1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

12-21-1998

Yskamp v. DEA

Precedential or Non-Precedential:

Docket 98-6148

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Recommended Citation

"Yskamp v. DEA" (1998). 1998 Decisions. Paper 280.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/280
Filed December 21, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 98-6148 

PETER YSKAMP; CIGNA CORP., in its individual capacity 

and in its capacity as subrogee to the rights and interest 

of Peter Yskamp, and in its capacity as subrogee to the 

rights and interest of James E. Haldan, deceased 

v. 

DRUG ENFORCEMENT ADMINISTRATION 

CIGNA CORP., 

 Petitioner 

On Review of a Decision of 

the Drug Enforcement Agency 

(RI-94-0015) 

Submitted Pursuant to Third Circuit LAR 34.1(a) 

December 14, 1998 

Before: SLOVITER and COWEN, Circuit Judges, 

and OBERDORFER, District Judge* 

(Filed December 21, 1998) 

 John S. Hoff 

 Hoff & Garley 

 Chicago, IL 60603 

 Attorney for Petitioner 

_________________________________________________________________ 

*Hon. Louis F. Oberdorfer, United States District Court for the District 

of Columbia, sitting by designation. 
 Robert A. Zauzmer 

 Office of United States Attorney 

 Philadelphia, PA 19106 

 Attorney for Respondent 

OPINION OF THE COURT 

SLOVITER, Circuit Judge. 

Appellant CIGNA Corp. ("CIGNA") seeks review of the

1994 administrative forfeiture of a Lear jet by the Drug 

Enforcement Administration ("DEA"). CIGNA contends that 

because the value of the aircraft seized exceeded $500,000, 

it was improper for the DEA to use administrative forfeiture 

instead of judicial forfeiture. Additionally, CIGNA raises 

several constitutional grounds for reversing the forfeiture. 

For the reasons stated herein, we will deny CIGNA's Petition 

for Review. 

I. 

Peter Yskamp purchased the Lear jet in 1991 for use in 

a charter operation certified by the Federal Aviation 

Administration ("FAA"). James E. Haldan held a lien on the 

jet pursuant to a security agreement signed in August 

1991, a few days before Yskamp purchased the jet, but that 

agreement was not filed with the FAA (as required by law) 

until after seizure of the plane more than three years later. 

CIGNA insured the jet under a standard policy which was 

later amended at Yskamp's request to cover losses caused 

by war or confiscation. 

In September 1994, DEA officers who had become 

suspicious of the activities of certain suspects tracked them 

to the Bermuda Dunes airport in California. The suspects 

unloaded luggage from a truck into Yskamp's jet. After the 

suspects boarded the jet, the officers approached and 

requested permission to search it, which was granted. On 

board, the officers found 12 pieces of luggage containing 

300 kgs of cocaine. 

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When questioned afterwards, Yskamp conceded that this 

flight and a prior one with the same suspects were odd, 

because the bulk of the payment was in cash, the travelers 

had significantly more luggage in one direction than the 

other, and the turn-around time was short. Additionally, 

when questioned by the DEA, pilots for Yskamp stated 

initially (but later retracted when Yskamp was present) that 

they had informed him of their suspicions, and that he told 

them to ignore these concerns. 

Following the DEA's seizure of the jet, Yskamp filed a 

claim for loss with CIGNA, which CIGNA approved and paid 

under his amended insurance policy. As provided in the 

contract, CIGNA then became Yskamp's subrogee. CIGNA 

also paid the outstanding loan balance owed Haldan, even 

though Haldan was not named on the policy, and then

claimed status as Haldan's subrogee, as well. Finally, by 

paying Yskamp's insurance claim, CIGNA became owner of 

the jet outright in addition to his subrogee. 

Pursuant to the administrative forfeiture provision in 19 

U.S.C. S 1607, the DEA mailed notices of seizure dated 

October 11, 1994, to Yskamp and Haldan. The mailed 

notices contained information on the first date set for 

public notice of the seizure, the appraised value of the 

property seized ($1 million), and the federal judicial district 

in which the seizure took place. The notices also explained 

that the party could post a $5000 bond and pursue judicial 

forfeiture proceedings as an alternative pursuant to the 

statute. 

