Opinion ID: 6065
Heading Depth: 3
Heading Rank: 2

Heading: Consistency with the Sentencing Reform Act

Text: Appellees nevertheless contend that to afford the government an appeal of a §1467 forfeiture under §3742(b) is inconsistent with certain provisions of the Sentencing Reform Act. Appellees maintain that a forfeiture pursuant to §1467 is not a sentence for purposes of §3742(b) because §1467 forfeiture is not specifically mentioned as an order of criminal forfeiture in 18 U.S.C. §3554 (1988).17 Yet only forfeitures pursuant to §3554 are authorized sanctions under 18 U.S.C. §3551 (1988 & Supp. II 1990),18 16 Actually, the sentences of the appellee corporations -- CPLC and Video Team -- are determined in compliance with Chapter 8 entitled Sentencing of Organizations. United States Sentencing Commission, Guidelines Manual §8A1.1 (Nov. 1, 1992). Just like the chapter applicable to non-organizations, Chapter 8 treats forfeitures as part of the sentence. For instance, the application instructions in Chapter 8 on determining sentences for organizations specifically requires a determination of the sentencing requirements relating to special assessments, forfeitures, and costs made by reference to Part E of Chapter 8. See id. §8A1.2(d) (emphasis added). Significantly, the relevant portion of Part E on forfeiture merely refers the user back to §5E1.4. See id. §8E1.2. Because the unmistakable implication of Chapter 8 is -- just as in Chapter 5 -- to treat forfeiture as part of the sentence, we will speak only in terms of Chapter 5 sentencing for the sake of clarity. 17 Section 3554 requires a court imposing a sentence under the federal RICO statute or Titles II and III of the Comprehensive Drug Abuse Prevention and Control Act of 1970 to order the forfeiture of property in accordance with the automatic forfeiture provisions of the respective statutes. 18 U.S.C. §3554. 18 Section 3551 provides in relevant part that [a] sanction authorized by section 3554, 3555, or 3556 may be imposed in addition to the sentence required by this subsection. 18 U.S.C. §3551(b) (1988). The same is true for organizations. See 18 15 and only §3551 sanctions are made appealable under §3557.19 Finally, appellees urge that 18 U.S.C. §3557 (1988) implicitly limits appeals under §3742(b) to sentences imposed in accordance with §3551. As such, the government has no statutory basis for appeal. This reasoning might be compelling but for two flaws. First, section 3551(a) provides in relevant part that [e]xcept as otherwise specifically provided, a defendant who has been found guilty of an offense described in any Federal statute, ... , shall be sentenced in accordance with the provisions of this chapter. 18 U.S.C. §3551(a) (emphasis added). Second, §3742(b) is not limited to authorizing appeals cross-referenced back to §3557. This fact harmonizes nicely with the §3551(a) proviso. Thus, even assuming that §3551(b) and (c) only authorize sentences with forfeiture limited to the specific types enumerated in §3554, U.S.C. §3551(c) (1988). Appellees do not concede that §3554 forfeitures are sentences, relying on the in addition to the sentence language in §3551 to conclude that even §3554 forfeitures are not sentences. While not necessary to our disposition of this case, we express reservations as to appellees' reading of §3554. First, a reading of §3554 which takes sentence to include the forfeitures enumerated in the section would be consistent with the totality of the language in the section, particularly the language which requires the court to order forfeiture in imposing a sentence on a defendant. 18 U.S.C. §3554. Further, such a reading would be consistent with the well-established understanding of forfeitures as punishment. See, e.g., Austin v. U.S., 113 S.Ct. 2801, 2810 (1993) (noting that forfeiture generally and statutory in rem forfeiture in particular have been historically understood as punishment); U.S. v. Horak, 833 F.2d 1235, 1246 (7th Cir. 1987) (finding that RICO forfeiture is punishment imposed on a guilty defendant). 19 In its entirety, section 3557 provides that [t]he review of a sentence imposed pursuant to section 3551 is governed by the provisions of section 3742. 18 U.S.C. §3557. 16 §3551(a) expressly allows for sentencing where otherwise specifically provided; this language is certainly broad enough to include sentencing pursuant to §5E1.4 of the Sentencing Guidelines. As our earlier discussion demonstrated, the guidelines clearly and specifically provide for sentencing to include a §1467 forfeiture. Contrary to appellees' ingenious argument, a sentence imposing §1467 forfeiture pursuant to §5E1.4 qualifies as a sentence imposed pursuant to section 3551 and thus its review would be governed by §3742. See 18 U.S.C. §3557. Under §3742(b), the government may appeal in four situations.20 The government has the statutory authority under §3742(b)(1) to bring this appeal since it alleges that the sentence is in violation of law -- specifically, §1467.21 20 See note 13 supra. 