The Supreme Court Has Already Agreed that the Mystery Appellant Caused a “Direct Effect” in the United States

I’d like to make a minor — but I think important — point about the DC Circuit opinion in the Mystery Appellant challenge to what is believed to be a Robert Mueller subpoena. Assuming that this is a challenge to a Special Counsel subpoena, then the Supreme Court has already agreed with Mueller — in dissolving a stay of financial penalties for blowing off a subpoena — that some company owned by a foreign country took an action outside the US that had an effect inside the US, in an investigation into what happened during an election.

This post will assume that this is a Mueller subpoena. Some of the evidence backing that assumption includes:

  • DC District Chief Judge Beryl Howell issued the original order; she presides over Mueller’s grand jury
  • A lawyer asked for Mueller’s latest sealed filing on the day a response from the Mystery Appellant was due
  • Greg Katsas recused from consideration of this case; he had said he would recuse on Mueller related issues
  • The secrecy for the hearing before the DC Circuit, and arguably the review process for this challenge, were exceptional
  • Mueller lawyers Michael Dreeben and Zainab Ahmad were seen returning to his office after the DC Circuit hearing

Judges David Tatel, Thomas Griffith, and Stephen Williams issued their order on December 18. The Mystery Appellant appealed to the Supreme Court, and over Christmas John Roberts took briefing on that appeal. Last week the Supreme Court declined to uphold the stay, effectively agreeing with the Circuit’s decision.

And that’s important, because a key part of the now-public (though still partly sealed) DC Circuit opinion explains how the presumed Mueller request overcomes the sovereign immunity of the company in question. The request must involve — among other things — an exception to sovereign immunity.

Taking section 1604 ‘s grant of immunity as a given, the government must check three boxes for the contempt order to stand. First, there must be a valid grant of subject-matter jurisdiction. Second, one of the Act’s exceptions to immunity must apply. And third, the contempt sanctions must be a permissible remedy. According to the district court, the government satisfies all three. We agree.

Mueller claimed that this qualified as an exception because the request involves an “act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere [when] that act causes a direct effect in the United States.”

Moving to those exceptions, in its ex parte filing the government steers us to the third clause of section 1605(a)(2). That provision denies immunity in an “action … based … upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere [when] that act causes a direct effect in the United States.” Ordinarily, the Corporation would bear the burden to establish that the exception does not apply. See EIG Energy FundXIV, L.P. v. Petroleo Brasileiro, S.A., 894 F.3d 339, 344- 45 (D.C. Cir. 2018) (“[T]he foreign-state defendant bears the burden of establishing the affirmative defense of immunity,” including “‘proving that the plaintiff’s allegations do not bring its case within a statutory exception to immunity.”‘ (quoting Phoenix Consulting Inc. v. Republic of Angola, 216 F .3d 36, 40 (D.C. Cir. 2000))).

And because Mueller relied on an ex parte filing to make that case, all the judges involved — Howell, Tatel, Griffith, Williams, Roberts, and whoever else at SCOTUS reviewed this — relied on the argument that Mueller’s lawyers laid out about the request.

Here, however, the government relies primarily on ex parte evidence unavailable to the Corporation. We have repeatedly approved the use of such information when “necessary to ensure the secrecy of ongoing grand jury proceedings,” In re Sealed Case No. 98-3077, 151 F.3d 1059, 1075 (D.C. Cir. 1998), and we do so again here. But where the government uses ex parte evidence, we think the burden falls on the government to establish that the exception applies, and we will conduct a searching inquiry of the government’s evidence and legal theories as a substitute for the adversarial process.

In a sealed discussion of Mueller’s ex parte filing, the DC Circuit finds a “reasonable probability” that that section covers this subpoena. It goes further and states that it doesn’t have to decide what the gravamen of the subpoena is, which suggests that something about this request makes it very clear that the company both possess the records and that they are relevant to Mueller’s investigation.

