Floyd v. U.S., 88-1065

• Decision Date: 07 November 1988
• Docket Number: No. 88-1065,88-1065
• Parties: Jim FLOYD, Petitioner-Appellee, v. UNITED STATES of America, Respondent-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 999

860 F.2d 999

Jim FLOYD, Petitioner-Appellee, v. UNITED STATES of America, Respondent-Appellant.

No. 88-1065.

United States Court of Appeals, Tenth Circuit.

Nov. 7, 1988.

Jeralyn E. Merritt, Denver, Colo., for petitioner-appellee.

Stephen C. Peters, Asst. U.S. Atty. (Michael J. Norton, U.S. Atty., with him on the brief), Denver, Colo., for respondent-appellant.

Before ANDERSON and BALDOCK, Circuit Judges, and PARKER, District Judge. ^*

BALDOCK, Circuit Judge.

This is an appeal from a district court order requiring the government to return to petitioner-appellee Jim Floyd (Floyd) $41,440 in currency. Our jurisdiction arises from 28 U.S.C. Sec. 1291.

I. Background

On September 12, 1987, Floyd proceeded through the passenger screening area at Denver's Stapleton International Airport. When private security agents were unable to mechanically screen the contents of a duffel bag carried by Floyd, an agent asked and received Floyd's permission to manually search the bag. Inside the bag the agent found large amounts of U.S. currency wrapped in envelopes. The agent then replaced the contents of the bag, allowed Floyd to proceed, and notified his supervisor of the occurrence. The supervisor summoned the Denver police.

Denver police officers located Floyd who voluntarily accompanied them to an airport security office. Without his permission, Floyd's bag was searched again. Subsequently, a Denver police technician arrived with a dog trained to detect the presence of drugs. Floyd then disclaimed ownership of the bag and left. The dog reacted positively to the presence of drugs, and the currency was turned over to federal agents from the Mountain States Drug Task Force.

On September 18, 1987, Floyd filed a motion for return of the currency pursuant to Fed.R.Crim.P. 41(e). ¹ The government's motion to dismiss was denied, and the case proceeded to a November 23, 1987, hearing. On December 2, 1987, the government published notice indicating that it had begun administrative forfeiture proceedings on the currency as provided for by 21 U.S.C. Sec. 881. ² On December 30, 1987, the district court entered its memorandum opinion and order which granted the Rule 41(e) motion upon a finding that Floyd's property had been illegally seized.

On appeal, the government argues that (1) the trial court had no jurisdiction to hear the Rule 41(e) motion, (2) Floyd lacked standing to assert the fourth amendment claim and (3) the seizure of the currency did not violate the fourth amendment. We reverse and remand.

II. Jurisdiction

The government asserts four grounds for reversal of the trial court's exercise of jurisdiction. According to the government, a Rule 41(e) motion cannot support jurisdiction for a return of property when unrelated to a criminal action. Second, the government argues that a court's Rule 41(e) jurisdiction must cease when the government commences a civil forfeiture proceeding. Third, the government contends that federal jurisdiction fails under Rule 41(e) as the search was conducted solely by private security agents and municipal police. Finally, the government claims that apart from Rule 41(e) jurisdiction, the trial court abused its discretion by asserting equitable jurisdiction over the suit to return property. Because of its importance, we address this last issue first.

A.

The trial court held that its jurisdiction was proper "based upon both Rule 41(e) and the general equitable jurisdiction of the federal courts." Floyd v. United States, 677 F.Supp. 1083, 1087 (D.Colo.1987). The government attacks both bases. Because these are matters of first impression in the Tenth Circuit, we find it necessary to clarify the nature of Rule 41(e) jurisdiction.

The circuits that have considered the issue have generally concluded that a motion for return of property, whether based on Rule 41(e) or a court's general equitable jurisdiction, is governed by equitable principles. In re Harper, 835 F.2d 1273, 1274 (8th Cir.1988); United States v. Martinson, 809 F.2d 1364, 1367 (9th Cir.1987); Angel-Torres v. United States, 712 F.2d 717, 719-20 (1st Cir.1983); Hunsucker v. Phinney, 497 F.2d 29, 34 (5th Cir.1974), cert. denied, 420 U.S. 927, 95 S.Ct. 1124, 43 L.Ed.2d 397 (1975); Smith v. Katzenbach, 351 F.2d 810, 814 (D.C.Cir.1965). We hold that a trial court's decision to grant jurisdiction over a Rule 41(e) motion for return of property should be governed by equitable principles.

Rule 41(e) jurisdiction should be exercised with caution and restraint. E.g., Hunsucker, 497 F.2d at 34. A Rule 41(e) motion should be dismissed if the claimant has an adequate remedy at law or cannot show irreparable injury. 3 C. Wright, Federal Practice and Procedure Sec. 673 (2d ed. 1982).

