Court Opinion

ID: 50703
Source: CourtListenerOpinion
Date Created: 2010-04-26 00:56:15+00
Date Added: 2024-06-11T17:18:54.484443
License: Public Domain

United States Court of Appeals
                                                                           Fifth Circuit
                                                                         F I L E D
                   IN THE UNITED STATES COURT OF APPEALS
                                                                         June 18, 2007
                          FOR THE FIFTH CIRCUIT
                          _____________________                     Charles R. Fulbruge III
                               No. 06-10724                                 Clerk
                          _____________________

DARREL RUNDUS; GREAT NEWS NETWORK, INC.,

                                                       Plaintiffs-Appellants
     v.

MICHAEL CHERTOFF, SECRETARY, DEPARTMENT OF
HOMELAND SECURITY; MARK L. LOWERY, Individually
and in his official capacity as Special
Agent-in-Charge for the United States Secret
Service, Department of Homeland Security, United
States of America; ROY WHATLEY, JR., Individually
and in his official capacity as Special Agent for
the United States Secret Service, Department of
Homeland Security, United States of America,
                                                       Defendants-Appellees

                       ----------------------
            Appeal from the United States District Court
                 for the Northern District of Texas
                           (3:06-CV-1032)
                       ----------------------
Before HIGGINBOTHAM, WIENER, and PRADO, Circuit Judges.

WIENER, Circuit Judge*:

     Three United States Secret Service agents confiscated 8,300

religious    hand-outs        from   Plaintiffs-Appellants      Great     News

Network,    Inc.    (“GNN”)    and   Darrel   Rundus    (collectively,    “the

Plaintiffs”).       These hand-outs resembled Federal Reserve notes

(dollar bills), but were each in the denomination of $1 million,

     *
       Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
a denomination never issued by the United States Department of

the    Treasury.         The     Plaintiffs      filed    a   civil   rights       lawsuit

against Defendants-Appellees Michael Chertoff, Mark L. Lowery,

and Roy Whatley, Jr. (collectively, “the government”), claiming

that    their      actions        violated    the    Plaintiffs’        constitutional

rights.

       On   the    same     day    that    they     filed     their   complaint,       the

Plaintiffs      sought      a    preliminary      injunction     from       the   district

court that would permit the continued use of the hand-outs.                            The

district court           denied    the    Plaintiffs’       preliminary      injunction,

concluding        that    they     had   failed     to   establish      a    substantial

likelihood of success on the merits.                     The Plaintiffs now appeal

that denial to us.              Satisfied that the district court did not

abuse its discretion, we affirm.

                            I.     FACTS AND PROCEEDINGS

       GNN is an evangelical training ministry with approximately

1,000 members in ten countries.                  Its headquarters are in Denton,

Texas, and Rundus is its president.

       As part of its ministry, GNN distributes the subject hand-

outs, which are designed to look like Federal Reserve notes with

a face value of $1 million.                   The Plaintiffs admit to having

distributed over one million of the hand-outs in the three years

preceding this lawsuit.

                                             2
     The Plaintiffs do not produce or create these hand-outs.

Rather,    the   Plaintiffs        obtain       them     from     Living    Waters

Publications,    Inc.   (“Living     Waters”),         which    operates    out   of

Bellflower, California.1       In his affidavit of June 15, 2006, the

president of Living Waters averred that, in the previous four

years, Living Waters had distributed over 5.3 million of the

hand-outs world-wide, 95 percent of which were distributed in the

United States.

     The   hand-outs    are   in   the       general   style    of   the   Treasury

Department’s Series 2004 notes.              Each bears a portrait of former

President Grover Cleveland on its face and a vignette of the

United States Supreme Court building on its reverse side.2                        In

addition, the hand-outs are of the same dimensions as the Series

2004 note designs, and have nearly identical color schemes and

layouts.

