularized, objective facts which, taken together with
4
Compare Alasaad, 988 F.3d at 13 (1st Cir. 2021); United States v. Kolsuz, 890
F.3d 133, 144 (4th Cir. 2018); and United States v. Cotterman, 709 F.3d 952, 967-68
(9th Cir. 2013) (en banc), with United States v. Touset, 890 F.3d 1227, 1233 (11th
Cir. 2018) (reasonable suspicion not required for personal property including
electronic devices), and Wanjiku, 919 F.3d at 489 (7th Cir. 2019) (declining to reach
the issue).
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rational inferences from those facts, reasonably warrant suspicion that a crime is
being committed.” United States v. Tamayo-Baez, 820 F.3d 308, 312 (8th Cir. 2016)
(quotation omitted). We must review “the totality of the circumstances of each case
to see whether the detaining officer has a particularized and objective basis for
suspecting legal wrongdoing.” United States v. Arvizu, 534 U.S. 266, 273 (2002)
(quotation omitted).
When CBP Officers seized Xiang’s devices at O’Hare Airport, officers were
aware of the following information: Xiang resigned from his position as a Monsanto
imaging scientist the day before; he was leaving the country without his family on a
one-way trip to China and then planned to work for an agricultural start-up company;
Monsanto personnel were concerned about Xiang stealing trade secrets -- he had
conducted suspicious Google searches and was visibly nervous when asked about the
searches during his exit interview; he had transferred unknown company information
from his company email account to a personal email account and appeared nervous
and deceptive when signing a termination contract that barred him from sharing
Monsanto trade secrets and confidential information with others; previously, Xiang
associated with a former colleague who downloaded and transmitted confidential
Monsanto documents to a personal email account before leaving to work for a
Chinese competitor; Xiang had sent packets of unknown information to a Chinese
competitor, NERCITA; and Monsanto’s security team believed that Xiang, as a new
Monsanto employee in 2008, misrepresented himself as a University of Illinois
student in an attempt to acquire information about an imaging company named
SpecTIR.
Xiang argues that this gave CBP officers no reasonable suspicion he was
engaged in even a violation of company policy, much less economic espionage or
criminal theft of trade secrets. They did not know what “packets of information” he
sent to NERCITA. Sending emails from his work account to a personal account does
not point to criminal activity. There was no evidence he was involved in coworker
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Chen’s wrongdoing. The Google searches were stale evidence -- over a year prior to
the seizure of his electronic devices. Resigning and traveling to visit his family in
China are not indicative of any criminal wrongdoing. The agents’ “background” on
the “trend” of Chinese trade are “profiling” that provides little to no value, nothing
more than “unparticularized suspicion or hunch.”
We agree with the district court that this argument is contrary to well-
established Fourth Amendment principles. “The totality-of-the-circumstances test
precludes this sort of divide-and-conquer analysis.” United States v. Quinn, 812 F.3d
694, 698 (8th Cir. 2016) (quotation omitted). Even though “each of these
[suspicious] factors alone is susceptible of innocent explanation, and some factors are
more probative than others[,] . . . together . . . they sufficed to form a particularized
and objective basis.” Arvizu, 534 U.S. at 277. The officers and agents had
background information, much of it corroborated, that provided a basis for assessing
Xiang’s actions in May and June 2017. Their experience and training in international
economic espionage and theft of trade secrets gave them reasonable suspicion for an
extended border search that included a forensic search of electronic devices.
C. Finally, Xiang argues the search of his devices was constitutionally
unreasonable because it was akin to an “invasive rummage,” violated CBP policies,
was unreasonable in duration, and CBP calling on the FBI for subject matter expertise
was pretextual. These contentions require little discussion. The “rummaging” cases
on which Xiang relies -- Kremen v. United States, 353 U.S. 346, 347-48 (1957) and
Go-Bart Importing Co. v. United States, 282 U.S. 344, 358 (1931) -- bear no
resemblance to the focused search of electronic devices in this case. If law
enforcement officers have reasonable suspicion to search a container, such as a
backpack, briefcase, or electronic device, they have not conducted an unconstitutional
“rummaging” if they find the contraband at issue at the bottom of the backpack,
underneath lots of innocent items they did not seize or further search. As presented,
the argument is frivolous.
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Xiang’s other arguments are likewise without merit. We agree with the district
court that “exclusion based on a failure to follow regulatory procedure is only
warranted if (1) the procedure is mandated by the Constitution or (2) the defendants
reasonably relied on the procedure in governing his conduct.” United States v. Xiang,
No. 4:19CR980, 2021 WL 4810556 at *3 (E.D. Mo. Oct. 15, 2021), citing United
States v. Caceres, 440 U.S. 741, 749-53 (1979). There was no such showing here.
Xiang’s argument that the CBP search was “a pre-textual search . . . to gather
evidence for SA Depke’s investigation” disregards Officer Beck’s credited testimony
that his actions were taken in exercise of CBP border search authority; the express
authorization for interagency cooperation and sharing of information in Directive
3340-049, § 5.4; and the common sense reality that there is nothing “pretextual”
about members of an interagency Counterintelligence Squad working together to
ferret out economic espionage and international trade secret theft that violates 18
U.S.C. § 1831(a).
Finally, as we have explained, the record demonstrates why, after Xiang’s
devices were retained for extended inspection, it took time to send the devices to St.
Louis, where FBI Agent Depke could most efficiently conduct the search, and
Monsanto’s trade secrets security professionals could then confirm that the devices
contained trade secrets and proprietary information. During the interim, neither
Xiang nor anyone acting on his behalf asked that the devices be returned, or even
inquired about them. Thus, the extended seizure “did not meaningfully interfere with
his possessory interests,” United States v. Clutter, 674 F.3d 980, 984 (8th Cir.), cert.
denied, 133 S. Ct. 272 (2012), and CBP was obligated to “appropriately safeguard
information retained, copied, or seized under this Directive and during transmission
to another federal agency.” Directive 3340-049, § 5.4.1.5. The search was not
constitutionally unreasonable.
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III. Imposition of a Fine
In his plea agreement, Xiang “waive[d] all rights to appeal all sentencing
issues” except for those explicitly preserved -- the district court’s determination of
the applicable guidelines and Xiang’s criminal history and the substantive
reasonableness of any sentence above the guidelines sentencing or fine range.
Xiang’s PSR stated that he has “the ability to pay a fine” and calculated his advisory
guidelines range as 10-16 months imprisonment, one to three years supervised
release, and a fine of $55,000.00 to $5,000,000.00. At sentencing, Xiang renewed his
objection to the PSR’s restitution recommendation. The district court imposed an
above-range sentence of twenty-nine months’ imprisonment, imposed a $150,000
fine, and held “in abeyance its judgment on restitution.” Xiang did not object to the
fine.
Xiang appeals imposition of the $150,000 fine, arguing “the district court made
no factual findings.” He does not challenge the substantive reasonableness of the
fine, only the imposition of a fine without factual findings. This is an alleged
procedural error he waived in his plea agreement. Moreover, as he did not object at
sentencing, the challenge is not only waived but forfeited and may only be reviewed
for plain error. See United States v. Wohlman, 651 F.3d 878, 886 (8th Cir. 2011).
The district court did not err, much less plainly err in imposing a $150,000 fine.
The judgment of the district court is affirmed.
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