Kindhearts For Charitable Humanitarian Dev. Inc. v. Geithner

• Decision Date: 10 May 2010
• Docket Number: Case No. 3:08CV2400
• Parties: KINDHEARTS FOR CHARITABLE HUMANITARIAN DEVELOPMENT, INC., Plaintiff v. Timothy GEITHNER, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

710 F.Supp.2d 637

KINDHEARTS FOR CHARITABLE HUMANITARIAN DEVELOPMENT, INC., Plaintiff

v.Timothy GEITHNER, et al., Defendants.

Case No. 3:08CV2400.

United States District Court,

N.D. Ohio,

Western Division.

May 10, 2010.

Fritz Byers, Toledo, OH, Alan R. Kabat, Bernabei & Wachtel, David D. Cole, Georgetown University Law Center, Lynne Bernabei, Bernabei & Wachtel, Washington, DC, Alexander A. Abdo, Benjamin E. Wizner, Hina Shamsi, American Civil Liberties Union Foundation, New York, NY, Carrie L. Davis, American Civil Liberties Union of Ohio Foundation, Cleveland, OH, Jeffrey M. Gamso, Gamso, Helmick & Hoolahan, Toledo, OH, for Plaintiff.

Amy E. Powell, Jonathan E. Zimmerman, U.S. Department of Justice-Civ. Division, Federal Programs, Washington, DC, for Defendants.

Daniel J. Maloney, Maloney, McHugh & Kolodgy, Ltd., Toledo, OH, Ranjana Natarajan, University of Texas, School of Law, Austin, TX, for Amicus Curiae.

ORDER

JAMES G. CARR, Chief Judge.

Plaintiff KindHearts for Charitable Humanitarian Development, Inc. (KindHearts) challenged defendants' block pending investigation (BPI) of KindHearts' assets and provisional determination, by the Office of Foreign Assets Control (OFAC) of the United States Treasury Department, that KindHearts is a Specially Designated Global Terrorist (SDGT).

OFAC's authority to designate SDGTs and block the assets of entities under investigation for supporting terrorism stems from the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701-06, and Executive Order 13224 (E.O. 13224).

On August 18, 2009, I found that in blocking KindHearts' assets, the government violated KindHearts' constitutional and statutory rights.KindHearts for Charitable Humanitarian Dev., Inc. v. Geithner (KindHearts I), 647 F.Supp.2d 857 (N.D.Ohio 2009) (August 18 Order) [Doc. 87]. I found that, in blocking KindHearts' assets, the government: 1) violated KindHearts' Fourth Amendment rights by failing to obtain a warrant based on probable cause; 2) violated KindHearts' Fifth Amendment rights by relying on criteria for the BPI that are unconstitutionally vague as applied, and by failing to provide KindHearts with adequate notice and a meaningful opportunity to respond; and 3) acted arbitrarily and capriciously in limiting KindHearts' access to its own funds to pay counsel for its defense. Id. I reserved ruling on the remedies for these violations.

On October 26, 2009, I temporarily restrained OFAC from proceeding with designation of KindHearts as an SDGT pending my determination of the appropriate remedies in this case. KindHearts for Charitable Humanitarian Dev., Inc. v. Geithner (KindHearts II), 676 F.Supp.2d 649 (N.D.Ohio 2009) (October 26 Order) [Doc. 106].

The parties have now fully briefed me on the issue of remedy.

I. Fourth Amendment Violation

A. Reasonableness

The government first contends that the Fourth Amendment analysis in my August 18 Order was incomplete. This is so, it argues, because I concluded that OFAC violated KindHearts' Fourth Amendment rights without separately analyzing whether OFAC's seizure of KindHearts' assets was "reasonable."

The government argues that the core of the Fourth Amendment is "reasonableness," and that a seizure may be consistent with the Fourth Amendment if it is reasonable, even if it is not supported by a warrant and probable cause. The government urges me to conclude that under the "totality of the circumstances," the seizure here was reasonable.

As I discussed in my August 18 Order, the government's argument is based on the Fourth Amendment's two textually distinct clauses-one barring "unreasonable searches and seizures," and one stating that "no Warrants shall issue, but upon probable cause." U.S. Const. Amend. IV; see also KindHearts I, supra, 647 F.Supp.2d at 878-79.

KindHearts responds that there is no independent "reasonableness" analysis under the Fourth Amendment, and that I already correctly found that the seizure of its assets violated the Fourth Amendment. KindHearts contends that it is well established that the Fourth Amendment requires a warrant and probable cause, or a recognized exception to those requirements.

