Court Opinion

ID: 9571826
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:35:35.567902+00
Date Added: 2024-06-11T12:31:04.183215
License: Public Domain

HARTZ, Judge (dissenting). I respectfully dissent. Although much of the majority opinion finds support in the Supreme Court’s language in United States v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 104 L.Ed.2d 487 (1989), this ease appears to be distinguishable from Halper in two important respects. First, the full amount of the tax could rationally be justified on grounds other than punishment of Whitener. Second, because the criminal prosecution and the tax collection were pursued concurrently, the tax collection is probably not a subsequent prosecution for the purposes of double-jeopardy doctrine. The novel questions raised by this appeal will probably be decided by the United States Supreme Court in the next few months. In October the Supreme Court granted certiorari in In re Kurth Ranch, 986 F.2d 1308 (9th Cir.1993), whose facts appear to be indistinguishable in any material respect from those in this appeal. Perhaps the parties to this appeal could have advanced their positions better by filing amicus briefs in Kurth than by persuading this panel of their views. Nevertheless, it is not this Court’s practice to await decisions of the United States Supreme Court. Therefore, I shall explain why I disagree with the majority opinion. I. Is the Imposition of the Tax a Punishment? The tax at issue is levied at the rate of $200 per ounce of marijuana. NMSA 1978, § 7-18A-3(A)(5) (Repl.Pamp.1993)." How much, if any, of the tax constitutes punishment? As I understand Halper, the punishment portion is that part of the tax which is left over after all other proper purposes of the tax are accounted for. In Halper the punishment resulted from imposition of a civil penalty. The civil penalty was to be considered punishment if it could not “fairly be said solely to serve a remedial purpose.” Id., 490 U.S. at 448, 109 S.Ct. at 1902. The remedial purpose need not be served with precision. The Court allowed for “an element of rough justice” in determining whether a remedial purpose was satisfied. Id. at 449, 109 S.Ct. at 1902. To apply Halper one must first determine what purposes Halper considered to be remedial. In general, one can say that obtaining compensation for the government’s injuries is a remedial purpose. Thus, in disposing of the specific case before it, Halper held that the government should not be bound by the trial court’s approximation of its expenses and remanded the matter to the trial court “to permit the Government to demonstrate that the District Court’s assessment of its injuries was erroneous.” Id. at 452, 109 S.Ct. at 1903. The government’s injuries include at a minimum whatever the defendant took from the government, together with the governmental costs of recovery. This conclusion follows from Halper’s discussion of United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443 (1943). Reaffirming the holding in Hess that the civil penalty for collusive bidding on government contracts did not constitute a second punishment, Hal-per stated, “Those injuries [done to the government], of course, included not merely the amount of the fraud itself, but also ancillary costs, such as the costs of detection and investigation, that routinely attend the Government’s efforts to root out deceptive practices directed at the public purse.” Halper, 490 U.S. at 445, 109 S.Ct. at 1900. Halper also suggested further costs that can be taken into account when it approved the Court’s earlier decision in Rex Trailer Co. v. United States, 350 U.S. 148, 76 S.Ct. 219, 100 L.Ed. 149 (1956). The defendants in that case had fraudulently purchased government trucks by claiming veteran priority rights to which they were not entitled. Hal-per noted that Rex Trailer recognized that the government sustained injury “due to the resultant decrease of motor vehicles available to Government agencies, an increase in undesirable speculation, and damage to its program of promoting bona fide sales to veterans.” Halper, 490 U.S. at 445-46, 109 S.Ct. at 1900. If civil payments can be deemed remedial to the extent that they reimburse the government for losses such as those noted in Rex Trailer, it would seem to follow that one could also consider as a remedial purpose the reimbursement of the governmental costs associated with social ills caused by marijuana. After all, high taxes on alcohol and tobacco products are often justified (even by the President of the United States) by the governmental costs caused by