Lead Opinion
Affirmed by published opinion. Chief Judge GREGORY wrote the majority opinion, in which Judge DUNCAN joined. Judge FLOYD wrote a dissenting opinion.
The claimants in this case appeal from the district court’s entry of default judgment for the government in a civil forfeiture action against funds deposited in the claimants’ names in banks in New Zealand and Hong Kong. Default judgment was entered after the government successfully moved to disentitle the claimants from defending their claims to the defendant property under the federal fugitive disen-titlement statute, 28 U.S.C. § 2466. The claimants appeal the judgment on several grounds, most prominent among them that the district court lacked jurisdiction over the defendant property because it resides in foreign countries, that fugitive disen-titlement violates constitutional due process, and that disentitlement in this case was improper because the claimants are not fugitives from the law. Finding these arguments unpersuasive, we affirm the district court.
I.
On January 5, 2012, a grand jury returned an indictment against many of the
Following the indictment, the district court issued restraining orders for assets in New Zealand and Hong Kong where most of the remaining identified proceeds resided. The High Court in Hong Kong responded almost immediately by issuing a restraining order against approximately $60 million in assets, while New Zealand first arrested several of the now-claimants, released them on bail, and then several months later, in April, registered restraining orders on $15 million in assets. New Zealand also scheduled extradition hearings for August 2012, but these hearings have been continued at least eight times at the claimants’ request.
The New Zealand restraining orders could only remain registered for two years, after which they could be extended for up to one year. Recognizing that the restraints would run out on April 18, 2014, or if extended on April 18, 2015, the United States filed this civil forfeiture action against forty-eight assets restrained pursuant to the criminal indictment in the district court on July 29, 2014. Although restraining orders froze the assets in the lead up to this action, the New Zealand courts have routinely released funds to claimants for living and legal expenses. Some of these have been very substantial, including millions in legal fees for Kim Dotcom, and $170,000 per month for living expenses for the same claimant.
Most of the claimants in this case filed their claims together on August 28, and Mona Dotcom filed a spousal claim on September 1, 2014. The claimants also filed a joint waiver of notice. The government subsequently moved to strike all the claimants’ claims pursuant to 28 U.S.C. § 2466, the federal fugitive disentitlement statute. On February 27, 2015, the district court granted the motion to strike, having allowed claimants to appear and present arguments on the motion but not on the merits of the case. The government then moved for default judgment, which the district court granted on March 25, 2015, issuing forfeiture orders for the assets in New Zealand and Hong Kong. United States v. All Assets Listed in Attachment A,
Claimants timely noted this appeal.
II.
The claimants’ first challenge to the district court judgment contests that court’s in rem jurisdiction over assets in foreign countries. The claimants make essentially several-arguments which we will address in turn: first, the statute cited by the district court as establishing its jurisdiction speaks to venue rather than jurisdiction; second, that if that statute is jurisdictional, the case must still be justiciable, meaning the district court must have sufficient control over the res to render a binding opinion effecting title; and finally, that jurisdiction was improper because the district court did not have sufficient minimum contacts with the defendant property-
A.
The district court asserted in rem jurisdiction pursuant to 28 U.S.C.
“Under the traditional paradigm, ‘the court must have actual or constructive control over the res when an in rem forfeiture suit is initiated.’” United States v. Approximately $1.67 Million,
The Meza court’s interpretation, urged by the claimants here, also runs contrary to the legislative history of the 1992 amendments. When the amendments were introduced in the Money Laundering Improvements Act, Senator D’Amato included an explanatory statement indicating that subsection (b) was intended to provide the federal district courts with jurisdiction over foreign property:
Subsection (b)(2) addresses a problem that arises whenever property subject to forfeiture under the laws of the United States is located in a foreign country. As mentioned, under current law, it is probably no longer necessary to base in rem jurisdiction on the location of the property if there have been sufficient contacts with the district in which the suit is filed. See United States v. $10,000 in U.S. Currency[,860 F.2d 1511 (9th Cir. 1988) ]. No statute, however, says this, and the issue has to be repeatedly litigated whenever a foreign government is willing to give effect to a forfeiture order issued by a United States court and turn over seized property to the United States if only the United States is able to obtain such an order.
