Opinion ID: 686724
Heading Depth: 1
Heading Rank: 1

Heading: the quasi-criminal nature of this action

Text: 12 The Supreme Court has prescribed a highly deferential test to determine when an apparently civil statutory penalty is, in fact, criminal: 13 First, we ... set out to determine whether Congress, in establishing the penalizing mechanism, indicated either expressly or impliedly a preference for one label or the other. Second, where Congress has indicated an intention to establish a civil penalty, we ... inquire[ ] further whether the statutory scheme was so punitive in purpose or effect as to negate that intention.... 14 United States v. Ward, 448 U.S. 242, 248-49, 100 S.Ct. 2636, 2641, 65 L.Ed.2d 742 (1980). Once determined to be criminal, actions to enforce such a statute must be accompanied by the full range of constitutional protections for criminal defendants, including the Fourth, Fifth, and Sixth Amendments. The test for quasi-criminality, however, is considerably less rigid and less deferential. A finding of quasi-criminality requires that only certain protections be imported from the criminal law in order to guarantee that due process is satisfied. 15 As set forth below, the touchstone of quasi-criminality is punishment. 1 Government-prosecuted civil RICO actions in which the remedies go beyond rough compensation must be considered quasi-criminal. 2 As the Supreme Court has noted, the labels 'criminal' and 'civil' are not of paramount importance ... [for] [i]t is commonly understood that civil proceedings may advance punitive as well as remedial goals. United States v. Halper, 490 U.S. 435, 447, 109 S.Ct. 1892, 1901, 104 L.Ed.2d 487 (1989). [T]he Supreme Court has in recent years eschewed the rigid labels of 'civil' or 'criminal' when examining constitutional interests. United States v. On Leong Chinese Merchants Ass'n Bldg., 918 F.2d 1289, 1299 (7th Cir.1990) (Cudahy, J., concurring). In Halper, the Court held that the determination whether a given civil sanction constitutes punishment in the relevant sense requires a particularized assessment of the penalty.... Halper, 490 U.S. at 448, 109 S.Ct. at 1901. The Halper Court adopted the following test: [A] civil sanction that cannot be fairly said to serve a remedial purpose, but rather can only be explained as also serving either retributive or deterrent purposes, is punishment, as we have come to understand the term. Id. 16 The Supreme Court has identified two types of proceedings as quasi-criminal: first, those actions in which a defendant faces loss of liberty or livelihood; second, those imposing a civil penalty arising from the commission of a criminal offense. See Elizabeth A. Fuerstman, Trying (Quasi) Criminal Cases in Civil Courts: The Need for Constitutional Safeguards in Civil RICO Litigation, 24 Colum.J.L. & Soc.Probs. 169 (1991). Put together, these decisions establish that the imposition of punishment for criminal activity segregates quasi-criminal from garden-variety civil causes of action. Both lines of cases fortify the conclusion that the present action is quasi-criminal. 17 The first line follows from In re Gault, 387 U.S. 1, 87 S.Ct. 1428, 18 L.Ed.2d 527 (1967), in which the Supreme Court held that due process protections apply to juvenile delinquency proceedings. The Court held that [a] proceeding where the issue is whether the child will be found to be 'delinquent' and subjected to the loss of liberty for years is comparable in seriousness to a felony prosecution. Id. at 36, 87 S.Ct. at 1448. Due process, the Court found, entitled the allegedly delinquent child to be notified of the charges against him and of his right to be represented by counsel; to assert the privilege against self-incrimination; and to confront and cross-examine witnesses. Similarly, in In re Ruffalo, 390 U.S. 544, 550, 88 S.Ct. 1222, 1225, 20 L.Ed.2d 117 (1968), the Supreme Court held that because [d]isbarment, designed to protect the public, is a punishment or penalty imposed on the lawyer, the accused lawyer is accordingly entitled to procedural due process.... The Court characterized disbarment actions as adversary proceedings of a quasi-criminal nature. Id. at 551, 88 S.Ct. at 1226. The Second Circuit has expanded upon Ruffalo, explaining that a court's disciplinary proceeding against a member of its bar is comparable to a criminal rather than to a civil proceeding. Erdmann v. Stevens, 458 F.2d 1205, 1209 (2d Cir.1972). Central to the reasoning in Erdmann was the court's acknowledgment that disbarment is punitive in nature: [F]or most attorneys the license to practice law represents their livelihood, loss of which may be a greater punishment than a monetary fine. Id. at 1210. 