New York Adopts Test for Excessiveness in Forfeiture Cases

Posted by Asset Forfeiture Attorney Steven Kessler.

By Steven L. Kessler | Article Posted 6/25/96

“The excitement over civil forfeiture and its constitutional ramifications is now spilling into the state courts. With three forfeiture cases pending before the United States Supreme Court this term, Bennis v. Michigan, 447 Mich. 527 (Mich. 1994), cert. granted, 116 S.Ct. 35 (U.S. 1995); United States v. $405,089.23 United States Currency, 33 F.3d 1210 (9th Cir. 1994), amended in part on denial of hearing, 56 F.3d 41 (9th Cir. 1995), cert. granted, __ U.S. __ (U.S. Jan. 1996); United States v. Ursery, 59 F.3d 568 (6th Cir. 1995), cert. granted, __ U.S. __, 133 L.Ed.2d 707, 64 U.S.L.W. 3484 (U.S. Jan. 1996), it is no wonder that the appellate courts in New York are beginning to take note. It is only surprising that it has taken them so long to do so.

In January, the Appellate Division, Third Department, in Matter of Attorney-General of the State of New York v. One Green 1993 Four Door Chrysler et al., 1996 N.Y. App. Div. Lexis 373 (3d Dept. Jan. 18, 1996), found New York’s Public Health Law 3388 the statute to be punitive for purposes of Eighth Amendment analysis. In a thorough examination of the statute and relevant United States Supreme Court precedent, the court adopted the analysis of the Supreme Court in Austin v. United States. 509 U.S. __, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993). There, the Court held that forfeitures under 21 U.S.C. 881(a)(4) and (a)(6) were subject to the limitations and protections of the Eighth Amendment’s Excessive Fines Clause. The Court determined that “”forfeiture generally and statutory in rem forfeiture in particular historically have been understood, at least in part, as punishment.”” Id. at 2810. Although finding that the provisions of PHL 3388 are “”not a mirror image”” of the Federal statute, the Appellate Division held that they are “”indistinguishable in purpose and design””. The presence of an innocent owner exemption in subsection 6 of the statute “”is strong evidence that the statute is intended at least in part to punish a guilty owner.”” 1996 N.Y. App. Div. Lexis 373, at *4-5.

Once the statute was deemed punitive and subject to Eighth Amendment scrutiny, the court was faced with whether the forfeiture before it constituted an excessive fine under the Eighth Amendment’s Excessive Fines Clause. Being a case of first impression in the New York state courts, the Third Department was left to review determinations made by other state courts and by the federal circuit courts to determine a test for deciding excessiveness. In Austin, the Supreme Court expressly left open the factors to be included in such a test, stating that “”prudence dictates that we allow the lower courts to consider the question in the first instance.”” 113 S.Ct. at 2812. Little did the Court know that such prudence would create a multitude of inconsistent and divergent opinions on the issue. See Kessler, Civil and Criminal Forfeiture: Federal and State Practice (Clark Boardman Callaghan 1993 and Supp. 1995).

The Appellate Division analyzed approaches taken by various courts in deciding an appropriate test for determining excessiveness. Calling it a “”more balanced approach””, the court chose the test adopted by the Second Circuit in United States v. Milbrand, 58 F.3d 841 (2d Cir. 1995). There, the circuit court, while not outlining a definitive test, concluded that “”appropriate excessiveness analysis entails a multi-factor test combining the principles of both instrumentality and proportionality.”” Id. at 847. Specifically, the court explained that consideration should be paid to (1) the harshness of the forfeiture (e.g., the nature and value of the property and the effect of forfeiture on innocent third parties) in comparison to a) the gravity of the offense, and b) the sentence that could be imposed on the perpetrator of such an offense; (2) the relationship between the property and the offense, including whether use of the property in the offense was a) important to the success of the illegal activity, b) deliberate and planned or merely incidental and fortuitous, and c) temporally or spatially extensive; and (3) the role and degree of culpability of the owner of the property. Id. at 847-848.

In adopting the Milbrand approach, the Appellate Division found that the test “”properly balances the remedial and punitive elements and applies the relevant factors necessary for making an excessiveness determination under the 8th Amendment.”” 1996 N.Y. App. Div. Lexis 373, at *7. The court, however, went one step further than the circuit court and held that the issue of whether a forfeiture would be excessive and constitute an Eighth Amendment violation is one for a court rather than a jury to decide. The court found support for this matter of first impression in United States v. All Assets of G.P.S. Automotive Corp., 66 F.3d 483, 502 (2d Cir. 1995), where the Second Circuit held that “”since the District Court has not yet closely scrutinized the forfeitures in this case and we are unable to do so on the record before us — we cannot decide whether the forfeitures here ordered are constitutionally valid under the Excessive Fines Clause.”” The Appellate Division said that requiring the court to determine excessiveness was in accord with its usual view regarding Eighth Amendment challenges. 1996 N.Y. App. Div. Lexis 373, at *10. Practitioners Note:

One must now ask, in light of existing Supreme Court analysis and the holdings of Austin and One Green 1993 Four Door Chrysler et al., how the forfeiture of an innocent owner’s property can be anything but inherently excessive under the Eighth Amendment Excessive Fines Clause. If a property owner is innocent, a one dollar fine imposed without “”legitimate purpose”” should be considered both an excessive fine and excessive punishment, and, consequently, would be unconstitutional.

Accordingly, in a forfeiture action where the claimant is an innocent owner, we, as counsel, must allege a constitutional violation of the Eighth Amendment Excessive Fines Clause.

In addition, where an innocent owner is the claimant in a forfeiture action, the practitioner should consider alleging a violation of the Fifth Amendment Takings Clause. In Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663 (1974), the Supreme Court implied that the forfeiture of property from an innocent owner would also violate the Takings Clause insofar as it forces an innocent owner to suffer a taking of their property, or interest therein, to finance the cost of law enforcement, a cost which should be borne by the public as a whole. An order of forfeiture issued by any state or federal court would, by statute, direct that net proceeds from the forfeiture be used to pay for the direct costs of the action with any remaining balance to be paid to the general treasury of the seizing sovereign. When a sovereign seizes property, without compensation, and adds the proceeds from the sale of that property to the general treasury for use in meeting the sovereign’s general financial obligations, the sovereign is financing costs which should be borne by society as a whole. Therefore, if the property owner is an innocent owner, the seizure of his or her interest in the property without compensation is a taking and unconstitutional.

Finally, given the wind and the way it is blowing in Washington and beyond, it might constitute malpractice in virtually any case, where there is a criminal and parallel civil forfeiture action, not to argue Double Jeopardy. By the end of this term, we hope to have a definitive work from the Supreme Court. In the meantime, those of you in the Second Circuit should read United States v. All Assets of G.P.S. Automotive Corp., 66 F.3d 483 (2d Cir. 1995), and United States v. Idowu, 1996 U.S. App. Lexis 431 (2d Cir. Jan. 12, 1996).

Steven L. Kessler is an attorney in New York City and author of Civil and Criminal Forfeiture: Federal and State Practice (Clark Boardman Callaghan 1993 and 1995 Supp.), a three-volume treatise on the forfeiture and RICO statutes in all 50 states and the District of Columbia and the major federal forfeiture provisions, all with interpretive case law and analysis.

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