Opinion ID: 712236
Heading Depth: 3
Heading Rank: 2

Heading: Civil Forfeiture as Punishment

Text: 59 The Fifth Amendment guarantee against double jeopardy has been said to consist of three separate constitutional protections. It protects against a second prosecution for the same offense after acquittal. It protects against a second prosecution for the same offense after conviction. And it protects against multiple punishments for the same offense. North Carolina v. Pearce, 395 U.S. 711, 717, 89 S.Ct. 2072, 2076, 23 L.Ed.2d 656 (1969) (footnotes omitted). These protections guard against two evils: successive prosecutions and impermissibly multiplicitous punishments. Regarding the successive prosecution aspect, the Supreme Court has said: The basis of the Fifth Amendment protection against double jeopardy is that a person shall not be harassed by successive trials; that an accused shall not have to marshal the resources and energies necessary for this defense more than once for the same alleged criminal acts. Abbate v. United States, 359 U.S. 187, 198-99, 79 S.Ct. 666, 673, 3 L.Ed.2d 729 (1959). 60 In this case the government first obtained a conviction against Philip May, then sought forfeiture of his property on the basis of the conduct for which Mr. May had already been convicted. In its motion for summary judgment, the undisputed facts on which the government based its case included the facts on which Mr. May had been convicted, plus the facts establishing a relationship between the defendant property and the illegal activity. Aplt.App. vol. I, at 4-7. Had this been a criminal forfeiture proceeding brought under 21 U.S.C. § 853, the double jeopardy problem would be apparent. The forfeiture proceeding would have been a second jeopardy, resulting in a second punishment, for the same offense. 61 However, the traditional view of civil forfeitures exempted them from double jeopardy analysis because the proceeding, being civil, could not be a jeopardy, and because forfeiture of the defendant property was not a punishment. 11 Mr. May urges that this view can no longer be maintained in the wake of the Supreme Court's decisions in United States v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 104 L.Ed.2d 487 (1989), Austin v. United States, 509 U.S. 602, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993), and Department of Revenue v. Kurth Ranch, --- U.S. ----, 114 S.Ct. 1937, 128 L.Ed.2d 767 (1994). We agree. 62
63 In Halper, the government sought civil sanctions against a former medical service manager who had already been criminally charged and convicted for filing sixty-five inflated Medicare claims that each charged $12.00 for what was really a $3.00 procedure. In the civil proceeding, the government sought more than $130,000 under a statute that provided for a $2,000 penalty plus double damages for each violation, and the manager challenged on double jeopardy grounds. The Court rejected the government's argument that double jeopardy could not apply in a civil case. Halper, 490 U.S. at 447, 109 S.Ct. at 1901. It observed that a civil penalty normally construed as remedial could become punitive where the penalty authorized by statute was so extreme and so divorced from the Government's damages and expenses as to constitute punishment. Id. at 442, 109 S.Ct. at 1898. It concluded that in such cases the Double Jeopardy Clause applied to civil penalties that cannot fairly be said solely to serve a remedial purpose, but rather can only be explained as also serving either retributive or deterrent purposes, id. at 448, 109 S.Ct. at 1901, and remanded the case for an accounting of the government's actual damages, id. at 452, 109 S.Ct. at 1903. 