UNITED STATES of America, Plaintiff-Appellant, v. Maria FERRO, Claimant-Appellee, and Robert Ferro, Claimant, and 1,679 Firearms; 87,983 Rounds of Ammunition; 3 Airburst Projectiles; Assorted Fuses, Defendants. United States of America, Plaintiff-Appellee, v. Maria Ferro, Claimant-Appellant, and Robert Ferro, Claimant, and 1,679 Firearms; 87,983 Rounds of Ammunition; 3 Airburst Projectiles; Assorted Fuses, Defendants.
Nos. 10-55734, 10-56808
United States Court of Appeals, Ninth Circuit
Argued and Submitted Feb. 17, 2012. Filed June 11, 2012.
681 F.3d 1105
Lisa J. Jackson, Law Offices of Lisa J. Jackson, Pacific Palisades, CA; Roger S. Hanson, Law Office of Roger S. Hanson, Santa Ana, CA, for the claimant-appellee/cross-appellant.
Before: HARRY PREGERSON, MICHAEL DALY HAWKINS, and CARLOS T. BEA, Circuit Judges.
OPINION
BEA, Circuit Judge:
These cross-appeals arise from what we understand to be the largest civil in rem forfeiture proceeding against firearms unlawfully possessed by a convicted felon in American history. In dispute is a forfeiture order against hundreds of collectable
This opinion addresses several issues. First, we hold that Maria Ferro is not entitled to the protections of the so-called “innocent owner” defense, and the district court was therefore correct to hold that the entire collection was subject to forfeiture. Second, we hold that, following a comprehensive revision to the forfeiture statutes in 2000, forfeitures of instrumentalities of crimes are subject to excessiveness analysis under the Eighth Amendment‘s Excessive Fines Clause. Third, we hold that excessiveness review must consider the individualized culpability of the property‘s owner and, when analyzing the offending conduct, it must focus only on the conduct that actually gave rise to the forfeiture of the property at issue, not other criminal conduct by the same person. Because the district court erred on this third point, we remand for the district court to undertake once again the excessiveness inquiry.1
I.
The facts of this case are unusual.
A.
The sole valid claimant in this case, Maria Ferro, married Robert Ferro in 1979. In 1983, the Ferros moved to their current home at 2045 Tapia Way in Upland, California. After their marriage, Robert began to collect firearms, and Robert obtained federal firearms licenses to do so. All 1,679 firearms eventually seized in 2006 were obtained by Robert between 1983 and May 1992, while he was married to Maria Ferro and while the couple resided in California.2
In 1991, Robert was arrested by local police in California for possessing explosives. He was charged on November 16, 1991 with California state crimes that prohibit the possession of explosives and explosive ingredients. On May 1, 1992, before his state court trial, Robert conveyed in writing “all of his property and possessions” to his wife Maria. The district court found this conveyance included the transfer of ownership of all of his firearms, and, in a separate filing, Robert himself expressly declared this to be true.
Robert was convicted of the crimes related to possession of explosives in that state court action and sentenced to two years in prison. Sometime in 1992, the Bureau of Alcohol, Tobacco, and Firearms (ATF) denied an application for renewal of Robert‘s firearms license which he had filed before his conviction. In a letter addressed to Robert, an ATF official explained that Robert “could continue his licensed operations under his now expired firearms licenses until 30 days after his conviction became final.” The official ex-
Robert‘s conviction became final in 1994. Robert then went to prison in June 1995 and was paroled in September 1996.
A decade later, in April, 2006, ATF agents searched the Ferros’ home and initially seized over 700 firearms. ATF officials executed a second, more thorough search and found additional firearms as well as “87,983 rounds of ammunition, 35 machineguns, 130 silencers, three short-barreled rifles, three destructive devices, a live hand grenade, a military rocket launcher tube, five bullet-proof vests, grenade fuses, and grenade hulls.” These additional firearms were hidden in the walls and floors of the Ferros’ home. The ATF agents also discovered hidden rooms containing weapons, as well as an underground bunker that housed a shooting range.3 Maria “did not know about the vast majority of the firearms hidden in her house; she did not know how many guns were in the house nor did she know where they were located.” D. Ct. Findings of Fact and Concl. of Law at 4.
B.
