Andersen v. U.S.

• Decision Date: 30 July 2002
• Docket Number: No. 01-56900.,01-56900.
• Citation: 298 F.3d 804
• Parties: Daniel ANDERSEN and Lorenzo J. Lamantia, individually and on behalf of the members of the Institute for Global Prosperity, Plaintiffs-Appellants, v. UNITED STATES of America, Named and Unnamed Agents of the Internal Revenue Service Criminal Division, IRS Special Agent Thomas Wourgiotis, IRS Special Agent Tom Oenbrink, IRS Special Agent Paula Lurvey, IRS Special Agent Jeffrey Holm, IRS Special Agent Julie Lau, IRS Special Agent Charles Phillips, IRS Special Agent Judy O'Briant and Shoshanna Szuch, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

298 F.3d 804

Daniel ANDERSEN and Lorenzo J. Lamantia, individually and on behalf of the members of the Institute for Global Prosperity, Plaintiffs-Appellants, v. UNITED STATES of America, Named and Unnamed Agents of the Internal Revenue Service Criminal Division, IRS Special Agent Thomas Wourgiotis, IRS Special Agent Tom Oenbrink, IRS Special Agent Paula Lurvey, IRS Special Agent Jeffrey Holm, IRS Special Agent Julie Lau, IRS Special Agent Charles Phillips, IRS Special Agent Judy O'Briant and Shoshanna Szuch, Defendants-Appellees.

No. 01-56900.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 11, 2002.

Filed July 30, 2002.

William A. Cohan, William A. Cohan, P.C., San Diego, CA, for the plaintiffs-appellants.

Gretchen M. Wolfinger, Tax Division, U.S. Department of Justice, Washington, D.C., for the defendants-appellees.

Appeal from the United States District Court for the Central District of California, Christina A. Snyder, District Judge, Presiding, D.C. No. CV-01-08427-CAS.

Before REINHARDT and GRABER, Circuit Judges, and HUNT,^* District Judge.

Opinion by Judge Graber; Dissent by Judge Reinhardt.

OPINION

GRABER, Circuit Judge.

Plaintiffs Andersen and LaMantia, on behalf of themselves and the members of the Institute for Global Prosperity (IGP), sued the United States and its agents. Plaintiffs alleged that the government conspired to violate their constitutional rights and those of IGP's members when the government executed eight search warrants and seized, among other things, IGP's membership lists and literature. Plaintiffs moved for an injunction (1) to prevent the government from conducting further searches or seeking further information, (2) to prevent the government from using the information obtained from search warrants already executed, and (3) to require the government to return the seized property. The district court denied the motion. We dismiss Plaintiffs' appeal for lack of jurisdiction.

FACTS AND PROCEDURAL HISTORY

Plaintiffs are leaders of IGP, an organization that distributes "educational, political, religious and philosophical materials in the form of books and CDs, much of which is critical of the United States' financial and taxing policies." Plaintiffs and other IGP leaders are currently under investigation¹ for tax-related crimes.

Between February 28, 2001, and September 25, 2001, the government executed eight search warrants on Plaintiffs' residences and on IGP offices across the country. The warrants sought a broad range of financial records. The warrants also sought material under the heading "[IGP] related records/evidence," including

applications for membership, membership cards, membership agreements, confidentiality agreements, promotional literature (letters, flyers, brochures, videotapes and audiotapes), scripts used during telephone solicitations, newspaper advertisements, lists of names or addresses or telephone numbers (or other identifying data) of members, prospective members or Qualified Retailers, records reflecting attendance at [IGP] seminars, videotapes/audiotapes of [IGP] leaders/members at [IGP] seminars, and audiotapes of [IGP programs].

On September 28, 2001, Plaintiffs filed this action in federal district court, alleging claims of (1) conspiracy to violate Plaintiffs' First and Fourth Amendment rights and the First Amendment rights of members and associates of IGP and (2) "willful, wanton and malicious violations" of Plaintiffs' individual Fourth Amendment rights.

At the same time, Plaintiffs filed a motion for a temporary restraining order and a preliminary injunction. They sought to prohibit the United States from

(a) conducting any further searches and seizures or otherwise seeking or acquiring indicia of association with plaintiffs and/or IGP's members and/or associates; and (b) any use or dissemination to any person, entity or agency whatsoever of any membership and/or associates' identities or information already obtained during the searches and seizures at issue

....

Plaintiffs also sought a permanent injunction ordering the return of all IGP-related property that had been seized pursuant to the warrants.

The district court denied the request for a temporary restraining order and, later, denied Plaintiffs' motion for a preliminary injunction. Plaintiffs timely filed a notice of appeal.

DISCUSSION

As a threshold matter, we must decide whether we have jurisdiction to review the district court's denial of the preliminary injunction.² Generally, we may review only final orders of the district court. 28 U.S.C. § 1291.