The “gravamen” of a subpoena may be the mere fact that an entity possesses the documents in question. Alternatively, the “gravamen” may be related to the content of the records and why they may be relevant to the government’s investigation. Indeed, the correct approach may well vary with the facts of a given case. Here, however, we need not resolve that issue [redacted]

There’s some other redacted discussion that dismisses a claim made by the corporation that will be interesting for the history books. But the DC Circuit is clear that the request — as laid out in an ex parte filing presumably written by Mueller’s lawyers — clears the subject matter question.

None of this analysis tells us enough about the company for us to guess what foreign company it is. The WaPo says it is a financial institution. I happen to think that Qatar or the Emirates’ investment authority are the most likely candidates but that’s just an educated guess.

Still, if this is indeed a Mueller subpoena, given the topic of Mueller’s inquiry and his fairly clear discipline at staying within the scope of it, that nevertheless is a signifiant revelation. That’s because Mueller is investigating events relating to an election. And most acts by a company owned by a foreign country that cause an effect in this country — if they have some relationship with that election — would be illegal. It could be the payoff for a bribe. It could be a more direct expenditure associated with the campaign. It could be a payment associated with activities that occurred during the campaign.

Maybe it’s something far more obscure. But any of the obvious applications here would all implicate a foreign country influencing — directly or indirectly — the election. And SCOTUS has already reviewed that Mueller argument, and found it reasonable.

That doesn’t mean SCOTUS has reviewed the evidence the company has, it doesn’t mean the company will turn over the evidence (though it would already incurred something like $300,000 to avoid compliance), it doesn’t mean the evidence proves whatever crime Mueller has cited in demanding it.

But SCOTUS has, at a minimum, found Mueller’s argument that such evidence would be relevant to his criminal investigation reasonable.

Update: Added language to make what happened — SCOTUS dissolved the stay — technically correct.

Update: And SCOTUS is now debating whether to allow the Mystery Appellant to file cert under seal or not.

As I disclosed last July, I provided information to the FBI on issues related to the Mueller investigation, so I’m going to include disclosure statements on Mueller investigation posts from here on out. I will include the disclosure whether or not the stuff I shared with the FBI pertains to the subject of the post. 

Government Recently Released Information Proving Larry Klayman Has Standing

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As I noted, the DC Circuit Court reversed Judge Richard Leon’s injunction against the phone dragnet. The judges disagreed on whether Larry Klayman had standing — because he is a Verizon Wireless but not Verizon landline subscriber, which had been the only thing confirmed by the government. All agreed he had not shown he had the high certainty of standing required to uphold an injunction against the program. But the per curium opinion did agree that the case has not been mooted, because by immediately restarting the bulk program after the passage of USA F-ReDux, the government showed that the harm could recur.

That’s important, because information proving that Klayman does have standing has recently been released in an official (albeit probably inadvertent) release.

Part of the IG Reports on the phone dragnet Charlie Savage obtained by suing shows that — at least in 2010 — the Primary Order for the phone dragnet went to AT&T, Sprint, Verizon’s subsidiaries (the former MCI part of Verizon’s business, which I believe is its backbone), and “Cellco Partnership d/b/a Verizon Wireless.”

I’ll say more about what I think this really means in a later post — and why I think the suit against bulk surveillance needs to be, and can be, tweaked somewhat to ensure standing.

But for the moment, know that for at least one 90 day period in 2010, Verizon Wireless as well as Verizon’s landline was ordered to turn over phone records.

DC Circuit Reverses Judge Leon Order Overturning Phone Dragnet

In a per curium decision, a DC Circuit panel including Janice Rogers Brown, Stephen Williams, and David Sentelle has reversed Judge Richard Leon’s decision preliminary injunction against the phone dragnet. They reversed on standing (which I’ll return to) but found the issue remains ripe.

This will be my working thread.

The panel pointed to the immediate resumption of the dragnet after USA F-ReDux to argue that the alleged violation could recur.

