U.S. v. $186,416.00 in U.S. Currency

• Citation: 590 F.3d 942
• Decision Date: 20 October 2009
• Docket Number: No. 07-56549.,07-56549.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. $186,416.00 IN U.S. CURRENCY, Defendant. United Medical Caregivers Clinic, Inc., Claimant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

590 F.3d 942

UNITED STATES of America, Plaintiff-Appellee, v. $186,416.00 IN U.S. CURRENCY, Defendant United Medical Caregivers Clinic, Inc., Claimant-Appellant.

No. 07-56549.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 12, 2009.

Filed October 20, 2009.

Amended January 7, 2010.

Paul L. Gabbert, Santa Monica, CA, for the claimant-appellant.

Thomas P. O'Brien, United States Attorney; Christine C. Ewell, Assistant United States Attorney, Chief, Criminal Division; Steven R. Welk, Assistant United States Attorney, Chief, Asset Forfeiture Section; P. Greg Parham (argued), Special Assistant United States Attorney, Los Angeles, CA, for the plaintiff-appellee.

Appeal from the United States District Court for the Central District of California, Stephen V. Wilson, District Judge, Presiding. D.C. No. CV-05-06703-SVW-SH.

Before MICHAEL DALY HAWKINS, MARSHA S. BERZON, and RICHARD R. CLIFTON, Circuit Judges.

ORDER

This court's opinion, filed October 20, 2009, is amended as follows:

1. At page 14636 of the slip opinion (583 F.3d 1220, 1230-31), replace the text:

Under federal forfeiture statutes, the Secretary of the Treasury is permitted to transfer forfeited property to "any State or local law enforcement agency that participated directly or indirectly in the seizure or forfeiture of the property." 19 U.S.C. § 1616a(c)(1)(B)(ii).

with the following sentence:

Under federal forfeiture statutes, the Attorney General is permitted to transfer forfeited property to "any State or local law enforcement agency which participated directly in the seizure or forfeiture of the property." 21 U.S.C. § 881(e)(1)(A).

With the opinion as amended, the petition for rehearing is denied. If the parties wish to file a new petition for rehearing and/or petition for rehearing en banc, they may do so within 14 days from the date of this order.

The petition for rehearing, filed December 3, 2009, is DENIED.

OPINION

CLIFTON, Circuit Judge:

California state law differs from federal law in its treatment of the distribution and possession of marijuana for purportedly medical purposes. California has concluded that marijuana may have medicinal value, and under California law the distribution and possession of "medical marijuana" is not illegal. See Cal. Health & Safety Code § 11362.5(b)(1)(A) (declaring that one purpose of a 1996 voter-approved medical marijuana initiative is "[t]o ensure that seriously ill Californians have the right to obtain and use marijuana for medical purposes"); id. § 11362.765 (exempting from criminal liability individuals who perform certain actions involving medical marijuana). The federal government has not recognized a legitimate medical use for marijuana, however, and there is no exception for medical marijuana distribution or possession under the federal Controlled Substances Act, 21 U.S.C. §§ 801-971. See Gonzales v. Raich, 545 U.S. 1, 14-15, 125 S.Ct. 2195, 162 L.Ed.2d 1 (2005) (explaining that the distribution or possession of marijuana is a criminal offense under the Controlled Substances Act); Raich v. Gonzales, 500 F.3d 850, 854-55 (9th Cir.2007) (discussing marijuana's status as a "Schedule I" controlled substance, a designation available only to certain substances found to have "no currently accepted medical use in treatment in the United States" (quoting 21 U.S.C. § 812(b)(1))).

This difference lies behind the civil forfeiture case before us. The case concerns $186,416.00 in U.S. currency seized by officers of the Los Angeles Police Department ("LAPD") during a search of the United Medical Caregivers Clinic ("UMCC" or "Clinic"), a non-profit medical marijuana dispensary owned by United Medical Caregivers Clinic, Inc. Although the LAPD secured a state court warrant for the search, the Department failed to inform the issuing court of extensive evidence that UMCC may have been operating in accordance with California's medical marijuana laws. The state court subsequently approved the release of the seized currency to the United States, which then initiated a federal civil forfeiture action against it. UMCC presented its own claim to the currency. On UMCC's motion the District Court suppressed the currency as evidence, holding the search to have been illegal. The District Court held, however, that the government had sufficient evidence, independent of the currency itself and of any other evidence tainted by the illegal search, to initiate the forfeiture action against the currency. We conclude that the evidence relied upon by the District Court was itself tainted by the illegal search and should be suppressed, and that without the suppressed evidence the government lacked probable cause to connect the defendant currency to a violation of federal law. We thus reverse the judgment of the District Court and remand for further proceedings.