Attorney John Scott Hoff (CIGNA's counsel here) notified 

the DEA of his representation of both CIGNA and Yskamp 

on October 11, 1994. Included with this notice was a 

petition for expedited release of the jet. The DEA then 

issued a notice of seizure addressed to Yskamp c/o Hoff as 

his attorney. CIGNA wrote to the DEA on November 15, 

1994, confirming its understanding that the DEA would 

proceed on the petition for expedited release and stating 

that CIGNA's decision whether to post bond was still 

pending. 

CIGNA failed to post the judicial bond and, on December 

16, the DEA administratively forfeited the jet. Several days 

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later, the DEA denied CIGNA's expedited release petition, 

but agreed to treat CIGNA's submission as a petition for 

discretionary mitigation or remission and agreed to CIGNA's 

filing of additional documentation for that purpose. 

Following the submission of additional information, the 

DEA denied the mitigation or remission petition. The DEA 

concluded, inter alia, that neither Yskamp nor CIGNA had 

taken reasonable steps to assure that the jet was not used 

for conveying illegal drugs. CIGNA filed a petition for 

reconsideration of the forfeiture based on the DEA's failure 

to consider CIGNA's status as subrogee of Haldan's 

interest. The DEA denied that petition in August 1996. 

In September 1996, CIGNA, together with Yskamp, timely 

filed in the Court of Appeals for the Ninth Circuit a Joint 

Petition for Review of the DEA's order of forfeiture. The 

court dismissed the claims of Yskamp as well as those of 

CIGNA as subrogee of both Yskamp and Haldan for lack of 

jurisdiction, reasoning that Yskamp was not an aggrieved 

party, and that Haldan was merely an unsecured creditor 

with whom CIGNA had no relationship creating 

subrogation. The court then transferred the remainder of 

the case to this court on jurisdictional grounds pursuant to 

28 U.S.C. S 1631. CIGNA pursues review of the forfeiture on 

its own behalf as owner of the jet. 

We have jurisdiction pursuant to 21 U.S.C. S 877. We will 

set aside the agency's determination only if it is arbitrary, 

capricious, an abuse of discretion, or otherwise not in 

accordance with law. See 5 U.S.C. S 706(2); Humphreys v. 

DEA, 96 F.3d 658, 660 (3d Cir. 1996). However, appeal 

from a petition for remission or mitigation is limited to 

assuring that the DEA complied with statutory and 

procedural requirements. See Schrob v. Catterson, 948 F.2d 

1402, 1412 n.9 (3d Cir. 1991); United States v. Kravitz, 738 

F.2d 102, 105 (3d Cir. 1984) ("[T]he remission decision of 

the Attorney General is not open to judicial review."); see 

also Marshall Leasing, Inc. v. United States, 893 F.2d 1096 

(9th Cir. 1990) (upholding district court's jurisdiction to 

consider collateral attack on DEA's selection of 

administrative forfeiture). Thus, despite CIGNA's invitation, 

we will not review de novo the merits of the DEA's 

conclusion that CIGNA was not entitled to return of the jet. 

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II. 

The principal issue in this appeal is a pure question of 

law and depends on statutory interpretation. At issue is 

whether the DEA must use the procedures for judicial 

forfeiture, rather than for administrative forfeiture, if the 

value of the object seized because it was transporting a 

controlled substance exceeds $500,000. To address the 

issue, we briefly review the history and operation of the civil 

forfeiture laws. 

A. 

The statutory procedures for civil forfeiture applicable to 

the DEA and other agencies, such as the Immigration and 

Naturalization Service, the Customs Service, and the 

Federal Bureau of Investigation, appear at 19 U.S.C.S 1606 

et seq. The current provisions reflect the comprehensive 

revision made to the federal forfeiture statutes in 1984. 