The denial of a preliminary injunction is one of the few kinds of appealable interlocutory orders. 28 U.S.C. § 1292(a)(1). However, here, Plaintiffs' motion sought relief typically provided by Federal Rule of Criminal Procedure 41(e). Although styled as an action for an "injunction," perhaps because of the general rule noted above, the motion in substance sought the return of property that had been seized pursuant to a warrant. Rule 41(e) controls the procedure for obtaining that form of relief. The distinction between injunction proceedings in general and Rule 41(e) motions in particular is important, because the denial of a motion under Rule 41(e) usually is not appealable. DiBella v. United States, 369 U.S. 121, 131-32, 82 S.Ct. 654, 7 L.Ed.2d 614 (1962).

The substance of the motion, not its form, controls its disposition. See Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 880 (9th Cir. 2000) ("[T]he label attached to a motion does not control its substance." (citation and internal quotation marks omitted)); Hasbrouck v. Texaco, Inc., 879 F.2d 632, 635 (9th Cir.1989) ("The nomenclature the movant uses is not controlling. This court must decide whether a motion, however styled, is appropriate for the relief requested." (citations omitted)). In accordance with that principle favoring substance over form, we have construed a motion that sought injunctive relief of the kind provided by Rule 41(e) as a Rule 41(e) motion, notwithstanding the motion's label. See, e.g., DeMassa v. Nunez, 747 F.2d 1283, 1291 (9th Cir.1984) (Ferguson, J., dissenting), reh'g granted on other grounds, 770 F.2d 1505 (9th Cir.1985) (per curiam) (DeMassa I and DeMassa II, respectively). Because Plaintiffs sought the relief provided by Rule 41(e), we construe their motion as one properly brought under that rule.

The Supreme Court has held that the courts of appeal have jurisdiction to review decisions on Rule 41(e) motions "[o]nly if the motion is solely for return of property and is in no way tied to a criminal prosecution in esse against the movant." DiBella, 369 U.S. at 131-32, 82 S.Ct. 654.³ As we recently recognized:

This rule reflects the careful balancing between two competing interests: On the one hand, appellate courts should act to prevent the deprivation of seized property that is sorely needed when those deprived have no other avenues for relief. On the other hand, the appeal of a lower court's decision denying a return of property can add uncertainty and delay to an ongoing parallel criminal proceeding, especially if the legality of the search is the critical issue in the criminal trial.

Bridges v. United States (In re 3021 6th Ave. N.), 237 F.3d 1039, 1041 (9th Cir. 2001).

In this case, Plaintiffs' motion seeks the return of the seized property but also asks for significant additional relief. And, there is an ongoing criminal investigation that targets Plaintiffs. In the circumstances, Plaintiffs fail both parts of DiBella's test, and they therefore cannot establish the exception to the general rule that motions like theirs are unappealable.

As for the first criterion, in addition to demanding the return of their property, Plaintiffs seek to enjoin the IRS from conducting any future searches or seizures. Further, they seek to enjoin the IRS from using the material that already was seized. By asking for exclusion of evidence and by seeking to prevent any further searches, the complaint seeks relief beyond "solely" the return of property.

As for the second criterion, an ongoing grand jury investigation constitutes a "`criminal prosecution in esse'" under DiBella. DeMassa I, 747 F.2d at 1291 (Ferguson, J., dissenting) (quoting DiBella, 369 U.S. at 132, 82 S.Ct. 654). In this circuit, rulings on motions for return of property are unappealable when there is an ongoing grand jury investigation. Id.

Indeed, DeMassa I directly controls this case.⁴ In DeMassa I, we construed a motion for a preliminary injunction as a Rule 41(e) motion. Because one of the plaintiffs was the target of an ongoing grand jury investigation, we held that we lacked jurisdiction to review the order denying injunctive relief. See id. at 1287 (stating that "[t]his circuit has joined those courts adopting a liberal definition of when a proceeding is in esse and has also concluded that an order denying the return of seized property is not appealable when a grand jury proceeding against the movant is underway").

DeMassa I clearly contemplates that grand jury proceedings constitute criminal proceedings for the purpose of determining appealability. This interpretation is consistent with DiBella, which held that "the mere circumstance of a pre-indictment motion does not transmute the ensuing evidentiary ruling into an independent proceeding begetting finality even for purposes of appealability. Presentations before a ... grand jury are parts of the federal prosecutorial system leading to a criminal trial." DiBella, 369 U.S. at 131, 82 S.Ct. 654 (citations omitted) (emphasis added).

Plaintiffs ask for an exception to the rule of nonappealability on the ground that their First Amendment rights allegedly have been infringed. Although DiBella and DeMassa dealt with Fourth Amendment rights, the broad proscription against interlocutory review that those cases establish applies with equal force to First Amendment claims.

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