I. Background

In early 2005 LAPD Sergeant Miguel Lopez began receiving complaints of marijuana smoking near the UMCC offices on Wilshire Boulevard. Many of the complainants observed that the individuals smoking marijuana carried the drug in small brown paper bags.

On March 15, 2005, Lopez investigated and found a flyer referring to "UMCC" and advising Clinic patrons to leave the premises after purchasing marijuana. Lopez located the UMCC facility and entered the building's lobby. Once inside he "immediately smelled the strong odor of marijuana" and observed a number of people leaving the Clinic's offices with small brown paper bags.

UMCC staff admitted Lopez into its offices. While he was there, at least three individuals appear to have told Lopez that UMCC was a medical marijuana provider: Scott Feil, UMCC's chief executive officer; Gabriella Jaramillo, a manager; and Michael Bryan, a security guard. Additionally, Jaramillo provided Lopez with copies of UMCC's corporate papers and its City of Los Angeles Tax Registration Certificate, as well as with written information about California's medical marijuana laws. In a declaration filed later, Jaramillo agreed with Lopez's estimate that he viewed approximately 50 individuals purchasing marijuana from UMCC within a 45-minute period. She added that "[e]ach of these patients was purchasing medical marijuana pursuant to a doctor's written recommendation" and that Lopez did not object to any of the transactions.

Lopez called his watch commander to report the situation. The LAPD applied for a search warrant to search the UMCC facility. A Los Angeles Superior Court judge issued the warrant, and it was executed the same evening. During the search LAPD officers seized $186,416.00 in U.S. currency from the Clinic's safe and from a cash register, along with about 209 pounds of marijuana, 21 pounds of hashish, and 12 pounds of marijuana oil.

No criminal charges were filed against UMCC or any of its employees, but the LAPD continued to hold the currency. About two months later UMCC filed a motion in Los Angeles Superior Court for return of the currency and other items seized by the LAPD on March 15. Attached to this motion was a declaration by Feil, the chief executive officer of UMCC, executed on May 12, 2005 ("Feil declaration").¹

In his declaration Feil acknowledged the connection between the currency and UMCC's activities but insisted that UMCC was, under California state law, a lawful medical marijuana provider. The declaration stated, among other things, that "[a]ll cannabis products obtained or produced by UMCC are only distributed to patient members of UMCC.... UMCC does not allow the distribution of cannabis products to non-patients or non-members[.]" Feil continued: "On March 15, 2005, the Los Angeles Police Department seized numerous cannabis products, approximately $200,000 in currency, and other items including security equipment. The materials seized were all, to the best of my knowledge and belief, legitimately used in the course of UMCC's activities as described above."

In late August 2005, the state court ordered the release of the seized currency from state court jurisdiction to allow the initiation of federal forfeiture proceedings. An LAPD detective had presented this order for the state court's approval.

On September 12, 2005, the federal government filed in District Court a complaint for forfeiture pursuant to 21 U.S.C. § 881(a)(6), alleging that the defendant currency was seized from UMCC and was traceable to narcotics violations under 21 U.S.C. §§ 841, 846. UMCC claimed ownership of the currency and filed a motion to suppress all evidence seized pursuant to the state search warrant issued on March 15, 2005. The District Court granted the motion to suppress, holding that there had not been probable cause to issue the warrant for a violation of state law. In considering probable cause under state law, the District Court found that the warrant affidavit submitted by the LAPD had been "misleading" and contained "reckless" omissions of numerous relevant facts pertaining to UMCC's status as a medical marijuana dispensary.

UMCC subsequently brought a motion for summary judgment in the federal civil forfeiture action, arguing that the government lacked sufficient evidence to initiate the action against the defendant currency. The District Court denied that motion, holding in a reported decision that the government had sufficient evidence to initiate its action, even in the absence of all evidence excluded under the court's prior suppression ruling and the fruits of the suppressed evidence. United States v. $186,416.00 in U.S. Currency, 527 F.Supp.2d 1103, 1107 (C.D.Cal.2007). Specifically, the District Court held that the Feil declaration "provided the Government with sufficient untainted probable cause" to proceed, as the declaration was not subject to suppression under any of a variety of theories. Id. at 1141-42. UMCC then consented to a judgment forfeiting the currency to the government and filed a timely appeal.

II. Discussion

UMCC argues on appeal that the District...