21 Appellee Warner raises a double jeopardy objection to the government's ability to appeal the district court's denial of the forfeiture motion. However, it is well-established that double jeopardy does not prevent appellate review of the government's statutorily authorized appeal of a sentence. See United States v. Greenwood, 974 F.2d 1449, 1473 (5th Cir. 1992) (relying on United States v. DiFrancesco, 449 U.S. 117, 132 - 33 (1980)). The remaining appellees additionally urge that this appeal should be dismissed on the basis that the Solicitor General authorized the appeal after the notice of appeal was filed by the government. Appellees' objection is without merit. The clear language of §3742(b) allows the government to file a notice of appeal in the district court, but prohibits the government from further prosecuting an appeal of a sentence without certain officials' approval. 18 U.S.C. §3742(b) (1988 & Supp. II 1990). The government has fully complied with these requirements. 17 B. Merits of Denial of Forfeiture Motion 1. Statutory Construction In appealing the denial of its motion for a forfeiture order, the government argues that the district court misconstrued the discretion given it under 18 U.S.C. §1467(a)(3) (1988) and erroneously limited the kind of property subject to forfeiture under that statutory provision. As the court recognized in its published opinion denying the forfeiture motion, the questions of statutory construction posed are of first impression.22 See United States v. Cal. Publishers Liquidating Corp., 778 F.Supp. 1377, 1379 (N.D. Tex. 1991). We conclude that the government's critique is essentially correct. A court begins the task of interpreting a statute by looking to the statutory language. See Mallard v. United States Dist. Court for S. Dist. of Iowa, 490 U.S. 296, 300 - 01 (1989). To that end, the relevant statutory language provides: A person who is convicted of an offense involving obscene material under this chapter shall forfeit to the United States such person's interest in ... (3) any property, real or personal, used or intended to be used to commit or to promote the commission of such offense, if the court in its discretion so determines, taking into consideration the 22 In one of only two appeals court cases dealing with §1467 forfeiture, the D.C. Circuit did not reach the merits of a First Amendment challenge to the forfeiture provision on the grounds that plaintiffs' claims were not justiciable. See American Library Assoc. v. Barr, 956 F.2d 1178, 1187 (D.C. Cir. 1992). In the only other reported case, the Fourth Circuit in dicta upheld §1467 against a First Amendment challenge. See United States v. Pryba, 900 F.2d 748, 755 (4th Cir. 1990), cert. denied, 498 U.S. 924 (1990). 18 nature, scope, and proportionality of the use of the property in the offense. 18 U.S.C. §1467(a)(3) (1988). The statute also requires the trier of fact to determine beyond a reasonable doubt that the property is subject to forfeiture. 18 U.S.C. §1467(e) (1988). Once the defendant/appellees were found guilty of violating 18 U.S.C. §1462 (1988), an offense under this chapter for purposes of §1467(a)(3), the district court submitted the forfeiture issue to the jury.23 See Cal. Publishers, 778 F.Supp. at 1381. The jury returned a special verdict in which it found that two tracts of real property in Los Angeles -- together with the buildings housing the corporate defendants and their contents -- and four corporate bank accounts were subject to forfeiture. See id. The jury did not find that the personal bank accounts of defendant/appellees Michael Warner and Donald Browning were subject to forfeiture.24 As has already been noted, the district court subsequently denied the government's motion for an order of forfeiture in the sound exercise of its discretion. Id. at 1394. Except as to defendant/appellee Great Western, the government appeals the court's denial of its forfeiture motion. While the only issue properly before the district court concerned forfeiture under §1467(a)(3), the district court 23 Section 1462 makes knowingly us[ing] any express company or other common carrier, for carriage in interstate or foreign commerce--(a) any obscene ... motion picture film punishable by a fine of up to $5,000 and/or imprisonment up to five years for a first offense. 