Subsection (b)(2) resolves this problem by providing for jurisdiction over such property in the United States District Court for the District of Columbia, in the district court for the district in which any of the acts giving rise to the forfeiture occurred, or in any other district where venue would be appropriate under a venue-for-forfeiture statute.
137 Cong. Rec. S16640-01 (Nov. 13, 1992) (statement of Sen. D’Amato). The Meza court acknowledged, but did not analyze, this evidence of legislative history, which clearly weighs in favor of affirming the district court’s interpretation of § 1355.
Because the plain meaning of the statutory text and the legislative history both support finding that 28 U.S.C. § 1355(b) is jurisdictional, we affirm the district court’s holding to that effect. The district court was also correct to find that jurisdiction would lie if any of the acts resulting in the forfeiture action occurred within its jurisdiction. The court noted that the civil complaint and the related criminal indictment allege that there was a conspiracy between the indicted parties and that they used “over 525 servers located within the Eastern District of Virginia.” All Assets Listed in Attachment A,
B.
The claimants next argue that the district court’s forfeiture order amounts to a nonbinding advisory opinion because for
This is essentially the same “lack-of-control” attack claimants launched against § 1355 as just discussed, but they attempt to reframe the argument as addressing more fundamental issues.
i.
The claimants’ first argument fails because it confuses principles of admiralty law for principles of constitutional law. Both Titanic I and Titanic II describe jurisdictional principles governing admiralty courts and the law of the sea. The two crucial distinctions between these cases and the one before us are (1) that the Titanic cases based jurisdiction on the common law of admiralty whereas this case relies on § 1355, and (2) the Titanic cases involved a salvage and so no court could assert jurisdiction through exclusive control of the res, but here the res resides in two sovereign nations that are cooperating with federal authorities from this country regarding the assets in question.
The claimants fail to acknowledge the most glaring problem with their reliance on Titanic I and Titanic II: the cases speak explicity of the jurisdictional limits of admiralty courts pursuant to “the common law of the seas.” Titanic I,
“Maritime law ... provides an established network of rules and distinctions that are practically suited to the necessities of the sea,” United States v. W.M. Webb, Inc.,
Finally, on this point, we note that admiralty cases involving salvages on the high seas (like the Titanic cases) necessarily involve difficult questions of previously owned property lost in shared international waters where no nation has sovereignty. Our opinion in Titanic I was crafted “to ensure that the conclusion that no nation has sovereignty through the assertion of exclusive judicial action over international waters does not leave the high seas without enforceable law.”
ii.
The claimants here argue that the district court is without jurisdiction because, without control of the res, it can only advise the courts of New Zealand and Hong Kong rather than disposing of the issues presented. It is among “the oldest and most consistent thread[s] in the federal law of justiciability ... that the federal courts will not give advisory opinions,” Flast v. Cohen,
For a court to hear a case “it must be ‘likely,’ as opposed to merely ‘speculative,’ that the injury will be redressed by a favorable decision.” Lujan v. Defs. of Wildlife,
The district court, also in reliance on the cooperation of Hong Kong and New Zea-land, concluded its opinion would not be advisory and that the court is capable of redressing the issue. We affirm that decision.
C.