     1
       Such hand-outs are still being offered for sale by Living
Waters.
     2
       The Series 2004 currency designs are the same size as and
have the same portraits, vignettes, and images as previous currency
designs, but also have additional security and design features that
their predecessors lacked, such as (1) color-shifting ink, (2)
watermarks, (3) security threads, (4) symbols of freedom, (5)
additional subtle coloration, (5) updated portraits and vignettes,
(6) microprint text, (7) low vision features, (8) Federal Reserve
indicators, and (9) different serial numbering.            The $20
denomination was first issued on October 9, 2003; the $50
denomination was issued on September 28, 2004; the $10 denomination
was issued on March 2, 2006.

                                         3
       There   are,    however,         myriad   intentional    differences    that

distinguish the hand-outs from actual legal tender.                      First, the

paper on which the hand-outs are printed is palpably different

from that used for Federal Reserve notes:                 The paper on which the

hand-outs are printed is substantially thicker and more rigid

than   that    of    real    currency,      the    hand-out’s    stock    having    a

consistency similar to that of smooth construction paper.

       Second, there are numerous verbal indicators on the hand-

outs that distinguish them from real currency.                  These include (1)

on   the   left     side    of   each    hand-out’s     face,   the   faux   Federal

Reserve indicator reads “Reserved Federal System,” contrast to

that of the official indicator, “Federal Reserve System;” (2) the

lower left corner of each face contains the statement “This note

is not legal tender for all debts, public and private;” (3) also

in   the   lower     left    corner,      each    is   purportedly    signed   by   a

representative of the “Department of Eternal Affairs;” (4) on the

lower right side of the face of each is a notation of the website

“www.WayOfTheMasterRadio.com;” (5) on the top border of the face

of each is written “Reserved Note,” instead of “Federal Reserve

Note;” (6) the ostensible seal of the United States Department of

Treasury on the right side of the face of each states “Thou Shall

Not Steal —— Isaiah Fifty Five One;” and (7) the border of the

reverse side of each reads:

                                            4
     The million-dollar question: Will you go to Heaven?
     Here’s a quick test. Have you ever told a lie, stolen
     anything, or used God’s name in vain?      Jesus said,
     “Whoever looks at a woman to lust for her has already
     committed adultery with her in his heart.”     Have you
     looked with lust? Will you be guilty on Judgment Day?
     If you have done those things, God sees you as a lying,
     thieving, blasphemous, adulterer-at-heart.    The Bible
     warns that if you are guilty you will end up in Hell.
     That’s not God’s will. He sent His Son to suffer and
     die on the cross for you. Jesus took your punishment
     upon Himself. “God so loved the world that he gave his
     only begotten Son, that whoever believes in Him should
     not perish but have everlasting life.”    Then He rose
     from the dead and defeated death. Please, repent (turn
     from sin) today and trust in Jesus, and God will grant
     you everlasting life. Then read your Bible daily and
     obey it. www.livingwaters.com

     Early in June 2006, after an individual in North Carolina

attempted to deposit one of the hand-outs into his personal bank

account, three United States Secret Service agents traced that

hand-out back to the Plaintiffs, went to GNN’s headquarters, and

seized eighty-three packs of hand-outs, each of which contained

100 individual hand-outs.    In addition, the agents informed the

Plaintiffs that the government intended to issue a cease-and-

desist order requiring them to discontinue their use of the hand-

outs.

     Ten days after the seizure, the Plaintiffs filed a civil

lawsuit in the district court, alleging that the seizure and

threatened cease-and-desist order violated their First and Fourth

Amendment   rights   and   seeking       a   declaratory   judgment   that

                                     5
distribution      of     the    hand-outs       was    protected         First   Amendment

expressive       activity.        In    addition,          the    Plaintiffs     sought   a

permanent injunction (1) prohibiting the government from seizing

additional hand-outs and (2) requiring the government to return

those that it had seized.               As an alternative measure of relief,

the Plaintiffs sought monetary damages in the event that the

government had already destroyed the hand-outs or otherwise made

their return impossible.