18 U.S.C. §1462(a). 24 The government did not seek forfeiture as against Susan Colvin. 19 nonetheless chose to discuss forfeiture under §1467(a)(1) and (a)(2). See id. at 1382 - 85. The court's discussion of those other forfeiture provisions is both problematic and wholly unnecessary.25 This court will entertain only the district court's construction of §1467(a)(3). A critical flaw in the district court's construction of §1467(a)(3) concerns the clause in which the court is directed to take into consideration the nature, scope, and proportionality of the use of the property in the offense in exercising its discretion. 18 U.S.C. §1467(a)(3) (emphasis added). Under the district court's reading, the only property over which the district court has discretion to order forfeiture is property actually used in the offense. See Cal. Publishers, 778 F.Supp. at 1386 n.9. That is, according to the district court, any property that the jury found was merely intended to be used to commit or promote the commission of an offense under the chapter on obscenity would be automatically excluded from forfeiture. 18 U.S.C. §1467(a)(3) (emphasis added). This construction renders the first part of §1467(a)(3) virtually meaningless. While a jury is empowered under the first part of §1467(a)(3) to return a broad forfeiture verdict as to 25 For instance, in its construction of §1467(a)(1), the district court noted that an order of forfeiture of materials not found to be obscene would do violence to the First Amendment's protection from prior restraint. See Cal. Publishers, 778 F.Supp. at 1384. This conclusion erroneously predicted the Supreme Court, which recently rejected the very same argument in the context of RICO forfeiture. See Alexander v. United States, 113 S.Ct. 2766, 2770 - 71 (1993). The constitutional objections raised to §1467(a)(3) are discussed fully in part 2 infra. 20 property which it found to be actually used or intended to be used to commit or promote the commission of the obscenity offense, the district court's discretion to order forfeiture under the latter portion of the statutory provision would extend only to a much more narrow class -- property actually used in the offense. Harmonizing all of its parts, as we must do, §1467(a)(3) plainly extends the court's discretion much more broadly than as construed by the district court. Consequently, in exercising its discretion, the district court must take into account the nature, scope, and proportionality of the use -- both actual and intended -- of the property in the commission and promotion of the obscenity offense.26 The district court also misconstrued §1467(a)(3) when it artificially narrowed the scope of forfeiture to include only property used to produce or transport obscene articles. See Cal. Publishers, 778 F. Supp at 1388-1389. No such qualifying language appears in the language of the statutory provision. Instead, the statute provides for the forfeiture of any property, real or personal so long as it is used or intended to be used to commit or to promote the commission of the obscenity offense. 18 U.S.C. §1467(a)(3). (emphasis added). Rather than rely on the unambiguous language of the statute, the district court hinged its analysis on a piece of 26 Offense for purposes of § 1467(a)(3) forfeiture is the offense of conviction. Specifically, the offense of conviction must be -- per the statutory requirement -- an offense involving obscene material under this chapter. 18 U.S.C. § 1467(a) (emphasis added). 21 ambiguous legislative history.27 See Cal. Publishers, 778 F.Supp at 1385, 1388. Except in rare circumstances, judicial inquiry is complete when the terms of a statute are unambiguous. See Demarest v. Manspeaker, 111 S.Ct. 599, 604 (1991). The meaning of any property is perfectly clear and does not present the exceptional case in which application of the statute as written would produce a result demonstrably at odds with the intentions of its drafters. See id. (relying on Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982)). The district court's erroneous construction of §1467(a)(3) led the court improperly to refuse consideration of certain evidence. Two particular instances merit discussion. First, the district court refused to consider FBI summaries of seventy-two unindicted videotapes shipped into the Dallas area by defendant/appellees. See Cal. Publishers, 778 F. Supp. at 1388. 