United States v. All Assets Held at Credit SuisseUnited States v. All Assets Held at Credit Suisse
Appeal from the United States District Court for the District of Columbia (No. 1:04-cv-00798)
William H. Stassen argued the cause for appellant. With him on the briefs were Ian M. Comisky, Jed M. Silversmith, and David B. Smith. Barry W. Levine entered an appearance.
Emily Beckman was on the briefs for movant-intervenors in support of appellant.
Andrew C. Noll, Attorney, U.S. Department of Justice, argued the cause for appellee United States. With him on the brief was Daniel H. Claman, Attorney. Scott A. Meisler, Attorney, entered an appearance.
Before: TATEL,* KATSAS, and JACKSON,† Circuit Judges.
Opinion for the Court filed Circuit Judge KATSAS.
KATSAS,
Lazarenko contends that the district court lacked statutory authority to issue the latter order and that, in any event, the order violated principles of international comity. We reject both challenges on procedural grounds.
I
A
Civil forfeiture actions allow the government to take property associated with criminal activity. Such actions are in rem: The property itself is named as the defendant and is, “by resort to a legal fiction, held guilty and condemned as though it were conscious.” Various Items of Personal Prop. v. United States, 282 U.S. 577, 581 (1931). “Traditionally, the property had to be present within the court‘s territorial jurisdiction.” United States v. All Funds in Acct. Nos. 747.034/278, 747.009/278, & 747.714/278 Banco Espanol de Credito, 295 F.3d 23, 25 (D.C. Cir. 2002) (Banco Espanol). Without possession of the property, a court would have “no power to enforce its
Congress altered this traditional rule in 1992. Now, if property located in a foreign country is subject to forfeiture under United States law, the federal government may bring a forfeiture action in our district court.
In any civil forfeiture action, the government may seek interim relief to ensure that the property at issue remains available while the case is pending. Section 983(j)(1) of title 18 provides that in such an action, the district court “may enter a restraining order or injunction, require the execution of satisfactory performance bonds, create receiverships, appoint conservators, custodians, appraisers, accountants, or trustees, or take any other action to seize, secure, maintain, or preserve the availability of property subject to civil forfeiture.”
Civil forfeiture proceedings are governed by the Supplemental Rules for Admiralty and Maritime Claims and Asset Forfeiture Actions (Supplemental Rules). Under these rules, a person asserting an interest in the property may file a claim in the forfeiture action, Supp. R. G(5)(a)(i), and the government may move to strike on the ground that the claimant lacks standing, id. G(8)(c)(i)(B). The Federal Rules of Civil Procedure do not apply to the extent that they are inconsistent with the Supplemental Rules. Id. A(2).
B
Pavel Lazarenko served in the Ukrainian government from 1992 to 1998, including as Prime Minister from 1996 to 1997. The government alleges that Lazarenko exploited his positions of authority to amass a $300 million fortune through fraud, extortion, bribery, misappropriation, and embezzlement. The government further alleges that Lazarenko laundered his illicitly obtained funds through United States financial institutions, in violation of U.S. law.
In 1997, Lazarenko established the irrevocable Balford Trust under the laws of Guernsey, a self-governing Crown Dependency of the United Kingdom. The trust beneficiaries are members of Lazarenko‘s family, including his daughters Ekaterina and Lecia. The government alleges that, by 1998, Lazarenko had transferred $121 million of ill-gotten funds to the trust. As of November 2017, the trust was worth over $176 million.
In 2001, a grand jury in the Northern District of California charged Lazarenko with 53 counts of money laundering, conspiracy, wire fraud, and transportation of stolen property. A jury convicted him on 14 counts, but the Ninth Circuit reversed as to six, leaving in place seven convictions for money laundering and one for conspiracy. United States v. Lazarenko, 564 F.3d 1026, 1047 (9th Cir. 2009).
In 2004, the government brought this civil action seeking the forfeiture of over $230 million held in overseas bank accounts, including the Balford Trust. The government invoked
Between 2004 and 2008, Lazarenko, his daughters, and others filed claims to the defendant property. Litigation dragged on for years. The government filed several motions to strike, and many discovery disputes arose.