Cessation of a challenged practice moots a case only if “there is no reasonable expectation . . . that the alleged violation will recur.” Larsen v. U.S. Navy, 525 F.3d 1, 4 (D.C. Cir. 2008) (quotations and citations omitted). Here, any lapse in bulk collection was temporary. Immediately after Congress acted on June 2 the FBI moved the FISC to recommence bulk collection, United States’ Mem. of Law, In re Application of the FBI, No. BR 15-75 (FISC, filed Jun. 2, 2015), and the FISC confirmed that it views the new legislation as effectively reinstating Section 215 for 180 days, and as authorizing it to resume issuing bulk collection orders during that period.

Brown reversed because Klayman had shown it likely his records were collected, but had not reached the bar for a preliminary injunction.

However, plaintiffs are Verizon Wireless subscribers and not Verizon Business Network Services subscribers. Thus, the facts marshaled by plaintiffs do not fully establish that their own metadata was ever collected.


Contrary to the assertions of my colleagues, these facts bolster plaintiffs’ position: where the Clapper plaintiffs relied on speculation and conjecture to press their claim, here, plaintiffs offer an inference derived from known facts.

However, the burden on plaintiffs seeking a preliminary injunction is high. Plaintiffs must establish a “substantial likelihood of success on the merits.” Sottera, Inc., 627 F.3d at 893. Although one could reasonably infer from the evidence presented the government collected plaintiffs’ own metadata, one could also conclude the opposite. Having barely fulfilled the requirements for standing at this threshold stage, Plaintiffs fall short of meeting the higher burden of proof required for a preliminary injunction. [citation omitted]

Williams reversed because he doesn’t think Klayman has standing. He points to Amnesty v Clapper to suggest he has only speculative standing.

Plaintiffs’ contention that the government is collecting data from Verizon Wireless (a contention that the government neither confirms nor denies, Gov’t’s Br. at 38-39), depends entirely on an inference from the existence of the bulk collection program itself. Such a program would be ineffective, they say, unless the government were collecting metadata from every large carrier such as Verizon Wireless; ergo it must be collecting such data. Appellee’s Br. 27-28. This inference was also the district judge’s sole basis for finding standing. Klayman v. Obama, 957 F. Supp. 2d 1, 27 & n.36 (2013).

Yet the government has consistently maintained that its collection “never encompassed all, or even virtually all, call records and does not do so today.”


Here, the plaintiffs’ case for standing is similar to that rejected in Clapper. They offer nothing parallel to the Clapper plaintiffs’ evidence that the government had previously targeted them or someone they were communicating with (No. 3 above). And their assertion that NSA’s collection must be comprehensive in order for the program to be most effective is no stronger than the Clapper plaintiffs’ assertions regarding the government’s motive and capacity to target their communications (Nos. 2 & 4 above).


Accordingly, I find that plaintiffs have failed to demonstrate a “substantial likelihood” that the government is collecting from Verizon Wireless or that they are otherwise suffering any cognizable injury. They thus cannot meet their burden to show a “likelihood of success on the merits” and are not entitled to a preliminary injunction.

Sentelle would boot the case entirely because Klayman doesn’t have standing.

Like Judge Williams, I believe that the failure to establish the likelihood of success depends at least in the first instance on plaintiffs’ inability to establish the jurisdiction of the court. I also agree with Judge Williams that plaintiffs have not established the jurisdiction of the court. That being the case, I would not remand the case for further proceedings, but would direct its dismissal.


Plaintiffs have not demonstrated that they suffer injury from the government’s collection of records. They have certainly not shown an “injury in fact” that is “actual or imminent, not conjectural or hypothetical.” Friends of the Earth, Inc., 528 U.S. at 180. I agree with the conclusion of my colleagues that plaintiffs have not shown themselves entitled to the preliminary injunction granted by the district court. However, we should not make that our judicial pronouncement, since we do not have jurisdiction to make any determination in the cause. I therefore would vacate the preliminary injunction as having been granted without jurisdiction by the district court, and I would remand the case, not for further proceedings, but for dismissal.