18 In the case before us, it is clear that Ferrante faces the loss of his livelihood. The government seeks an order 19 enjoining Nicholas Ferrante: (1) from engaging in any activities involving or connected with the collection, transportation or disposal of solid waste ... (3) from participating in any of the affairs of any trade waste association, and from participating in any of the affairs of Local 813 or of any other union, and from participating in any way in the affairs of any of the Trust Funds of Local 813 or any other union, and (4) from associating with any other defendant or any member or associate of organized crime for any commercial purpose. In addition, it is requested that he be ordered to divest his interests in the named enterprises and to disgorge the proceeds derived from his unlawful conduct or from participation in the Enterprises into a Court-administered fund to be used for the Monitorship of the carting industry on Long Island ... in an amount to be determined after an inquest. 20 Memorandum of Law in Support of Plaintiff's Motion for Summary Judgment as Against Nicholas Ferrante at 2-3. If required to divest his interests in Unique Sanitation Co. and U-Need-A-Roll-Off Corp. and to remain permanently out of the industry, Ferrante, like a disbarred attorney, will lose the only source of income he has known, at least part of which the government concedes may be legitimate. Moreover, Ferrante faces being branded as a racketeer, just as the juvenile in Gault faced the label delinquent. Thus, Gault, Ruffalo, and their progeny suggest that the relief sought by the government in this case renders the action quasi-criminal. 21 Beginning with Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746 (1886), the second line of cases isolates certain varieties of civil forfeitures as quasi-criminal. In Boyd, the Court held that proceedings instituted for the purpose of declaring the forfeiture of a man's property by reason of offenses committed by him, although they may be civil in form, are in their nature criminal.... [S]uits for penalties and forfeitures, incurred by the commission of offenses against the law, are of this quasi criminal nature. Id. at 633-34, 6 S.Ct. at 534. While the full implications of Boyd 's broad language have occasionally been foreclosed by the Supreme Court, 3 the Court has reaffirmed Boyd 's central holding that civil forfeiture is quasi-criminal in nature. One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 85 S.Ct. 1246, 14 L.Ed.2d 170 (1965) (holding Fourth Amendment exclusionary rule applies to civil forfeiture proceedings); United States v. United States Coin & Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971) (holding Fifth Amendment prohibition against self-incrimination applies to civil forfeiture proceedings); United States v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 104 L.Ed.2d 487 (1989) (holding Double Jeopardy Clause applies to civil forfeiture proceedings). When the forfeiture statutes are viewed in their entirety, it is manifest that they are intended to impose a penalty only upon those who are significantly involved in a criminal enterprise. United States Coin & Currency, 401 U.S. at 721, 91 S.Ct. at 1045. 22 In the case at hand, the government has requested relief closely analogous to civil forfeiture, including, among other things, divestiture, disgorgement, and a wide-ranging dissociation injunction. In my view, the RICO remedies sought by the government in this case go beyond the roughly compensatory. I recognize, however, that this view has not been adopted by the courts of this circuit in similar cases. Because I believe those decisions to rest on incomplete analyses, it may prove useful to set forth the basis for my disagreement. 