In November 2015, Lazarenko asked the Guernsey court to lift its restraining order on the ground that the disputed assets were not forfeitable under Guernsey law. The government threatened Lazarenko with a contempt motion for violating the district court‘s restraining order. In response, Lazarenko asked the district court to clarify that its order did not bar him from challenging the Guernsey restraining order in Guernsey. The district court rejected the request, ruling that Lazarenko‘s filing in Guernsey violated “the plain language” of its order. United States v. All Assets Held at Bank Julius, Baer & Co., Guernsey Branch, Acct. No. 121128, 244 F. Supp. 3d 188, 191 (D.D.C. 2017). Lazarenko stopped pursuing his Guernsey application.
In 2020, the district court struck Lazarenko‘s claim to the Balford Trust for lack of standing. United States v. All Assets Held at Bank Julius, Baer & Co., Guernsey Branch, Acct. No. 121128, 480 F. Supp. 3d 1 (D.D.C. 2020). It reasoned that Lazarenko, as settlor of the irrevocable trust, had no concrete interest in the disposition of its assets. Id. at 16. In response to that ruling, Lazarenko moved to modify the district court‘s restraining order to allow him to litigate the forfeitability of the Balford Trust under Guernsey law in Guernsey. Lazarenko argued that the district court no longer had authority to restrain him because he was no longer a party with respect to the trust and that the order violated principles of international comity.
The district court denied the motion. The court held that its decision to strike Lazarenko‘s claim did not vitiate its power to enforce the restraining order. United States v. All Assets Held at Bank Julius, Baer & Co., Guernsey Branch, Acct. No. 121128, 502 F. Supp. 3d 91, 102 (D.D.C. 2020). The purpose of the restraining order, the court explained, was “to preserve the availability of property subject to forfeiture during the pendency of the forfeiture proceedings.” Id. (cleaned up). The court concluded that restraining Lazarenko still served that purpose because the Balford Trust would become unavailable to other claimants if he were to gain access to it through successful litigation in Guernsey. Id. Allowing Lazarenko to litigate abroad would thus prejudice the rights of other claimants. Id.
Lazarenko seeks review of the denial of his motion to modify the restraining order. Because that order has remained in effect for more than 14 days, it counts as an injunction immediately appealable under
The district court‘s order refusing to modify the injunction was therefore itself immediately appealable.
C
Shortly after the district court struck Lazarenko‘s claim to the Balford Trust,
The district court granted the government‘s motion to strike, and it denied the daughters’ cross-motion for the reasons set forth in its opinion denying their father‘s motion to modify. United States v. All Assets Held at Bank Julius Baer & Co., Guernsey Branch, Acct. No. 121128, No. 04-cv-0798 (PLF), 2021 WL 4060353, at *16 (D.D.C. Sept. 7, 2021). The daughters’ appeal of this ruling is being held in abeyance pending the resolution of their father‘s appeal. See Order, United States v. All Assets Held at Credit Suisse (Guernsey) Ltd., Acct Nos. 41610 & 41950, No. 21-5226 (D.C. Cir. Jan. 20, 2022). The daughters have moved to intervene as a matter of right in their father‘s appeal.
II
We begin with the daughters’ motion to intervene.
The daughters claim an interest in being able to litigate in Guernsey themselves, which might be impaired by a decision in favor of the government in this appeal. But Lazarenko himself adequately represents that interest. A would-be intervenor is adequately represented when she “offer[s] no argument not also pressed by” an existing party. Bldg. & Constr. Trades Dep‘t v. Reich, 40 F.3d 1275, 1282 (D.C. Cir. 1994). Here, the daughters seek to raise precisely the same arguments as their father. Moreover, the daughters have revealed by their conduct that they find his representation adequate. In their cross-motion below, they adopted his arguments wholesale. And in this appeal, they declined our invitation to appear at oral argument. We therefore deny the daughters’ motion to intervene.1
III
On the merits, we review a district court‘s refusal to modify an injunction for abuse of discretion. See Manitoba v. Zinke, 849 F.3d 1111, 1117-18 (D.C. Cir. 2017). A district court abuses its discretion “when it makes an error of law.” Koon v. United States, 518 U.S. 81, 100 (1996).
Lazarenko raises three arguments that the district court abused its discretion. First, the court can no longer enjoin him because he is no longer party to the dispute over the Balford Trust. Second, the court had no statutory authority to enjoin him from litigating in the courts of other sovereigns. Third, the injunction here violates principles of international comity.
A
Lazarenko contends that the district court lost the authority to restrain his
First, Lazarenko remains a party in this case, including with respect to the Balford Trust. Unless a district court expressly directs entry of a final judgment, any order “that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties.”
Second, the court would be able to restrain Lazarenko regardless of his party status.