The claimants next seek to challenge the district court’s assertion of jurisdiction under the Due Process Clause of the Fifth Amendment. They argue that, regardless of any statute passed by Congress, a federal court cannot assert jurisdiction unless it is established that the defendant meets the “minimum contacts” test articulated by International Shoe v. State of Washington, Office of Unemploy
While Congress has substantial power to set the jurisdiction of the federal courts, the Due Process Clause limits that power. The exact contours of that limitation are not entirely clear. In Shaffer v. Heitner,
The Court’s decision in Shaffer, however, emerged from a case that might be viewed as the inverse of what § 1355(b) contemplates: the property at issue was stock in a Delaware corporation that was, by virtue of state law, legally sited in the state of Delaware, while the owners of that stock had no other ties to the state. The Court determined that, despite the property being legally located in the state, the owners of that stock had insufficient contacts with Delaware for courts there to invoke quasi in rem jurisdiction over the underlying shareholder’s derivative suit. Id. at 213,
Given that Shaffer provides only limited guidance as to how to proceed in this case, we assume without deciding that a traditional, state-based minimum contacts approach is appropriate in this case,
As in other cases we have decided in which websites and web transactions have been the asserted basis for jurisdiction, we will analyze the minimum contacts question by applying the factors commonly used for determining specific personal jurisdiction: “(1) the extent to which the defendant has purposefully availed itself of the privilege of conducting activities in the state; (2) whether the plaintiffs’ claims arise out of those activities directed at the state; and (3) whether the exercise of personal jurisdiction would be constitutionally ‘reasonable.’” Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc.,
As already mentioned, both the forfeiture complaint and the criminal indictment allege that 525 servers located within the Eastern District of Virginia were used in furtherance of the Mega Conspiracy. All Assets Listed in Attachment A,
The claimants argue, however, that “this Court has repeatedly dismissed ‘as “de minimis” the level of contact created by. the connection between an out-of-state defendant and a web server located within a forum.’” Appellants’ Br. 17-18 (quoting Carefirst,
The second factor, whether the plaintiffs’ claims arise out of those activities directed at the state, is easily met: the forfeiture action before this Court arises from the alleged illegal transfer of files conducted using the servers located in Virginia.
The third factor, constitutional reasonableness, is also met. To determine constitutional reasonableness, we look at “the burden on the defendant, the forum State’s interest in adjudicating the dispute, the plaintiffs interest in obtaining convenient and effective relief, the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies.” Burger King Corp. v. Rudzewicz,
III.
The district court ordered the claimants disentitled from defending claims to the defendant property pursuant to the Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), 28 U.S.C. § 2466. The effect of the order was to prevent the claimants from using the U.S. courts to defend their claims to the property. The claimants argue that this application of 28 U.S.C. § 2466 violates the Due Process Clause of the Fifth Amendment by stripping them of their right to be heard. The claimants present arguments closely tracking those rejected by the Second Circuit in Collazos v. United States,
A.
Fugitive disentitlement began as a judicial doctrine allowing appellate courts to dismiss appeals from criminal fugitives who failed to surrender to authorities, holding that such failure “disentitles the defendant to call upon the resources of the Court for determination of his claims.” See Molinaro v. New Jersey,
In 1996, the U.S. Supreme Court struck a federal district court’s use of disentitlement to strike a civil forfeiture claimant’s defense on the grounds that he was a fugitive evading related criminal charges. Id. at 828,
In the course of that opinion, the Supreme Court acknowledged that the answer might be different if civil disentitlement were authorized by statute. Id. at 828,
B.
The claimants argue that the district court was not constitutionally authorized to disentitle them from defending their property claims against the government’s forfeiture action, regardless of any statute passed by Congress. They argue that “[t]he fundamental requirement of due process is the opportunity to be heard,” Doolin Sec. Sav. Bank, FSB v. FDIC,
To begin, much of Degen’s reasoning declaring judicial disentitlement unconstitutional centered on balance-of-powers concerns eliminated by the congressional authorization manifest in § 2466. The De-gen Court noted that “[principles of deference counsel restraint in resorting to inherent power,”
But more to the point, the claimants’ argument fails primarily because § 2466 does not eliminate “the opportunity to be heard.” Id. (emphasis added). The guarantees of due process do not mean that “the defendant in every civil case [must] actually have a hearing on the merits.” Boddie v. Connecticut,
The government points out that courts regularly impose procedural requirements that will control when and how a party may be heard, including requiring that an appearance be made in court. See id. (“A State, can, for example, enter a default judgment against a defendant who, after adequate notice, fails to make a timely appearance -”). As was true of the claimant in Collazos, the claimants here “could have secured a hearing on [their] forfeiture claim any time ... simply by entering the United States.”
