UNITED STATES of America, Plaintiff-Appellee, v. ON LEONG CHINESE MERCHANTS ASSOCIATION BUILDING, et al., Defendants-Appellants.
No. 90-1191.
United States Court of Appeals, Seventh Circuit.
Decided Nov. 14, 1990.
918 F.2d 1289
Before CUMMINGS, CUDAHY and EASTERBROOK, Circuit Judges.
Argued Sept. 10, 1990.
Don Flood, one of Kingsley‘s salesmen, testified as to a mistake Del-Met had made in failing to pay Kingsley commissions of some $166,240.99 for a sale of certain parts to AMC between 1982 and 1984. Flood‘s evidence supports the jury‘s award of those pre-termination commissions to Kingsley.
Robert Zimmerman prepared exhibits and testified regarding calculations he made of commissions Del-Met owed Kingsley between April of 1987 and January of 1989 totalling $492,694. The jury could base its post-termination commissions award, less certain commissions applicable to a particular plastic wheel cover part, on this evidence.
VI.
For the foregoing reasons, the judgment of the district court granting the judgment notwithstanding the verdict is VACATED, and the verdict of the jury is ordered reinstated. In addition, the case is REMANDED to the district court for a limited new trial upon the plaintiff‘s claim for commissions earned after January 1989, upon sales plaintiff may have procured for defendant prior to April 7, 1987.
Elizabeth M. Landes, Asst. U.S. Atty., Office of U.S. Atty., Chicago, Ill., for plaintiff-appellee.
Lawrence F. Ruggiero, Siff, Rosen & Parker, New York City, John M. Beal, Chicago, Ill., for defendants-appellants.
This is an appeal of an order granting summary judgment to the United States on a civil forfeiture claim. The property ordered forfeited is the On Leong Chinese Merchants Association Building (“Building“), a three-story landmark located in Chicago‘s Chinatown and owned by claimant, the On Leong Chinese Merchants Association (“On Leong“). The government alleged that the Building housed an illegal gambling business, and sought forfeiture pursuant to
On appeal, claimant argues that the government failed to establish probable cause and that the district court improperly denied its motion for a stay of summary judgment proceedings on the Building. Claimant also contends that the forfeiture of real property, as opposed to personal property, is simply not authorized by
I. BACKGROUND
The affidavit of F.B.I. Special Agent James Whitmer accompanied the government‘s verified complaint filed on June 15, 1988. According to Agent Whitmer, the Chicago Police Department discovered gambling activity at the On Leong Building on three separate occasions from 1984 to 1986. On September 2, 1984, police officers entered the Building with a warrant. They found the entrance to the second floor blocked by iron gates and equipped with a buzzer. Upon reaching the second
The F.B.I. also subsequently raided the On Leong Building. F.B.I. Special Agent George Ng, who later filed his own affidavit, observed and participated in gambling games in the Building while working undercover. On April 19, 1988, after passing through a door equipped with an electronic buzzer and a closed circuit television camera, he climbed to the second floor. There he observed the Chinese games of Fan-Tan and Pai Gow being played at separate tables. At least 50 bettors or spectators were present. Bettors wagered as much as $3,000 and $4,000 at the Pai Gow table. Agent Ng, who speaks fluent Mandarin Chinese, purchased $500 in chips from a cashier. He placed bets, receiving 90% of his winnings from a banker at the Fan Tan table. The house kept the remaining 10%. He was present during a shift change in which six new workers replaced four workers at the Fan Tan table and two at the Pai Gow table.
Agent Ng returned on the following evening, April 20, 1988, with Agent Whitmer. The two executed a federal search warrant and interrupted similar gambling activity. One hundred people were present at the time of the search. The agents confiscated over $300,000 in currency, chips worth over $75,000, video equipment, and gambling paraphernalia. Agent Ng later identified three of those present at the raid as corporate officers of the On Leong Chinese Merchants Association. One of the officers, Chi Chak Leung, had served as the cashier of the gambling operation, and another, Henry H. Fong, had supervised the floor.