The Klayman Hearing: Everyone Can Stand If DOJ Has the Backbone

Update: See this post, which explains that I’m wrong about the timing of Verizon’s different approach to production than AT&T. And that difference precedes Verizon’s withdrawal from the FBI call record program in 2009 — it goes back to 2007.

I’m finally getting around to listening to the Klayman v. Obama hearing from the other day, which you can listen to here. I’ll have more to say on it later. But my impression is that — because of the incomplete reporting of a bunch of NSA beat reporters — Klayman may be improperly thrown out on standing because he is only a Verizon cell customer, not a Verizon landline customer.

Back on June 14, 2013, the WSJ reported that Verizon Wireless and T-Mobile don’t turn over records under the phone dragnet, but that the government obtains those records anyway as they travel across the domestic backbone, largely owned by AT&T and Verizon Business Services.

The National Security Agency’s controversial data program, which seeks to stockpile records on all calls made in the U.S., doesn’t collect information directly from T-Mobile USA and Verizon Wireless, in part because of their foreign ownership ties, people familiar with the matter said.

The blind spot for U.S. intelligence is relatively small, according to a U.S. official. Officials believe they can still capture information, or metadata, on 99% of U.S. phone traffic because nearly all calls eventually travel over networks owned by U.S. companies that work with the NSA.


Much of the U.S.’s telecom backbone is owned by two companies: AT&T and Verizon Business Network Services Inc., a U.S. subsidiary of Verizon Communications that it views as a separate network from its mobile business. It was the Verizon subsidiary that was named in the FISA warrant leaked by NSA contractor Edward Snowden to the Guardian newspaper and revealed last week.

When a T-Mobile or Verizon Wireless call is made, it often must travel over one of these networks, requiring the carrier to pay the cable owner. The information related to that transaction—such as the phone numbers involved and length of call—is recorded and can then be passed to the NSA through its existing relationships.

Then, on February 7, 2014, the WSJ (and 3 other outlets) reported something entirely different — that the phone dragnet only collects around 20% of phone records (others reported the number to be a higher amount).

The National Security Agency’s collection of phone data, at the center of the controversy over U.S. surveillance operations, gathers information from about 20% or less of all U.S. calls—much less than previously thought, according to people familiar with the NSA program.

The program had been described as collecting records on almost every phone call placed in the U.S. But, in fact, it doesn’t collect records for most cellphones, the fastest-growing sector in telephony and an area where the agency has struggled to keep pace, the people said.

Over the course of 8 months, the WSJ’s own claim went from the government collecting 99% of phone data (defined as telephony) to the government collecting 20% (probably defining “call data” broadly to include VOIP), without offering an explanation of what changed. And it was not just its own earlier reporting with which WSJ conflicted; aspects of it also conflicted with a lot of publicly released primary documents about what the program has done in the past. Nevertheless, there was remarkably little interest in explaining the discrepancy.

I’m getting a lot closer to being able to explain the discrepancy in WSJ’s reporting. And if I’m right, then Larry Klayman should have standing (though I’m less certain about Anna Smith, who is appealing a suit in the 9th Circuit).

I’m fairly certain (let me caveat: I think this is the underlying dynamic; the question is the timing) the discrepancy arises from the fact that, for the first time ever, on July 19, 2013 (a month after the WSJ’s first report) the FISA Court explicitly prohibited the collection of Cell Site Location Information.

Furthermore, this Order does not authorize the production of cell site location information (CSLI).

We’ve learned several details since February that puts this in context.

First, the NSL IG Report revealed that one of the three providers who had been part of FBI’s onsite call records access from 2003 to 2006 did not renew the contract for that program in 2009.