27 The specific legislative history relied upon by the district court is particularly suspect. The district court relied upon a portion of President Reagan's message to Congress urging adoption of the larger legislation of which §1467(a)(3) was a part. See Cal. Publishers, 778 F.Supp. at 1385. The district court quotes a section of the message in which the President noted that §1467(a)(3) 'is intended to cover the things used to produce or transport the obscene article.' See id. (citations omitted). Note that the President's remarks were directed at a very different, earlier version of §1467(a)(3). See id. at 1385 n.8. The court took these remarks to mean that §1467(a)(3) only allowed forfeiture of property used in the production or transportation of the obscene material. See id. at 1388. However, the quoted language could easily be read not to be exclusive in its coverage. As a general matter, legislative history in the form of Presidential messages or committee reports -- a legislative analogue to the Presidential message -- should be approached with skepticism. See, e.g., Wis. Pub. Intervenor v. Mortier, 111 S.Ct. 2476, 2487 - 2491 (1991) (Scalia, J., concurring) (criticizing use of committee reports in part because of their unreliability as indicators of congressional intent). 22 A magistrate in Los Angeles had concluded that probable cause existed to believe that these tapes were obscene. See id. The district court declared that [t]o assume that the unindicted video tapes are obscene would be as improper as finding that all eight of the indicted video tapes are obscene, despite the fact that the jury did not so find. Id. But the unindicted videos need not be deemed obscene in order for the court to consider them for purposes of forfeiture.28 First, to the extent the unindicted videos are part of the contents of the real property that the jury found subject to forfeiture in its special verdict, the district court must take them into account in deciding whether to exercise its discretion. Second, in actually exercising its discretion to determine a forfeiture under § 1467(a)(3), the court might well conclude that these unindicted, sexually explicit videos shipped into Dallas were used to promote the commission of the offense of conviction -- namely, interstate shipping of the obscene videos. The court might reasonably view the numerous unindicted shipments into the Dallas area as facilitating the offense of conviction in that the shipments established or maintained market presence in Dallas. Further, the shipments might reasonably be seen as helping build the necessary client contacts or reputation in the Dallas market with the inevitable consequence of facilitating the conviction offense. 28 As to the constitutional propriety of such forfeiture, see note 29 infra. 23 Property used to promote the commission of the obscenity offense necessarily encompasses a broader category of property than that used to commit the offense. Following from this observation, the nexus required of property used to promote the commission of the obscenity offense is necessarily less exacting than that required of property used to commit the offense. The district court thus erred in refusing to consider this evidence and should do so on remand. Similarly, the court is required on remand to consider the 369 videos in the defendants' inventory which had been found obscene in unrelated state prosecutions in Texas. The court refused to consider such evidence in exercising its discretion to order forfeiture on the grounds that they were irrelevant and that no evidence existed that the [d]efendants ever shipped a single copy of any of the ... [videos] into the Dallas Division of the Northern District of Texas. Id. at 1388 n.12. Under our above reasoning, however, they are equally subject to consideration by the court as were the unindicted videotapes. By discussing the two sets of videos that the district court specifically refused to admit, we by no means intimate the extent of the district court's task on remand. The narrow construction of the statute by the district court permeated its view of the relevant considerations at the forfeiture stage. For example, under the district court's narrow view, a computer not actually used in the offense but located on the defendants' premises -- part of the contents of the real property the jury 24 found subject to forfeiture -- would not be subject to forfeiture for a couple of reasons. First, the district court construed §1467(a)(3) to be limited to articles used to produce or transport obscene articles; presumably the computer would not be covered under this construction. Second, the district court also construed its discretion to extend only to property actually used in the offense. Under the proper understanding