Before the 1984 amendments, S 1607, which authorizes 

administrative forfeiture, provided: 

 S 1607. Seizure; value $10,000 or less 

 If such value of such vessel, vehicle, merchandise, or 

 baggage does not exceed $10,000, the appropriate 

 customs officer shall cause a notice of the seizure of 

 such articles and the intention to forfeit and sell or 

 otherwise dispose of the same according to law to be 

 published for at least three successive weeks in such 

 manner as the Secretary of the Treasury may direct. 

 For the purposes of this section and sections 1610 and 

 1612 of this title merchandise the importation of which 

 is prohibited shall be held not to exceed $10,000 in 

 value. 

19 U.S.C. S 1607 (1982). In contrast, S 1610, which

authorizes judicial forfeiture, stated: 

 S 1610. Seizure, value more than $10,000 

 If the value of any vessel, vehicle, merchandise, or 

 baggage so seized is greater than $10,000, the 

 appropriate customs officer shall transmit a report of 

 the case, with the names of available witnesses, to the 

 United States attorney for the district in which the 

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 seizure was made for the institution of the proper 

 proceedings for the condemnation of such property. 

19 U.S.C. S 1610 (1982).1 

Thus, the statute required an agency seeking forfeiture of 

property to use judicial process whenever the value of the 

property exceeded $10,000. For property appraised at or 

below $10,000, the agency could use administrative 

procedures, and these procedures required public notice of 

the intended action. A party claiming an interest in 

property that was subjected to administrative forfeiture 

could opt for a judicial proceeding by notifying the seizing 

agency and posting a bond, both within a specified period 

from the date of first public notice. 19 U.S.C.S 1608.2 

The 1984 amendments reworded these sections, 

increased the dollar cutoff, and slightly altered the process.3 

While the dual forum approach to forfeiture remained, 

Congress added a provision directing that in addition to the 

public notice already required, the interested parties be 

given personal notice. 

The relevant sections of the statute, as amended in 1984, 

provided: 

 S 1607. Seizure; value $100,000 or less, prohibited 

 merchandise, transporting conveyances 

 (a) If-- 

_________________________________________________________________ 

1. The operative text for both of these statutory sections went 

essentially 

unchanged from their first enactment in 1930 until 1984, except for 

increases in the threshold amount, which had started at $1000. 

2. Section 1608 operates today essentially as it did in 1930 except for 

amendments to the bond amount. Today, that bond value is ten percent 

of the property's value or $5000, whichever is less, but not less than 

$250. A party losing in a forfeiture proceeding also is liable for the 

costs 

of the proceeding. 

3. Congress enacted comprehensive revisions to the relevant forfeiture 

laws twice that session. See Comprehensive Forfeiture Act, Pub. L. No. 

98-473, SS 311-319, 98 Stat. 2040, 2053-56 (1984); Trade and Tariff Act, 

Pub. L. No. 98-573, S 213, 98 Stat. 2948, 2984-88 (1984). Although the 

Comprehensive Forfeiture Act did not have a designated effective date, 

the forfeiture provisions in the Trade and Tariff Act became effective on 

October 15, 1984. See S 214(e), 98 Stat. at 2989. 

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 (1) the value of such seized vessel, vehicle, aircraft, 

 merchandise, or baggage does not exceed $100,000; 

 (2) such seized merchandise is merchandise the 

 importation of which is prohibited; or 

 (3) such seized vessel, vehicle, or aircraft was used to 

 import, export, transport, or store any controlled 

 substance; 

 the appropriate customs officer shall cause a notice of 

 the seizure of such articles and the intention to forfeit 

 and sell or otherwise dispose of the same according to 

 law to be published for at least three successive weeks 

 in such manner as the Secretary of the Treasury may 

 direct. Written notice of seizure together with 

 information on the applicable procedures shall be sent 

 to each party who appears to have an interest in the 

 seized article. 

 1610. Seizure; judicial forfeiture proceedings 

 If any vessel, vehicle, aircraft, merchandise, or baggage 

 is not subject to section 1607 of this title, the 

 appropriate customs officer shall transmit a report of 

 the case, with the names of available witnesses, to the 

 United States attorney for the district in which the 

 seizure was made for the institution of the proper 

 proceedings for the condemnation of such property. 