While the claimants correctly respond that § 2466 is no mere procedural requirement, their argument actually underscores the justification for disentitlement pursuant to statute. Whereas entering default judgment against a party for failure to meet a nonsubstantive requirement might produce the same result as in Degen, the refusal to face criminal charges that would determine whether or not the claimants came by the property at issue illegally supports a presumption that the property was, indeed, so obtained. Id. at 203-04. The very logic of fugitive disentitlement is that refusal to face and defend against charges, particularly in criminal court where procedural rights and the presumption of innocence favor the defendant, is “but. an admission of the want of merit in the asserted defense.” See Hammond Packing Co. v. Arkansas,
The distinction is made clearer by reviewing one of two nineteenth-century cases on which the claimants unsuccessfully rely, Hovey v. Elliott,
But in Hammond Packing the Court distinguished the situation in Hovey from one where a party creates an adverse presumption against itself.
We make two final notes in support of our decision. First, there can be no doubt that the claimants’ waiver was knowing. Section 2466 leaves the application of dis-entitlement to the court’s discretion, see § 2466(a) (using “may” instead of “shall”), and in this case, the claimants were given a full opportunity to resist its application. Given their lengthy, and apparently expensive, intransigence with regard to the underlying controversy, it cannot be argued that they were unaware of the statute’s consequences and therefore unable to waive. Cf. United States v. Eng,
Second, we are not certain that Degen cast as wide a net as the claimants argue. In that decision, the Supreme Court concluded that “[t]here was no necessity to justify the rule of disentitlement in this case,”
In this case, the claimants readily concede that the property at issue is being spent rapidly, despite numerous orders at
As § 2466 predicates disentitlement on an allowable presumption that a criminal fugitive lacks a meritorious defense to a related civil forfeiture, we find it does not violate the Due Process Clause of the Fifth Amendment and affirm the district court’s decision.
IV.
Having established the constitutionality of § 2466, we now proceed to review its application in this case. The claimants principally challenge the district court’s finding that each of them is a fugitive from law as defined by the statute. We address two
Finding none of their arguments persuasive, we affirm the decision of the district court.
A.
The intent standard established by § 2466 is an issue of first impression in this Court. We review questions of statutory interpretation de novo. United States v. Ide,
A person is a fugitive subject to disen-titlement if he or she,
(1) after notice or knowledge of the fact that a warrant or process has been issued for his apprehension, in order to avoid criminal prosecution—
(A)'purposely leaves the jurisdiction of the United States;
(B) declines to enter or reenter the United States to submit to its jurisdiction; or
(C) otherwise evades the jurisdiction of the court in which a criminal case is pending against the person; and
(2) is not confined or held in custody in any other jurisdiction for commission of criminal conduct in that jurisdiction.
§ 2466(a). The dispute here is over the meaning of “in order to avoid criminal prosecution,” which the claimants argue requires a showing that the individual’s sole or primary reason for being absent from the United States is evasion. The
“The starting point for any issue of statutory interpretation ... is the language of the statute itself.” United States v. Bly,
Congressional intent also favors a specific intent requirement. The claimants’ desired interpretation relies on words that are not in the statute: had Congress wanted to make § 2466 apply only where avoiding prosecution was the “sole” or “principal” reason for a person’s absence from the United States, adding those modifiers to the statute would accomplish the goal easily.
Further, Congress clearly anticipated § 2466 would apply to individuals with no reason to come to the United States other than to defend against criminal charges. As the Second Circuit noted in Collazos, “Subpart B also applies to persons who, qualifying in all four other respects for disentitlement, decline to ‘enter’ the United States’ jurisdiction.”
Because the statute must apply to people with no reason to come to' the United States other than to face charges, a “sole” or “principal” purpose test cannot stand. The principal reason such a person remains outside the United States will typically be that they live elsewhere. A criminal indictment gives such a person a reason to make the journey, and the statute is aimed at those who resist nevertheless.
Finally, we note that this decision is consistent with the precedent in our sister circuits who have addressed the question. The Second and Ninth Circuits have explicitly adopted a specific intent, standard for § 2466. See Technodyne,
In United States v. $6,976,934.65, Plus Interest Deposited into Royal Bank of Scotland International, Account No. 2029-
The Sixth Circuit’s opinion in United States v. Salti,
Because the plain language of the statute, the legislative intent, and the weight of persuasive authority all favor doing so, we adopt a specific intent standard for § 2466 and affirm the district court.
B.