Lazarenko counters that
Lazarenko also relies on United States v. Kirschenbaum, 156 F.3d 784 (7th Cir. 1998). Kirschenbaum dealt with
B
Lazarenko next argues that
This argument is forfeited, because Lazarenko did not raise it below in his motion to modify the restraining order. See Manitoba v. Bernhardt, 923 F.3d 173, 179 (D.C. Cir. 2019). Lazarenko contends that he raised the argument in his 2015 motion to clarify the restraining order. But that motion merely stated in a footnote, without further elaboration, that section
In his reply brief, Lazarenko also argues
C
Finally, Lazarenko contends that even if
Even when granted the power to issue foreign anti-suit injunctions, courts must exercise that power with due regard for international comity. The “mere filing” of a suit in one jurisdiction does not disable other sovereigns from exercising their own prescriptive jurisdiction. Laker Airways Ltd. v. Sabena, 731 F.2d 909, 927 (D.C. Cir. 1984). For actions in personam, parallel proceedings “should ordinarily be allowed to proceed simultaneously, at least until a judgment is reached in one which can be pled as res judicata in the other.” Id. at 926-27. And foreign anti-suit injunctions are appropriate only when “required to prevent an irreparable miscarriage of justice,” such as when “necessary to protect the jurisdiction of the enjoining court, or to prevent the litigant‘s evasion of the important public policies of the forum.” Id. at 927. The “duplication of parties and issues alone is not sufficient.” Id. at 928.
A different rule traditionally prevailed in in rem actions. In such cases, “the first court seized of jurisdiction over property, or asserting jurisdiction in a case requiring control over property, may exercise that jurisdiction to the exclusion of any other court.” SEC v. Banner Fund Int‘l, 211 F.3d 602, 611 (D.C. Cir. 2000). The justification for this rule is tied to the historic limits on in rem proceedings: A court exercising in rem jurisdiction “has possession or must have control of the property which is the subject of the litigation in order to proceed with the cause.” Princess Lida v. Thompson, 305 U.S. 456, 466 (1939). For this reason, “the jurisdiction of the one court must yield to that of the other.” Id.
Lazarenko contends that the traditional rule governing in rem proceedings does not apply here. Because
Whatever the force of this argument, we think it is untimely. Where a litigant seeks to bring a second action in another jurisdiction long after the commencement of the first, “equitable principles” analogous to laches “make it more
To begin, it took Lazarenko nearly 16 years to raise his current argument that the district court could not or should not restrain him from litigating in Guernsey. The district court and the Guernsey restraining orders were issued in 2004. Although the Guernsey order expressly permitted Lazarenko to seek a modification or discharge, he failed to do so until 2015. And even when the government then threatened to seek contempt in the district court, Lazarenko did not challenge the propriety of that court issuing a foreign anti-suit injunction. Instead, he argued only that the district court had not prevented him from litigating in Guernsey. After the district court ruled otherwise in March 2017, Lazarenko did not challenge the propriety of the anti-suit injunction until July 2020.
Lazarenko offers no justification for this extraordinary delay. He does not claim that he was unable to raise his objections to a foreign anti-suit injunction before 2020. To the contrary, he could have raised all his current arguments as early as 2004. His delay squarely reflects a lack of diligence.
As the district court recognized, overlooking Lazarenko‘s delay would prejudice other parties to the forfeiture action. When Lazarenko filed his motion to modify, the parties had already spent over a decade and a half litigating in the district court. By then, they had undertaken extensive discovery and briefed dozens of motions, the district court had written nearly 40 opinions, and the docket contained over 1300 filings. Opening a second front of litigation now, in the middle of ongoing proceedings here, would unfairly disrupt the parties’ settled understanding that the district court had become the principal forum for determining the forfeitability of the trust. On the other side of the balance, any prejudice to Lazarenko from keeping the injunction in place would be mitigated because, as the district court and the government both have acknowledged, Lazarenko may assert any defenses he may have under Guernsey law when and if the United States seeks to enforce a forfeiture judgment by the district court in the Guernsey courts.
Lazarenko could have pressed his current objections more than a decade and a half ago, and excusing his delay would risk wasting the considerable time and resources that the parties have invested in the district court proceedings. Under these circumstances, the district court reasonably denied his motion to modify the restraining order.
IV
We deny Ekaterina and Lecia Lazarenko‘s motions to intervene and to enlarge the record on appeal. We affirm the denial of Pavel Lazarenko‘s motion to modify the restraining order.
So ordered.