Opinion ID: 588114
Heading Depth: 3
Heading Rank: 1

Heading: The Mathews v. Eldridge factors.

Text: 30 The due process clause of the fifth amendment--No person shall be    deprived of life, liberty, or property, without due process of law--has generally been read to require the government to afford procedural safeguards before it deprives a person of one of these fundamental rights. The right to be heard before being condemned to suffer grievous loss of any kind, even though it may not involve the stigma and hardships of a criminal conviction, is a principle basic to our society. Joint Anti-Fascist Comm. v. McGrath, 341 U.S. 123, 168, 71 S.Ct. 624, 647, 95 L.Ed. 817 (1951) (Frankfurter, J., concurring). In certain limited circumstances, however, process may be postponed until after deprivation where an important governmental interest is accompanied by assurances that the deprivation is warranted. Strong v. Board of Educ., 902 F.2d 208, 212 (2d Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 250, 112 L.Ed.2d 208 (1990). 31 Our prior cases involving the government's powerful forfeiture arsenal--notably Livonia and 141st Street Corp.--have used the balancing test articulated in Mathews v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976) to determine whether a pre-hearing seizure of property violates due process. The Mathews calculus instructs us to determine the constitutional adequacy of the ex parte procedure, by balancing (a) the private interest involved, (b) the risk of an erroneous deprivation of that interest through the procedures utilized, as well as the probable value of additional procedural safeguards, and (c) the government's interest, including the burden that additional procedural requirements would impose. See 141st Street Corp., 911 F.2d at 874; Livonia, 889 F.2d at 1264-65. 32
33 In Livonia, the private interest at stake was the claimant's interest in his home, an interest which we noted merits special constitutional protection. Id. at 1264. However, in Livonia, we also noted that the claimant's interest in his home was not in any way diminished by the occupancy agreement entered into with the government, since that agreement allowed continued occupancy as a matter of grace, not entitlement. Id. at 1265. In contrast, the interest at stake in 141st Street Corp. was ownership and possession of an apartment building for commercial purposes, 911 F.2d at 875, which is different from, and indeed less than, a similar expectation in an individual's home. New York v. Burger, 482 U.S. 691, 700, 107 S.Ct. 2636, 2642, 96 L.Ed.2d 601 (1987) (approving warrantless administrative inspection of the closely-regulated automobile-junkyard and vehicle-dismantling industries). Despite this lower interest, the government in 141st Street Corp., when it took control of the apartment building and fifteen individual apartment units, entered into occupancy agreements with the remaining tenants. 34 Here, the property interest which has been affected by the government's actions is the ownership, possession, and operation of an ongoing business. While it is true that a commercial property interest traditionally has not occupied the same privileged place as the home in the eyes of the law, 141st Street Corp., 911 F.2d at 875, it is also true that the extent of the invasion of the property interest here was far greater than in either Livonia or 141st Street. Livonia 's occupancy agreement did not in any way diminish[ ] the homeowner's interest in his home. But here, of course, the government shut Statewide down completely instead of pursuing some less-intrusive means, such as entering into an occupancy agreement, or appointing a receiver to run the business during the pendency of the forfeiture proceedings. Thus, while the commercial property interest involved here may be less substantial than the residential property interest at issue in Livonia, the invasion of that interest--nonexistent in Livonia--is far greater here. 35 The invasion of property rights here is similarly much more substantial than that involved in 141st Street Corp. There, the government seized a commercial interest (an apartment building) from its owners, but preserved its viability as a commercial enterprise by evicting only tenants who were involved in drug activity (none of whom challenged their evictions) and entering into occupancy agreements with the remaining tenants. 911 F.2d at 873. Thus, in 141st Street Corp. the government took action which sought to preserve the status quo ante seizure. 36 Of course, the government's ex parte seizure here was unaccompanied by any attempt to preserve the claimants' property rights. 37
38 In both Livonia and 141st Street Corp., we concluded that the judicial procedures employed by the government afforded some measure of protection from an erroneous deprivation of property, 141st Street Corp., 911 F.2d at 875, since an ex parte probable cause determination before a judicial officer reduces the possibility of an erroneous deprivation, even though preseizure notice and an opportunity to be heard would certainly further minimize that risk. Livonia, 889 F.2d at 1265. Virtually the same judicial procedure was utilized in this case; thus, this Mathews factor weighs no more heavily than it did in either Livonia or 141st Street Corp. 39
40 This brings us to the third Mathews factor, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Mathews, 424 U.S. at 335, 96 S.Ct. at 903. On its face, the government's interest here is similar to those in Livonia and 141st Street Corp.--the narrow one of obtaining pre-notice seizure of a fixed item like a home, not the broad interest of enforcing the [money laundering] laws, since the latter will also be served by forfeiture after an adversary proceeding. Livonia, 889 F.2d at 1265; see also 141st Street Corp., 911 F.2d at 875. 41 In assessing the strength of the government's interest in obtaining pre-notice seizure, we look to whether exigent or extraordinary circumstances are present by referring to the factors enunciated in Fuentes v. Shevin, 407 U.S. 67, 91, 92 S.Ct. 1983, 2000, 32 L.Ed.2d 556 (1972). Exigent circumstances are present when (1) the seizure is necessary to secure an important governmental or public interest, (2) very prompt action is necessary, and (3) a government official initiated the seizure by applying the standards of a narrowly-drawn statute. Fuentes, 407 U.S. at 91, 92 S.Ct. at 2000; 141st Street Corp., 911 F.2d at 875; Livonia, 889 F.2d at 1263. 42