64 Austin, although decided on Eighth Amendment grounds, underscored the need to pierce the civil-criminal veil in determining the scope of constitutional protections in forfeiture cases. The owner of a body shop and mobile home pleaded guilty to a charge of selling cocaine, then challenged as an excessive fine the subsequent forfeiture of his house and mobile home pursuant to 21 U.S.C. § 881(a)(4) and (7). The Court conducted a historical review of the purposes behind in rem forfeitures in general and concluded that they have been understood, at least in part, as punishment. Austin, 509 U.S. at ----, 113 S.Ct. at 2810. It then concluded that the specific forfeiture provisions in the case, § 881(a)(4) and (7), were not remedial, id. at ----, 113 S.Ct. at 2811, not  'a reasonable form of liquidated damages,'  id. (quoting One Lot Emerald Cut Stones v. United States, 409 U.S. 232, 237, 93 S.Ct. 489, 493, 34 L.Ed.2d 438 (1972)), and not exempt from Eighth Amendment analysis even if the provisions' aim was in part nonpunitive. Id. The Court then remanded the case for a determination of whether the forfeiture was excessive. Id. 65 Guided primarily by Halper and Austin, the Ninth Circuit held in United States v. $405,089.23 United States Currency, 33 F.3d 1210, 1222 (9th Cir.1994), reh'g denied and modified on other grounds, 56 F.3d 41 (9th Cir.1995), cert. granted, --- U.S. ----, 116 S.Ct. 762, 133 L.Ed.2d 707 (U.S.1996), that the Double Jeopardy Clause barred the forfeiture of property under 18 U.S.C. § 981(a)(1)(A) and 21 U.S.C. § 881(a)(6) where the forfeiture was based on conduct for which the claimants had been previously convicted. In reaching its conclusion, the court held first that the civil and criminal trials, although roughly contemporaneous, were not the same proceeding for double jeopardy purposes, id. at 1216, and then held that § 881(a)(6), the drug proceeds provision which Austin did not address, was as punitive for double jeopardy purposes as the other two forfeiture provisions in § 881. Id. at 1220. The court concluded that the entire forfeiture was a second attempt by the government to exact punishment for the same conduct and was thus barred by the Double Jeopardy Clause. Id. at 1222. 66 The last case on which Mr. May relies is Kurth Ranch. After the Kurths were convicted of growing marijuana on their ranch, the State of Montana sought to collect a $1,000-per-ounce tax on the harvested marijuana, and the Kurths challenged the assessment on double jeopardy grounds. The Supreme Court first cited Halper 's unequivocal statement that labels do not control in a double jeopardy inquiry, Kurth Ranch, --- U.S. at ----, 114 S.Ct. at 1946, and then scrutinized the state tax statute to determine whether it exacted punishment or merely revenue. Id. Based on the high rate of tax in proportion to the value of the taxed items, the tax's deterrent effect, its predication on the commission of a crime, and the fact that, as contraband, the taxed items were never legally owned, the Court concluded that the tax was in fact punitive. Id. at ---- - ----, 114 S.Ct. at 1947-48. As such, it could be imposed during the first prosecution or not at all. Id. at ----, 114 S.Ct. at 1948. 67 In the wake of Kurth Ranch, Judge Easterbrook agreed, in dicta, with the Ninth Circuit's conclusion that civil forfeiture following a criminal trial is a punishment for double jeopardy purposes. 68 [I]f, as Kurth Ranch holds[,] a civil proceeding to collect a monetary penalty for crime counts as an independent jeopardy, it does not require much imagination to see the problem. Civil and criminal proceedings are not only docketed separately but also tried separately, and under the double jeopardy clause separate trials are anathema. 69 United States v. Torres, 28 F.3d 1463, 1465 (7th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 669, 130 L.Ed.2d 603 (1994). In short, The United States would do well to seek imprisonment, fines, and forfeiture in one proceeding. Id. at 1464. 70 We are constrained by Halper, Austin, and Kurth Ranch to conclude that forfeiture under § 881(a)(7) constitutes punishment as far as Mr. May is concerned. Austin makes it clear that forfeitures under § 881(a)(7) are punishment, and we agree with the Ninth Circuit that there is no difference between the excessive fines and the double jeopardy definition of punishment. $405,089.23 United States Currency, 33 F.3d at 1219. Finally, since Halper and Kurth Ranch make it clear that the Double Jeopardy Clause brooks no distinction between civil and criminal punishments (as opposed to remedial penalties), we must conclude that double jeopardy concepts apply to the forfeiture of Mr. May's interest in his house and business property.
