Opinion ID: 41378
Heading Depth: 3
Heading Rank: 6

Heading: Summary of Jurisdictional Analysis

Text: 40 Neither the South Carolina nor the Washington levy placed HLF funds in the custody of a court or its officer so as to remove the funds from the jurisdiction of the Texas district court. The New York levy arguably divested other courts of jurisdiction during the ninety day period following service, but that levy is void and therefore is not a proper basis for the relief requested by the Ungars. Under these circumstances, the Ungars have not demonstrated that the Texas district court was without jurisdiction to include the HLF bank accounts in South Carolina or Washington in its order restraining HLF assets. Moreover, the Ungars may not challenge entry of this restraining order on the basis of a levy they allowed to become void. For these reasons, the Ungars' jurisdictional argument fails. 41 E. The Terrorism Risk Insurance Act of 2002 § 201(a) and 21 U.S.C. § 853 42 The Ungars next argue that the Terrorism Risk Insurance Act of 2002 (TRIA) section 201(a), 28 U.S.C. § 1610(f)(1)(A) (2000), permits attachments and executions notwithstanding any other provision of law, and that the legislative purpose of the TRIA is such that § 1610(f)(1)(A) trumps any forfeiture provisions and proceedings. Thus, they contend, § 1610(f)(1)(A) overrides statutory limitations on attachment and execution, and all blocked HLF assets are subject to execution under § 1610(f)(1)(A), without regard to whether they are tainted property otherwise subject to restraint or criminal forfeiture. The basis for this argument is the § 1610(f)(1)(A) provision that, notwithstanding any other provision of law, . . . blocked assets (such as the restrained HLF bank accounts) shall be subject to execution or attachment in aid of execution of any judgment relating to a claim such as the claim upon which the Ungars prevailed against Hamas. 8 28 U.S.C. § 1610(f)(1)(A) (2000); Estates of Ungar ex rel. Strachman, 304 F.Supp.2d at 241-42. 43 The Government counters this argument by pointing out that, as third parties rather than owners of the restrained assets, the Ungars may not assert HLF's rights. The Government asserts that ancillary proceedings under the criminal forfeiture statute are the exclusive means by which third parties may assert their interest in forfeitable property, and contends that the Ungars may not assert their alleged interest in HLF's forfeitable property prior to entry of an order of forfeiture. This contention is grounded in 21 U.S.C. § 853 which provides that (1) [n]o party claiming an interest in property subject to forfeiture under this section may intervene in a trial or appeal of a criminal case involving the forfeiture, or commence an action at law or equity against the United States concerning the validity of his alleged interest in the property subsequent to the filing of an indictment or information alleging that the property is subject to forfeiture under this section, except as provided in § 853(n); and (2) after entry of an order of forfeiture, a third party may petition the court for a hearing to adjudicate the validity of his alleged interest in the property. 21 U.S.C. §§ 853(k), 853(n)(2). 44 The Ungars are not parties to the instant criminal case; they have appealed but have not commenced an action against the United States. Likewise, they have not intervened in the criminal case against HLF. See Fed.R.Civ.P. 24(c) (A person desiring to intervene shall serve a motion to intervene upon the parties as provided in Rule 5. The motion shall state the grounds therefor and shall be accompanied by a pleading setting forth the claim or defense for which intervention is sought.). Accordingly, their appeal is outside the scope of §§ 853(k) and 853(n)(2). While § 853(n)(2) permits a third party to petition the court after entry of a forfeiture order, § 853 does not require entry of a forfeiture order before third parties in the Ungars' procedural posture may challenge an ex parte, post-indictment restraining order that specifies bank accounts subject to writs of execution issued by other federal district courts. Similarly, § 1610(f)(1)(A) does not purport to override the issuance of such a restraining order. This subsection of the TRIA provides as follows: 45 Notwithstanding any other provision of law, . . . any property with respect to which financial transactions are prohibited or regulated pursuant to section 5(b) of the Trading with the Enemy Act (50 U.S.C.App. 5(b)), section 620(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2370(a)), sections 202 and 203 of the International Emergency Economic Powers Act (50 U.S.C. 1701-1702), or any other proclamation, order, regulation, or license issued pursuant thereto, shall be subject to execution or attachment in aid of execution of any judgment relating to a claim for which a foreign state (including any agency or instrumentality or such state) claiming such property is not immune under section 1605(a)(7). 