In my August 18 Order, I first concluded that OFAC's actions amounted to a seizure of KindHearts' assets. KindHearts I, supra, 647 F.Supp.2d at 872. I then determined that OFAC's blocking of KindHearts' assets violated the Fourth Amendment because OFAC did not obtain prior judicial review, and neither the special needs nor exigency exception applied. Id. at 878-84.¹

The government's reasonableness argument echoes its prior argument that the BPI falls within the special needs exception to the warrant requirement. The government contends specifically: 1) the government has a strong interest in acting quickly to protect national security; 2) KindHearts' interest is limited; 3) proceduralsafeguards built into the blocking program protect KindHearts' interests; and 4) the specific facts underlying the BPI support a finding of reasonableness.

Even assuming arguendo that the government is correct that a "reasonable" seizure may comply with the Fourth Amendment absent a warrant and probable cause, or exception thereto, I find the seizure here was not reasonable.

In assessing the reasonableness of a seizure, I must weigh the nature and extent of the government's intrusion on private interests, government's interest in effecting the seizure, and the existence of checks on arbitrary executive discretion. See Samson v. California, 547 U.S. 843, 856, 126 S.Ct. 2193, 165 L.Ed.2d 250 (2006); Delaware v. Prouse, 440 U.S. 648, 654-55, 99 S.Ct. 1391, 59 L.Ed.2d 660 (1979); see also Skinner v. Ry. Labor Executives' Ass'n, 489 U.S. 602, 619, 109 S.Ct. 1402, 103 L.Ed.2d 639 (1989) ( "[T]he permissibility of a particular practice is judged by balancing the individual's Fourth Amendment interests against its promotion of legitimate governmental interests." (internal citation and quotation omitted)).

The government argues that its interests here-national security and foreign policy-are "at their zenith." [Doc. 110, at 10]. This is so, the government contends, because BPIs carried out under E.O. 13224 "are by definition conducted to address 'an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States[,]' and are an exercise of the Executive's authority to act in the foreign policy and national security realm." [ Id. (quoting E.O. 13224) ].

The government's interest in cutting off funds and other support to terrorism is unquestionably compelling. The other factors, however, demonstrate OFAC's BPI here was not reasonable.²

The government continues to argue that it "has a strong interest in being able to act rapidly, sometimes instantaneously, in this area to protect the national security." [ Id. at 11]. I do not doubt that these interests are strong. I have, however, already held that the government did not demonstrate a need to act rapidly in this case. KindHearts I, supra, 647 F.Supp.2d at 883.

KindHearts' interest here is also strong, despite the government's contention that it is "limited." [Doc. 110, at 11]. As KindHearts points out, I previously held that it "had a strong interest in accessing its funds, remaining in operation and disbursing its funds, to the extent it was doing so, lawfully." KindHearts I, supra, 647 F.Supp.2d at 884. I remain convinced that KindHearts' interest is substantial.

The government also argues that this was a "regulatory action," not an action carried out "for regular law enforcement purposes." [Doc. 110, at 17]. My prior finding that "OFAC's blocking power has more in common with ordinary law enforcement than with any of the activities considered in the special needs cases" refutes this argument, and I decline the invitationto revisit it. KindHearts I, supra, 647 F.Supp.2d at 881.

Next, the government contends that the facts underlying the BPI require a finding of reasonableness. While these facts may speak to the level of governmental interest at stake-one which I agree is compelling-the seriousness of the actions OFAC attributes to KindHearts does not itself make a search reasonable.

The government argues that "this case involves not the search of a home, but the regulatory blocking of the assets of an organization. The blocking does not involve a search ... and as a result, Plaintiff's privacy interests are substantially lower than those of the typical criminal defendant whose home was searched." [Doc. 110, at 16-17]. I disagree.

The intrusion in this case is far different in time and scope than those upheld as "reasonable" in the cases the government cites. For example, in upholding a police officer's authority to order a driver out of his car at a traffic stop, the Supreme Court noted that the intrusion on the driver's liberty "can only be described as de minimis " and as "at most a mere inconvenience." Pennsylvania v. Mimms, 434 U.S. 106, 111, 98 S.Ct. 330, 54 L.Ed.2d 331 (1977).

In U.S. v. Knights, 534 U.S. 112, 118, 122 S.Ct. 587, 151 L.Ed.2d 497 (2001), the Court upheld as "reasonable" a warrantless search of a probationer's apartment. The Court noted, however, a probationer's "significantly diminished privacy interests." Id. at 121, 122 S.Ct. 587.

Similarly, in U.S. v. Conley, 453 F.3d 674, 680-81 (6th Cir.2006), the Sixth Circuit held that collection of DNA from a parolee did not violate the Fourth Amendment. The court in Conley relied on a parolee's "sharply reduced expectation of privacy" and the "minimal intrusion required in taking a blood sample." Id. at 680.

The duration of the intrusion on private interests here is far more extensive than the "mere inconvenience" in Mimms, supra, 434 U.S. at 111, 98 S.Ct. 330, or the "minimal intrusion" in Conley, supra, 453 F.3d at 680. OFAC froze all of KindHearts' assets in February, 2006, and they have remained frozen ever since. A block affects "all property" in the control of a target entity, presently, and in the...