use and abuse of those substances. In addition to any costs caused by the use of marijuana, the criminal conduct of trafficking imposes its own costs. Language in the Supreme Court’s recent decision in Austin v. United States, — U.S. -, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993), supports this broad view of the remedial purposes that can be considered in determining whether a civil imposition is punitive. One reason Austin gave for finding an in rem forfeiture under 21 U.S.C. §§ 881(a)(4) and (a)(7) to be punitive (for purposes of the Excessive Fines Clause of the Eighth Amendment) was that “the ‘forfeiture of property ... ha[s] absolutely no correlation to any damages sustained by society or to the cost of enforcing the law.’” Id., 118 S.Ct. at 2812 (quoting United States v. Ward, 448 U.S. 242, 254, 100 S.Ct. 2636, 2644, 65 L.Ed.2d 742 (1980)). The Court could say with confidence that there was no correlation because a vehicle or parcel of real property would be forfeitable no matter what its value and no matter how small the amount of drugs involved. A forfeiture that was proportionate to the quantity of drugs seized might be adequately correlated. More significantly for the purposes of this case, Austin implies that a civil imposition that compensates for “damages sustained by society” is not punitive. Thus, although Austin was addressing only forfeitures, the opinion suggests that a civil imposition could be fully justified as remedial if the amount of the imposition is comparable to the social harm caused by the activity that is the subject of the imposition. If the above analysis is correct, then the $200-per-ounce tax is remedial to the extent that it reimburses the state for (1) the costs of investigating, prosecuting, and punishing marijuana offenses (which would include the costs of incarceration and probation), and (2) the costs arising from the social ills created by the use of marijuana and criminal trafficking in marijuana. The majority opinion errs by focusing only on the costs of prosecuting Defendant, which admittedly were minimal because of the plea bargain. The opinion ignores investigative costs. Those costs should include not only the pay of the investigating officers for the time they spent on Defendant’s case, but also a proportionate share of such “overhead” costs as the cost of training the officers and the cost of maintaining a scientific laboratory to verify the chemical composition of questioned substances. The majority opinion also ignores the social costs arising from the use and trafficking of marijuana. I realize that there are informed, intelligent people who believe that those costs are small. But reasonable minds can differ on that matter and courtroom procedures are not well-suited for determining the effects on society of the use of marijuana. When the constitutionality of legislation depends on such legislative facts, see Trujillo v. City of Albuquerque, 110 N.M. 621, 634-37, 798 P.2d 571, 584-87 (1990) (Montgomery, J., concurring in part and dissenting in part) (discussing “legislative facts”), the presumption of constitutionality, see State v. Segotta, 100 N.M. 498, 500, 672 P.2d 1129, 1131 (1983), properly imposes the burden of persuasion on those challenging constitutionality. Thus, the taxpayer must establish that the tax does not “fairly serve” proper non-punishment purposes. Halper reached essentially the same conclusion when it held that the government is not required to provide an accounting of its damages and costs unless the civil penalty “bears no rational relation to the goal of compensating the Government for its loss.” 490 U.S. at 449, 109 S.Ct. at 1902. In the present case Defendant has failed to show that the tax rate imposed is not rationally related to the costs imposed upon the state. See Rehg. v. Illinois Dep’t of Revenue, 152 Ill.2d 504, 178 Ill.Dec. 731, 734, 743, 605 N.E.2d 525, 528, 537 (1992) (Tax penalty of $168,000 imposed on $300 worth of stolen prescription drugs “appears to bear a rational relationship to the goal of compensating the State for the costs typically incurred in investigating and prosecuting that type of conduct.”). Moreover, the present case is not totally controlled by Halper because Halper considered a civil penalty whereas Defendant is here challenging a tax. It is not clear to me that the only difference between a tax and a civil penalty is the purely formal one of the label attached to the imposition. Because Halper was addressing a civil penalty, the Supreme Court could start from the assumption that the sole non-punishment purpose of the imposition