The claimants’ next contention is that the district court’s findings of intent with respect to each of them were erroneous. We review these findings for clear error, for while determining whether claimants are fugitives is a legal determination that would be reviewed de novo, Collazos,
The claimants’ principal argument is that the district court impermissibly relied on the fact that each of them is fighting extradition in finding specific intent. But the district court did not rely solely on this evidence — it merely considered it as a relevant part of a holistic analysis. And the
Moreover, the district court did not rely solely on the claimants’ resistance to extradition. Instead, it reviewed each claimant and noted additional evidence of an intent to avoid prosecution. For example, Kim Dotcom posted a message to Twitter stating “HEY DOJ, we will go to the U.S. No need for extradition. We want bail, funds unfrozen for lawyers & living expenses.” All Assets Listed in Attachment A,
The claimants’ argument that they have legitimate reasons to remain where they are, such as jobs, businesses, and families does not disprove that avoiding prosecution is the reason they refuse to come to the United States. As we have already rejected their argument for a “sole intent” standard, the existence of additional reasons to remain in one’s home country are utterly unpersuasive because they do not contradict the evidence relied upon by the district court. In fact, their argument demonstrates another reason to reject that very high standard — almost any claimant could defeat disentitlement by merely asserting a self-serving reason to remain outside the United States. Under the claimants’ preferred standard, the statute might easily be rendered a nullity.
Finally, we address the evidence of intent for two particular claimants who do not face extradition in their home countries. Claimant Sven Echternach argues that his “absence from Germany could lead to a default judgment, or potentially even a German arrest warrant in proceedings related to [the U.S. charges],” and that this is his reason for remaining there. Appellants’ Br. 35 (internal quotations omitted). This assertion, however, is based on the testimony of Echternach’s own attorney, and the district court spent considerable energy demonstrating that the scenario he described was highly doubtful, particularly because his trouble with German authorities is based on the crimes he is charged with in the United States. Id. at
Claimants also argue there is no evidence Julius Bencko returned to his home country of Slovakia, being driven across Europe from Portugal by a Portuguese national, to avoid prosecution. But Bencko told a third party that “he was ‘stuck here in this post commie state ... the sooner the USA will do some steps the soner [sic] they will let me go.’ ” Id. at 831 (quoting Bencko declaration). Bencko told this person that he would prefer not to travel outside the country but could if necessary and stated that he faced a fifty-five-year sentence in the United States. The district court did not abuse its discretion in finding these statements taken together showed intent to avoid prosecution.
V.
The claimants make two arguments regarding the effect of international law on the application of § 2466, which we' now address. Both are questions of law which we review de novo. See United States v. Al-Hamdi,
First, they argue that disentitling New Zealand residents violates the Charming Betsy canon of interpretation which requires courts to interpret federal statutes “consistent with our obligations under international law,” Kofa v. INS,
The relevant portion of UNTOC says,
Any person whom [extradition] proceedings are being carried out in connection with any of the offences to which this article applies shall be guaranteed fair treatment at all stages of the proceedings, including enjoyment of all the rights and guarantees provided by the domestic law of the State Party in the territory of which that person is present.
UNTOC, art. 16, ¶ 13, Dec. 12, 2000, 2255 U.N.T.S. 209. The claimants argue that disentitlement prevents them from exercising their rights under New Zealand law and thereby violates the multinational treaty to which both the United States and New Zealand are parties.
None of the claimants’ rather conclusory arguments made to this Court respond to the district court’s ruling on this issue. It held that there was nothing inconsistent about allowing the claimants to pursue their rights in New Zealand courts, meanwhile subjecting them to default judgment in civil proceedings in the United States which they refused to defend: “That the exercise of their rights in new Zealand may cause disadvantages for the claimants with respect to litigation occurring in America does not mean they are being treated unfairly or that they are denied their enjoyment of rights in New Zealand.” All Assets Listed in Attachment A,
The claimants only answer is to misconstrue a New Zealand court opinion as declaring disentitlement unconstitutional. The opinion to which they refer was only deciding a motion to strike a request that their government’s enforcement of restraining orders on funds (issued in re
The claimants also argue that claimant Echternach cannot be disentitled pursuant to § 2466 because the Mutual Legal Assistance Treaty between Germany and the United States (“U.S.-German MLAT”) prohibits “any penalty” or “coercive measure” for failure to answer a summons. See The German Mutual Legal Assistance Treaty, Ger.-U.S., Oct. 18, 2009, T.I.A.S. No. 09-1018 [hereinafter MLAT], The U.S.-German MLAT was signed in 2003 and ratified in 20Ó7, years after § 2466 was enacted in 2000. As such, claimants argue that the Supremacy Clause dictates that the treaty trumps the statute. See Vorhees v. Fischer & Krecke,
The district court expressed “serious doubts that this treaty bars application of the fugitive disentitlement statute against all [foreign nationals] who maintain fugitive status in Germany.” All Assets Listed in Attachment A,
VI.
