787 F.Supp. 1466 (CIT. 1992), Court 89-04-00206, United States v. Modes, Inc.

Docket Nº:Court 89-04-00206
Citation:787 F.Supp. 1466
Party Name:United States v. Modes, Inc.
Case Date:March 30, 1992
Court:Court of International Trade

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787 F.Supp. 1466 (CIT. 1992)

UNITED STATES of America, Plaintiff,


MODES, INC. and Jaikishan C. Budhrani, Defendants.

Court No. 89-04-00206.

United States Court of International Trade.

March 30, 1992

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[Copyrighted Material Omitted]

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Golden, Potts, Boeckman & Wilson, Claude R. Wilson, Jr., Susan P. Mueller, Dallas, Tex., for defendants.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice, Patricia L. Petty and Michael Kane, Washington, D.C., for plaintiff.


CARMAN, Judge:

This Court has jurisdiction pursuant to 28 U.S.C. § 1582(1) (1988). This is an action to enforce penalties under 19 U.S.C. § 1592 (1988).

Defendants, Modes, Inc. ("Modes") and Jaikishan C. Budhrani, move to suppress all entries, invoices, and other documents contained in the legal files of Defendants' attorney that were seized by the United States Customs Service ("Customs") on May 21, 1985, at the Dallas/Fort Worth International Airport as well as any evidence of the entries set forth by Defendants. Defendants also move to bar Plaintiff from using or referring to such evidence in any way in the trial of the above-captioned matter. This Court finds that Customs' seizure of Defendants' counsel's legal files was unlawful. This Court, however, denies Defendants' motion to suppress because Plaintiff has met its burden of proving that the evidence sought to be suppressed falls squarely within the independent source doctrine because it was either acquired through independent means or required by statutes, regulations, and administrative summonses.


Defendants are in the business of importing jewelry from Taiwan for resale in the United States. In early 1985, Robert Wallace, a Senior SpecialAgent [16 C.I.T. 190] with Customs began a civil and possible criminal investigation of Defendants. As a result of the Customs investigation, an administrative summons was served on Defendants' attorney Claude R. Wilson, Jr. and Defendant Jaikishan C. Budhrani. Special Agent Wallace sought production, via an administrative summons, of certain records required to be kept by Modes pursuant to 19 U.S.C. § 1508 (1988) to ensure compliance with Customs laws.

Special Agent Wallace postponed the return date on the summons (April 30, 1985) to allow Defendants' counsel, Mr. Wilson, and his investigator, Tim Millis, to travel to Taiwan to question the shipper of the imported merchandise and gather other relevant facts. For unrelated reasons, the trip was delayed.

Both Defendants' counsel and Defendant Budhrani did not comply with the summons claiming protection under the attorney-client privilege and under the Fifth Amendment of the United States Constitution, respectively.

In late May of 1985, after notifying Special Agent Wallace, Mr. Wilson and his investigator travelled to Taiwan to conduct the planned investigation. On May 21, 1985, Mr. Wilson and Mr. Millis returned from Taiwan. While waiting to clear Customs at Dallas/Fort Worth International Airport, the Customs Agent searched Mr. Millis's briefcase that contained Mr. Wilson's legal files on the Modes case. Mr. Millis repeatedly informed the Customs Agent that he worked for Mr. Wilson, an attorney, that the files belonged to Mr. Wilson, and that they concerned an investigation involving Customs. In addition, Mr.

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Millis informed the Customs Agent that Special Agent Wallace was working on the case and that he was aware of Mr. Wilson's trip to Taiwan. Mr. Wilson also repeatedly protested the seizure, claiming that the files consisted of documents protected by the attorney-client privilege, the attorney work product doctrine, and the Defendants' rights under the United States Constitution.

Despite the protest, Customs Supervisor Lelon Beckham, Jr. decided to seize the files. Thereafter, he called Special Agent Wallace at home, who according to Supervisor Beckham, requested that the files be turned over to him the next morning. Further, it was Supervisor Beckham's representation to the Defendants that Customs has a right to detain an attorney's legal file.

Special Agent Wallace testified that he consulted several attorneys who advised him that he could not read the documents but could look over the documents in an attempt to find evidence of a violation. Special Agent Wallace stated that he glanced at the documents, did not find any evidence of a violation, put the documents back in the envelopes, and returned the files to Mr. Wilson on May 23, 1985. Mr. Wilson did receive the files on May 23, 1985, but because Mr. Millis had not been allowed to make an inventory prior to the files being taken, he was unable to determine whether any of the documents had been removed.