The government filed a forfeiture complaint pursuant to
II. DISCUSSION
A. Probable Cause Showing
a gambling business which--
(i) is a violation of that law of a State or political subdivision in which it is conducted;
(ii) involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and
(iii) has been or remains in substantially continuous operation for a period in excess of thirty days or has a gross revenue of $2,000 in any single day.
Claimant argues that forfeiture is improper because the government failed to prove one of the elements of an “illegal gambling business,” namely the underlying state law violation. On Leong does not challenge the government‘s proof of elements (ii) and (iii) of
The government‘s burden in a civil forfeiture case is merely to establish probable cause to believe that the defendant property is subject to forfeiture. In this case, the government needed to show probable cause to believe that the Building housed an “illegal gambling business.” Probable cause is defined as “reasonable ground for the belief of guilt supported by less than prima facie proof but more than mere suspicion.” United States v. Three Hundred Sixty Four Thousand, Nine Hundred Sixty Dollars etc., 661 F.2d 319, 322-323 (5th Cir.1981). Of course, probable cause must be demonstrated with respect to “every essential element” of the alleged violation. United States v. Arias, 575 F.2d 253, 254 (9th Cir.1978), certiorari denied, 439 U.S. 868, 99 S.Ct. 196, 58 L.Ed.2d 179. Once the government demonstrates probable cause in a forfeiture case, the ultimate burden shifts to the claimant to prove by a preponderance of the evidence that the property is not subject to forfeiture.
Claimant challenges the method by which the government established probable cause on the “state law violation” element of
On Leong‘s argument is overly formalistic. First the presence or involvement of the claimant is simply immaterial under the statute. The language of
By arguing that it must be linked to the state law crime, On Leong in essence claims that innocent ownership precludes forfeiture. This argument “has almost uniformly been rejected as a defense” in the context of civil in rem forfeiture actions. Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 683, 94 S.Ct. 2080, 2091, 40 L.Ed.2d 452 (1974) (seizure of yacht justified after one marijuana cigarette discovered on board though owner/lessor was wholly innocent).3 “Traditionally, forfeiture actions have proceeded upon the fiction that inanimate objects themselves can be guilty of wrongdoing.” United States v. U.S. Coin and Currency, 401 U.S. 715, 719, 91 S.Ct. 1041, 1044, 28 L.Ed.2d 434 (1971). This is reflected in the fact that the object itself is the formal defendant. Because the object is the wrongdoer, forfeiture can be ordered even in the absence of any wrongdoing on claimant‘s part. Though the result for the innocent claimant is harsh, the hope is that the spectre of forfeiture will provide owners of property with an incentive to monitor the uses of their property. See Calero-Toledo, 416 U.S. at 687-688, 94 S.Ct. at 2094.
On Leong also cannot assume that arrests, at a minimum, are necessary to prove that violations of state law occurred. The relevant burden of proof requires merely that the government establish probable cause to believe that state gambling laws were being violated. The means by which the government can do this are not limited to evidence of arrests. In this case, records of arrests were clearly relevant since the arrests were made pursuant to search warrants necessarily issued on a finding of probable cause. However, this does not mean that the government could only have shown probable cause to believe that the Building housed an illegal gambling business by introducing evidence of arrests. Any facts or evidence which might tend to establish “reasonable grounds for belief” of illegal activity are pertinent to the probable cause showing and can be presented to the district court.4
The affidavits presented to the district court contained ample evidence of gambling activity to support a probable cause finding. Claimant‘s quibbles over the proper means of establishing a state law violation are meritless. They do not amount to a refutation of the facts constituting probable cause. Claimant never denies the observations made by Agents Ng and Whitmer, nor does it try to argue that the gambling which occurred on the premises was legal under Illinois law. The government sustained its burden of demonstrating the absence of a genuine issue of material fact. See Anderson v. Liberty Lobby Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); Egger v. Phillips, 710 F.2d 292, 296 (7th Cir.1983), certiorari denied, 464 U.S. 918, 104 S.Ct. 284, 78 L.Ed.2d 262. The district court properly found that probable cause existed to believe that the Building was being used in violation of state gambling laws,5 and thus in violation of
B. Denial of Claimant‘s Motion for Continuance
Claimant next argues that the district court improperly denied its motion for a continuance of the forfeiture proceeding as it applied to the Building. On Leong originally moved under
On Leong claims that by deposing Agents Ng and Whitmer, it would have been able to cast doubt on the “basis, scope, and accuracy” of their statements. Amended Mem. in Support of Claimant‘s
The district court‘s denial of a
This Court has noted that
Rule 56(f) is not a shield that can be raised to block a motion for summary judgment without even the slightest showing by the opposing party that his opposition is meritorious. A party invoking its protections must do so in good faith by affirmatively demonstrating why he cannot respond to movant‘s affidavits ... and how postponement of a ruling on the motion will enable him, by discovery or other means, to rebut the movant‘s showing of the absence of a genuine issue of fact.