The claimants’ final argument is that the district court erred in striking the marital claims to the defendant property asserted by Mona Dotcom, the estranged wife of claimant Kim Dotcom. The court recognized Mrs. Dotcom’s possessory interest in two assets — a vehicle and the house in which she resides — but struck her claims to fifty percent of marital property affected by this litigation, concluding she lacked standing. The claimants argue this was error because Mrs. Dotcom only needs to show a “colorable interest” in the property (based on New Zealand property law) to establish Article III standing, and she has done so.
Article III standing requires a plaintiff to show “an injury in fact — an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” Lujan,
Actual legal interests under the PRA vest “only in the event of a future Court order or compromise” between the, married parties. Comm’r of Police v. Hayward (unreported) High Court, Auckland, CIV 2011-404-002371, 10 June 2013, Venning J, at para 103 (N.Z.) (“Hayward I”). While the New Zealand Criminal Proceeds Recovery Act (2009) (“CPRA”), which controls asset forfeiture, statutorily defines an “interest” as including “a right to claim,” Hayward v. Comm’r of Police [2014] NZCA 625 at para [33] White J for the Court (N.Z.) (“Hayward II”), it is the Article III definition of interest which controls standing. That is, New Zealand law determines the extent of Mrs. Dotcom’s interest in the property, and Article III determines whether that interest is sufficient to create standing. The district court rightly concluded that a right to state a claim “does not rise to the level of a legal or equitable interest sufficient to satisfy Article III.” JA 1995 (citing United States v. Schifferli,
The district court concluded, rightly, that because the Dotcoms had neither adjudicated their rights to the marital property nor reached a binding settlement, Mrs. Dotcom had no actual interest in the property and had therefore failed to even “allege that she owns the property.” Id. The claimants’ argument to the contrary is built upon two major errors. First, they argue that a New Zealand court declared that Mrs. Dotcom had an existing interest in the property, but failed to mention that the opinion was explicitly nonprecedential and that it recognized an interest in a claim, not an interest in property. See JA 1994-96. Second, the claimants misrepresent the holding in Hayward II, implying that it reversed Hayward I and broadened the definition of a marital property interest to include hypothetical claims to such property. It did not — it very clearly distinguished the two statutes.
Finding the district court’s reasoning persuasive, we affirm the decision to strike Mrs. Dotcom’s claims for lack of standing.
VII.
For the foregoing reasons, the district court opinion is affirmed in full.
AFFIRMED
Notes
. For convenience, the relevant portions of § 1355 are reproduced here:
(a) The district courts shall have original jurisdiction, exclusive of the courts of the States, of any action or proceeding for the recovery or enforcement of any fine, penalty, or forfeiture, pecuniary or otherwise, incurred under any Act of Congress, except matters within the jurisdiction of the Court of International Trade under section 1582 of this title.
(b) (1) A forfeiture action or proceeding may be brought in—
(A) the district court for the district in which any of the acts or omissions giving rise to the forfeiture occurred, or
(B) any other district where venue for the forfeiture action or proceeding is specifically provided for in section 1395 of this title or any other statute.
(2) Whenever property subject to forfeiture under the laws of the United States is located in a foreign country, or has been detained or seized pursuant to legal process or competent authority of a foreign government, an action or proceeding for forfeiture may be brought as provided in paragraph (1), or in the United States District court for the District of Columbia.