46 28 U.S.C. § 1610(f)(1)(A) (2000). The Ungars contend that the notwithstanding clause overrides all legal barriers to execution that prevent them from obtaining these HLF assets in satisfaction of their judgment against Hamas. 47 The purpose of the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. §§ 1330, 1602-11, is to set forth principles by which a federal court decides a foreign state's claim that its property is immune from jurisdiction. 9 28 U.S.C. § 1602 (Claims of foreign states to immunity should henceforth be decided by courts of the United States and of the States in conformity with the principles set forth in this chapter.). Subject to certain international agreements involving the United States, a foreign state's property in the United States is immune from attachment arrest and execution except as provided in 28 U.S.C. §§ 1610 and 1611. 28 U.S.C. § 1609. The TRIA amended § 1610 of the FSIA, which is titled Exceptions to the immunity from attachment or execution to make available assets that might otherwise be immune from execution. The TRIA's legislative history clarifies that the purpose of § 1610(f)(1)(A) is to strip a terrorist state of its immunity from execution or attachment in aid of execution. 148 Cong. Rec. S11528 (daily ed. Nov. 19, 2002) (statement of Sen. Harkin); see also Hill v. Republic of Iraq, 2003 WL 21057173 at  (D.D.C. Mar. 11, 2003) (holding that the § 1610(f)(1)(A) notwithstanding clause overrides any immunity from execution that blocked [terrorist party] property might otherwise enjoy). Thus, the purpose of § 1610(f)(1)(A) appears to be to provide a general exception to a foreign state's immunity from execution and attachment. See TRIA, Pub. L. No. 107-297, Title II, section 201(a), 116 Stat. 2322, 2337 (2002) (where the general nature of section 201(a) is emphasized as follows: In General. Notwithstanding any other provision of law . . . .) 48 We conclude that the notwithstanding language relied on by the Ungars appears to target statutory immunities to execution. The criminal forfeiture statute does not immunize HLF bank accounts from writs of execution. The challenged restraining order freezes and preserves the accounts until the claims to them can be prioritized in ancillary proceedings. The TRIA does not address these circumstances. Because the issues at bar do not involve a foreign state's or terrorist party's FSIA immunity from execution, we find no basis to conclude that § 1610(f)(1)(A) preempts, trumps, or otherwise interferes with the operation of 21 U.S.C. § 853 criminal forfeiture provisions. 49 F. No Intervening Precedent has Changed the Fifth Circuit's Holding that Federal Rule of Civil Procedure 65 applies to § 853(e)(1)(A) Restraining Order 50 The Ungars assert that the notice and hearing requirements of Federal Rule of Civil Procedure 65 apply to ex parte restraining orders and injunctions issued under 21 U.S.C. § 853(e)(1)(A). Arguing that the restraining order was aimed entirely at the Ungars, not at the criminal defendants, the Ungars maintain that they should have been provided prior notice and a hearing as required by Rule 65. They contend that failure to comply with Rule 65 notice and hearing requirements violated their Fifth Amendment due process rights and rendered the restraining order void. 51 The Government asserts that Federal Rule of Civil Procedure 65 notice must be given to the property owner, HLF, and that this notice was given, via the indictment. The Government further asserts that HLF does not have an automatic right to a hearing under the forfeiture statute. The Government points out that the Ungars cite no authority for the proposition that a third party with an unperfected interest in a criminal defendant's forfeitable property has a right under Rule 65 to notice and a hearing prior to the entry of a forfeiture restraining order. Moreover, the Government argues, the Ungars are not the only judgment creditors that can seek to attach HLF's blocked assets. 52 The Government also contends that the Federal Rule of Civil Procedure 65 ten-day time limit for temporary restraining orders does not apply to ex parte post-indictment forfeiture restraining orders. Section 853 provides a ten-day limit for ex parte pre-indictment orders and a ninety-day limit for other pre-indictment orders, but provides no time limit for post-indictment restraining orders. Therefore, the Government argues, § 853 post-indictment restraining orders, like preliminary injunctions, have an indefinite duration. 1. Applicable Law 53 Upon application of the United States, a district court may enter a restraining order or an injunction, or take any other action to preserve the availability of forfeitable property [u]pon the filing of an indictment or information charging a violation . . . for which criminal forfeiture may be ordered under this section and alleging that the property with respect to which the order is sought would, in the event of conviction, be subject to forfeiture under this section. 21 U.S.C. § 853(e)(1)(A). The requirements of Federal Rule of Civil Procedure 65 apply to the issuance of restraining orders and injunctions issued pursuant to 21 U.S.C. § 853(e)(1)(A). United States v. Thier, 801 F.2d 1463, 1468 (5th Cir.1986); United States v. Melrose E. Subdivision, 357 F.3d 493, 505 n. 12 (5th Cir.2004) (As a general matter, the Federal Rules presumptively apply except to the extent that they actually conflict with a subsequent statute.). Federal Rule of Civil Procedure 65 provides, in pertinent part, as follows: 54