of the statute, however, this computer could be found subject to forfeiture in the court's discretion. The district court would have to consider the nature, scope, and proportionality of the computer's use -- actual and intended -- in the commission and promotion of the obscenity offenses. If the computer were solely dedicated to keeping sales and transport records of the sexually explicit inventory, a district court would be within its discretion to order forfeiture following these criteria. This result is completely permissible even though the computer was not actually used to commit the §1462 violation. This illustration does not suggest that the issue of forfeiture must be fought item by item across a defendant's inventory. Rather, we hope to demonstrate that the proportionality determination embodies more property than a forfeiture of only the obscene materials themselves or the articles used in their transportation and production. Comparison with the drug crime and RICO forfeiture provisions is also apt. In the former case, Congress authorized forfeiture of property used in any part to 25 facilitate a drug offense, 21 U.S.C. §853 (1988); this penalty is broader than the § 1467(a)(3) discretionary provision. RICO forfeiture, authorized under 18 U.S.C. § 1963 (1988), is also broader, but it is predicated upon the more onerous conviction of predicate offenses establishing an illegal enterprise. As we view it, § 1467(a)(3) discretionary forfeiture ought to rest in the middle ground between the district court's unduly narrow construction and the broader mandatory forfeitures authorized under other statutes.29 On remand, the district court must broaden its view of discretionary forfeiture consistent with this opinion. While attempting to guide the court's exercise of discretion, we do not intimate how discretion should ultimately be exercised. 2. Constitutional Objections Defendant/appellees argue that any interpretation of §1467(a)(3) other than that of the district court would run afoul of the Constitution. Specifically, they urge that our view of the statutory provision constitutes an impermissible prior restraint on presumptively protected speech and will lead to a chilling effect on such speech. Warner also argues that the forfeiture sought by the government would violate the Eighth Amendment. Their First Amendment concern was laid to rest by the Supreme Court's recent opinion in Alexander v. United States, ____ U.S. ___, 113 S.Ct. 2766 (1993). The Supreme Court turned back the 29 It was appropriate for the court to assess forfeiture against the backdrop of the criminal sentences and five-figure fines it meted out for the convictions. 26 argument that a RICO forfeiture of sexually oriented business convicted of multiple obscenity violations constituted an impermissible prior restraint. To accept the defendant's argument, the Court noted, would virtually obliterate the distinction ... between prior restraints and subsequent punishments. Id. at 2771. The critical distinction that placed the RICO forfeiture order firmly in the category of subsequent punishments was that the order did not forbid future expressive activities or require any sort of prior approval for such activities. See id. Section 1467 forfeiture shares this constitutionally significant characteristic. As to the alleged chilling effect on protected speech, Alexander countered that the threat of forfeiture has no more of a chilling effect on free expression than the threat of a prison term or a large fine. See id. at 2774. The same holds true of a § 1467 forfeiture.30 Warner's Eighth Amendment objection is premature since we are remanding to the district court for a redetermination of the appropriateness of forfeiture. If the district court in the exercise of its discretion orders forfeiture, defendants may at such time raise their Eighth Amendment arguments. See Alexander, 113 S.Ct. at 2775 - 76 (concluding that on remand order of criminal 30 The defendant/appellees also argue that any construction of the statute which allows for forfeiture of videotapes in their California inventory based on the videotapes found obscene in Dallas would effectively violate the community standards test set forth in Miller v. California, 413 U.S. 15, 32 - 34 (1973). But this argument assumes that the videos are being forfeited because they are believed to be obscene. Under §1467(a)(3), the videos may be forfeited because they were related to the defendants' obscenity convictions in this case and, thus, as subsequent punishment. 27 forfeiture under RICO should be analyzed under Excessive Fines Clause of Eighth Amendment).