The trial court held specifically that a Rule 41(e) motion did not require a showing of irreparable harm, noting that the text of the rule made no mention of it. Floyd, 677 F.Supp. at 1087 n. 2. We disagree. We join with those courts cited above holding that Rule 41(e), with regard to jurisdiction, is an embodiment of equitable principles rather than a basis for jurisdiction strictly by its terms. Further, the Supreme Court has noted that irreparable injury is required to support a motion to suppress under Rule 41(e) when entertained by the court on equitable grounds in advance of any proceedings. G.M. Leasing Corp. v. United States, 429 U.S. 338, 359-60, 97 S.Ct. 619, 632, 50 L.Ed.2d 530 (1977) (citing Hunsucker, 497 F.2d at 34). We therefore reverse the trial court and hold that a showing of irreparable harm is necessary for Rule 41(e) jurisdiction.

We are aware that in addition to showing irreparable harm and an inadequate remedy at law, a number of courts require the claimant to show that the seizure involved a callous disregard for his constitutional rights. See, e.g., Hunsucker, 497 F.2d at 34. The equitable nature of Rule 41(e) jurisdiction is well established, and we have no difficulty reading equitable constraints into the text of the statute for that purpose. Rule 41(e) deals specifically, however, with the conduct that will trigger relief. It requires a showing of an illegal seizure, not a callous disregard of that legality. It would be anomalous to impose as a jurisdictional hurdle a requirement more restrictive than the substantive harm specifically sought to be remedied by Rule 41(e). Having determined the equitable nature of 41(e) jurisdiction, we now turn to the analysis of the underlying factors.

1. Adequate Remedies at Law

The government asserts that Floyd failed to pursue four available remedies at law, including the filing of (1) a claim and cost bond under 19 U.S.C. Sec. 1608, (2) a petition for remission or mitigation of the forfeiture pursuant to 19 U.S.C. Sec. 1618, (3) a petition in the United States Claims Court under 28 U.S.C. Sec. 1491(a)(1) or (4) a state tort or replevin action. We review these remedies respectively.

(1) The government contends that Floyd had an adequate remedy at law according to 19 U.S.C. Sec. 1608. ³ The relevant statutes ⁴ provide for two potential stages

in a forfeiture situation: first, an administrative process allowing for summary forfeiture, and second, a judicial forfeiture proceeding. A claimant may invoke Sec. 1608 to end the administrative forfeiture and force the institution of judicial proceedings. The legality of a seizure may be tested in the judicial forfeiture. See One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 696, 85 S.Ct. 1246, 1248, 14 L.Ed.2d 170 (1965) (fourth amendment exclusionary rule applies to forfeiture proceedings).

The process works as follows. If the value of a seized article does not exceed $100,000, the appropriate customs officer is required to publish for three successive weeks a notice of seizure and intent to forfeit the property. 19 U.S.C. Sec. 1607. After the first publication of notice, a claimant has twenty days to file a claim and cost bond. 19 U.S.C. Sec. 1608. If no such filing occurs, the property is administratively forfeited at the end of the twenty days. 19 U.S.C. Sec. 1609. A timely filing, however, stops the administrative forfeiture, 21 C.F.R. Sec. 1316.76(b), and the matter is then transferred to the appropriate United States attorney for the institution of judicial forfeiture proceedings. 21 C.F.R. Sec. 1316.78.

The Sec. 1608 remedy, brought about by the filing of a claim and cost bond, is not available to the claimant until statutory notice is published. After the September 18, 1987, filing of this Rule 41(e) motion, the government indicated that formal notice would be published "on or about October 21, 1987." See Affidavit of Special Agent Ann Canty, rec. vol. I at 2A. It was not so published, and the Rule 41(e) motion proceeded to a hearing on November 23, 1987. Notice was published on December 2, 1987, and the trial court entered its order on December 30, 1987. Floyd had no remedy pursuant to Sec. 1608 at the time of the Rule 41(e) hearing, and given the government's delay, the trial court did not abuse its discretion by retaining jurisdiction after the publication of administrative notice.

We do not foreclose the possibility that a trial court may in its discretion properly dismiss a Rule 41(e) motion even after a Rule 41(e) hearing. The inquiry should always be equitable and not mechanical, and thus resolution should not turn on a pure race between the parties to file or publish notice. ⁵ In this case, however, where the government failed to publish notice on or soon after a date it specifically targeted, and where the Rule 41(e) motion proceeded to a hearing, we find no abuse of discretion.

(2) The government asserts that 19 U.S.C. Sec. 1618 provided Floyd with an adequate remedy at law. Section 1618 allows an interested party to file a petition for remission or mitigation of a seizure. Section 1618 permits the Secretary of the Treasury to remit or mitigate a forfeiture if he finds that it "was incurred without wilful...