In September 2006, a mere four days before David Fallek joined money-transfer titan Western Union (WU) as assistant general counsel of litigation and investigations, the Arizona attorney general’s office presented the company with a seizure warrant for all transfers made from twenty-eight different states to twenty-six agent locations in Sonora, Mexico. For Fallek, what had promised to be a relaxed first day getting to know his new colleagues and arranging his office became something altogether different.
“I was told, ‘Welcome to the company; now we need to figure out what to do about this seizure warrant,’” Fallek recalls. “I thought it was a great opportunity. Most lawyers have a desire to work on constitutional issues and never get a chance to do it. My first day, I was already dealing with three constitutional provisions.”
For several years at that point, the Arizona Attorney General’s Office had been serving seizure warrants related to certain individuals to try to stymie money laundering it believed was related to human smuggling between Mexico and the US. WU had been cooperating, even changing its systems to make tracking the questionable transfers easier.
But, as Fallek began his work, the company was grappling with a new warrant, which suddenly included all transactions between the indicated states and Sonora. Any and all transfers of $500 or more between the locations were to be seized, meaning anyone who made such a transaction would find it suspended and be given a phone number to call. Those who dialed the number would then find themselves being interrogated by Arizona law enforcement personnel.
By casting such a wide net, the attorney general was making it difficult for WU to do business and potentially harming its reputation as a reliable money-transfer service. The company also believed that the warrants were unconstitutional.
“We felt the attorney general didn’t have jurisdiction to affect money transfers that didn’t have a leg in Arizona,” Fallek says. “So, in response, we filed a motion to quash that seizure warrant. It was essentially like a constitutional law class. The arguments we raised touched on the due process clause of the Fourteenth Amendment, on the Fourth Amendment, as well as on the Commerce Clause.”
After keeping a line open with the attorney general’s office to see if an out-of-court resolution was possible, WU eventually decided to go to court. However, by doing so, WU was inviting negative publicity. The attorney general was keeping the seizure warrants out of the public eye so that smugglers would remain unaware they were being pursued and not switch their methods. Now, the details of the case were being brought to light, but the potential impact of staying silent was so great that the company felt it was worth it.
In January 2007, the court quashed the warrant. It ruled that the attorney general did not have jurisdiction for the warrants under the due process clause and had not established probable cause.
But, the case was far from over. In July 2008, the attorney general took the case to the Arizona Court of Appeals, which ruled in his favor. The question for WU, at that point, was whether to accept the decision or keep fighting. That would mean bringing the case to the Arizona Supreme Court.
“We thought about the implications and the chances we would succeed,” Fallek says. “In the end, we did go to the supreme court. We knew that if Arizona could do this, other states might get the same idea. Any border state could decide to do this, and that would have huge consequences to our company and the money-transfer business at large.”
Fallek was fascinated with constitutional law in school and had clerked for a federal judge. He knew that at the state supreme court level, a judge would not only consider legal arguments but also think about the larger implications of the decision—how it might affect law enforcement’s ability to do its job, for example. He and a small team restructured the company’s arguments to address what they felt had been errors in the way the appeals court had ruled on the case. Finally, in 2009, the Arizona Supreme Court ruled in WU’s favor, stating that the blanket warrants were unconstitutional.
It was a long fight to get to that ruling, but Fallek says it was more than worth it. “The case was long and difficult,” he says, “but it ended the attorney general’s practice of seizing money transfers and confirmed the company’s commitment to consumers.”
