Daily Development for
Monday, July 8, 1996

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

FORFEITURES; FORFEITURE AS "PUNISHMENT:" Supreme Court holds that civil forfeiture is not "punishment" for purposes of Double Jeopardy Clause. United States v. Usery, 1996 WL 340815 (6/24/96)

Defendant cultivated marijuana in a woody area near his house. He had no ownership interest in the area in which he cultivated the marijuana. Acting on the reasonable belief that the defendant did own the cultivated area, however, police, after finding marijuana at that location, searched the house. In the house they found marijuana seeds, stems, stalks and a growlight. Based upon this evidence, the government was able to sustain its burden of proof that the house was used for the distribution of marijuana (in fact, the distribution, if any, was to family members, who consumed marijuana on the premises. There was no allegation or proof of commercial sale of marijuana).

As a consequence of this showing, after the defendant had been convicted and sentenced for manufacturing marijuana, the government seized the house in a forfeiture proceeding. There was no evidence that the proceeds of sale of contraband had been used to acquire the house. The sole basis for the forfeiture was the government's contention that the presence of the stems and seeds and growlight and the conviction for cultivation established that the house had been used for criminal activity. (The detailed facts are from Justice Steven's lone dissent in the case)

Defendant argued that the forfeiture proceeding constituted double jeopardy in that he was being punished twice for the same crime. The Court of Appeals had agreed, basing its views upon a three recent Supreme Court precedents. One, Halper had held that a civil penalty of $130,000 for an offense that injured the government in the amount of $585 was so disproportionate as to amount to a second punishment after the defendant had been convicted and punished for the offense, and was barred by the Double Jeapording Clause. A second, Kurth Ranch, had held that that a special tax imposed on marijuana production was a penalty as to which the Double Jeopardy Clause applied. A third (Austin) had held that that a civil forfeiture could qualify as an "excessive punishment" under the Eighth Amendment.

The Supreme Court reversed. Civil forfeitures do not invoke the Double Jeopardy Clause. In a majority opinion joined by five other judges, Chief Justice Rehnquist observed that civil forfeiture has enjoyed a long period of acceptance from our nation's judiciary (and presumably, in the body politic). Consequently, civil forfeiture should not be viewed as "punishment," and successive impositions of a criminal sanction and civil forfeiture do not amount to double jeopardy.

Justice Rehnquist acknowledged that civil forfeiture has "perhaps . . . certain punitive aspects," but stressed that the devise serves "important nonpunitive goals." These goals appear to be deterrence of conduct deemed undesirable by society:

"Requiring the forfeiture of property used to commit federal narcotics ciolations encourages property owners to take care in managing their property and ensures that they will not permit that property to be used for illegal purposes."

Further, forfeiture prevents illegal uses by imposing an economic penalty, thereby rendering illegal behavior unprofitable, "may abate a nuisance," and "prevents further illicit use of property." Consequently, civil forfeiture should not be regarded as punitive in character and, notwithstanding other cases in which, under special facts, the Court elected to stress the punitive aspects of particular civil penalties, forfeiture does not involve double jeopardy.

Justices Scalia and Thomas concurred on the special grounds that the Double Jeopardy Clause prohibits only successive prosecutions, not successive punishments. Scalia's opinion does not give us a clue as to his views on the majority position.

Justice Kennedy concurred specially. While admitting that civil forfeiture indeed is punitive in character, Justice Kennedy would uphold its application in this case, as in most, because it is directed at conduct other than the alleged criminal act for which the criminal sentence is imposed. It is not the conduct, but the application of the property for such conduct, which is being punished by the forfeiture:

"The key distinction is that the instrumentality-forfeiture statutes are not directed at those who carry out the crimes but at owners who are culpable for the criminal misuse of the property. . . The theory is that the property, whether or not illegal or dangerous in nature, is hazardous in the hands of this owner because either he uses it to commit crimes or allows others to do so. The owner can be held accountable for the misuse of the property."

The critical distinction made by Justice Kennedy led him to emphasize the fact here that the statutes in question have an "innocent owner" exception, so that parties who indeed are not culpable will not be punished. It appears that the six judges joining the majority would not require the presence of an "innocent owner" exception, as indeed they did not so require in Bemis v. Michigan, 116 S.Ct. 994 (1996), where the Court upheld a Michigan statute which resulted in the forfeiture of a cotenant's interest in a car when the cotenant - the wife of the criminal perpetrator, neither knew of nor consented to the criminal use. Justice Kennedy dissented in that case.