On August 10, 2006, the government, with all of the firearms in its custody, filed the complaint that initiated this civil in rem forfeiture action. The complaint was filed pursuant to 1)
The firearms still in dispute make up a remarkable collection. At oral argument, the government said that when these proceedings conclude and the government has ownership of all the firearms, “a lot of these collectable firearms will be placed at the ATF museum, and will not be destroyed—not necessarily because of their value, but because of their rarity.”4 Some of the firearms are gold-plated; others are early twentieth-century rarities; several are valued at $10,000 or more. Still, despite the fact that these weapons are a far cry from the inexpensive handguns used in most crimes, it is uncontested that all of the weapons meet the definition of “firearm” under
The forfeiture proceeding for the contested firearms is governed by
Maria Ferro raised the affirmative defense that the property is not forfeitable because she was an “innocent owner” and “[a]n innocent owner‘s interest in property shall not be forfeited under any civil forfeiture statute.”
The case proceeded to a two-day bench trial, with Maria Ferro as the sole claimant of the property. In a written order, the district court found that the firearms were subject to forfeiture because they had been in the possession of a convicted felon. The district court then rejected Maria‘s innocent owner defense to forfeiture. While the parties disputed whether Maria even qualified as an owner under the statute,6 the district court assumed without deciding that Maria was an owner of the property under the statute but that she nonetheless was not “innocent.” The district court found that Maria “kn[e]w of the conduct giving rise to the forfeiture” because she “knew that her husband had been convicted of a felony and sentenced to more than one year in jail and that he possessed these firearms after his conviction.” D. Ct. Findings of Fact and Concl. of Law 8. For the district court, it was irrelevant whether Maria “underst[oo]d the significance of those facts [i.e., that Robert Ferro had been convicted of a felony and that he had possessed firearms] when applied to existing law.”
Maria then moved to remit the forfeiture because it constituted an “excessive fine” under the Excessive Fines Clause of the
As noted above, both sides appealed.
II.
The district court‘s factual findings are reviewed for clear error. United States v. Bajakajian, 524 U.S. 321, 336 n.10 (1998). Its legal conclusions, including the determination whether a fine is unconstitutionally excessive, are reviewed de novo. Id.
III.
This appeal presents three separate questions regarding the forfeiture. First, is Maria Ferro entitled to the innocent owner affirmative defense to forfeiture? Second, if she is not, is the property susceptible to an excessiveness analysis under the
A. Background
The
The Supreme Court‘s first case dealing with the potential application of the Excessive Fines Clause to civil in rem forfeitures was Austin v. United States, 509 U.S. 602 (1993). In Austin, the claimant was indicted in South Dakota for drug distribution, and the government initiated a civil in rem forfeiture proceeding against his mobile home and an automobile repair shop that he owned and that were allegedly connected to his drug trafficking offenses. Id. After canvassing the early history of both the Clause and of forfeiture proceedings, the Supreme Court held that the proper question was not “whether forfeiture under [the statute then at issue] is civil or criminal, but rather whether it is punishment.” Id. at 610. The Court stated that a forfeiture may count as a “fine“—that is, a “payment to a sovereign as punishment for some offense,” Browning-Ferris Indus. v. Kelco Disposal, 492 U.S. 257, 265 (1989)—even if the forfeiture was in part remedial. Austin, 509 U.S. at 621. Instead, if the forfeiture “cannot fairly be said solely to serve a remedial purpose, but rather can only be explained as also serving either retributive or deterrent purposes, [it] is punishment.”
Five years later, in United States v. Bajakajian, the Court held for the first time that a particular fine was excessive. 524 U.S. 321 (1998). In Bajakajian, the defendant was charged with failing to report that he was crossing the U.S. border with more than $10,000 in currency—in fact, Bajakajian was traveling to Cyprus with over $350,000 in currency. Id. at 324-25. Federal law provided that “any property ... involved in such offense” was forfeitable in an in personam criminal proceeding. Id. The government attempted to confiscate all $357,154 in currency, but the Court held that such a fine was excessive under the Clause. Id. at 344.
The Court first looked to the history of forfeiture and noted that “traditional civil in rem forfeitures ... were historically considered nonpunitive” and that such nonpunitive forfeitures “were considered to occupy a place outside the domain of the Excessive Fines Clause.”8 Id. at 330-31. But then, citing Austin, the Court noted that modern forfeiture laws were not generally aligned with this historical tradition, and could be “fines” for
The Bajakajian Court then considered and rejected the government‘s argument that the currency at issue was an “instrumentality” of the reporting offense and therefore could never be considered excessive. Id. at 333. The Court defined an “instrumentality” forfeiture as one involving “property that historically was subject to forfeiture because it was the actual means by which an offense was committed.” Id. at 333 n. 8. The Court then stated that “a forfeiture that reaches beyond this strict historical limitation [of forfeitability as an instrumentality] is ipso facto punitive and therefore subject to review under the Excessive Fines Clause.” Id. Because the currency in Bajakajian was not an instrumentality of the offense—instead, the currency was “merely the subject of the crime of failure to report“—the Court ended its analysis of instrumentality forfeitures without stating explicitly whether they must be reviewed for excessiveness under the Clause. Id. at 334 n. 9.