71 We must consider separately the forfeiture of Mr. May's interest in the $13,050 he carried to his ill-fated drug deal and the $2,800 found in his home. The district court held the $13,050 to be forfeitable on the grounds that it was furnished or intended to be furnished for the purchase of controlled substances, and was intended to facilitate an illegal drug activity. The district court held the $2,800 to be forfeitable on the grounds that it was either drug proceeds or was to be furnished for the purchase of controlled substances or to facilitate drug trafficking. See 21 U.S.C. § 881(a)(6). 72 The forfeiture of these two sums involves two issues not directly addressed in the three Supreme Court cases on which we rely above. First, they were forfeited under § 881(a)(6), which was not addressed in Austin. Second, both sums were either held by the court or asserted by the government to be drug proceeds, and the government contends that forfeiture of such proceeds is never punishment. 73 As to Austin 's silence on § 881(a)(6), we see no reason why that provision--at least where the money forfeited thereunder is not drug proceeds--should be analyzed any differently than § 881(a)(7). The government apparently concedes this point, since it suggests no reason to treat that section differently in terms of its intent, effect, or legislative history. 74 Instead, the government saves its ammunition for the drug proceeds argument. Here the government relies on United States v. Tilley, 18 F.3d 295 (5th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 573, 130 L.Ed.2d 490 (1994), and cert. denied, --- U.S. ----, 115 S.Ct. 574, 130 L.Ed.2d 490 (1994); United States v. Alexander, 32 F.3d 1231 (8th Cir.1994); and SEC v. Bilzerian, 29 F.3d 689 (D.C.Cir.1994). Cf. United States v. $21,282 in United States Currency, 47 F.3d 972, 973 (8th Cir.1995) (holding criminal forfeiture of drug proceeds under 18 U.S.C. § 981(a)(1) not to be punishment). But see $405,089.23 United States Currency, 33 F.3d at 1220; United States v. Borromeo, 1 F.3d 219, 221 (4th Cir.1993) (remanding a § 881(a)(6) drug proceeds case to determine whether the Excessive Fines Clause had been violated). We ultimately conclude that the correct approach to § 881, as dictated by Austin, precludes application of the government's cases. 75 Alexander, Bilzerian, and Tilley all hold in different statutory contexts that forcing a wrongdoer to disgorge ill-gotten gains is never punishment, and so cannot violate the Double Jeopardy clause. Alexander involved a civil RICO forfeiture and a claimant who had previously been convicted on criminal racketeering charges. Considering various elements of the forfeiture for excessive fines purposes, the Eighth Circuit held that [f]orfeiture of proceeds cannot be considered punishment, ... as it simply parts the owner from the fruits of the criminal activity. Alexander, 32 F.3d at 1236. Bilzerian involved a civil action by the SEC to force a defendant previously convicted of illegal stock trading to disgorge the profits from his schemes. The District of Columbia Circuit held that disgorgement was not punishment because it  'merely places that party in the lawfully protected financial status quo that he enjoyed prior to launching his illegal scheme.'  Bilzerian, 29 F.3d at 696 (quoting Tilley, 18 F.3d at 300). 76 Tilley is the only one of these cases to address the forfeiture of illegal proceeds under § 881. There the Fifth Circuit addressed the issue of whether the forfeiture of drug proceeds under § 881(a)(6) should be considered punishment for Eighth Amendment purposes. The court reasoned that such forfeiture was purely remedial, first because it was repayment for the social cost of the illegal activity and the government's costs in investigating and prosecuting such activity, id. at 298-99, and second because the possessor of drug proceeds has no reasonable expectation that the law will protect, condone, or even allow, his continued possession of such proceeds, id. at 300. Thus, the seizure of drug proceeds is more closely akin to the seizure of the proceeds from the robbery of a federal bank than the seizure of lawfully derived real property. Id. 77 The difficulty with the repayment to society argument is that it applies as readily to all § 881 forfeitures as it does to the forfeiture of drug proceeds. If the remedy effected by forfeiture is understood broadly enough to encompass not only direct governmental losses, as with Medicaid fraud in Halper, but also the nearly incalculable social costs of an entire class of illegal conduct, then all forfeitures are purely remedial. This conclusion is inconsistent with the Supreme Court's analysis in Austin. 