19 U.S.C. SS 1607, 1610 (1988). 

The upper limit on subsection (a)(1) forfeitures was raised 

to $500,000 in 1990, and a separate monetary instruments 

category (codified at S 1607(a)(4)) was added. 

The 1984 amendments effected a major change in the 

statute from one that authorized administrative forfeiture 

only if the property fell below a fixed appraised value to one 

that also authorized administrative forfeiture of certain 

categories of properties based on the type of property or the 

reason for forfeiture regardless of the property's appraised 

value. In fact, the House Conference Report accompanying 

the 1990 amendment, which added the monetary 

instruments category (a)(4), noted that the addition of 

subsection (a)(4) removes the dollar limit in uncontested 

cash seizures and also observed that "[t]here is no value 

 7 
limit on conveyances that contain illegal drugs." H. Conf. 

Rep. No. 101-650 at 112, reprinted in 1990 U.S.C.C.A.N. 

989, 1002. Thus, Congress recognized that S 1607 

contained distinctly separate categories of property for 

administrative forfeiture purposes. 

To summarize, the four distinct categories of property 

subject to administrative forfeiture under the forfeiture 

statute are: (1) certain property valued at or under $500,000;4 

(2) merchandise that may not be imported; (3) vehicles, 

aircraft, and vessels used to transport drugs; and (4) 

monetary instruments. Only the first category, that in 

S 1607(a)(1), has a dollar threshold. Judicial forfeiture is 

required if the property does not fall into any of the four 

categories. S 1610. Significantly, a party may convert an 

administrative forfeiture to a judicial proceeding by posting 

a relatively small bond with the agency. S 1608.5 

B. 

In light of this historical background, we turn to CIGNA's 

contentions. First, CIGNA argues that federal law requires 

the DEA to use judicial forfeiture proceedings any time the 

value of the property seized exceeds $500,000, and that 

because the DEA failed to use judicial forfeiture to seize the 

jet, it violated CIGNA's constitutional rights. 

CIGNA relies on dictum in Marshall Leasing, Inc., 893 

F.2d at 1102-03 n.6, which CIGNA reads to suggest that 

the 1984 amendments increasing the dollar threshold for 

triggering judicial forfeiture to $100,000 applies to all 

property. Indeed, notwithstanding that the 1984 revision 

explicitly distinguished, for purposes of administrative 

forfeiture, between property seized below a fixed dollar 

value and certain classes of property subject to 

administrative forfeiture irrespective of the dollar value (a 

_________________________________________________________________ 

4. The threshold amount applies to individual items seized, not to the 

aggregate value of all items seized. See In re One 1985 Nissan, 889 F.2d 

1317, 1322 (4th Cir. 1989). 

5. Because CIGNA failed to post the necessary $5000 bond for its 

$950,000 jet, it was not entitled to judicial forfeiture under 19 U.S.C. 

S 1608. 

 8 
distinction carried over to the 1990 amendments), many 

courts have continued to refer to property generally without 

acknowledging that distinction. See, e.g., Weng v. United 

States, 137 F.3d 709, 712 (2d Cir. 1998); Ibarra v. United 

States, 120 F.3d 472, 474 (4th Cir. 1997); Litzenberger v. 

United States, 89 F.3d 818, 819-20 (Fed. Cir. 1996); United 

States v. Baird, 63 F.3d 1213, 1217 n.9 (3d Cir. 1995); 

United States v. Giraldo, 45 F.3d 509, 510 (1st Cir. 1995); 

Linarez v. United States Dept. of Justice, 2 F.3d 208, 209 

(7th Cir. 1993); Schrob, 948 F.2d at 1412 n.9. We note that 

these statements, however, are mere dicta. Several cases 

have recognized the statutory distinctions. See Arango v. 

United States Department of the Treasury, 115 F.3d 922, 

925 & n.4 (11th Cir. 1997) (grouping all property together 

in text while specifying in footnote different categories of 

seizure); United States v. Idowu, 74 F.3d 387, 394 & n.10 

(2d Cir. 1996) (enumerating four categories of property 

administratively forfeitable after notice). 

