Posts Tagged ‘Ursery’

United States v. Hudson

By Steven L. Kessler | Article Posted 5/11/98

If United States v. Ursery slammed the door on Double Jeopardy Clause challenges to forfeitures and other civil penalties, United States v. Hudson padlocked the building and threw away the key. Disturbed that the fact-based reasoning of Halper was still finding its way into some lower court decisions despite Ursery, the Supreme Court aggressively went after Halper with both guns drawn. Although some question remains whether Halper has been actually overruled, there is no doubt that the Court has devalued that decision so greatly that no lower court dare cite it again to support a Double Jeopardy Clause analysis.

The facts of the case are unimportant (as they were — unimportant — to the Court), except to note that after the defendant bank officers agreed to modest fines and conditional debarment for an apparently severe pattern of speculation, they were then prosecuted under criminal statutes for “the same lending transactions that formed the basis for the prior administrative actions . . ..” The defendants’ motion to dismiss on double jeopardy grounds was granted by the district court. The Tenth Circuit reversed, but only because it found that defendants had failed the Halper test — i.e., that “the actual fines imposed by the Government were not so grossly disproportional to the proven damages to the Government as to render the sanctions ‘punishment’ for double jeopardy purposes.”

The Supreme Court granted certiorari to resolve the issue of “whether the imposition upon petitioners of monetary fines as in personam civil penalties . . . is ‘punishment’ for purposes of the Double Jeopardy Clause.” The Supreme Court affirmed the Court of Appeals’ dismissal, but rejected its reasoning. Although all nine Justices concurred in the result, four separate concurring opinions were filed.

The Court used four classic techniques to disown the Halper decision. Technique No. 1: Rely on numerous cases that predate the case to be discredited. This will demonstrate that before the ‘bad’ case was decided, there was a long, unbroken line of well-reasoned decisions that employed a better analysis. That makes the ‘bad’ case appear to be an anomaly, and sets the stage for the Court to present the new decision as a ‘return to tradition.’

The Court was not shy about using Technique No. 1. The very first paragraph of the Hudson decision states that the reasons for the Court’s holding “in large part disavow [Halper] and reaffirm the previously established rule exemplified in United States v. Ward.” The Court heightened this sense of ‘return to precedent’ by avoiding reliance on Ursery at first. Instead, the Court cited older cases to establish its basic premise that “jeopardy” has always meant criminal punishment and, (before Halper), determining what constituted criminal punishment involved first and foremost a literal exercise in statutory construction. In stark contrast to these settled principles, Halper “marked the first time we applied the Double Jeopardy Clause to a sanction without first determining that it was criminal in nature,” and therefore “deviated from our traditional double jeopardy doctrine . . ..” In addition, Halper failed to apply the time-honored multiple-factor analysis originally set forth in Kennedy v. Mendoza-Martinez, instead elevating a single Kennedy factor — excessiveness — to controlling status. The Court polished off Halper with its ultimate put-down: the Halper test was “unworkable” because under its “solely remedial” standard, no penalty could be deemed “beyond the scope of the [Double Jeopardy] Clause” since every civil penalty has “some deterrent effect.”

Technique No. 2: Strongly emphasize the “egregious” facts of the “bad” case. This will demonstrate that an unusually harsh fact scenario understandably induced a sympathetic Court to temporarily (but wrongly) turn away from well- settled precedent and lead with its heart, not with its head. For this, the Hudson Court took pains to point out that Mr. Halper “appeared to be liable for a penalty of $130,000, despite the fact that he actually defrauded the Government of less than $600,” after having been “sentenced to two years’ imprisonment and fined $5,000.” Touching facts, perhaps, but clearly irrelevant under Ursery and Hudson.

Technique No. 3: Re-analyze cases that were decided after the “bad” case to make it appear that they did not contribute in any way to the sustained viability of the ‘bad’ case. To the contrary, only in hindsight can it be seen that these recent cases in fact signalled an instinctive return to the longstanding principles that were in effect before the ‘bad’ case was decided. To accomplish this, the Hudson Court cited Department of Revenue of Mont. v. Kurth Ranch, but downplayed that decision’s double jeopardy finding while emphasizing its use of a “Kennedy-like” test, thereby bringing that somewhat troublesome case into the Hudson fold. It was only at this late portion of the decision that the Hudson Court finally played the Ursery card — not to establish its point, but only to drive home a point already made.

And Technique No. 4: Point out that there are numerous other, more appropriate remedies available to the aggrieved parties whose rights the Court’s decision apparently forecloses. This will demonstrate that, even though it is finally leading with its head, not its heart, the Court has not lost the humanity it displayed when it wrongly decided the “bad” case. To accomplish this, the Hudson Court observed that “some of the ills at which Halper was directed are addressed by other constitutional provisions,” such as the Due Process, Equal Protection and Excessive Fines Clauses. The Court did not explain exactly how these principles would have helped Mr. Halper; nor was this apparently a good time to mention United States v. James Daniel Good, where the Court “rejected the view that the applicability of one constitutional amendment pre-empts the guarantees of another.”