23 In the limited context of the Fifth Amendment's applicability to RICO, several courts, including this one, have held that equitable remedies, such as divestiture, disgorgement, and injunction, are remedial, non-punitive, forms of relief. See, e.g., United States v. Ianniello, 824 F.2d 203, 208 (2nd Cir.1987); United States v. Bonanno Organized Crime Family, 683 F.Supp. 1411, 1450-51 (E.D.N.Y.1988). First, these decisions employ only the United States v. Ward test of criminality, without considering whether RICO remedies sought in those cases were quasi-criminal. The Supreme Court has recently rejected similarly myopic approaches to civil forfeitures in Austin v. United States, --- U.S. ----, ---- - ----, 113 S.Ct. 2801, 2805-06, 125 L.Ed.2d 488 (1993). Holding that the Excessive Fines Clause may limit the amount of a civil forfeiture under 21 U.S.C. Sec. 881, the Court stated that the question is not, as the United States would have it, whether forfeiture ... is civil or criminal, but whether it is punishment. Id. 4 Thus, the Supreme Court has instructed that the resolution of questions turning on punishment ought not rely on the all-or-nothing criminality analysis of Ward. Second, the Bonanno and Ianniello analyses rely on United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 81 S.Ct. 1243, 6 L.Ed.2d 318 (1961), which upheld disgorgement and divestiture as remedial relief under the antitrust statutes. I agree that disgorgement of ill-gotten gains constitutes a nonpunitive relief. 5 But as to divestiture, the analogies to antitrust are misplaced. As one commentator has noted, [w]hile antitrust divestiture requires the dispossession of the specific interest that created the unlawful monopoly power, under [RICO] a defendant can be forced to divest himself of his entire interest in an enterprise because some investments stem from violations of RICO. Fuerstman, supra, at 187. Moreover, antitrust divestiture requires no predicate criminal offense, while civil RICO divestiture follows exclusively from the commission of criminal acts. In their sweeping reach, civil RICO's divestiture provisions parallel the civil forfeitures in Boyd. Rather than provide injured parties with rough compensation for the injuries caused by the defendant, civil RICO divestiture forces the defendant to divest his entire interest in an enterprise so long as a portion of the funds invested in that enterprise was obtained in violation of RICO. Id. Thus, to the extent that a defendant is required to extract herself entirely from an enterprise, beyond the ascertainable reach of the racketeering taint, the court is in effect imposing a civil forfeiture. 6 Total divestiture eliminates the defendant's ability to maintain a future income derived from the legitimate, untainted, portion of the divested enterprise. The point is important because non-remedial forfeitures--uncompensated takings of property--clearly serve retributive goals. 7 Thus, in my view, civil RICO divestiture must be distinguished from antitrust divestiture on the basis of RICO's vastly wider scope, its failure to restrict available remedies to rough compensatory measures, and its predicate criminal offense requirement. Together, these features convert civil RICO divestiture into a punitive sanction. 24 In addition to divestiture and disgorgement, the government seeks to enjoin Ferrante from any involvement in any solid waste enterprise; from participating in the affairs of any union; and from associating with any of the other defendants for commercial purposes. While I have no quarrel with the necessity of such injunctions in the fight against organized crime, it simply cannot be denied that they are punitive measures. Dissociation orders and lifetime bans neither compensate victims nor prevent unjust enrichment. On the contrary, they serve to punish wrongdoers and deter others from similar courses of action. In sum, the relief sought by the government in this case goes beyond rough compensation to serve the goals of retribution and deterrence and therefore constitutes punishment. See Halper, 490 U.S. at 448, 109 S.Ct. at 1901 (punishment serves the twin aims of deterrence and retribution); Kennedy v. MendozaMartinez, 372 U.S. 144, 168, 83 S.Ct. 554, 567, 9 L.Ed.2d 644 (1963) (deterrence and retribution are traditional aims of punishment). 25 Thus, in light of Boyd's still vital holding that suits for penalties and forfeitures, incurred by the commission of offenses against the law, are of this quasi-criminal nature, I conclude that the action before us must be considered quasi-criminal. Boyd, 116 U.S. at 634, 6 S.Ct. at 534.