was a remedial one. That assumption appears incorrect, however, when the imposition is a tax. Taxes need not be justified by the damage to the government caused by the taxpayer. Nor need the tax be justified by the amount of benefit conferred. See State ex rel. Angel Fire Home & Land Owners Ass’n v. South Cent. Colfax County Special Hosp. Dist., 110 N.M. 496, 498-500, 797 P.2d 285, 287-89 (Ct.App.), cert. denied, 110 N.M. 330, 795 P.2d 1022 (1990). “A tax is not an assessment of benefits____ The only benefit to which the taxpayer is constitutionally entitled is that derived from his enjoyment of the privileges of living in an organized society, established and safeguarded by the devotion of taxes to public purposes.” Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 522, 57 S.Ct. 868, 878, 81 L.Ed. 1245 (1937). A tax can be justified on the ground that the legislature finds it to be an equitable way of apportioning the costs of government. In discussing a federal tax on conducting a liquor business contrary to state law, Justice Cardozo wrote: Congress may have held the view that an excise should be so distributed as to work a minimum of hardship; that an illegal and furtive business, irrespective of the wrongdoing of its proprietor, is a breeder of crimes and a refuge of criminals; and that in any wisely ordered polity, in any sound system of taxation, men engaged in such a calling will be made to contribute more heavily to the necessities of the Treasury than men engaged in a calling that is beneficent and lawful. ... Congress is not punishing for a crime against another government. It is not punishing at all. It is laying an excise upon a business conducted in a particular way with notice to the taxpayer that if he embarks upon that business he will be subjected to a special burden. What he pays, if he chooses to go on, is a tax and not a penalty. United States v. Constantine, 296 U.S. 287, 297-98, 56 S.Ct. 223, 228, 80 L.Ed. 233 (1935) (Cardozo, J., dissenting). Cf. United States v. Sanchez, 340 U.S. 42, 71 S.Ct. 108, 95 L.Ed. 47 (1950) (upholding federal marihuana tax). Although these remarks were written in dissent, they were joined by two other giants of the United States Supreme Court, Justices Brandéis and Stone. Their view may well carry the day today. I realize that it should not be possible for a legislature to avoid the Double Jeopardy Clause by simply calling a civil penalty a tax. Nevertheless, the recognition that taxes serve purposes other than punishment and compensation to the government for loss certainly complicates the task of determining whether a tax should be considered punishment. To the extent that a tax on marijuana can be viewed as simply an equitable way of apportioning the burden of taxation to support New Mexico government, the tax is not punishment. This observation reinforces the earlier conclusion that Defendant had a heavy burden to establish that the tax in this case constituted punishment. One final comment regarding whether the tax in this case served a remedial purpose. The majority opinion seems to suggest that the forfeiture had already reimbursed all, or at least a part, of the state’s costs, thereby rendering the tax that much more a punishment. I do not agree that the forfeiture recovery should be considered in assessing the extent to which the tax constituted punishment. After all, the forfeiture, which was not challenged by Defendant, may itself have been punitive. A few months ago the United States Supreme Court stated, with apparent unanimity, that an in personam forfeiture “is clearly a form of monetary punishment no different, for Eighth Amendment purposes, from a traditional ‘fine.’” Alexander v. United States, — U.S. -, -, 113 S.Ct. 2766, 2775-76, 125 L.Ed.2d 441 (1993), accord Austin v. United States, — U.S. -, -, 113 S.Ct. 2801, 2811-12, 125 L.Ed.2d 488 (1993) (also finding an in rem forfeiture to be punishment for Eighth Amendment purposes). When a fine is imposed as part of a defendant’s punishment, it would be improper to calculate that the fine compensated the government for its costs and then rule that the civil penalty did not serve a purely remedial purpose and therefore constituted improper punishment. The net result would be to deny the government its authority to impose the financial punishment. Likewise, when a forfeiture serves the purpose of a traditional fine, the extent to which the forfeiture could be said to compensate the state for its costs should not be considered in determining whether a later civil imposition — such as a civil penalty or a tax — constituted a