Torres v. Horne

• Decision Date: 10 February 2011
• Docket Number: No. CV 06-2482-PHX-SMM,CV 06-2482-PHX-SMM
• Parties: Javier Torres and Lia Rivadeneyra, on behalf of themselves and others similarly situated, Plaintiffs, v. Thomas C. Horne, Attorney General of the State of Arizona, in his official capacity, Terry Goddard, in his individual capacity, and Cameron ("Kip") Holmes, in his individual capacity, Defendants.
• Court: U.S. District Court — District of Arizona

Javier Torres and Lia Rivadeneyra, on behalf of themselvesand others similarly situated, Plaintiffs,

v. Thomas C. Horne, Attorney General of the State of Arizona, in his official capacity, Terry Goddard, in his individual capacity, and Cameron ("Kip") Holmes, in his individual capacity, Defendants.

No. CV 06-2482-PHX-SMM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

Filed: February 10, 2011

ORDER

Before the Court is Defendants' Motion for Summary Judgment on All Claims (Re: Standing) (Doc. 196). Plaintiffs responded (Doc. 201), Defendants replied (Doc. 213), and the matter is now fully briefed.¹ Having considered the parties' memoranda and other submissions, the Court now issues this Memorandum of Decision and Order denying Defendants' Motion.

BACKGROUND

Since at least October 2000, an Arizona Financial Crimes Task Force (the "Task Force") has worked to interrupt proceeds from narcotics trafficking and alien smuggling to and from Arizona. (Plaintiffs' Responses to Defendants' Separate Statement of Facts in Support of Motion for Summary Judgment on All Claims (Re: Standing) ("PRSOF") ¶ 1.) The Task Force, which includes Defendants, has obtained warrants authorizing the seizure for forfeiture of electronic credits from Western Union Financial Services, Inc. ("Western Union"). (PRSOF ¶ 2.) Since 2004, Defendants have seized more than $9,000, 000 from thousands of people throughout the United States pursuant to these warrants. (Doc. 183 at 2.) The two Plaintiffs in this case, Javier Torres and Lia Rivadeneyra, met the criteria set forth in the seizure warrants, and the funds they sent through Western Union were seized. (PRSOF ¶ 6.)

When the events that are the subject of this lawsuit occurred, Western Union operated through independent contracts with its authorized agents. (PRSOF ¶ 8.) Western Union's will-call transfer service allowed customers to provide money to Western Union for transfer to a designated receiver, who could retrieve the amount designated for transfer at any Western Union agent location. (PRSOF ¶¶ 7, 9, 10.) Western Union and its sender customers agreed to contractual terms and conditions, which governed these money transfers. (PRSOF ¶ 11.) A customer was required to complete a "Send Money" form, provide supporting documents, and submit the amount of money designated for transfer along with a service fee. (PRSOF 1 12.) An authorized agent would then enter the required transaction information, which was transmitted to Western Union's data processing system. (PRSOF ¶¶ 13, 14.) The sender would then receive a Money Transmitter Control Number ("MTCN") to share with the designated receiver for use at pick-up. (PRSOF ¶ 15.)

Rather than sending the currency the sender submitted, the Western Union agent either deposited the money in the agent's own bank account in trust for Western Union or maintained an equivalent amount of money in trust in the bank account. (PRSOF ¶ 16.) Once Western Union deemed the money in the agent's bank account sufficient to cover thetransfer, one of two processes would occur. (PRSOF ¶¶ 17-19.) For most Western Union agents, Western Union created an Automated Clearing House file that would debit the agent's bank account for the amount submitted by the sender, and that debit would be sent to the agent's Originating Depository Financial Institution so that Western Union would receive a credit for the amount submitted on the following business day. (PRSOF ¶¶ 17, 18.) For certain larger agents, Western Union accepted amounts delivered through the Federal Reserve wire process directly from the agents' account into Western Union's operating account. (PRSOF ¶ 19.) Once Western Union's account was credited, Western Union's mainframe would show that the funds were available within about ten to fifteen minutes. (PRSOF ¶ 20.)

The recipient initiated the transaction by appearing at a Western Union agent's location, completing a "Receive Money" form, and providing proper identification and the correct MTCN number. (PRSOF ¶ 21.) Once the recipient provided the information, the Agent would enter the transaction into a point-of-sale computer linked to Western Union's processing center and mainframe. (PRSOF ¶ 22.) For transactions completed within the United States, an agent would locate the transaction on Western Union's mainframe, then print out a money transfer check drawn on Western Union's clearing account. (PSOF ¶ 23.) The receiver would then sign the check over to the agent, who would issue cash, and later receive reimbursement from Western Union. (PRSOF ¶ 23.) For transactions completed in Mexico, the agent would locate the transaction on Western Union's mainframe, then pay the receiver in cash, reconciling with Western Union the amounts paid out. (PRSOF ¶ 24.)