With Halper thus bound, gagged and stuffed in a box, the Hudson Court moved on to applying the “traditional” Ward test (dating all the way back to 1980) to the facts of this case, a process that took about one page of legal analysis. The Court concluded that (1) Congress intended theadministrative banking laws at issue to be civil, not criminal; and (2) there was nothing so punitive in effect about these laws that the Court should override the intent of Congress and deem them criminal for Double Jeopardy Clause purposes.

Justice Stevens, in the most extensive and fully-reasoned of the four concurring opinions, criticized the Court for selecting a completely inappropriate case in which to express “concern about the danger that [Halper] might be interpreted too expansively,” since the facts of Hudson were blatantly insufficient to warrant double jeopardy protection under any theory, including Halper. Indeed, this is what the Court of Appeals had already found. Therefore, it was difficult to understand exactly why the Court had taken up this case. Justice Stevens found disingenuous the Court’s purported “concerns about the wide variety of novel double jeopardy claims spawned in the wake of Halper”, particularly since every single case it cited to illustrate this “wide variety” in fact applied Ursery to conclude that the civil penalty in issue was not punishment for double jeopardy purposes. Justice Stevens quoted Ursery to rebut the Court’s attempt to paint Halper as an “oddball” case whose standard was unworkable:

‘Whether a particular sanction cannot fairly be said solely to serve a remedial purpose is an inquiry radically different from that we have traditionally employed in order to determine whether, as a categorical matter, a civil sanction is subject to the Double Jeopardy Clause. Yet nowhere in Halper does the Court purport to make such a sweeping change in the law, instead emphasizing repeatedly the narrow scope of its decision.’

Having just recently emphasized Halper’s narrow rule in Ursery, it is quite odd for the Court now to suggest that its overbreadth has created some sort of judicial emergency.

In fact, Justice Stevens noted, Halper itself stated that its rule was “for the rare case where a fixed penalty provision subjects a prolific but small-gauge offender to a sanction overwhelmingly disproportionate to the damages he has caused.”

Justice Stevens then slyly eviscerated the Court’s attempt to show that Halper was inconsistent with both older and more recent cases:

Despite my disagreement with the Court’s decision to use this case as a rather lame excuse for writing a gratuitous essay about punishment, I do agree with its reaffirmation of the central holding of Halper and [Kurth Ranch which] reconfirmed the settled proposition that the government cannot use the ‘civil’ label to escape entirely the Double Jeopardy Clause’s command, as we have recognized for at least six decades . . . However the Court chooses to recalibrate the meaning of punishment for double jeopardy purposes, our doctrine still limits multiple punishments of the rare sort contemplated by Halper.

Justice Stevens completed the reintegration of Halper into the Court’s Double Jeopardy Clause doctrine by demonstrating Halper’s conformance with the Kennedy multi-factor approach that the Court held out as an example of its “traditional” double jeopardy analysis in Hudson. Then he turned the tables and demonstrated that in fact it is the Court’s opinion in Hudson, not Halper, that suffers from “the danger of changing approaches midstream” and demonstrates “a new attitude” which may “unduly influence[]” lower court decision-making to the exclusion of “our established approach,” which, of course, is exemplified by Halper. Justice Stevens finished off the Court’s Hudson opinion by describing it as a mere “advisory opinion,” and thus a breach of the Court’s most basic constitutional responsibility under Article III to decide only actual “Cases” and “Controversies.” Justice Stevens, therefore, ‘out-traditioned’ the Hudson Court by showing that its decision violated a 200-year-old constitutional mandate. In short, Justice Stevens negated each of the techniques employed by the Court in its attempt to disown Halper: (1) Halper was in fact consistent with traditional double jeopardy doctrine; (2) the Halper decision itself recognized its unique facts and narrow holding, therefore rendering unnecessary any attempt to marginalize it further, and (3) Halper was consistent with recent Court double jeopardy cases as well, including Ursery.

Justice Scalia’s brief concurrence only restated his objections to Kurth Ranch, where he opined that the Double Jeopardy Clause does not prohibit successive punishment. Justice Souter agreed with Justice Stevens that the basis for the Court’s decision was unnecessary, since the Hudson case failed the “same-elements” test, and thus should have been affirmed on that ground alone. Justice Souter also cautioned against the mechanical use of the “clearest proof” test to determine whether a civil penalty should be deemed punishment for double jeopardy purposes, suggesting that the proof should vary with the “strength of the countervailing indications of civil nature. . ..” This point was triggered by Souter’s concern that forfeitures will continue to proliferate, “spurred by the increasingly inviting prospect of its profit to the Government;” thus, continued scrutiny of civil sanctions will be critical to ensuring protection of constitutional rights in the future.

Justice Breyer’s concurrence, in which Justice Ginsburg joined, disagreed with the Court’s opinion in two respects: (1) the “clearest proof” test the Court purportedly derived from Ward was in fact not the test the Court actually uses; as demonstrated in Kurth Ranch, the true test applies “factors of the Kennedy variety,” and (2) the Court’s attempt to disavow the use of any factual analysis in evaluating civil sanctions for double jeopardy purposes was inconsistent with Kennedy, which included such factors in its approach.