78 Tilley 's second line of analysis, the analogy of drug proceeds to the loot from a bank robbery, comprises both a legal and an equitable aspect. Legally, just as one cannot own contraband, see, e.g., Trupiano v. United States, 334 U.S. 699, 710, 68 S.Ct. 1229, 1234, 92 L.Ed. 1663 (1948) (holding that illegally seized contraband need not be returned to defendants because they had no right to it), overruled on other grounds by United States v. Rabinowitz, 339 U.S. 56, 70 S.Ct. 430, 94 L.Ed. 653 (1950), it can be argued that one cannot own the proceeds from the sale of contraband. Of course, § 881(a) itself provides that no property right shall exist in anything forfeitable under that subsection, but the use of that provision to establish the lack of ownership in proceeds not only amounts to a petitio principii, but also again offends Austin by making all forfeitures nonpunitive. Tilley does not state, and we do not find, any clear authority for the proposition that legal ownership of drug proceeds is impossible. In fact, drug proceeds are ownable by anyone who can establish an innocent owner defense. United States v. 92 Buena Vista Ave., 507 U.S. 111, 128, 113 S.Ct. 1126, 1137, 122 L.Ed.2d 469 (1993). Thus, even a noninnocent possessor of such proceeds must own them insofar as he can alienate them. We must conclude that the proposition that drug proceeds may not be owned is false as a statement of law. 12 79 Tilley also rests on the equitable argument that the forfeiture of drug proceeds simply denies the claimant the benefit of his or her misconduct. See Rex Trailer Co. v. United States, 350 U.S. 148, 153 n. 6, 76 S.Ct. 219, 222 n. 6, 100 L.Ed. 149 (1956) (stating that the civil sanction imposed in that case might serve to avoid unjust enrichment), cited in Tilley, 18 F.3d at 300. However, Rex Trailer involved a scheme to defraud the government at the expense of a group, namely veterans, that the government had intended to benefit. Unjust enrichment typically involves the illicit enjoyment of a benefit taken from its rightful owner. Restatement of Restitution § 1 (1936). The force of the equitable analogy is diminished where, as here, there simply is no rightful owner to whom the money may be returned. 80 Finally, Tilley is inconsistent with the analysis the Supreme Court has already applied to § 881. In Austin, the Court held § 881(a)(4) and (7) to be punishment based on the historical understanding of forfeiture as punishment, 509 U.S. at ----, 113 S.Ct. at 2812, the focus of the provisions on the culpability of the owner, id. at ----, 113 S.Ct. at 2811, and the fact that Congress tied forfeiture directly to the commission of specified offenses, id. These factors apply as readily to § 881(a)(6) as they do to § 881's other provisions. See $405,089.23 United States Currency, 33 F.3d at 1221. 81 In addition, we note a further difficulty with Tilley 's drug proceeds exception. Drug proceeds are also forfeitable under the criminal forfeiture statute. 21 U.S.C. § 853(a)(1). If the forfeiture of drug proceeds under § 881(a)(6) were held not to be punishment, and if the civil and criminal labels are indeed not dispositive of the double jeopardy issue, there would be no principled way to avoid applying Tilley 's reasoning to § 853(a)(1). Criminal forfeiture could then be imposed in a proceeding separate from the criminal trial without constituting double jeopardy, as long as drug proceeds only were forfeited. 13 82 For the above reasons, we reject the government's invitation to analyze the drug proceeds portion of § 881 separately from the rest of the statute. Forfeiture of Mr. May's interest in the $13,050 and $2,800 was punishment for double jeopardy purposes whether those sums were forfeited as drug proceeds or otherwise. 14 83 Having determined that the forfeiture in this case was punishment, we must next consider whether the Double Jeopardy Clause bars the forfeiture to the extent that it was based on conduct already punished criminally. Mr. May says it does, and contends that he is entitled to an immediate judgment to secure the full extent of his interest in the forfeiture res. The government responds in two ways. First, it argues that the forfeiture proceeding is not a second jeopardy. Next, the government argues that the forfeiture is not a jeopardy for the same offense. We reject the former argument completely, and accept the latter only insofar as the record indicates that forfeiture can be based on conduct for which Mr. May was not previously prosecuted. 84