[16 C.I.T. 191] The following day, May 24, 1985, a Customs Agent visited the shipper in Taiwan. After the visit, the Customs Agent prepared a consumption entry schedule (Def. Exh. C) which Defendants allege to be strikingly similar to Defendants' schedule (Pl. Exh. 3). Also, on that same day, Special Agent Wallace wrote up a referral of the case to the United States Attorney of the Northern District of Texas.

At the time of the airport seizure, Customs was involved in an investigation of the Defendants based upon allegations of double invoicing. On April 29, 1989, the Plaintiff filed a Complaint against the Defendants alleging that the Defendants made false statements on certain invoices of merchandise imported from Taiwan.

In the suppression hearing, Defendants moved to suppress entries, invoices, and other documents which were contained in the legal files of Defendants' attorney and seized by Customs on May 21, 1985, as well as any evidence of the entries set forth on Defendants' consumption entry schedule (Pl. Exh. 3), which was a document contained in the legal files. Defendants allege that as a result of the seizure of Defendants' attorney's files, Plaintiff had access to the attorney's notes, records, and work product regarding Defendants' case which enabled Plaintiff to prepare a consumption entry schedule similar to the consumption entry schedule contained in the seized files. Defendants contend that such evidence must be excluded because it was obtained through an unlawful seizure in violation of the 4th and 14th Amendments to the United States Constitution, the attorney-client privilege, and the attorney work-product doctrine. During the suppression hearing, Defendants abandoned their attorney-client privilege by waiving it upon the testimony of Defendants' counsel.


Before this Court addresses the merits of Defendants' motion to suppress, it must first decide whether the motion is properly before this Court; this action involves a civil proceeding in which the Government is attempting to enforce a penalty action pursuant to 19 U.S.C. § 1592.

Applicability of Exclusionary Rule

The Supreme Court has held the exclusionary rule applicable in civil proceedings, where the "object, like a criminal proceeding, is to penalize for the commission of an offense against the law." One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 700, 85 S.Ct. 1246, 1250, 14 L.Ed.2d 170 (1965). In Plymouth Sedan, the state brought a forfeiture proceeding concerning an automobile owned by the defendant under a statute that gave the state a right to title to the vehicle upon proof that the vehicle had been used in the criminal transportation

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of illegal liquor. The Court determined that the forfeiture was clearly a penalty for the commission of a criminal act by the defendant and held that the exclusionary rule was applicable to forfeiture proceedings such as the one involved. Id. at 701-02, 85 S.Ct. at 1251.

Plymouth Sedan followed the holding in Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746 (1886), in which the Court found a forfeiture action to be quasi-criminal [16 C.I.T. 192] in nature. Boyd was a forfeiture proceeding under the Customs revenue law and the paper held to be within the scope of the Fourth Amendment was an invoice covering the imported goods. 116 U.S. at 617-19, 638, 6 S.Ct. at 525-26, 536. The Court stated in Boyd:

We are also clearly of opinion that proceedings instituted for the purpose of declaring the forfeiture of a man's property by reason of offences committed by him, though they may be civil in form, are in their nature criminal.... [This case] consists of certain acts of fraud committed against the public revenue in relation to imported merchandise.... The information, though technically a civil proceeding, is in substance and effect a criminal one.... As, therefore, suits for penalties and forfeitures incurred by the commission of offences against the law, are of this quasi-criminal nature, we think that they are within the reason of criminal proceedings for all the purposes of the Fourth Amendment of the Constitution....

Id. at 633-34, 6 S.Ct. at 534.

In addition to the argument that a penalty action may be deemed quasi-criminal in nature, the Supreme Court "has established that the 'prime purpose' of the [exclusionary] rule, if not the sole one, 'is to deter future unlawful police conduct.' " United States v. Janis, 428 U.S. 433, 446, 96 S.Ct. 3021, 3028, 49 L.Ed.2d 1046 (1976) (citations omitted). The Janis Court considered the applicability of the exclusionary rule in deciding the issue of whether evidence which included a sum of money and certain wagering records that were seized illegally by a state police officer acting in good faith, was admissible in a civil proceeding brought by the United States. Id. at 434, 96 S.Ct. at 3022. After the seizure, the Internal Revenue Service was notified of the evidence and, subsequently, commenced...

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