308 F. Supp. 3d 186
D.C. Cir.2018Background
- This in rem forfeiture arises from funds (the "Samante assets") tied to allegations that Pavel Lazarenko acquired hundreds of millions through corruption; claimants are his daughters and asserted beneficial interest only in the Samante accounts.
- Claimants filed an answer in 2004 asserting an "innocent interest / due process" defense but did not plead an Eighth Amendment excessive fines defense at that time.
- The United States amended its complaint; claimants failed to answer the amended complaint timely but the Court excused that failure and allowed a late answer after denying the Government’s motion to strike.
- In 2017 claimants sought leave to amend their answer to add, for the first time, an Eighth Amendment excessive fines affirmative defense; the Government opposed on waiver, pleading sufficiency, and prejudice grounds (notably additional discovery burden).
- On August 3, 2017 the Court denied leave to plead the excessive fines defense based on prejudice to the United States from introducing a new legal issue at a late stage that would require burdensome discovery; claimants then moved for reconsideration.
- The Court denied reconsideration, finding no intervening change in law, no new evidence that would materially alter the prejudice analysis, and no clear legal error in concluding culpability would raise a new issue implicating additional discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claimants may be allowed to amend their answer to add an Eighth Amendment excessive fines defense | The amendment should be allowed because the Government already had notice via the 2004 "innocent interest" defense and discovery remains open, so no prejudice | Adding the defense was waived, pleaded inadequately, and would prejudice the Government by imposing burdensome, additional discovery on a new legal issue | Denied: amendment refused due to prejudice from late addition of a new legal issue requiring burdensome discovery |
| Whether the May 2017 scheduling order is "new evidence" justifying reconsideration | Scheduling order granting 90 days of discovery shows Government can obtain needed discovery now, so no prejudice exists | The scheduling order was known and does not cure the prejudice identified earlier | Denied: scheduling order was not new evidence that changes the earlier prejudice conclusion |
| Whether the Court relied on matters outside the parties’ pleadings when finding prejudice | Claimants contend the Court relied on issues (culpability discovery) not argued by parties | Government had asserted prejudice from voluminous discovery in its opposition; issue was litigated | Denied: Court considered matters presented by parties; reconsideration not warranted on this ground |
| Whether the Court made a clear error of law in treating claimants’ culpability as a new legal issue in excessive fines analysis | Claimants say their 2004 "innocent interest" defense put culpability at issue, so it is not a new legal issue | Court relied on persuasive Ninth Circuit authority that culpability of uncharged claimants may be considered, so adding that inquiry is a new legal issue that affects discovery | Denied: no clear error of law identified; claimants’ disagreement with the Court’s prejudice analysis is insufficient for reconsideration |
Key Cases Cited
- United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 268 F. Supp. 3d 135 (D.D.C. 2017) (denying leave to plead Eighth Amendment excessive fines defense due to prejudice from late-stage discovery burden)
- United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 228 F. Supp. 3d 118 (D.D.C. 2017) (denying Government’s motion to strike claimants’ claim and excusing untimely answer where no prejudice shown)
- United States v. Ferro, 681 F.3d 1105 (9th Cir. 2012) (persuasive authority holding culpability of an uncharged claimant may be considered in excessive fines analysis)