Soon after, the Ninth Circuit dealt with this possible “instrumentality exception” to
The forfeiture landscape changed substantially in 2000 with the passage of CAFRA. See
In passing CAFRA, Congress noted that the use of forfeiture by the federal government had skyrocketed in the 1980s and 1990s. The total value of forfeited assets was under $30 million in 1985, and eight years later, it was over $550 million.
As passed by the Congress and signed by the President in 2000, CAFRA worked a number of major changes to forfeiture law, two of which are particularly relevant here. First, it created a uniform innocent owner defense that applies to virtually all civil in rem forfeiture proceedings. See
Second, CAFRA itself incorporates guidelines to review a forfeiture for proportionality which largely track those stated by the Supreme Court in Bajakajian.
The effect of CAFRA on the Excessive Fines Clause analysis for a forfeiture of this type and magnitude is a novel question in this circuit.
B. The “innocent owner” defense
An innocent owner is an owner who “(i) did not know of the conduct giving rise to forfeiture; or (ii) upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property.”
Maria‘s argument elides the distinct concepts of knowledge of facts and knowledge of law. The innocent owner defense exempts from civil forfeiture any property owned by anyone who did not know of the conduct giving rise to the forfeiture.
Further, while the legal significance of the district court‘s finding that Maria was ignorant of the applicability of the felon-in-possession law is unclear given the well-known legal precept that “[a]ll citizens are presumptively charged with knowledge of the law,” Atkins v. Parker, 472 U.S. 115, 130 (1985), we need not explore that tension here. After all, there is no dispute that Maria knew of the relevant facts that constituted Robert‘s commission of the crime of being a felon-in-possession. That is enough knowledge to make the innocent owner defense unavailable.
C. Whether these firearms are subject to excessiveness review
The government contends that the firearms here are categorically im-
In Austin, the Supreme Court stated that a sanction which “cannot fairly be said solely to serve a remedial purpose, but rather can only be explained as also serving either retributive or deterrent purposes, is punishment” and is therefore subject to analysis under the Excessive Fines Clause. 509 U.S. at 621 (quoting Halper, 490 U.S. at 448). In determining whether a fine is punitive, at least in part, the availability of an innocent owner defense is crucial. In Austin, the Court held the civil in rem forfeiture in that case was punitive since “[i]f forfeiture had been understood not to punish the owner, there would have been no reason to reserve the case of a truly innocent owner.” 509 U.S. at 617.
Under CAFRA, which governs this case, the innocent owner defense is now broadly available, except in the case of forfeiture of contraband. See
D. The focus of the excessiveness inquiry
Although the district court properly subjected the fine here to excessiveness review, it misapplied the inquiry. Because
As the Supreme Court has stated, and as CAFRA codifies by statute, “[a] punitive forfeiture violates the Excessive Fines Clause if it is grossly disproportional to the gravity of a defendant‘s offense.” Bajakajian, 524 U.S. at 334; see also
It was error for the district court to focus solely on Robert Ferro‘s conduct and therefore fail to consider owner Maria Ferro‘s culpability, if any. Before Bajakajian, the caselaw in our circuit was clear that the excessiveness inquiry must focus, at least in part, on the “culpability of the owner.” See United States v. Real Property Located in El Dorado County at 6380 Little Canyon Road, 59 F.3d 974, 982 (9th Cir. 1995). Although the actual two-pronged test for excessiveness followed by this court in 6380 Little Canyon Road was abrogated in 1998 by Bajakajian‘s “grossly disproportional” standard, nothing in Bajakajian directs a court to ignore the culpability of the owner and focus solely on whether the fine is excessive given the conduct that subjected the property to forfeiture, i.e., Robert Ferro‘s possession of the collectable firearms. Indeed, Bajakajian was necessarily silent on that particular issue, since Bajakajian involved a criminal in personam forfeiture, which type of forfeiture “reaches only currency owned by someone who himself commits a reporting crime.” Bajakajian, 524 U.S. at 328 n. 3 (emphasis added). And the language of the Supreme Court‘s precise holding—that a court must examine whether a fine is “grossly disproportional to the gravity of a defendant‘s offense“—assumes a human defendant who is the actual person that committed the crime. Id. at 334 (emphasis added). Where, as here, the person who committed the sole crime charged which gave rise to forfeitability is not the property‘s owner, the culpability of the owner must be considered in the analysis. We must remember that Maria was not charged with any crime, much less a crime which in some way enabled or caused Robert‘s crime.