55
56 . . . . 57 (b) Temporary Restraining Order; Notice; Hearing; Duration. A temporary restraining order may be granted without written or oral notice to the adverse party or that party's attorney only if 58 (1) it clearly appears from specific facts shown by affidavit or by the verified complaint that immediate and irreparable injury, loss, or damage will result to the applicant before the adverse party or that party's attorney can be heard in opposition, and 59 (2) the applicant's attorney certifies to the court in writing the efforts, if any, which have been made to give the notice and the reasons supporting the claim that notice should not be required. 60 Every temporary restraining order granted without notice shall be indorsed with the date and hour of issuance; shall be filed forthwith in the clerk's office and entered of record; shall define the injury and state why it is irreparable and why the order was granted without notice; and shall expire by its terms within such time after entry, not to exceed 10 days, as the court fixes, unless within the time so fixed the order, for good cause shown, is extended for a like period or unless the party against whom the order is directed consents that it may be extended for a longer period. The reasons for the extension shall be entered of record. In case a temporary restraining order is granted without notice, the motion for a preliminary injunction shall be set down for hearing at the earliest possible time and takes precedence of all matters except older matters of the same character; and when the motion comes on for hearing the party who obtained the temporary restraining order shall proceed with the application for a preliminary injunction and, if the party does not do so, the court shall dissolve the temporary restraining order. 61 Although Federal Rule of Civil Procedure 65(b) allows the ex parte issuance of restraining orders under certain limited circumstances, it also provides that an ex parte restraining order is effective for a maximum of ten days unless the court extends it for one additional ten-day period for good cause shown, or unless the party against whom the order is directed consents [to an extension]. Fed.R.Civ.P. 65(b); Thier, 801 F.2d at 1469; Phillips v. Chas. Schreiner Bank, 894 F.2d 127, 130 n. 5 (5th Cir.1990). An ex parte order that purports to be of indefinite duration is a preliminary injunction rather than a temporary restraining order. Phillips, 894 F.2d at 130 n. 5. 62 The Federal Rule of Civil Procedure 65(a)(1) notice requirement mean[s] that where factual disputes are presented, the parties must be given a fair opportunity and a meaningful hearing to present their differing versions of those facts before a preliminary injunction may be granted. Kaepa, Inc. v. Achilles Corp., 76 F.3d 624, 628 (5th Cir.1996) (footnote, citation, and internal quotation marks omitted). The Federal Rule of Civil Procedure 65(a)(1) notice should comply with Federal Rule of Civil Procedure 65(d), which requires five days' notice before a hearing on a motion. Harris County, Tex. v. CarMax Auto Superstores Inc., 177 F.3d 306, 326 (5th Cir.1999) (citing Marshall Durbin Farms, Inc. v. Nat'l Farmers Org., 446 F.2d 353, 358 (5th Cir. 1971)). Because [c]ompliance with Rule 65(a)(1) is mandatory, a preliminary injunction granted without adequate notice and a fair opportunity to oppose it should be vacated and remanded to the district court. Harris County, 177 F.3d at 326 (citing Parker v. Ryan, 960 F.2d 543, 544 (5th Cir.1992)). The language of Federal Rule of Civil Procedure 65(a)(1) requires notice to the adverse party. In dealing with a preliminary injunction, the adverse party means the party adversely affected by the injunction, not the opponent in the underlying action. Parker v. Ryan, 960 F.2d 543, 545 (5th Cir.1992). 63 The Government contends that Thier 's application of Federal Rule of Civil Procedure 65 to § 853(e)(1)(A) ex parte, post indictment restraining orders was called into serious question by United States v. Monsanto, 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989), and asserts that, in light of Monsanto, the Ungars are not entitled to a Federal Rule of Civil Procedure 65 automatic hearing. It is well-established that one panel of our court will not overturn another absent an intervening precedent by our court sitting en banc or a Supreme Court precedent. FDIC v. Dawson, 4 F.3d 1303, 1307 (5th Cir.1993); see also United States v. Fowler, 216 F.3d 459, 460 (5th Cir.2000); United States v. Avants, 367 F.3d 433, 441 (5th Cir.2004). Therefore, if the Ungars are an adverse party for purposes of Federal Rule of Civil Procedure 65, then we are constrained by Thier and its progeny to find that (1) the Ungars were entitled to notice, (2) absence of this notice requires that the restraining order be dissolved, and (3) the Ungars are entitled to notice and a hearing before the New York, South Carolina, or Washington bank accounts are restrained indefinitely-unless there is intervening precedent by our court, en banc, or by the Supreme Court. 