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United States v. $405 089.23 U.S. Currency

filed: May 30, 1995.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
$405,089.23 U.S. CURRENCY, ET AL., DEFENDANTS. CHARLES ARLT, JAMES WREN, PAYBACK MINES, CLAIMANTS-APPELLANTS.



D.C. No. CV 91-3264-AWT. {Judge}{Q}Judges{/Q}{/Judge}

Before: Cecil F. Poole and Stephen Reinhardt, Circuit Judges, and Jack E. Tanner,*fn* District Judge.

Order AND DISSENT

RYMER, Circuit Judge, with whom Circuit Judges HALL, WIGGINS, KOZINSKI, O'SCANNLAIN, TROTT and T.G. NELSON join, Dissenting from the order rejecting the suggestion for rehearing en banc:

By failing to rehear this case en banc, the court lets stand a decision that "could free hundreds of drug dealers across the western United States." Why a Major Drug Suspect May Go Free, S.F. Chron., May 9, 1995, at A1.*fn1

The panel held that the government could not convict a drug dealer of trafficking in drugs and then seek civil forfeiture of the proceeds of the illegal transactions. It reasoned that to do so "punishes" - or prosecutes - the dealer twice for the same offense and thus runs afoul of the Double Jeopardy Clause. The flip side of the panel's reasoning is that a drug dealer whose illegally obtained proceeds have previously been seized may not thereafter be prosecuted because he will already have been "punished." This cannot be right.

The Supreme Court has held that the civil forfeiture of contraband is a remedial sanction that does not constitute punishment for double jeopardy purposes. United States v. One Assortment of 89 Firearms, 465 U.S. 354 (1984). Proceeds are the functional equivalent of contraband. Yet the panel's opinion writes 89 Firearms off the books by taking one line in United States v. Halper, 490 U.S. 435, 104 L. Ed. 2d 487, 109 S. Ct. 1892 (1989), and Austin v. United States, 125 L. Ed. 2d 488, 113 S. Ct. 2801 (1993), an excessive fines case, out of context and surmising that "the Court changed its collective mind" about double jeopardy - despite the fact that the Court itself didn't say that it had. This can't be right, either.

Halper did not involve civil forfeiture, but rather a civil fine under the False Claims Act, 31 U.S.C. §§ 3729-3731. In that context, the Court stated that "a civil sanction that cannot fairly be said solely to serve a remedial purpose, but rather can only be explained as also serving either retributive or deterrent purposes, is punishment, as we have come to understand the term."*fn2 490 U.S. at 448. The Court picked up on this statement in Austin, where the issue was whether civil forfeitures of automobiles and real property under 21 U.S.C. §§ 881(a)(4) and (a)(7) are subject to the limitations of the Excessive Fines Clause of the Eighth Amendment. Because the Excessive Fines Clause is implicated whenever a sanction serves at least in part to punish and does not solely serve a remedial purpose, the Court concluded that instrumentality forfeitures are subject to excessiveness analysis because they are at least partly punishment.

The panel's opinion collapses Halper into Austin, converting Halper 's rule of reason for the "rare" case into a per se rule for the routine case. It also merges the inquiry for excessive fines cases - whether the amount forfeited is partly punishment - into double jeopardy cases, where the issue is whether the amount forfeited is entirely punishment. And, perhaps most critically, the opinion treats proceeds, which are forfeitable under § 881(a)(6), like a car or a house used to facilitate a drug offense. This has to be wrong. 89 Firearms - which Austin distinguishes but leaves intact - says otherwise; and so does the Fifth Circuit, with which we are now squarely in conflict. United States v. Tilley, 18 F.3d 295, 300 (5th Cir.) (post- Austin and post- Halper, forfeiture of illegal proceeds cannot be punishment for double jeopardy purposes because it is of property to which the defendant never had a legal right and "it exacts no price in liberty or lawfully derived property"), cert. denied, 115 S. Ct. 574 (1994).

If the Supreme Court has changed its mind - if instead of being a remedial sanction that does not trigger the double jeopardy bar as 89 Firearms held with respect to contraband, separating a drug trafficker from the proceeds of his trafficking is punishment which either bars forfeiture after conviction or prosecution after seizure - it is up to that Court to say so. I question whether it has.*fn3 However, the panel has read the Court's excessive fines and double jeopardy jurisprudence differently. Given the national importance of the civil forfeiture program and the damage that can be wrought from getting it wrong, I Dissent from our failure to go en banc.

Order

The opinion filed September 6, 1994 is amended as follows:

On Slip op. 10471, please add the following footnote at the end of the text and renumber the footnotes accordingly:

Our adoption of this categorical approach is also compelled by the Supreme Court's recent decision in Department of Revenue of Montana v. Kurth Ranch, 114 S. Ct. 137 (1994). There, the Supreme Court applied Austin 's categorical approach for determining when punishment has been imposed in a Double Jeopardy case ...


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