In 1928, the U.S. Supreme Court ruled, in the case of Olmstead v. United States, that wiretapping was legal in criminal investigations. That decision made it possible for Congress to regulate electronic surveillance, which Congress did in 1934. However, the legislation prohibited only the wiretapping of phones. It did not prevent other forms of electronic surveillance, such as eavesdropping with bugs, or electronic listening devices. Furthermore, Congress specifically prohibited "unauthorized interceptance and divulgence." Exploiting this loophole in the law, many State attorney generals interpreted the regulation to mean that wiretapping and eavesdropping were legal—as long as law enforcement officials did not "divulge" the information they gathered by using it in court as evidence. In 1940, the Supreme Court ruled that eavesdropping was legal in investigations as long as no illegal entry—that is, an entry in violation of the 4th Amendment's protection against "unreasonable searches and seizures"—had been committed.
As electronic technology advanced, law enforcement officials increasingly took advantage of the capabilities it afforded. Sophisticated electronic surveillance techniques raised new questions about a citizen's "reasonable expectation of privacy" under the 4th Amendment—questions that the Warren Court considered in the case of Katz v. United States.
Charles Katz was suspected of involvement in illegal gambling activities in Los Angeles. Agents from the Federal Bureau of Investigation (FBI) regularly observed him using a public telephone, which they believed he was using to relay gambling information. Without obtaining a warrant and without ever entering the booth, the agents attached an eavesdropping device to the top of the phone booth. Over subsequent days, they recorded Katz's end of conversations to Boston and Miami. Federal prosecutors used these recordings to help convict Katz of transmitting wagering information by telephone—a violation of federal law. Katz appealed and his attorneys sought wider protection for him under the 4th Amendment than the law to date had recognized. They argued that his conviction should be overturned because evidence against him was gathered in an unconstitutional manner. In 1967, the case came before the Supreme Court.
Is the 4th Amendment protection from "unreasonable searches and seizures" restricted to the search and seizure of tangible property, or does it extend to intangible areas, such as conversations overheard by others or conversations conducted electronically, or over the telephone? Are there "constitutionally protected areas" outside of a person's private home or office?
For Katz: The 4th Amendment requires that a warrant be issued stating the probable cause for a search and names of the persons or things to be seized. In bugging the phone booth, the FBI used none of these guidelines. Moreover, a phone booth, although public, becomes private when a person uses it for confidential conversations. It becomes a "constitutionally protected area," just like a person's home or office. Finally, the Olmstead v. United States decision should be overturned, as should Katz's conviction. A person's private conversations should remain private wherever they occur, unless proper procedure is followed, including the use of a search warrant.
For the United States: The 4th Amendment protects against "unreasonable searches and seizures" conducted without a warrant. In this case, no tangible property was searched or seized, so the 4th Amendment does not apply. A telephone booth is a public place and Katz made no effort to make it private. A phone booth, in short, is not a "constitutionally protected area." Lastly, the Olmstead decision provided a precedent which the FBI agents followed and which the Court should uphold. There was no physical entry of the booth itself, which, according to Olmstead, meant that the evidence gathered was obtained legally.
With a 7–1 vote, the Court overturned the Olmstead precedent and Katz's conviction along with it. In writing the majority opinion, Justice Potter Stewart rejected the arguments that both sides had put forward about whether a phone booth was a "constitutionally protected area."
Stewart drew a telling distinction when he said that the 4th Amendment "protects people, not places. What a person knowingly exposes to the public, even in his home or office, is not a subject of the Fourth Amendment protection…. But what he seeks to preserve as private, even in an area accessible to the public [i.e., a phone booth] may be constitutionally protected."
Although Olmstead established a clear precedent, Stewart cited several decisions since 1928 that had extended the 4th Amendment, including one in which protection was given to oral statements overheard without any "technical trespass…under local property law." Stewart concluded that if the FBI agents had sought advance authorization to bug the phone booth from a judge in the same way that they might have sought a search warrant, permission would probably have been granted because the agents followed all accepted procedures for a warrant. But, as Stewart wrote: "Wherever a man may be, he is entitled to know that he will remain free from unreasonable searches and seizures. The government agents here ignored the 'procedure of antecedent justification…that is central to the Fourth Amendment,' a procedure that we hold to be a constitutional precondition to the kind of electronic surveillance involved in this case."
Since Katz, law enforcement personnel must apply for a court's permission to use electronic surveillance at the State and local level and their application must be handled in the same way as applications for a search warrant.