Seventh Circuit Holds That A Power Company’s Access to Granular Data About City Residents’ Electronic Device Usage Does Not Constitute an Unreasonable Search or Seizure

Mallory Jensen
O’Melveny & Myers LLP

In Naperville Smart Meter Awareness v. City of Naperville, the Seventh Circuit affirmed the order of Judge John Z. Lee of the Northern District of Illinois (Eastern Division), denying a consumer privacy rights organization leave to amend their complaint against the city of Naperville, Illinois for engaging in an allegedly unreasonable search and seizure of its residents’ private data in the form of electric meter monitoring. 900 F.3d 521 (2018). The Seventh Circuit concluded that while the city was conducting a “search” by collecting and monitoring residents’ smart meter data, that search is a “reasonable” one under relevant Fourth Amendment law.

Background

In January 2012, the Naperville Department of Public Utilities—Electric (DPU-E) began replacing residents’ electricity meters with smart meters. Naperville Smart Meter Awareness v. City of Naperville, 114 F. Supp. 3d 606, 609 (2015). The replacement project was part of the city’s “Smart Grid Initiative,” which was funded partly by the federal Department of Energy’s money from the American Recovery and Reinvestment Act of 2009. Id. The smart meters that were installed had wireless radio transmitters that can send usage data to network access points in different neighborhoods; the DPU-E would collect the data from there. Id.The smart meters are also capable of measuring a home’s aggregate electricity usage in intervals of fifteen minutes, meaning that the DPU-E would be gathering “data consisting of ‘granular, fine-grained, high-frequency type of energy usage measurements” . . . totaling to ‘over thousands of intervals per month.’” Id.

Because so much data is being collected from residents’ homes, it is possible for someone with access to that data to make fairly accurate inferences about what the residents are doing, because of the distinct “load signatures” that different electronic devices have. As the Seventh Circuit explained, a refrigerator, television, respirator, and indoor grow light all draw power differently, so their usage of power can be distinguished and researchers can predict what appliances are being used in a home, and when. 900 F.3d at 524.

In addition, Naperville residents do not have a choice about whether or not to get a power meter that collects this kind of information. They can request (and pay an extra fee for) a meter that does not have the wireless transmitter enabled, but the meter will still collect the same data – it must just be manually retrieved. Id. at n.1. As a result, a group of Naperville residents formed the Naperville Smart Meter Awareness (NSMA) organization and sued the city, alleging that Naperville’s collection of smart meter data constitutes an unreasonable search and seizure under the Fourth Amendment as well as the analogue provision in Illinois’ Constitution. 114 F. Supp. 3d at 610. After the court dismissed in part two earlier versions of NSMA’s complaint, the city opposed NSMA’s motion to file its third amended complaint.

The district court denied the motion with prejudice. The court concluded that NSMA had failed to state a cognizable Fourth Amendment claim, because it had not alleged that Naperville was “actually collecting and using the data in a way that would amount to an unreasonable search or invasion of privacy.” Id. at 612. Rather, NSMA’s allegations were no more than speculation that the city might use the information from the smart meters unconstitutionally. In the court’s view, regardless of the potential of the smart meters, NSMA had not alleged that the meters were “relaying detailed information beyond aggregate data about members’ electricity usage to the City and that the City is disaggregating the data to analyze the private lives of its residents.” Id. at 613. Therefore, there was no Fourth Amendment (or Illinois Constitution) claim.

Arguments on Appeal

On appeal, NSMA pointed to the special protections for privacy in the home conferred by the Fourth Amendment, and argued that this case implicated those concerns. 2017 WL 817301, at *18. Moreover, NSMA contended that it pleaded, and would have proven, if only it had been allowed to proceed past the pleadings, it would have shown the “significant risks created by the massive, ongoing data collection integral to the City’s smart-meter program.” Id. at *21-*22. In addition, NSMA argued that the collection of such data opened the City and its citizens up to other privacy risks, such as those that arise when personal data is shared with third parties. Id. at *24-*25. Throughout its brief, NSMA relied heavily on the Supreme Court’s decision in Kyllo v. United States, 533 U.S. 27 (2001), in which the defendant had been surveilled by the police using infrared technology, which revealed that he was using many grow lights to grow his marijuana plants. Kyllo emphasized the sanctity of the home and a person’s right to be free of unwanted governmental intrusion there.

