United States v. $31,000.00 in U.S. Currency

• Decision Date: 20 September 2017
• Docket Number: No. 16-4279.,16-4279.
• Citation: 872 F.3d 342
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. $31,000.00 IN U.S. CURRENCY, et al., Defendants, Taiwan Wiggins; Dalante Allison, Claimants–Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

872 F.3d 342

UNITED STATES of America, Plaintiff–Appellee,

v. $31,000.00 IN U.S. CURRENCY, et al., Defendants,Taiwan Wiggins; Dalante Allison, Claimants–Appellants.

No. 16-4279.

United States Court of Appeals, Sixth Circuit.

Decided and Filed: September 20, 2017

COUNSEL ON BRIEF: James R. Willis, Cleveland, Ohio, for Appellants. Phillip J. Tripi, United States Attorney's Office, Cleveland, Ohio, for Appellee.

Before: COLE, Chief Judge; BATCHELDER and MOORE, Circuit Judges.

ALICE M. BATCHELDER, Circuit Judge.

OPINION

The federal law governing civil in rem forfeiture actions gives the government authority to seize items it suspects were used in furtherance of criminal activity and to commence civil in rem proceedings against the property without charging the property's owner with a crime. See United States v. Seventeen Thousand Nine Hundred Dollars ($17,900.00) in U.S. Currency , 859 F.3d 1085, 1087 (D.C. Cir. 2017) (explaining the practice of civil forfeiture); see also Leonard v. Texas , ––– U.S. ––––, 137 S.Ct. 847, 848–49, 197 L.Ed.2d 474 (2017) (Thomas, J.) (statement respecting the denial of certiorari) (describing some abuses in the administration of civil forfeiture laws in the United States and questioning the constitutionality of such laws). Federal agents and entities have significant latitude to pursue these claims, from special discovery provisions written into the governing rules to a burden of proof that is lower than required in standard criminal cases. But this latitude has its limits, and this case requires us to define some of these limits. The district court granted the government's motion to strike Taiwan Wiggins's and Dalante Allison's claims to currency seized from each man at the Cleveland Hopkins International Airport. Each man's claim asserted that he owned the currency that had been taken from his suitcase. The district court recited the facts as alleged by the government, found that each claim presented "nothing more than a naked assertion of ownership," and held that, under Sixth Circuit precedent, Wiggins and Allison lacked the standing necessary to pursue their claims.

In many ways, this civil forfeiture action looks routine, for federal courts have developed well-settled principles concerning a forfeiture claimant's need to demonstrate both Article III and statutory standing. But this case comes to us in a procedural posture unlike most civil forfeiture actions—the government apparently moved to dismiss the claim before it engaged in any discovery. Its basic argument before the district court and on appeal is that the claimant's pleadings must do more than assert a bare ownership in the res that is subject to forfeiture, and that the claimant's pleadings must provide the government sufficient detail to draft interrogatories allowing it to test the claimant's claim of ownership. As we will explain, the procedural rules governing civil forfeiture actions do not demand such a heightened standard. Accordingly, we REVERSE the district court's order granting the government's motion to strike the claim and REMAND for further proceedings.

I. BACKGROUND

The parties dispute most of the facts underlying this action. We begin where they find common agreement, drawing these details from the pleadings. On February 24, 2016, Taiwan Wiggins and Dalante Allison (together, "claimants") were each at the Cleveland Hopkins International Airport for a flight to Orange County, California. The Drug Enforcement Administration (DEA) was aware of the claimants' itineraries and that each had previous felony drug convictions. The DEA observed them at the airport engaging in conversation before they walked together toward the security checkpoint. Beyond this, the government's complaint and the claimants' answers and claims tell very different stories.

A. Wiggins

The government alleges that Wiggins spoke voluntarily with a DEA agent who had approached him after he passed through airport security. Wiggins stated that he owned a company named "Wiggins Cleaning," but he could name only one client of his cleaning and construction services, "Mike and Mike." A DEA agent asked if Wiggins was carrying any bulk currency, and Wiggins told the agents that he had $2,000 in a shoe in his bag. After Wiggins consented to a search, the agents found $31,000 hidden in the lining of his suitcase. He could not answer why he was traveling with that sum of money and, at some point, said it was earnings from Wiggins Cleaning. He seemed to be startled at the agents' discovery, claimed to be traveling alone, and denied knowing Allison.

In his answer, Wiggins denied these facts. He specifically stated that neither his discussion with the DEA agent nor the search of his suitcase was consensual.

