669 F.3d 78
2d Cir.2011Background
- Wallach was CEO and majority owner of Wireless Avionics, an Israeli company that helped produce jammers that can interfere with IED detonation signals.
- Wallach was arrested March 13, 2009 by DHS/ICE and charged with exporting defense articles without a license, under 22 U.S.C. § 2778(b)(2) and 18 U.S.C. § 371.
- The criminal complaint alleged Wallach planned to ship Jammers abroad and possibly mislabel the end user to obtain an export license.
- The criminal case was dismissed without prejudice on July 9, 2009, and Wallach and Wireless signed a July 10, 2009 Stipulation agreeing not to contest forfeiture of the Jammers.
- The government filed a civil forfeiture action in October 2009 seeking forfeiture of the Jammers under 22 U.S.C. § 401(a).
- Wallach asserted the Stipulation was void due to lack of consideration and/or duress, and challenged his lack of standing to contest the forfeiture.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wallach has standing to contest forfeiture after signing the Stipulation | United States: Wallach waived standing by stipulation | Wallach: waiver is invalid due to duress and lack of consideration | Wallach lacked standing; standing required but waived by the Stipulation |
| Whether the Stipulation is enforceable under New York law despite lack of consideration | United States: NY law allows releases without consideration under Gen. Oblig. Law § 15-303 | Wallach: lack of consideration makes release void | Stipulation enforceable under NY law regardless of consideration |
| Whether the Stipulation was procured by duress and thus voidable | Government: no duress; actions were lawful and not coercive | Wallach: signed under duress due to detention and coercive conditions | Duress not established; evidence shows Wallach voluntarily engaged and ratified the Stipulation |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requirements: concrete injury, causation, redressability)
- Kamerman v. Steinberg, 891 F.2d 424 (2d Cir. 1989) (duress requires wrongful threat and lack of free will)
- VKK Corp. v. National Football League, 244 F.3d 114 (2d Cir. 2001) (duress and ratification principles; prompt repudiation rule)
- O'Melveny & Myers v. FDIC, 512 U.S. 79 (1994) (federal common law not controlling; state law governs release enforceability)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) (federal courts apply state substantive law in absence of federal rule)