     On    the    same    day    that     they       filed       their   complaint,     the

Plaintiffs       filed    a    motion     for    a     preliminary         injunction     to

restrain the government from issuing a cease-and-desist order

that would prohibit the Plaintiffs from thereafter acquiring,

distributing, or using such hand-outs.                           The Plaintiffs argued

that the government lacked statutory authority either to seize

the hand-outs or to prohibit their future use.

     The     district          court     denied        the        Plaintiffs’      motion,

determining      that    they    had    failed        to    establish      a   substantial

likelihood of success on the merits.                   The Plaintiffs timely filed

a notice of appeal.

                               II.     LAW AND ANALYSIS

A.   Standard of Review

     Our jurisdiction to review a district court’s order denying

injunctive relief is premised on 28 U.S.C. § 1292(a)(1).                                  We

                                            6
ultimately review denials of preliminary injunctions for abuse of

discretion, but we review de novo decisions based on erroneous

principles of law.3

       To        prevail    on   a   motion       for   preliminary     injunction,    a

plaintiff must show (1) a substantial likelihood of success on

the    merits,        (2)    a   substantial        threat     that   he   will   suffer

irreparable injury if the preliminary injunction is denied, (3)

his threatened injury if the injunction is denied outweighs any

harm that will result if the injunction is granted, and (4)

granting the preliminary injunction will not disserve the public

interest.4

B.     Merits

       Overarching this case is its context: This is not a criminal

counterfeit case, but a civil case involving the exercise of

administrative discretion.               On appeal, the Plaintiffs contend

that       the     government’s      asserted       statutory     authority    for    its

seizure and cease-and-desist order —— 18 U.S.C. §§ 474, 475 ——

does not apply to fake Federal Reserve notes of fictitious or

non-existent denominations, such as $1 million, and thus the

government’s         actions     were   improper.         As    an    alternative,   the

       3
       Lake Charles Diesel, Inc. v. Gen. Motors Corp., 328 F.3d
192, 195 (5th Cir. 2003).
       4
           Speaks v. Kruse, 445 F.3d 396, 399-400 (5th Cir. 2006).

                                              7
Plaintiffs assert that, to the extent that §§ 474 and 475 do

apply     to    non-existent      denominations,    the    government     still

exceeded       its   authority,    because    the   hand-outs      are   not    a

sufficient “similitude” or “likeness” of a Federal Reserve note

to fall within the ambit of §§ 474 and 475.

     1.        Fictitious Obligations

     Here, the relevant portions of § 474 —— paragraphs six and

seven —— make it a felony (1) to possess with the intent to sell

“any obligation or other security made or executed, in whole or

in part, after the similitude of any obligation or other security

issued under the authority of the United States,” or (2) to

“print[],       photograph[],     or   in   any   other   manner    make[]     or

execute[] any engraving, photograph, print, or impression in the

likeness of any such obligation or other security.”                Section 475

prohibits the making, distribution, or use5 of any business or

professional card, advertisement, or other similar documents6 “in

the likeness or similitude of any obligation or security of the

United States.”

     In support of their position, the Plaintiffs advance two

separate but related arguments.             They first contend that, as 18

     5
        Section 475 also criminalizes designing, engraving,
printing, execution, uttering, issuing, and circulation.
     6
       These other similar documents include notices, placards,
circulars, and handbills.

                                        8
U.S.C. § 8 defines “obligation or other security” as “Federal

Reserve notes . . . of whatever denomination, issued under any

Act of Congress,” the hand-outs are not covered by §§ 474 or 475,

because Congress has never authorized the printing, circulation,

or issuance of a $1 million Federal Reserve note.7                                 We disagree.

       Sections 474 and 475 require that the hand-outs be in the

likeness or similitude of any Federal Reserve note issued by Act

of   Congress.             There     is    nothing          in     the       statutory    language,

legislative history, or caselaw addressing these statutes that

supports the conclusion that the use of a fictitious denomination

alone is sufficient to render an instrument a per se non-likeness

or non-similitude.                 Rather, we are convinced that this is at

most       one     factor     to   be      considered             in    making    the     requisite

determination.