The Impact of Hudson

As Justice Stevens accurately pointed out, the most mystifying aspect of the Court’s opinion in Hudson is why it exists at all. It adds nothing to existing double jeopardy jurisprudence, nor does it effectively eliminate the reasoning underlying Halper from being applied by the lower courts in the future. If, following a criminal prosecution, a civil penalty for the same offense is found to be grossly disproportionate to the harm, it can still be found violative of the Double Jeopardy Clause under the Kennedy multi-factor test. As long as the court cites Kennedy and not Halper, there should be no basis for reversal.

Justice Stevens also was on the mark in noting the Hudson Court’s inability to cite a single federal case decided after Ursery that found a civil sanction in any area of the law to be violative of the Double Jeopardy Clause. Each of the cited cases involved a “challenge” under Halper to a civil sanction; none resulted in a violation. If the results of such challenges in the lower courts already accord with the double jeopardy principles espoused by the Hudson Court, if none of these cases would have been decided differently as a result of Hudson, why did the Court grant certiorari and render what Justice Stevens accurately characterized as an ‘advisory opinion’?

The answer has to do with hats. The Hudson Court rendered a blatantly advisory opinion because it was not wearing its Article III “Cases” and “Controversies” judge’s hat at the time. Rather, the Court was wearing its “judicial administration” hat — the hat it puts on when it wants to assume the role of ‘master gatekeeper’ for the entire federal court system. Hudson is not about changing the actual results of Double Jeopardy Clause challenges. It is about eliminating those challenges completely at the district court level. (Recall that the district court in Hudson had ruled in favor of the defendants). Thus, as Justice Stevens noted, the real purpose of Hudson is to “unduly influence . . . the Government and the lower courts [to] unduly restrict the protections of the Double Jeopardy Clause.”

Perhaps down the road, attorneys will advise their clients not to bother even raising a double jeopardy argument at all, because the attempt will be futile after Hudson. In fact, it is difficult not to conclude that such a result was exactly the intention of the Hudson Court. Double jeopardy claims are the grist of convicted criminals, drug dealers, jailhouse lawyers, pro se litigants and other undesirables clogging the court system and ‘wasting’ judges’ time with frivolous, poorly-pleaded claims. The Hudson Court would willingly throw out the few viable double jeopardy claims buried in the pack in the name of a more ‘efficient’ administration of justice.

Many of the concurring justices, however, are uneasy with these implications, fearing, justifiably, that civil sanctions can be used against people not so very different from themselves. As Justice Stevens wrote, Double Jeopardy Clause protection against sanctions labeled “civil” by the government is extremely important because the States and the Federal Government have an enormous array of civil administrative sanctions at their disposal that are capable of being used to punish persons repeatedly for the same offense, violating the bedrock double jeopardy principle of finality. ‘The underlying idea, one that is deeply ingrained in at least the Anglo-American system of jurisprudence, is that the State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an alleged offense, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity . . ..’

Steven L. Kessler practices white collar criminal law in New York in Manhattan. Prior to entering private practice, Mr. Kessler was head of the Asset Forfeiture Unit of the Bronx District Attorney’s Office in New York, where he supervised and litigated all phases of forfeiture and related matters. In that capacity, he served as a member of the Forfeiture Law Advisory Group of the New York State District Attorney’s Association.

Mr. Kessler has written and lectured extensively on topics relating to forfeiture. He is the author of “Civil and Criminal Forfeiture: Federal and State Practice” (West Group 1993 & Supp. 1998), a 3 volume treatise covering the forfeiture and RICO statutes of all 50 states and the District of Columbia and the major federal forfeiture provisions, and is the author of the forthcoming “New York Criminal and Civil Forfeitures” (Gould Publishing 1998). Mr. Kessler is a contributor to the New York Law Journal on issues relating to forfeiture and is the author and Revisions Editor of eight chapters in Weinstein, Korn & Miller’s “New York Civil Practice,” including the chapter “New York Forfeiture”. He is widely quoted and cited in court opinions and media of legal and general circulation nationwide.

A graduate of the Cornell Law School, Mr. Kessler serves as a member of the House of Delegates of the New York State Bar Association and as editor of One on One, the publication of the 5,000-member General Practice Section of which Mr. Kessler is an officer. He is a member of the White Collar Crime Committee and the RICO, Forfeitures and Civil Remedies Committees of the American Bar Association, the Criminal Justice Section of the New York State Bar Association, and the Forfeiture Abuse Task Force of the National Association of Criminal Defense Lawyers, and serves as co-chair the Forfeiture Law subcommittee of the New York State Association of Criminal Defense Lawyers. An Adjunct Professor of Law at New York Law School, Mr. Kessler is listed in Who’s Who in American Law.

Mr. Kessler is a member of the New York and Connecticut Bars and is admitted to practice before the United States Supreme Court.

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