Justice Stevens dissented on the grounds that where the primary purpose of a sanction is "deterrent," rather than remedial, then it is punitive in character. He would permit forfeiture to occur when it involves depriving the criminal of the proceeds of the crime, such as the stems and seeds of marijuana, or such as the cash proceeds or other benefits derived from a criminal enterprise. These are "contraband," and the criminal has no right to them. Therefore, no punishment is involved in such cases. But Justice Stevens would draw the line at forfeiture of property whose sole relationship to the crime was that the crime occurred on the premises.

Justice Stevens points out that Austin acknowledged that a civil forfeiture is a punishment for purposes of the Eighth Amendment, and that the same reasoning should apply in this case. He accuses the majority of standing Austin "on its head." (Although the majority carefully explains how Kurth Ranch and Halper can be distinguished, it does not perform this service for Austin. It appears that the distinguishing analysis was excised from the final version of the Court's opinion.)

Comment 1: In continuing its very tolerant view of civil forfeiture statutes, the Court is building on a concept based upon an absurd fiction - that property can be "guilty" of a crime. This may have served well in the mechanistic legal thinking of the Nineteenth Century, but the editor would argue that concepts of the proper role of government in regulating private property interests have progressed a bit since then.

Perhaps we need not shed too many tears for criminal perpetrators who lose their property when they have used it for a crime. But we should keep in mind that criminal perpetrators are not the only potential victims of forfeiture statutes - even statutes with "innocent owner" exceptions. These exceptions protect owners only when they are totally innocent, when they neither know nor have reason to know of the presence of criminal conduct.

It is safe to say that probably half of the large multi-family residential real estate projects in this country is subject to forfeiture. At least in half, the resident manager of such projects knows or has reason to know of facts which could be shown to be clues to criminal conduct occuring on the premises. Remember that such conduct need not be drug trafficing. The RICO "criminal enterprise" statutes also have forfeiture provisions, and the Court has held that such statutes can be used for such remote criminal activity as anti-abortion activism.

The key is inquiry notice. It cannot be said that knowledge on the part of any employee of the owner of real estate will render the owner liable for forfeiture. Cleaning crews probably have no duty to report. But property management staff clearly does stand as the alter ego of the ownership. In some lower court cases involving mortgage lenders, courts have held that knowledge of significant new wealth puts a lender on inquiry notice to examine carefully the source of those assets, and to look beyond express warranties of a customer that the customer came by the wealth legitimately. With that kind of inquiry duty, most resident managers, if they are otherwise doing their job, have sufficient notice of conduct occuring on the premises that would give rise to inquiry duties - or at least could be said to give rise to such duties when a tenant later is found to engaging in criminal conduct.

Remember also that government can seize your client's property on reasonable suspicion, and your client may be deprived of income from that property while trying to go forward to qualify as an "innocent owner."

What about all the information we hear about government giving notice to owners and opportunity to eradicate criminal conduct before holding the owners liable in forfeiture? It's all prosecutorial discretion - it's not in the statutes.

And further we should note that the Court's analysis expressly does not require the existence of such an exception to begin with.

In short, property owners in America are faced with little or no Constitutional protection against a government seizure of their property that might amount to rampant despotism, and clearly could be used to target particular government "enemies" to deprive them of the assets they need to fight on. The sole protection against such despotism is the wisdom and political judgment of prosecutors.

It's true that crime is evil and we should wage war on it with everything we have. But fear of crime historically has led a number of societies to forfeit freedoms to despotic governments. The Court now has ruled clearly that our protection from overreaching civil forfeitures is not in the Constitution. But shouldn't it be in the statutes? Shouldn't our civil forfeiture laws require significant protection for innocent interests? Are you really secure that prosecutors always will view your client as "innocent?"

The editor remembers Watergate, when tapes from the Oval Office revealed the President telling his advisors that his administration would "use the power . . . the IRS . . . " against political enemies. The editor has no bone to pick with the current administration - we can assume integrity until the contrary is shown . But a free society requires government by law, not by individual discretion. By the way, do you know where your FBI file has been lately?

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last five years, these Reports annually have been collated, updated, indexed and bound into the Annual Survey of Developments in Real Estate Law, volumes 1-5, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Laprica Mims at the ABA. (312) 988 6233.

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