Company A, Company B, and Company C are the three telephone carriers described in our Exigent Letters Report that provided telephone records to the TCAU in response to exigent letters and other informal requests between 2003 and 2006. As described in our Exigent Letters Report, the FBI entered into contracts with these carriers in 2003 and 2004, which required that the communication service providers place their employees in the TCAU’s office space and give these employees access to their companies’ databases so they could immediately service FBI requests for telephone records. Exigent Letters Report, 20. As described in the next chapter, TCAU no longer shares office space with the telephone providers. Companies A and C continue to serve FBI requests for telephone records and provide the records electronically to the TCAU. Company B did not renew its contract with the FBI in 2009 and is no longer providing telephone records directly to the TCAU. Company B continues to provide telephone records in response to NSL requests issued directly by the field without TCAU’s assistance.

The original WSJ, in retrospect, makes it fairly clear that Company B is Verizon (though I believe it provides the wrong explanation otherwise for Verizon’s inability to provide records, that it was partly foreign owned–though admittedly it only claims to be providing part of the explanation).

Unlike Sprint and AT&T, [Verizon Wireless and T-Mobile] also don’t perform classified work for the government. Such contracts require secure facilities that make cooperating with NSA programs simpler, people familiar with the matter said.

Verizon Associate General Counsel Michael Woods’ response to questions at a hearing earlier this year made it even more clear. He said that Verizon does not keep call detail records — as distinct from billing records — long at all (and they only keep billing records on the landline side for 18 months).

The contract with TCAU, the NSL IG Report (and the earlier Exigent Letters report) makes clear, would require providers to keep records for longer to facilitate some bells and whistles. That’s a big part of what the “make cooperating with NSA programs simpler” is likely about. Therefore, Verizon must be the provider that stopped retaining records in 2009 for the purpose of the government (It also just so happens to be the provider that doesn’t need the government cash as part of its business model). I suspect that TCAU remains closely related to Hemisphere, which may be why when I asked FBI about its participation in that unclassified project, FBI refused to comment at all.

If all that’s right, then AT&T and Sprint retain their call detail records because they have signed a contract with the government to do so. Verizon does not.

That means, at least since 2009, Verizon has been relying on actual call detail records to fulfill its obligations under Section 215, not a database that makes it easier to pull out precisely what the government wants (indeed, I suspect the end of the contract created the problems where Verizon was providing entirely foreign calls along with its domestic calls starting with the May 29, 2009 order).  The business records that Verizon had on hand was a CDR that, in the case of cell phones, necessarily included CSLI.

Verizon is still (the Verizon-specific language remains in the dragnet orders, and they challenged the first order after Leon’s decision in this case) providing records of landline calls that traverse its backbone.

But when FISC made it a violation — rather than just overproduction they otherwise would have and have, in both this and other programs, approved — to provide CSLI, and made that public, it gave Verizon the opportunity to say it had no way to provide the cell data legally.

That’s sort of what the later WSJ report says, though it doesn’t explain why this would be limited in time or why NSA would have a problem when it collects CDRs internationally with CSLI with no problem.

Moreover, the NSA has been stymied by how to remove location data—which it isn’t allowed to collect without getting additional court approval—from U.S. cellphone records collected in bulk, a U.S. official said.

I’m not sure whether it’s the case that Verizon couldn’t very easily pull that CSLI off or not. But I do suspect — particularly for a program that offers no compensation — that Verizon no longer had a legal obligation to. (This probably answers, by the way, how AT&T and Sprint are getting paid here: they’re being paid to keep their CDRs under the old TCAU contracts with the FBI.)

The government repeats over and over that they’re only getting business records the companies already have. Verizon has made it clear it doesn’t have cell call detail records without the location attached. And therefore, I suspect, the government lost its ability to make Verizon comply. That is also why, I suspect, the President claims he needs new legislation to make this happen: because he needs language forcing the providers to provide the CDRs in the form the government wants it in.

If I’m right, though — that the government had 99% coverage of telephony until Claire Eagan specifically excluded cell location — then Klayman should have standing. That’s because Richard Leon’s injunction not only prohibited the government from collecting any new records from Klayman, he also required the government to “destroy any such metadata in its possession that was collected through the bulk collection program.”

Assuming Verizon just stopped providing cell data in 2013 pursuant to Eagan’s order, then there would still be over 3 years of call records in the government’s possession available for search. Which would mean he would still be exposed to the government’s improper querying of his records.