The
The proper focus of the excessiveness inquiry is a novel issue for this circuit after Bajakajian. The Second Circuit, though, has explicitly considered this issue in a post-Bajakajian case, and it held that it is the individual culpability of a claimant—i.e., the person who is actually punished by the “fine“—which must be considered in the excessiveness analysis. In von Hofe v. United States, the government initiated a civil in rem forfeiture action against a home, worth approximately $248,000, owned jointly by claimants Harold and Kathleen von Hofe. 492 F.3d at 178-79. Upon a valid search, the police had found 65 marijuana plants in the basement of the couple‘s home, and the property was subject to civil in rem forfeiture because the house had a “substantial connection” to the drug possession crime. Id. at 180-81. Harold and Kathleen von Hofe both filed as claimants for their respective shares of the property, and, on appeal from an order upholding the forfeiture of the entirety of both claimants’ ownership interests, the Second Circuit analyzed whether the forfeiture was excessive with respect to each claimant. The district court found that Harold had been the one growing, using, and sharing the marijuana, and the Second Circuit affirmed that a forfeiture of Harold‘s $124,000 ownership interest was not excessive. Id. at 188.
The court reached the contrary conclusion for Harold‘s wife Kathleen. Id. at 191. The court said that Kathleen‘s conduct could be “best described as turning a blind eye to her husband‘s marijuana cultivation in their basement.” Id. Thus, although Kathleen “was not an innocent owner,” she “b[ore] minimal blame for the criminal activity.” Id. at 188-89. The Second Circuit found that the forfeiture of her entire $124,000 interest in the house was an excessive fine, but the Second Circuit remanded the case to the district court for further factual development without specifying the maximum constitutional fine. Id. at 191. We agree with the approach taken in von Hofe.
Of course, though von Hofe provides the correct approach, the outcome on these facts may be somewhat different. Especially from our vantage point as an appellate tribunal, Maria‘s culpability, if any, for enabling Robert‘s illegal possession of firearms is hard to assess. Maria knowingly allowed hundreds of collectable, and evidentially operational, firearms to be stored away in her house; they were there possessed by a felon. Moreover, even though she was the owner of hundreds of these firearms, the district court found that she “did not know about the vast majority of the firearms hidden in the house; she did not know how many guns were in the house nor did she know where they were located.” Some might think this careless because some of the firearms were operable. Others, more at home with the presence of firearms, would harbor no cause for alarm. Also, Maria seems to have been quite naive: she could also be characterized as a doting wife who failed to ask any hard questions of the husband she loved and trusted, and to whom she has been married for decades. Choosing among these or possibly other scenarios is something that must be done by the district court in the first instance, since that court is in a position to make credibility determinations and has doubtless become familiar with the principals over the course of this lengthy litigation.
The government urges this court to focus only on Robert‘s conduct and contends that to allow Maria‘s culpability to be considered “suggests a profound misunderstanding of federal forfeiture law.” The government then cites a statutory exces-
Second, the district court improperly focused on Robert Ferro‘s entire course of conduct rather than just the conduct that gave rise to the forfeiture of the collectable guns. For instance, the district court, in discussing what “other penalties [were] authorized for these violations,” included Robert‘s possession of a “military rocket-launcher tube,” “guns with obliterated serial numbers,” a “hand grenade,” and other contraband weapons such as a “sawed-off shotgun.” D. Ct. Forfeiture Order 8-9. As Maria points out, the inclusion of the contraband weapons in the analysis is unfair double-counting because those contraband firearms were already forfeited without challenge from Maria. Because the collectable firearms are the only property remaining in this proceeding, their unlawful possession should be the sole focus of the excessiveness inquiry.
*
*
*
Today, we answer three questions in federal forfeiture law: (1) whether the innocent owner defense is available to those who know of all of the relevant facts giving rise to the property‘s forfeitability; (2) whether a civil forfeiture of the “instrumentalities” of a crime can be reviewed for excessiveness; and (3) whether excessiveness review must focus on the individualized culpability of the property‘s owner. As the answers to those questions apply to this case, we AFFIRM the district court‘s order that the property here is forfeitable, and we VACATE the determination of excessiveness and REMAND for reconsideration of the excessiveness inquiry according to the principles discussed in this opinion. We express no view as to what the proper amount of reduction will be under a corrected excessiveness analysis.13
AFFIRMED IN PART, VACATED IN PART, AND REMANDED.