We rely on the plain language of the statute to hold that 

S 1607 creates four distinct classes of property subject to 

administrative forfeiture. With the statute so understood, it 

is apparent that CIGNA cannot prevail on its argument that 

SS 1607 and 1610 required the DEA to use judicial 

forfeiture to forfeit the airplane at issue. The DEA found 

300 kgs of cocaine on the seized jet, which was being used 

to transport the drugs. The property therefore falls under 

S 1607(a)(3) as an aircraft transporting drugs, and is not 

subject to the $500,000 threshold. Thus, the DEA did not 

abuse its discretion in using administrative forfeiture. 

As an alternative argument, CIGNA asserts that the 

DEA's own regulations require the use of judicial 

proceedings. See 21 CFR S 1316.71 et seq. A review of those 

regulations shows that they track substantially the

forfeiture statute. They define "property" generally to mean 

"a controlled substance, raw material, product, container, 

equipment, money or other asset, vessel, vehicle, or aircraft 

within the scope of the Act." S 1316.71(c). The "property" to 

be forfeited must be appraised, see S 1316.74; 19 U.S.C. 

S 1606 (requiring appraisal of vessels, vehicles, aircraft, 

merchandise, or baggage); and if the property's "appraised 

value does not exceed the [statutory] monetary amount . . .; 

 9 
is [a] monetary instrument . . .; or . . .[is] a conveyance 

used to . . . transport or store any controlled substance," 

then the DEA must publish a public notice, S 1316.75, 

which is a prerequisite for administrative forfeiture under 

19 U.S.C. S 1607. 

CIGNA focuses on the language of S 1316.78, stating that 

if the appraised value exceeds "the jurisdictional limits in 

1316.75(a)," the DEA must use judicial forfeiture, and the 

language of S 1316.77, stating that the DEA may pursue 

administrative forfeiture for property that "does not exceed 

the jurisdictional limits in S 1316.75(a)." It argues that the 

phrase "jurisdictional limits in S 1316.75(a)" applies to all 

categories of property set forth in the regulation's 

definitional section.6 It is apparent, however, that by 

pursuing administrative forfeiture of the jet, the DEA 

interprets the regulation to incorporate the statutory 

distinctions in S 1607, so that the "jurisdictional limits" 

phrase of S 1316.77 and .78 refers only to property for 

which S 1607 of the statute imposes a dollar threshold. This 

is consistent with the congressional intent that property 

used in transporting controlled substances be subject to 

administrative forfeiture. 

CIGNA suggests no reason why the DEA, the agency in

the forefront of drug interdiction, would do any less than 

Congress. Moreover, the DEA was aware that under the 

statute all that is required to invoke judicial forfeiture 

proceedings is the posting of a bond. We are obliged to 

defer to the DEA's interpretative application of these 

regulations when, as here, it is neither plainly erroneous 

nor inconsistent with the regulation. See Shell Oil Co. v. 

Babbitt, 125 F.3d 172, 175-76 (3d Cir. 1997). 

In conclusion, we hold that the DEA was not obligated 

under the federal forfeiture statutes or regulations to 

pursue judicial forfeiture merely because the value of the 

property seized pursuant to S 1607(a)(3) exceeded 

$500,000. 

_________________________________________________________________ 

6. This interpretation is articulated in CIGNA's reply brief, which the 

DEA has not had an opportunity to answer. 

 10 
III. 

CIGNA raises several constitutional arguments against 

the forfeiture of the jet. First, it claims that the forfeiture is 

violative of the Eighth Amendment's prohibition on 

excessive fines. See United States v. Austin, 509 U.S. 602 

(1993). In United States v. Bajakajian, 118 S. Ct. 2028 

(1998), the Supreme Court analyzed whether a criminal 

forfeiture of $357,144 sought by the government was

grossly disproportionate to the crime and, therefore, 

punitive and excessive. It stated that although a court 

should defer to the decision of the legislature regarding the 

appropriateness of the forfeiture, id. at 2037, the statute is 

not conclusive. Because Bajakajian's offense involved only 

a willful failure to report the export of currency in amounts 

at or over $10,000, see 18 U.S.C. S 982(a)(1), and was not 

associated with any other related crimes, such as tax 

evasion, drug trafficking, or money laundering, see

Bajakajian, 118 S.Ct. at 2036, 2038, the Court rejected as 

excessive the government's demand for the entire amount. 