The agreement between Western Union and the sender included certain terms and conditions. (PRSOF ¶ 27.) First, Western Union stated that it permitted refunds of the transfer amount up until the money was paid to the receiver. (PRSOF ¶ 28.) Second, the service fees were refundable only if Western Union did not make the funds available in the time promised in the agreement. (PRSOF ¶ 29.) Third, in California, senders were entitled to a refund if the money sent was not forwarded within 10 days. (PRSOF ¶ 30.) Fourth, senders seeking a refund were required to submit a written refund request to Western Union. (PRSOF ¶ 31.)

This payout process, as it pertained to Plaintiffs and others, was interrupted by Defendants' service on Western Union of a series of seizure warrants. When each warrant was served, Western Union was required to "hold" all customers' wire transfer transactions meeting the warrant criteria and then pay the funds from the transactions into a detention account. (Plaintiffs' Statement ofAdditional Facts Precluding Summary Judgment ("PSOF") ¶¶ 3, 11.) From the detention account, the seized funds were intended to be transferred to an account of the Clerk of the Maricopa County, Arizona Superior Court, where they would be subject to forfeiture. (PSOF ¶ 3; PRSOF ¶ 54.) During the effective dates of the warrant, representatives of the State of Arizona were available by phone to speak with senders and receivers regarding the seizure of the funds. (PSOF ¶¶ 34, 38.) After questioning the caller about the transaction, the representative determined whether to allow the transaction to be completed. (Doc. 80, Ex. K ¶¶ 3-4.) If no one called or the person calling failed to demonstrate that the money was for a legal purpose, the money transfer was to be forfeited. (PSOF ¶¶ 1, 8; Doc. 80, Ex. K ¶¶ 3-4.) When Defendants instituted forfeiture proceedings, the senders did not receive written notice of the pending forfeiture. (PSOF ¶ 22; Doc. 51 at 6.)

In March 2006, Torres completed the necessary paperwork at a Western Union agent in Illinois to send between $920 and $1,000 to Claudia Vasquez in Arizona as proceeds from the sale of Vasquez's car. (PRSOF ¶¶ 32, 36, 37, 39.) It is undisputed that Torres promised Vasquez half the proceeds from selling a car (PRSOF ¶ 41), but it is disputed whether Vasquez sold the car to Torres, who then resold it, or whether Torres sold the car on behalf of Vasquez. (PRSOF ¶¶ 39-41.) Vasquez remained the single title holder of the vehicle, but left Torres a signed "open title" to the vehicle. (PRSOF ¶ 46.)

Torres met the criteria set forth in the seizure warrants obtained by Defendants, which was stored in Western Union's system. (PRSOF ¶ 33.) The warrant applicable to Torres caused his transfer to be diverted to Western Union customer service employees, and wasunavailable for pick-up by Vasquez. (PRSOF ¶ 34.) When Torres called representatives of the State of Arizona to discuss the seizure, he was told that "the money was detained by the State of Arizona." (PSOF ¶ 34.) Vasquez never received the money that Torres attempted to send her, so Torres mailed Vasquez a check for $1,000 instead. (PSOF ¶¶ 30-31.)

In September 2006, Rivadeneyra went to a Western Union agent in South San Francisco, California to transfer $500 to her brother in Sonora, Mexico. (PRSOF ¶¶ 47, 4950; PSOF ¶ 35.) Rivadeneyra's transfer was stopped pursuant to a warrant obtained by Defendants (the "Sonora warrant"), and the funds were diverted into a Western Union detention account once the receiver requested the money. (PRSOF ¶¶ 35, 53.) Rivadeneyra spoke with a representative of the State of Arizona and stated that the money derived from her job. (PSOF ¶ 38.) Rivadeneyra claims that she would send money through Western Union, but only with assurances that it would not be seized. (PSOF ¶ 39; Doc. 205, Ex. J.)

The State of Arizona never gained possession of the funds Rivadeneyra sent. (PRSOF ¶ 54). In October 2006, Western Union filed a lawsuit in Maricopa County Superior Court pertaining to the Sonora warrant, and obtained a preliminary injunction that prevented Western Union from having to transfer Sonora warrant funds to the Maricopa County Superior Court Clerk for forfeiture proceedings. (PRSOF ¶ 54.) In February 2010, the State of Arizona and Western Union reached a settlement that allowed Western Union to release funds seized pursuant to the Sonora warrant. (PRSOF ¶ 55.) Defendant Holmes has stated that senders whose funds were seized are eligible for a refund from Western Union. (Doc. 197, Ex. 8 ¶¶ 6-7.)

PROCEDURAL BACKGROUND

On October 18, 2006, Plaintiffs filed their Complaint pursuant to 42 U.S.C. § 1983, alleging: (1) Defendants lacked probable cause to believe that the monies seized were the fruits or instrumentalities of crimes or otherwise subject to forfeiture in violation of the Fourth Amendment; (2) the seizure warrants were overly broad on their face in violation of the Fourth Amendment; (3) Defendants failed to give adequate and timely notice that their monies would be seized, and failed to provide a prompt post-seizure hearing to contest theseizures, all in violation of due process; and (4) Defendants...