B. Allison

The government alleges that while the DEA questioned Wiggins, Allison walked by, glaring at the agents. He joined a long line at Starbucks a mere ten minutes before his scheduled flight time and quickly jumped out of line when the gate agent paged him. He rushed down the jet way, but a Homeland Security Investigations agent asked the gate agent to ask Allison to come back up the jet way to speak with him. Allison voluntarily spoke with agents, acknowledged that he was carrying currency, and agreed to wait for a DEA agent who had been speaking with other passengers. When the DEA agent approached him, he agreed to speak to him and consented to a search of his carry-on luggage. The agent found $10,000 in currency in a sock. Allison stated that he had won the money at a casino but could not provide details about the date when he had won it or the casino where he had played. He also stated that his employer was "Jay's Cleaning Service," that he earned $35,000 annually, that he filed taxes annually, that he was travelling alone, and that he did not know Wiggins.

Like Wiggins, Allison filed an answer denying the relevant allegations by the government. He admits that he possessed $10,000, but he denies that he consented to the search of his carry-on luggage.

C. Additional Factual Background

After the claimants allegedly allowed the DEA to search their bags, a canine alerted to the odor of narcotics on "the separate boxes containing each of the defendant currencies." The government thereafter seized the funds. In its complaint, the government further alleges that the DEA could not locate business filings for Jay's Cleaning, Wiggins Cleaning, or Mike and Mike, and that neither claimant filed state income tax returns for 2011–2015. Finally, the government alleges that the defendant currencies were forfeitable pursuant to 21 U.S.C. § 881(a)(6), as proceeds traceable to drug trafficking activities or that were used or intended to be used to facilitate drug-trafficking in violation of 21 U.S.C. §§ 841(a), 846.

Allison denies the allegations concerning the drug-sniffing dog and the lack of business filings for the three companies. Both Allison and Wiggins deny that they failed to pay taxes¹ and that the funds were forfeitable.

D. Procedural History

The government filed its civil in rem forfeiture complaint on June 23, 2016, naming as defendants $31,000 in U.S. Currency and $10,000 in U.S. Currency. In response, Wiggins and Allison filed verified claims on July 6, 2016. Wiggins asserted an ownership interest in defendant $31,000 in U.S. Currency, and Allison did the same for defendant $10,000 in U.S. Currency. Beyond this difference, the two claims are substantially the same; in both, the claimants assert that the DEA conducted "a warrantless arrest and a warrantless search and seizure [in] the absence of probable cause." In addition, each alleged that "this Claim is further based on the indisputable fact that as the person who is the sole and absolute owner, and who was in exclusive possession of the monies, I was victimized by an illegal arrest and I was victimized by the illegal seizure of the funds here involved." In the midst of further assertions that the government violated each man's constitutional rights, they each stated that "the funds [that] were forcibly taken from me ... were in my possession."

Wiggins and Allison each filed an answer to the forfeiture complaint on July 20, 2016. The district court held a case management conference on August 12, 2016, at which the parties agreed upon a deadline for the completion of discovery.²

Less than a month later—well before the discovery deadline passed or any discovery was undertaken—the government moved to strike both claims. The district court found that Wiggins and Allison "lack[ed] standing because their claims are nothing more than a naked assertion of ownership." The district court also explained that "the government's motion put [them] on notice that their claims were deficient," yet "they did not seek to supplement them." Therefore, the district court struck the claims. The government subsequently moved for an order of forfeiture, which the district court granted on October 25, 2016. Wiggins and Allison timely appealed.

II. ANALYSIS

A. Standard of Review

Generally, we review "a district court's decision to strike a claim in an in rem forfeiture action for an abuse of discretion." United States v. One 2011 Porsche Panamera , 684 Fed.Appx. 501, 506 (6th Cir. 2017) (citing United States v. Thirty–Five Firearms , 123 Fed.Appx. 204, 205–06 (6th Cir. 2005) (per curiam)); see also United States v. $22,050 U.S. Currency , 595 F.3d 318, 322 (6th Cir. 2010). However, "[w]e review de novo the district court's determination of a claimant's standing to contest a federal forfeiture action." United States v. Real Prop. Located at 4527–4535 Michigan Ave., Detroit, Mich. , 489 Fed.Appx. 855, 857 (6th Cir. 2012) (citing United States v. Salti , 579 F.3d 656, 667 (6th Cir. 2009) (discussing criminal forfeiture)). "In so doing, we accept as true all material allegations contained in the claim and liberally construe them in favor of the claimants." Id. (citing Am. Canoe Ass'n, Inc. v. City of Louisa Water & Sewer Comm'n , 389...