Even before the Bajakajian opinion, this court was 

moving toward a proportionality test for forfeiture cases, 

both civil and criminal. See, e.g., United States v. Sarbello, 

985 F.2d 716 (3d Cir. 1993) (discussing criminal RICO 

forfeiture). In United States v. Premises Known as RR #1, 14 

F.3d 864 (3d Cir. 1994), there was a question whether the 

property at issue was in fact used "to facilitate" violation of 

the drug laws, a prerequisite for civil forfeiture. Id. at 876. 

We stated that if that nexus were proven, then the trier of 

fact would be required to look at the overall circumstances, 

including seriousness of the offense and personal benefit or 

culpability, to decide excessiveness. Id. at 875 (citing 

Sarbello, 985 F.2d at 724). 

We conclude that the forfeiture here was not excessive. 

The federal statute clearly authorized the forfeiture of 

aircraft used in the transportation of drugs. The amount of 

cocaine to be transported in the jet was comparatively large 

for a drug case. Indeed, an offense involving 150 kgs or 

more of cocaine has been placed in the highest base offense 

level under the Sentencing Guidelines. See U.S.S.G.

S 2D1.1(c). Furthermore, the DEA found CIGNA culpable 

because it failed to assure that the jet was not used for 

 11 
improper purposes. CIGNA has not contended that it had 

no duty to take reasonable precautions to prevent Yskamp's 

use of the airplane for illegal cargo. The DEA noted that 

CIGNA's insurance policy reimbursed a claimant even

though the property seized was used in illegal drug

trafficking, which effectively insulated criminals from the 

loss consequences of their crimes. Consequently, the 

forfeiture of the jet does not violate the constitutional ban 

on excessive fines. 

CIGNA's other constitutional arguments are equally 

meritless. On its Fifth Amendment claims, there is no 

question that CIGNA's counsel was aware of the forfeiture 

proceedings and could have acted to preserve the 

company's rights to a judicial forfeiture by submission of a 

$5,000 bond, but he failed to do so in a timely manner. 

CIGNA has not pursued an argument that it must receive 

personal notice, as opposed to the notices counsel received 

on behalf of Yskamp and Haldan. CIGNA's reliance on

United States v. James Daniel Good Real Property, 510 U.S. 

43 (1993), for the proposition that it deserves a hearing is 

misplaced. That case required notice and a hearing before 

the government may seize real property, not personal 

property. We decline to extend Good's reach in this case. 

CIGNA has not challenged the use of administrative 

forfeitures generally, only the use of administrative 

forfeiture instead of judicial forfeiture in this case. Because 

we have concluded that the DEA's administrative forfeiture 

was permissible here, and authorized by statute, we need 

not address CIGNA's Sixth and Seventh Amendment 

arguments. 

Finally, CIGNA raises, apparently for the first time, an 

argument that the jet was not subject to forfeiture because 

it served as a common carrier under 21 U.S.C. S 881(a)(4). 

However, even that exception requires that the owner 

neither consent nor be willfully blind to the property's use 

in transporting drugs. Id. Even were we to disregard our 

precedent and consider this claim in the first instance, see, 

e.g., Southwestern Pa. Growth Alliance v. Browner, 121 F.3d 

106, 111-13 (3d Cir. 1997) (declining review of issue not 

considered by agency in the first instance), which we are 

not inclined to do, the DEA found that CIGNA failed to 

 12 
prevent the jet's use in transporting illegal drugs, which 

would render that exception inapplicable. CIGNA offers no 

explanation that would overcome this finding. 

IV. 

In conclusion, we will deny CIGNA's Petition for Review. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 13