64 2. Thier and Monsanto in the United States Fifth Circuit Court of Appeals 65 In Thier, 801 F.2d. at 1468, this court considered the absence of a specified duration for the post-indictment order in the language of § 853(e)(1)(A) and, inter alia, held the following: 66 The statute does not on its face or by necessary implication bar minimum due process protections. The wording of § 853 does not expressly or impliedly negate the applicability of Fed.R.Civ.P. 65. The requirements of Rule 65 apply to the issuance of all restraining orders and injunctions by the courts of the United States. Since those requirements were not excluded, they apply to restraining orders and injunctions issued pursuant to 21 U.S.C. § 853(e)(1)(A). 67 The Government correctly notes that the indictment constituted notice to HLF sufficient for issuance of a temporary restraining order, but under Thier 's application of Federal Rule of Civil Procedure 65, 10 the duration of that order could be no longer than ten days (twenty days, if HLF consented thereto). The district court specified that this ex parte restraining order shall remain in full force and effect until further notice of this Court. Because of its indefinite duration, under Thier, this restraining order is a preliminary injunction issued in violation of Federal Rule of Civil Procedure 65(a)(1). Cf. Phillips, 894 F.2d at 130 n. 5. 68 Citing Melrose East Subdivision, 357 F.3d at 504, the Government asserts that Thier was driven by the belief that Federal Rule of Civil Procedure 65 embodies minimum due process protections that must be enforced in criminal forfeiture proceedings, but that this theory was called into serious question by Monsanto. The Government asserts that this court should follow the approach adopted by the Tenth and Fourth Circuits that no automatic hearing is required under Federal Rule of Civil Procedure 65 in light of Monsanto, following United States v. Jones, 160 F.3d 641, 645-47 (10th Cir.1998). 69 In Melrose East Subdivision, the issue at bar was, at a hearing challenging the issuance of a pretrial restraining order pursuant to a civil forfeiture statute, whether the Government must show probable cause instead of substantial likelihood of success on the merits. The court observed that Thier found applicable to 21 U.S.C. § 853(e)(1)(A) the substantial likelihood of success standard typically required for preliminary injunctions but Monsanto had concluded that due process permitted the Government to restrain assets needed to pay counsel upon a showing of probable cause. Although the civil forfeiture statute in Melrose East Subdivision was textually very similar to § 853(e)(1)(A), there was no comment on whether Monsanto had changed Thier except as follows: 70 Whether or not all of Thier remains good law in the context of 21 U.S.C. § 853(e)(1)(A), this new guidance from the Supreme Court convinces us that in the context of § 983(j)(1)(A)—a statute enacted after Monsanto—Thier should not be carried over to the extent that it would require the government to show more than probable cause in order to restrain assets. 71 Melrose East Subdivision, 357 F.3d at 504. Thier 's determination that Federal Rule of Civil Procedure 65 applies to 21 U.S.C. § 853(e)(1)(A) restraining orders was not discussed. See Melrose East Subdivision, 357 F.3d at 505 n. 12. But the court did state the following: 72 This case therefore does not implicate the question whether the district court may in its discretion hold a pre-restraint hearing, or indeed whether it must hold a pre-restraint hearing as a matter of due process. There is authority for the proposition that due process does not require a pre-restraint hearing in the context of post-indictment restraining orders under 21 U.S.C. § 853(e)(1)(A), the criminal analogue of § 983(j)(1)(A). See United States v. Monsanto, 924 F.2d 1186, 1192-93 (2d Cir.1991) (en banc), on remand from 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989); United States v. Musson, 802 F.2d 384, 387 (10th Cir.1986). But cf. United States v. James Daniel Good Real Prop., 510 U.S. 43, 52-57, 62, 114 S.Ct. 492, 126 L.Ed.2d 490 (1993) (holding that due process requires a hearing before the government may seize real property pending the resolution of a civil forfeiture action). 73 Thus, the Government is not alone in its assertion that Federal Rule of Civil Procedure 65 notice and hearing requirements do not apply to § 853 post-indictment restraining orders. 