43 Judge Nickerson concluded that [t]he United States ha[s] a clear interest in stopping the trafficking in stolen motor vehicles and motor vehicle parts with vehicle identification numbers removed or altered. The government articulates this interest as halting financial transactions designed to facilitate, and conceal the proceeds of, a highly-sophisticated and wide-ranging auto theft scheme. The government adds that it also has strong interests in (a) preventing mail fraud and the bribery of a public official, and (b) ensuring that the district court maintains in rem jurisdiction over the defendants so that this action may be properly prosecuted. 44 We have no quarrel with the government's asserted interest in preventing mail fraud and bribery, but their actions somewhat belie their words. No federal indictment charging violations of the federal bribery or mail fraud statutes has yet taken place. In view of that fact, we have some fears that the forfeiture statute is being used here as a substitute--or perhaps as a dry run--for a criminal prosecution. The protections available to defendants in criminal prosecutions are well-known: the government (1) must prove its case beyond a reasonable doubt, (2) may avail itself only of limited court-approved discovery, and (3) has no right of appeal from an adverse verdict. All of these protections are absent in a civil forfeiture action. Further, the property owner in a civil forfeiture action--not the government--generally has the burden of proof, and hearsay is admissible to prove the guilt of the property. Should a criminal action be tried first, a defendant's acquittal has no collateral estoppel effect on the forfeiture action in view of the lower civil standard of proof. United States v. One Assortment of 89 Firearms, 465 U.S. 354, 362, 104 S.Ct. 1099, 1104-05, 79 L.Ed.2d 361 (1984). 45 Additionally, by trying a federal forfeiture action, and only then a state criminal proceeding, the state and federal governments could conceivably avail themselves of not two, but three bites at the proverbial apple. Initially, the federal government could utilize the forfeiture proceeding and all of its concomitant procedural advantages to gather evidence and test the case. Then, the state could prosecute the individual and corporate defendants in state court for violations of state law. Since the doctrine of dual sovereignty prevents the application of the double jeopardy clause in such circumstances, the federal government could also prosecute the same defendants--for the same offenses--in federal court. See Bartkus v. Illinois, 359 U.S. 121, 79 S.Ct. 676, 3 L.Ed.2d 684 (1959). But see United States v. Certain Real Property and Premises Known as 38 Whalers Cove Drive, Babylon, New York, 954 F.2d 29, 35 (2d Cir.1992) (when an individual is subjected to a 'civil' sanction that in effect is punishment[, he] is protected against multiple punishments under the Double Jeopardy Clause), petition for cert. filed, 60 U.S.L.W. 3755 (U.S. Apr. 20, 1992) (No. 91-1682). 46 In any event, the government has a clear interest in stopping the trafficking in stolen motor vehicles and motor vehicle parts, as Judge Nickerson concluded. Similarly, we agree with Judge Nickerson that the government has a strong interest in stopping the fraudulent conveyance of these vehicles to fictitious persons. 47
48 As to whether prompt action was required to secure this interest, we cannot agree with the government's argument that mere allegations of ongoing criminal activity, standing alone, justify pre-notice seizure and the shutdown of a thriving business. The government adds, however, yet another reason why prompt action was required here: pre-seizure hearing on notice would have served only to allow claimants the opportunity to remove any valuable assets of Statewide and/or cause waste to the defendant property and premises (emphasis added). This reasoning is at best ironic: had the government taken a less-drastic action, such as appointing a receiver to run Statewide during the pendency of the forfeiture proceedings, or entered into the sort of occupancy agreement which we have heretofore favored, great waste could have been avoided at Statewide. In short, it is the government's choice of action--pre-hearing shutdown of an ongoing business--which is causing the waste. In Livonia we said: 49 As a general matter, a showing of exigent circumstances seems unlikely when a person's home is at stake, since, unlike other forms of property, a home cannot be readily moved or dissipated. Cf. United States v. Eight Thousand Eight Hundred and Fifty Dollars ($8,850) in United States Currency, 461 U.S. 555, 562 & n. 12, 103 S.Ct. 2005, 2011 [&] n. 12; 76 L.Ed.2d 143 (1983) (seizure of currency); Calero-Toledo [v. Pearson Yacht Leasing Co.], 416 U.S. [663,] 679, 94 S.Ct. [2080,] 2089 [40 L.Ed.2d 452 (1974) ] (seizure of pleasure yacht). Any exigency that might be posed by the threat of an encumbrance on, or transfer of, the property may be met by less restrictive means than seizure, for example, by the filing of a lis pendens, as was done in this case, along with a restraining order or bond requirement. 50 Livonia, 889 F.2d at 1265. What we said of Serafine's home in Livonia applies with full force to Muro's business here. Obviously, the defendant Real Property and Premises Known as 1256 Grand Street, Brooklyn, New York--Statewide's place of business--is not going to disappear overnight. True, the stolen automobiles arguably would have possessed the same movability concerns as did the pleasure yacht in Calero-Toledo, but--as the government conceded at oral argument--no automobiles were seized by the United States. 51 Concerning the remaining assets, the government had at its disposal numerous less-restrictive means for limiting their movement or dissipation. A receivership, an occupancy agreement, and a lis pendens--invoked separately or togetherwould have served the government's interest more than adequately, and would have simultaneously avoided the serious, irreparable damage caused by the summary shutdown of an ongoing business enterprise. 52
53 The ex parte procedures used here were virtually identical to those we permitted in 141st Street Corp., 911 F.2d at 875, and Livonia, 889 F.2d at 1260. However, on balance, the lack of exigent circumstances combined with the drastic measures taken by the government lead us to the conclusion that the district court's decision, approving this ex parte, pre-notice seizure, was erroneous. 54