punishment. Considering the forfeiture for that purpose results in negating the forfeiture as punishment. The State should be able to collect money for non-punishment purposes. and also impose punishment (by forfeiture) on top of that amount. II. Was Imposition of the Tax a Subsequent Punishment? The majority state that they do not “decide the question of whether the State may seek both civil and criminal penalties in one proceeding.” This statement follows Halper, which said that the decision did not “prevent the Government from seeking and obtaining both the full civil penalty and the full range of statutorily authorized criminal penalties in the same proceeding.” Halper, 490 U.S. at 450, 109 S.Ct. at 1902. What puzzles me is the meaning of “the same proceeding” in this context. I find it hard to visualize a joint criminal-trial-and-tax-colleetion proceeding. When a person is subject to both a civil imposition and a criminal prosecution, I doubt that either the defendant or the government would often want to see the two matters tried together. Was Halper suggesting to Congress a new form of hybrid proceeding? The resolution of this question may lie in Halper's explanation of the purpose of prohibiting successive proceedings. The Court wrote, “[W]hen the Government already has imposed a criminal penalty and seeks to impose additional punishment in a second proceeding, the Double Jeopardy Clause protects against the possibility that the Government is seeking the second punishment because it is dissatisfied with the sanction obtained in the first proceeding.” Id. at 451 n. 10, 109 S.Ct. at 1903 n. 10. In Halper the civil penalty action was brought after Halper had been sentenced in the criminal prosecution. Id. at 437-38, 109 S.Ct. at 1896-97. Here, in contrast, the State had been pursuing the criminal prosecution, the forfeiture, and the tax for several months before Defendant entered his plea of guilty in the criminal prosecution. The State was undoubtedly going all out to seek the maximum possible sanctions against Defendant. This was not the type of circumstance envisioned by Hal-per in which the government seeks a civil penalty only after being dissatisfied with the criminal penalty imposed by the court; If, as Halper suggests, Defendant would have no double-jeopardy claim if the State had sought the criminal penalty, the forfeiture, and the tax all in the same pleading, I fail to see how Defendant suffered any prejudice or how any Constitutional policy was violated by the State’s pursuing the three matters concurrently as it did here. Cf. United States v. Marcus Schloss & Co., 724 F.Supp. 1123, 1126-27 (S.D.N.Y.1989) (defendant cannot claim violation of Double Jeopardy Clause when it entered into consent order in civil case with knowledge of pending criminal inquiry). The opinion in United States v. Millan, 2 F.3d 17 (2d Cir.1993), supports this analysis. In that case the defendants invoked Halper to try to bar a criminal prosecution after a civil forfeiture. The original criminal indictment was filed on August 14, 1991; the civil forfeiture complaint was filed several months later, on December 26, 1991, but was settled before the start of the criminal trial. The court held that Halper did not apply, writing “[W]e conclude that the government has employed a single proceeding to prosecute the [defendants], and, therefore, the proscription of the Double Jeopardy Clause does not apply.” Id. at 19. Although the relationship between the criminal prosecution and the forfeiture in Millan may have been more marked than the relationship between the criminal prosecution and the tax collection here, the essence of the Millan analysis still applies. Millan said: “[W]e are cognizant that one of the Halper Court’s concerns was that the government might act abusively by seeking a second punishment when it is dissatisfied with the punishment levied in the first action. See Halper, 490 U.S. at 451 n. 10[, 109 S.Ct. at 1903 n. 10]. That problem is obviously not present in the instant case, because the civil and criminal actions were contemporaneous, and not consecutive. Indeed, the record before us gives ample indication that it was clear to all parties that the government intended to pursue all available civil and criminal remedies, regardless of the individual outcome of any of these claims.” Id. at 20-21. The last sentence of the quoted passage also describes this case. Therefore, I would distinguish the present situation from Halper and find that the State’s simultaneous pursuit of the tax and the criminal penalty did not violate the Double Jeopardy Clause.