       Second, the Plaintiffs assert that the plain language and

legislative history of 18 U.S.C. § 514 demonstrate that neither

§§   474         nor    475   cover       Federal          Reserve       notes    of     fictitious

denomination.              Section        514    prohibits             the    printing,    passing,

possessing, or movement in interstate commerce of “any false or

fictitious             instrument,        document,          or        other    item     appearing,

representing,             purporting,           or       contriving          through     scheme   or

       7
           Emphasis added.

                                                     9
artifice, to be an actual security or other financial instrument

issued under the authority of the United States,” with the intent

to defraud.

      The   Plaintiffs      contend     that,       as   §   514    covers      “false    or

fictitious” representations of Federal Reserve notes, §§ 474 and

475 cannot also cover fictitious denominations without creating

an overlap in criminal liability.                   The Plaintiffs would draw a

distinction       between       “counterfeit”            instruments,          which     are

punishable under §§ 474 and 475, and “fictitious” instruments,

which are punishable only under § 514.

      In    aid   of    their   proposed         interpretation,         the   Plaintiffs

proffer then-Senator Alfonse M. D’Amato’s introductory remarks to

the   Financial         Instruments      Anti-Fraud          Act    of     1995,       which

eventually led to the enactment of § 514.8                              Senator D’Amato

expressed     his      belief   that    a    loophole        existed     under     federal

criminal     counterfeiting        law       that        prevented       counterfeiting

prosecutions        involving    fictitious         instruments         that    were     not

counterfeits of any existing negotiable instrument.                        Section 514,

according to Senator D’Amato, would close this loophole.

      Having      considered     this       argument,        we    do    not    find     the

Plaintiffs’ contention persuasive.                  The fact that two criminal

      8
       141 Cong. Rec. S9533-34, quoted in United States v. Howick,
263 F.3d 1056, 1066-67 (9th Cir. 2001).

                                            10
statutes     may    penalize   similar          conduct   does   not   require    a

mandatory application of one to the exclusion of the other.9

Moreover, there is nothing in Senator D’Amato’s remarks that

leads us to believe that Congress intended § 514 to preempt §§

474’s and 475’s application to false Federal Reserve notes of

fictitious denomination.

     2.      Similitude or Likeness Test

     As their second argument on appeal, the Plaintiffs assert

that the hand-outs do not so closely resemble actual Federal

Reserve notes that they may be deemed to be a “similitude” or

“likeness” within the intendment of these statutes.                    This is a

question    of     fact   reserved    to    the    fact-finder.10      Given     the

similarities (and despite the differences) between the hand-outs

and actual Federal Reserve notes, we cannot say that the district

court either clearly erred in finding similitude or abused its

discretion in ruling that the Plaintiffs failed to satisfy their

burden of establishing a substantial likelihood of success on the

merits.

                               III.    CONCLUSION

     9
       Pasquantino v. United States, 544 U.S. 349, 358 n.4 (2005)
(“The Federal Criminal Code is replete with provisions that
criminalize overlapping conduct. The mere fact that two federal
criminal statutes criminalize similar conduct says little about the
scope of either.” (citations omitted)).
     10
          Webb v. United States, 216 F.2d 151, 152-53 (6th Cir. 1954).

                                           11
       In closing, we re-emphasize the vast difference between the

government’s acts complained of here in merely confiscating the

hand-outs because of their similarities to legal tender, on the

one hand, and a criminal prosecution for counterfeiting (which

this   is   not),   on   the       other   hand.      Within   this    non-criminal

framework    and    based     on    the    applicable    law   and    our   extensive

review of the parties’ briefs and the record on appeal, we hold

that the district court did not abuse its discretion in denying

the    injunction    sought         by    the    Plaintiffs,   ruling       that   the

Plaintiffs    failed     to        establish     a   substantial     likelihood     of

success on the merits and thus failed to prove their entitlement

to a preliminary injunction.

AFFIRMED.

                                            12