NSMA was supported on appeal by Electronic Frontier Foundation (EFF) and Privacy International (PI), who co-authored an amicus brief. 2017 WL 995490. Their brief concentrated on carefully spelling out (1) why the data collected by the smart meters is highly intimate and can reveal the particulars of what people are doing in the privacy of their own homes, and (2) pointing to case law establishing that such information is protected under the Fourth Amendment. EFF and PI argued that under Kyllo, “all details of the home are intimate details,” so the smart meter information clearly qualifies; EFF and PI noted that, in fact, “smart meter data can be used to infer a far more detailed picture of the interior of a home and of the lives of its inhabitants than the grainy thermal images in Kyllo,” making the smart meter data arguably even more sensitive. Id. at *15-*16. EFF and PI also contended that people have a reasonable expectation of privacy as to their electronic device usage, and cited studies showing “consumer concern over the privacy implications of smart meter data.” Id. at *19-*20.

In its response, Naperville argued that the Fourth Amendment is not implicated at all by smart meters, because it is “meaningless data” by itself and requires disaggregation and analysis to understand anything more about the residents of homes with the meters. 2017 WL 2311912, at *11. Naperville asserted that Kyllo and similar Supreme Court cases cited by NSMA, EFF and PI were not controlling because of their very distinct factual contexts. Id. at *12. The city also took the position that not only were residents voluntarily using the smart meter (never mind that they could not get electricity without it), measurement of electricity usage is not “surveillance,” and in any case residents lack a reasonable expectation of privacy in such information because they are handing it over to a third party (the “third-party doctrine,” which has been applied in other cases, including the Sixth Circuit’s United States v. Carpenter, 819 F.3d 880 (2016), which was later overturned by the Supreme Court). Id. at *17-*21.

The Seventh Circuit’s Analysis

Reaching more deeply into the foundations of Fourth Amendment rights, and into Supreme Court case law on unreasonable searches, than the district court did, the Seventh Circuit began by agreeing with NSMA and amici that Kyllo was an important precedent. 900 F.3d at 525-26. The Seventh Circuit also agreed with NSMA and amici that the data being gathered here “is at least as rich as that found to be a search in Kyllo.” Id.at 526. The court noted that the data being collected by Naperville “can be used to draw the exact inference that troubled the Court in Kyllo,” with even more certainty and specificity. Id. Because this kind of technology is not in general use, the Seventh Circuit had no difficulty finding that Naperville was conducting a “search” of residents’ homes via the smart meters. Id. at 527. The Seventh Circuit also easily rejected the city’s third-party doctrine argument, noting that no third party is involved, and Naperville residents have no real “choice” about whether to use the smart meters. Id.

However, the Seventh Circuit then went on to assess the reasonableness of the search, and here the city prevailed. In the court’s view, data collection from an electricity meter is “far less invasive than the prototypical Fourth Amendment search of a home,” and is conducted without any prosecutorial intent. Id. at 528. The court distinguished this case from Camara v. Municipal Court, a 1967 Supreme Court case holding that a warrantless, administrative home inspection violated the Fourth Amendment, on the grounds that the smart meter data collection revealed details without requiring any physical entry into the home, so there would be no threat to the residents’ security. Id., discussing 387 U.S. 523, 530-31. The court went on to say that the government has a strong interest in using smart meters and collecting this kind of data, because they allow utilities to restore services more quickly after outages, permit time-based pricing, and can reduce utilities’ labor costs, since home visits for meter reading and repair can be less frequent. Id. at 528-29. But the court emphasized that its conclusion was dependent on its assumption that the search was (1) unrelated to law enforcement, (2) not very invasive, and (3) poses minimal risk to residents of criminal consequences. Id. at 529.

Implications

The Naperville decision comes on the heels of the Supreme Court’s blockbuster opinion in Carpenter v. United States, in which the Court ruled that a warrant is required for police to access the detailed geolocation information generated by a cellphone’s communication with cell towers. 138 S.Ct. 2206 (2018). The Seventh Circuit took care to distinguish this case from Carpenter, reasoning, as noted, that law enforcement was not involved in the meter-reading, and excessive electricity use is not a crime in Naperville, so residents are not subject to criminal or other penalties based on the search of their meters. 900 F.3d at 529. Still, the court’s view that the extremely detailed information obtainable from the meters is less invasive than police or others walking through a person’s house is somewhat surprising, and points to future struggles for privacy advocates. On this reasoning, a search of a cell phone by a wireless provider or internet service provider is hardly “invasive,” yet everyone knows how much intimate information is recorded on a cell phone – more than is in a house, even. And although the Seventh Circuit attempted to cabin the opinion to this particular context, it is hard not to see the context as a slippery slope: yes, the DPU-E was not cooperating with law enforcement or doing any detailed analysis of the data yet, but they easily might start. And, at least as important, the data is being harvested and stored somewhere: how secure is it? As more and more corners of our lives are digitized and transmitted wirelessly to government offices, utilities, manufacturers, service providers, and advertisers, the lines drawn in prior Fourth Amendment caselaw will become more and more hazy and squiggly, until they eventually need to be redrawn altogether.