Opinion ID: 779180
Heading Depth: 3
Heading Rank: 2

Heading: Actual Litigation

Text: 56 Our consideration of the fairness of applying collateral estoppel also requires us to examine whether the parties actually litigated the source and intended use of the currency. See Boguslavsky, 159 F.3d at 720. The parties do not dispute that the District Court, at Castro's sentencing, actually decided that the currency in question was derived from a lawful source and was intended to be used for a lawful purpose. But the parties disagree as to whether the issues of source and intended use were actually litigated in the criminal proceedings — specifically, whether the parties' execution of the plea agreement and their discussion with the District Court at sentencing establish that they actually litigated the issues. 57 The claimants contend that the Government is collaterally estopped from re-litigating a fact established by the plea agreement. Cf. Central Hudson Gas & Elec. Corp. v. Empresa Naviera Santa, S.A., 56 F.3d 359, 369 n. 4 (2d Cir.1995) (holding that, if the parties intended to be bound by a prior stipulation, the issue that is the subject of the stipulation may be deemed to have been actually litigated for collateral estoppel purposes). We need not reach this question, however, as the plea agreement contains no stipulation regarding the source or intended use, legal or otherwise, of the seized currency. The agreement simply provides that Castro will plead guilty to a violation of the currency reporting law, 31 U.S.C. § 5316, which applies to all such violations regardless of the source of the funds. The agreement further states the Government's position that the relevant base offense level is determined under subsection 2S1.3(a) of the 1995 Guidelines and is level six. Subsection 2S1.3(a) is the general guideline for currency reporting offenses, and itself contains no reference to the source of the funds. The plea agreement makes no mention of subsection 2S1.3(b)(1), which enhances the base offense level if the funds are derived from an unlawful source, or subsection 2S1.3(b)(2), the 1995 Guidelines section ultimately relied upon by the District Court in sentencing, which provides for an offense level of six if the source and intended use of the funds are lawful. If the Government had stated in the agreement that subsection 2S1.3(b)(1) or (b)(2) should apply to Castro's offense, one might argue that the Government had implicitly taken a position on the source or intended use of the currency. However, the Government made no such statement. Given the absence of any reference in the agreement to the source or intended use of the currency, or anything else in the record to suggest that these issues were contested or even considered during the plea negotiations, we find that the negotiation and execution of the plea agreement established nothing about either the source or the intended use of the currency. 58 Furthermore, by its terms, the plea agreement does not prohibit the United States, any agency thereof, or any third party from initiating or prosecuting any civil or administrative proceedings directly or indirectly involving the defendant, including, but not limited to, proceedings by the Internal Revenue Service relating to potential civil tax liability or forfeiture of assets. This reservation of rights by the Government would seem incongruous if, as the claimants assert, the Government had implicitly conceded in the same document that the currency was from a lawful source. 11 More generally, the inclusion of the reservation of rights clause indicates that future forfeiture litigation was foreseen, or at least contemplated, by both parties. 59 The claimants also assert that the source and intended use of the currency were actually litigated at the sentencing hearing. Those issues were presented to the parties and the District Court in the PSR, which set forth a sentencing recommendation based in part on a finding that [t]he defendant has provided proof that the funds were the proceeds of lawful activity, and they were to be used for a lawful purpose. At the hearing, Castro's counsel referred to the PSR's findings, arguing that there was [ sic ] no illegal proceeds involved in this case, and the funds were not to be used for anything improper. The District Court then asked, Does the government have any position on that at this point or not? The Government stated that it did not have a position. That the issues of source and intended use were raised by the PSR, addressed by one party, and made the subject of inquiry by the District Court strongly suggests that those issues were actually litigated for purposes of collateral estoppel despite the Government's failure to take a position. However, the Government's silence appears to have been neither strategic nor abusive: under the terms of the plea agreement, the Government effectively was constrained from arguing in favor of a higher Guidelines range, which would have been the necessary implication of any argument that the currency was derived from an illegal source or intended for an illegal use. In the end, we need not resolve this conundrum, given our finding that in this case the Government lacked a full and fair opportunity to litigate the source and intended use of the currency.