74 In addition, at least one district court within the Fifth Circuit has chosen to follow the Tenth Circuit rather than Thier. Faced with a motion to dissolve a § 853 ex parte restraining order, it held that a post-restraint, pre-conviction hearing is not required before denial of defendant's motion to dissolve absent a prima facie showing, made through a properly supported motion, that [the defendant] needs the assets for reasonable and necessary legal and/or living expenses, and that the grand jury erred in determining the assets are either proceeds from or traceable to the offenses charged in the Superseding Indictment. United States v. Causey, 309 F.Supp.2d 917, 924-27 (S.D.Tex.2004) (following United States v. Jones, 160 F.3d 641, 647 (10th Cir.1998) and citing United States v. Jamieson, 189 F.Supp.2d 754, 757 (N.D.Ohio 2002)). In effect, this district court decided that the Federal Rule of Civil Procedure 65 ten day limit for ex parte orders did not apply to the § 853(e)(1)(A) restraining order. 11 75 The Causey district court correctly noted that, [b]ecause the district court held an extensive four-day hearing on the issue of probable cause and because the Second Circuit had not addressed the procedural due process issue, the [ Monsanto ] Court did not consider whether due process requires a pre-restraint hearing. Causey, 309 F.Supp.2d at 925. Likewise, the Causey district court accurately observed that Melrose did not address the question whether the district court may in its discretion, or must as a matter of due process, hold a pre-restraint hearing. Id. at 926. Yet, there has been no en banc precedent from this court that changes Thier 's ruling that a § 853 ex parte, post indictment restraining order is subject to Federal Rule of Civil Procedure 65. Nevertheless, as we noted in Melrose, there is authority for the Government's position that Monsanto has cast serious doubt upon Thier 's holding that a hearing is required for such a restraining order. 76 There is a circuit split on this issue. See United States v. Monsanto, 924 F.2d 1186, 1192-93 (2d Cir.1991) (en banc), on remand from 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989) (finding no Rule 65 requirement for a § 853 ex parte, post indictment restraining order); accord United States v. Musson, 802 F.2d 384, 387 (10th Cir.1986); accord United States v. Jones, 160 F.3d 641, 647 (10th Cir.1998). In contrast to these Second and Tenth Circuit cases, shortly after Monsanto was decided, the Ninth Circuit reaffirmed its decision in United States v. Crozier, 777 F.2d 1376 (9th Cir.1985), that Federal Rule of Civil Procedure 65 applies to post-indictment pre-conviction restraining orders: 12 77 In the absence of valid procedural guidelines in the forfeiture provisions of the Act, we held that Rule 65 of the Federal Rules of Civil Procedure applies to require a district court to hold a prompt hearing after a TRO is granted to determine whether a preliminary injunction should issue. [ Crozier, 777 F.2d] at 1384. This holding is not inconsistent with United States v. Monsanto, 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989). There, the Supreme Court explicitly refused to decide whether a hearing in connection with a restraining order pending trial was required and what type of hearing, if any, would satisfy the requirements of due process. Id. 109 S.Ct. at 2666 n. 10. The law of our circuit therefore remains that in order for a restraining order under § 853 to be constitutional, the district court must hold a hearing under Rule 65 to determine whether probable cause exists to issue an injunction. 78 United States v. Roth, 912 F.2d 1131, 1133 (9th Cir.1990). Likewise, the law of the Fifth Circuit remains unchanged because there has been no intervening en banc Fifth Circuit or Supreme Court precedent: the requirements of Federal Rule of Civil Procedure 65 apply to the issuance of restraining orders and injunctions issued pursuant to 21 U.S.C. § 853(e)(1)(A). Thier, 801 F.2d at 1468. Monsanto changed the standard of proof for the Federal Rule of Civil Procedure 65 probable cause hearing, but not this circuit's holding that Rule 65 governs a § 853(e)(1)(A) restraining order. 79 The instant § 853(e)(1)(A) order restrains indefinitely the New York, South Carolina, and Washington bank accounts that are the subject of this appeal; therefore it is to be treated as a preliminary injunction. Phillips, 894 F.2d at 130 n. 5. The Ungars are adverse parties for Federal Rule of Civil Procedure 65 purposes, having been named in the Government's application for the restraining order and having an interest in some of the bank accounts specified in the order, which interest is (1) adverse to both parties to this criminal case, and (2) adversely affected by the restraining order. As an ex parte preliminary injunction, Federal Rule of Civil Procedure 65(a)(1) requires notice to adverse parties. 80 The record reveals no compliance with Federal Rule of Civil Procedure 65(a)(1) notice provision. Compliance with Rule 65(a)(1) is mandatory, and a preliminary injunction granted without adequate notice and a fair opportunity to oppose it should be vacated and remanded to the district court. Harris County, 177 F.3d at 326 (citing Parker v. Ryan, 960 F.2d at 544).