It is certainly possible that Verizon stopped providing cell data once it ended its TCAU contact in 2009. If that’s the case, the government’s hasty destruction of call records in March would probably have eliminated the last of the data it had on Klayman (though not on ACLU, since ACLU is a landline customer as well as a wireless customer).

But if Verizon just stopped handing over cell records in 2013 after Claire Eagan made it impossible for the government to force Verizon to comply with such orders, then Klayman — and everyone else whose records transited Verizon’s backbone — should still have standing.

Update: I provided this further explanation to someone via email.

I should have said this more clearly in the post. But the only way everyone is correct: including WSJ in June, Claire Eagan’s invocation of “substantially all” in July, the PRG’s claims they weren’t getting as much as thought in December, and WSJ’s claims they weren’t much at all in February, is if Verizon shut down cell collection sometime during that period. The July order and the aftermath would explain that.

I suspect the number is now closer to 50-60% of US based telephony records within the US (remember, on almost all international traffic, there should be near duplication, because they’re collecting that at scale offshore), but there’s also VOIP and other forms of “calls” and texts that they’re not getting, which is how you get down to the intentionally alarmist 20%. One reason I think Comey’s going after Apple is because iMessage is being carved out, and Verizon is already pissed, so he needs to find a way to ensure that Apple doesn’t get a competitive advantage over Verizon by going through WiFi that may not be available to Verizon because it is itself the backbone. But if you lose both Verizon’s cell traffic AND any cell traffic they carry, you lose a ton of traffic.
That gets you to the import of the FBI contract. It is a current business purpose of AT&T and Sprint to create a database that they can charge the FBI to use to do additional searching, including location data and burner phones and the like. AT&T’s version of this is probably Hemisphere right now (thus, in FBI-speak, TCAU would be Hemisphere), meaning they also get DEA and other agencies to pay for it. In that business purpose, the FBI is a customer of AT&T and Sprint’s business decision to create its own version of the NSA’s database, including all its calls as well as things like location data the FBI can get so on individualized basis.
Verizon used to choose to pursue this business (this is the significance, I think, of the government partially relying on a claim to voluntary production, per Kris). In 2009, they changed their business approach and stopped doing that. So they no longer have a business need to create and keep a database of all its phone records.
What they do still have are SS7 routing records of all traffic on their backbone, which they need to route calls through their networks (which is what AT&T uses to build their database). That’s the business record they use to respond to their daily obligations.
But there seem to be two likely reasons why the FISC can’t force Verizon to alter those SS7 records, stripping the CSLI before delivering it to the government. First, there is no means to compensate the providers under Section 215. That clearly indicates Congress had no plan to ask providers to provide all their records on a daily basis. But without compensation, you can’t ask the providers to do a lot of tweaking.
The other problem is if you’re asking the providers to create a record, then you’re getting away from the Third Party doctrine, aren’t you? In any case, the government and judges have repeated over and over, they can only get existing business records the providers already have. Asking Verizon to do a bunch to tweak those records turns it into a database that Verizon has created not for its own business purpose, but to fulfill the government’s spying demands.
I think this is the underlying point of Woods’ testimony where he made it clear Verizon had no intent of playing Intelligence agent for the government. Verizon seems to have made it very clear they will challenge any order to go back into the spying for the government business (all the more so after losing some German business because of too-close ties to the USG). And since Verizon is presumably now doing this for relatively free (since 2009, as opposed to AT&T and Sprint, who are still getting paid via their FBI contract), the government has far less ability to make demands.
This is also where I think the cost from getting complete coverage comes from. You have to pay provider sufficiently such that they are really doing the database-keeping voluntarily, which presumably gets it well beyond reasonable cost compensation.
Update: One final point (and it’s a point William Ockham made a billion years ago). The foreign data problem Verizon had starting in 2009 would be completely consistent with a shift from database production to SS7 production, because SS7 records are going to have everything that transits the circuit.