CINDY A. COHN, ESQ.; SBN 145997 McGLASHAN & SARRAIL Professional Corporation 177 Bovet Road, Sixth Floor San Mateo, CA 94402 Tel: (415) 341-2585 Fax: (415) 341-1395 LEE TIEN, ESQ.: SBN 148216 ROBERT CORN-REVERE, ESQ. 1452 Curtis Street JULIA F. KOGAN, ESQ. Berkeley, CA 94702 JEREMY B. MILLER, ESQ. Tel: (510) 525-0817 Hogan & Hartson L.L.P. 555 Thirteenth Street, NW M. EDWARD ROSS, ESQ; SBN 173048 Washington, DC 20004 STEEFEL, LEVITT & WEISS Tel: (202) 637-5600 A Professional Corporation One Embarcadero Center, 30th Floor San Francisco, CA 94111 Tel: (415) 788-0900 JAMES WHEATON; SBN 115230 ELIZABETH PRITZKER; SBN 146267 FIRST AMENDMENT PROJECT 1736 Franklin, 8th Floor Oakland, CA 94612 Tel: (510) 208-7744 Attorneys for Plaintiff Daniel J. Bernstein IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA ) DANIEL J. BERNSTEIN, ) Case No. C-95-0582 MHP ) Plaintiff ) PLAINTIFF'S OPPOSITION TO ) DEFENDANTS' MOTION FOR ) RECONSIDERATION AND UNITED STATES DEPARTMENT OF ) REPLY TO DEFENDANTS' STATE, et al., ) REQUEST FOR CLARIFICATION ) Defendants. ) ) INTRODUCTION Plaintiff Daniel J. Bernstein, by his attorneys, hereby opposes Defendants' Motion to Reconsider this Court's December 16, 1996 Memorandum Opinion and Order. Although a district court "may reconsider its grant of summary judgment under either Fed. R. Civ. P. 59(e) (motion to alter or amend a judgment) or 60(b) (relief from judgment), Defendants must show, as a threshold matter, that new material facts have emerged or that there has been a change in law since issuance of the order. 1/ Reconsideration is appropriate only where the court is presented with newly discovered evidence, where the court has committed clear error, or there has been an intervening change in controlling law. Reconsideration for any other reason would be "highly unusual." School Dist. No. 1J, Multnomah County, Oregon v. ACandS, Inc., 5 F.3d 1255, 1262 (9th Cir. 1993), cert. denied, 114 S. Ct. 2742 (1994). No circumstances warranting reconsideration exist in this case. Although Defendants have rearranged the chairs for the agencies that will administer the prior restraint at issue, the government has made no material change in its regulations regarding the export of cryptographic software. Even the modifications now being proffered to this Court are ephemeral, for Defendants have expressly reserved the right to reimpose the ITAR regulations. In short, there is nothing to reconsider. Clarification may be appropriate, however, to explore the extent to which Defendants are free to disregard the this Court's constitutional findings. ARGUMENT I. RECONSIDERATION OF THIS COURT'S DECEMBER 1996 ORDER IS COMPLETELY UNJUSTIFIED The sole rationale for reconsideration offered by Defendants is that the ITAR regulations upon which this Court's Order was based "have been superseded." Defendants' Memorandum of Points and Authorities in Support of the Motion for Reconsideration ("Recon. Motion") at 2. Although Defendants acknowledge, as they must, that "the controversy between the parties continues under the new EAR" and that "the parties' dispute as to licensing procedures for plaintiff's encryption source code, and as to technical data, would continue," they assert that "the ITAR no longer governs the export of plaintiff's source code or technical data." Id. at 2-3. It is by no means clear that Defendants are even technically correct in their claim that the ITAR no longer applies. As President Clinton's Memorandum accompanying Executive Order 13026 made clear, Defendants retain the authority at their discretion to redesignate encryption products as defense articles "to be placed on the United States Munitions List and controlled pursuant to the terms of the terms of the Arms Export Control Act and the International Traffic in Arms Regulations." Recon. Motion, Tab A. Moreover, Executive Order 13026 provides that Defendants "shall" control the "export of assistance (including training) to foreign persons in the same manner and to the same extent as the export of such assistance is controlled under the AECA." It further provides that the regulation of encryption products "shall be subject to such further conditions as the President may direct." Id. Far from implementing a substantive change in the law, the Executive Order specifies that the new process "is intended only Although Plaintiff agrees with the Defendants that "[a]ny final judgment in this case should be directed at the current regulatory policy," 2/ there is no basis for reconsidering this Court's previous Order. Instead, Plaintiff proposes that this Court consider a separate Summary Judgment on the new regulations. Defendants themselves cite a Supreme Court decision declining to alter its previous opinion when presented with a claim of mootness due to intervening replacement of one ordinance with another. The Court characterized the question as "whether the new ordinance is sufficiently similar to the repealed ordinance that it is permissible to say that the challenged conduct continues . . . ." Northeastern Florida Chapter of the Associated General Contractors of America v. City of Jacksonville, 508 U.S. 656, 662 n.3 (1993). The Court stated, "Nor does it matter that the new ordinance differs in certain respects from the old one. . . . The new ordinance . . . disadvantages [petitioner] in the same fundamental way The Supreme Court similarly rejected a mootness claim in City of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 289 (1982), where it applied