(d) Any court with jurisdiction over a forfeiture action pursuant to subsection (b) may issue and cause to be served in any other district such process as may be required to bring before the court the property that is the subject of the forfeiture action.
. There is only a ''potential” split because the Second Circuit may have reversed itself following its decision in United States v. All Funds on Deposit in Any Accounts Maintained in Names of Meza or De Castro,
. "Because the United States is a distinct sovereign, a defendant may in principle be subject to the jurisdiction of the courts of the United States but not of any particular State. This is consistent with the premises and unique genius of our Constitution.” J. McIntyre Mach., Ltd. v. Nicastro,
. The claimants also rely on McVeigh v. United States,
. The claimants also argue that the district court abused its discretion in deciding to dis-entitle them, but its brief on this point merely repeats arguments made elsewhere and we see no reason to repeat ourselves in response.
. The Fourth Circuit uses a higher "dominion and control” test to determine Article III standing in criminal forfeiture cases. In re Bryson,
Dissenting Opinion
dissenting:
The majority concludes that a district court may properly enter a forfeiture order against property entirely outside of the United States after barring foreign Claimants — who are also entirely outside of the United States — from defending the
I.
I agree with the majority that 28 U.S.C. § 1355 is a jurisdictional statute. In enacting § 1355, Congress intended to fundamentally alter the law regarding in rem jurisdiction. But see United States v. All Funds on Deposit in Any Accounts Maintained in Names of Meza or De Castro,
“The jurisdiction of federal courts is defined and limited by Article III of the Constitution.” Flast v. Cohen,
As one commentator cited by the majority notes, cases brought pursuant to § 1355(b)(2) implicate two distinct but related constitutional justiciability requirements — bindingness and redressability. See Courtney J. Linn, International Asset Forfeiture and the Constitution: The Limits of Forfeiture Jurisdiction Over Foreign Assets Under 28 U.S.C. § 1355(b)(2), 31 Am. J. Crim. L. 251, 297-99 (2004). In my view, bindingness presents the most serious problem here.
The opinions of federal courts must be final and binding on the parties. “ ‘[T]he oldest and most consistent thread in the federal law of justiciability is that the federal courts will not give advisory opinions.’” Flast,
The advisory opinion prohibition is founded on the principle that federal courts may only issue judgments that are binding and conclusive on the parties. See Waterman,
The majority side-steps this concern by cabining it to the separation of powers context. One of the basic tenets of what constitutes a “case or controversy” cannot be elided so. The defendant in this action — the res — is outside of the United States and beyond the control of the district court. Absent control, no order of the district court can be binding on the res because the fate of the res is ultimately not in the hands of the district court. In
The risk of revision to the district court’s judgment is no mere hypothetical. As the government notes, “[djespite the registration of the restraints, the New Zealand courts released” over $5 million for legal fees and living expenses. Gov’t’s Br. 7. Additionally, even after receiving the “final” forfeiture order from the district court, New Zealand courts granted Dotcom monthly releases of $135,000 for living expenses. Id. at n.5. In fact, the district court recognized that the foreign courts “may or may not” register its order and that “New Zealand courts may continue to litigate the issue of whether the assets will be forfeited.” J.A. 1982. The government also concedes that “even with a valid forfeiture order, the fugitive’s property may suffer no adverse effect.” Gov’t’s Br. 20 n.13. In an in rem action, the district court cannot issue a judgment binding the res absent control of the res. Where, as here, a foreign sovereign controls the res because the res is located abroad, any in rem forfeiture order by a district court constitutes advice to the foreign sovereign regarding how it should vest title to the res.
III.
Our own precedent recognizes the Article III limits of in rem jurisdiction. We explored the interplay at length in our Titanic decisions. R.M.S. Titanic, Inc. v. Haver,
What makes in rem actions problematic from an Article III standpoint is that “judgments in them operate against anyone in the world claiming against that property.” Titanic I,
Our decision in Titanic I emphasizes the importance of sovereignty — and control— for in rem actions. In Titanic I, we found the exercise of in rem jurisdiction proper because the court had constructive control over the wreck because it had a portion of the wreck in its control. The main body of the wreck itself was located in international waters, i.e., beyond the sovereign limits of any nation. Thus, although “the exclusiveness of any [in rem] order could legitimately be questioned by any other court in admiralty,” we concluded that the court could, nonetheless, exercise an “ ‘imperfect’ or ‘inchoate’ in rem jurisdiction which falls short of giving the court sovereignty over the wreck.” Id. at 967.