the "well settled" rule that "a defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice." City of Mesquite is particularly relevant here, because the Court refused to reverse as moot a holding based upon an ordinance that was subsequently amended in an attempt to eliminate vagueness. The Court stressed that "[m]ere voluntary cessation of allegedly illegal conduct does not moot a case; if it did, the courts would be compelled to leave "[t]he defendant . . . free to return to his old ways.'" Id. at 289 n.10, citing United States v. W. T. Grant Co., 345 U.S. 629, 632 (1953); United States v. Trans-Missouri Freight Assn., 166 U.S. 290 (1897). The only authorities Defendants cite in support of their Motion, Diffenderfer v. Central Baptist Church of Miami, Inc., 404 U.S. 412 (1972) (per curiam) and Fusari v. Steinberg, 419 U.S. 379 (1975), see Recon. Motion at 3 nn.5, 8, were expressly distinguished in Northeastern Florida, 508 U.S. at 662 n.3 (citations omitted), where the Court noted that both cases predate City of Mesquite, and also that "the statutes at issue in those cases were changed substantially, and . . there was therefore no basis for concluding that the challenged conduct was being repeated." Here, by contrast, "[t]here is no mere risk that [the government] will repeat its allegedly wrongful conduct; it has already done so." Northeastern Florida, 508 U.S. at 662. II. THIS COURT SHOULD CLARIFY THE EXTENT TO WHICH DEFENDANTS MAY IGNORE THE CONSTITUTIONAL FINDINGS IN THE DECEMBER 1996 ORDER At the time of the December Order this Court anticipated that the guidance it provided would enable the parties to reach a stipulation to permit Professor Bernstein to teach free of the threat of prosecution. And so it did. Yet just two weeks after this Court held that the licensing scheme for cryptographic software imposed an unconstitutional prior restraint on its face, the government adopted new rules that Defendants acknowledge impose the same "essential requirements that previously applied to encryption source code under the ITAR." Recon. Motion at 2. Defendants have given this Court's Order the narrowest possible interpretation, limiting its scope effectively to the stipulation and nothing more. This position threatens Plaintiff with prosecution should he "export" his encryption software without a license. In adopting a new set of rules, the government chose to reimpose fundamentally the same system of prior restraint that this Court concluded is unconstitutional, and, in their statements to Plaintiff, have acted as if the Order does not exist. Defendants correctly point out that this Court so far has not issued an injunction, but a declaratory ruling should eliminate uncertainty about legal obligations and prevent future litigation. Such a declaration "should be a message not only to the parties but also to the public" and should have "significant educational and lasting importance." Bilbrey v. Brown, 738 F.2d 1462, 1471 (9th Cir. 1984). It should be "another marker along the road to implementation of [constitutional] rights." Id. It is difficult to conclude that a declaratory ruling performs this function when Defendants ignore its constitutional findings, both in their issuance of new regulations and in their threats to Plaintiff. 3/ Given these developments, Plaintiff agrees that all parties would benefit from this Court's clear direction. However, any such clarification can be accomplished when it rules on Summary Judgment pursuant to Plaintiff's Supplemental Complaint. CONCLUSION For the foregoing reasons, this Court should deny Defendants' Motion for Leave to File a Motion for Reconsideration. Respectfully submitted, McGLASHAN & SARRAIL, P.C. Professional Corporation By: _______________________ CINDY A. COHN 1/ Civil L. R. 7-9(b)(2). Similarly, Civil L.R. 7-9(b)(1) requires the moving party to demonstrate that it did not know, or could not reasonably have discovered the purported change in law "at the time of the interlocutory order." Although the specific Department of Commerce regulations were not issued until December 30, 1996, Defendants were well aware of the impending transfer of jurisdiction, as evidenced by Executive Order 13026, filed with this Court by Defendants on November 26, 1996 and as Attachment A in the instant Motion. Moreover, Defendants participated in promulgation of the new regulations. 2/ Plaintiff has filed a Request for Leave to File a Supplemental Complaint to account for the government's procedural adjustments and intends to immediately file for Summary Judgment after the Supplemental Complaint is filed. Defendants do not oppose supplementing the complaint "in principle," except as to the addition of new Defendants (Department of Justice, Central Intelligence Agency and the Department of Energy). The addition of these parties as Defendants is appropriate because they have been given authority over exports only because encryption products have been transferred to the Commerce Control List. Whether or not these parties will promulgate rules, they will have the ability to block the grant of export licenses. Plaintiff is challenging the export regulations both on their face and as applied. 3/ Once a district court issues a declaratory ruling that a statutory scheme is facially unconstitutional, as occurred here, it has the authority to grant other necessary relief, such as barring enforcement "as to any to whom [the regulations] might be applied." Doe v. Gallinot, 657 F.2d 1017, 1024 (9th Cir. 1981).