As Titanic II makes clear, the court’s exercise of power in Titanic I was possible only because the wreck was outside the territorial limits of another sovereign. In Titanic II we announced the limits of constructive in rem jurisdiction grounded in the boundaries imposed upon courts by territorial sovereignty. We held that a court cannot exercise in rem or constructive in rem jurisdiction over property within the sovereign limits of other nations. Titanic II,
The majority is correct that the Titanic cases applied the traditional, admiralty-based law of in rem jurisdiction and is also correct that § 1355 attempted to alter that traditional law. What the majority fails to recognize, however, is that the traditional limits of in rem jurisdiction are also commanded by the Constitution’s requirement that judgments by Article III courts be binding on the parties. Needless to say, this requirement cannot be waived by statute. Because the res is a party and because the judgment purports to adjudicate rights in the rescinding against the whole world, control of the res is the sine qua non of in rem actions. Absent control, the court’s judgment cannot bind the property but, instead, merely advises the foreign sovereign that does control the property as to how a United States court believes the rights in the property should be settled.
The possible cooperation of the foreign sovereign is irrelevant, contrary to the weight the district court and the majority place on that variable. Unlike the question of redressability, which is indeed a matter of probabilities, the requirement that a judgment be binding and conclusive on the parties is absolute. Consider the circumstances of Waterman, which articulated bindingness as an essential requirement of Article Ill’s judicial power. In Waterman, the court of appeals determined that it had jurisdiction to review an order of the Civil Aeronautics Board awarding an overseas air route.
The Supreme Court has never given any indication that the bindingness concerns in Waterman could be cured by a court’s determination that the other entity was “likely” to follow its decision. While a judgment may in fact have a higher chance of eventually being binding on the parties where the foreign sovereign has acted cooperatively, the U.S. judgment remains “subject to later review or alteration by [foreign] administrative action” and -its bindingness remains — impermissibly—a question of probabilities.
IV.
The district court in this case did not have control of the res. The res is controlled by foreign sovereigns — New Zea-land and Hong Kong. Therefore, the district court could not in my view issue an order as to the res which would be binding against the world. Foundational Article III principles preclude the court from entering a forfeiture order against the res in this case. I would reverse the district court on this basis and deem the other issues presented by this appeal moot.
. Admiralty law indisputably requires control of the res as a prerequisite to the exercise of jurisdiction.
. None of the circuits to apply § 1355(b)(2) and cited by the majority considered challenges to the exercise of in rem jurisdiction based on Article III. The D.C. Circuit acknowledged that application of § 1355(b)(2) must conform with the Constitution, but declined any justiciability analysis because no claimant raised constitutional objections. United States v. All Funds in Account Nos. 747.034/278, 747.009/278, & 747.714/278 in Banco Español de Credito, Spain,
.This is not to say that I am convinced by the majority's treatment of the redressability issue, ante, at 422-23. Lujan v. Defenders of Wildlife requires that it be "likely” and not
Further — although this question may safely be left for another day — it seems to me that if a foreign sovereign were to refuse to cooperate, the probability that a § 1355 forfeiture judgment would redress the government’s injury might slip from "likely” to "speculative.” Such a refusal to cooperate by a foreign sovereign may deprive the government of standing to pursue the forfeiture action.
. The Supreme Court has similar concerns with regard to in rem jurisdiction, observing that when a defendant ship leaves a port and the plaintiff no longer has a res from which to collect, courts may find the judgment to be "useless” and not adjudicate the case based on a "traditional, theoretical concern[ ] of jurisdiction: enforceability of judgments.” Republic Nat’l Bank of Miami v. United States,
. It may be possible for the government to make a showing before the district court that the foreign sovereign would be compelled, by its own law, to give binding effect to a civil forfeiture judgment by a U.S. court. However, the government has made no such showing in this case sufficient to assuage Article III concerns.