Korf v. Ball State University, 726 F.2d 1222, 1230 (1984) (emphasis added), quoting Willmar Poultry Co. v. Morton-Norwich Products, Inc., 520 F.2d 289, 297 (8th Cir.1975), certiorari denied, 424 U.S. 915, 96 S.Ct. 1116, 47 L.Ed.2d 320. Here claimant failed to specify any information it could produce by deposing either adverse witnesses or witnesses under its control. Similarly claimant did not demonstrate that it would discover facts sufficient to rebut the government‘s showing of probable cause. Under these circumstances, the district court did not abuse its discretion in refusing claimant‘s
On Leong renews its argument for postponement of summary judgment proceedings on appeal by raising a host of what it characterizes as “equitable” arguments. These arguments focus on the issue of whether forfeiture of the entire Building was appropriate and fair in this case. Because none of the claimant‘s arguments were presented to the district court, they cannot furnish a basis for reversing the forfeiture order and remanding the case. It is well established that this Court will not consider issues on appeal not presented to the district court. Country Fairways, Inc. v. Mottaz, 539 F.2d 637, 642 (7th Cir.1976). This maxim has been applied to equitable issues raised in forfeiture cases. United States v. U.S. Currency in Amount of $103,387.27, 863 F.2d 555, 558 n. 6 (7th Cir.1988).
Even if claimant‘s arguments had been properly raised in the district court, they would not support a remand because they are based on misunderstandings of the relevant law.
Claimant argues vehemently, for example, that the district court should on remand exercise its discretion to order a proportional, rather than a total, forfeiture. Claimant believes that the language of the statute, which directs that property “may” be seized, vests discretion in district courts to order proportional forfeiture.
This Court has never held that district courts can mitigate forfeitures at their own discretion. In fact, in United States v. One 1958 Pontiac Coupe, 298 F.2d 421 (7th Cir.1962), we held that the statute authorizing mitigation petitions,
Claimant‘s arguments about discretion and proportionality are different versions of the same complaint. At the core of On Leong‘s arguments is an assertion that it is unfair to seize an entire three-story building, especially one that is an historical landmark, on the basis of evidence of gambling confined to one area of the Building. Claimant‘s characterization of the gambling activity is not supported by the record, however. The gambling was not confined to any one small area in the Building. Law enforcement officials observed organized gambling games on two different floors of the Building, the second floor and the basement, on four separate occasions. At the last raid, on April 20, 1988, nearly one hundred people were present, suggesting that the Fan-Tan and Pai Gow games were set up in some sizeable room. The Building itself had been modified to harbor the gambling activity, as it was equipped with a camera and electronically-activated gates to monitor outsiders. These facts do not present a compelling picture of disproportionality.
Courts have previously held that entire buildings are subject to forfeiture under
This case does not afford this Court an opportunity to decide the precise constitutional or statutory limits of permissible forfeiture under
C. The Forfeiture of Real Property under Section 1955(d)
Finally, claimant argues that the Building cannot be forfeited because
The starting point in statutory interpretation is “the language of the statute itself.” Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 756, 95 S.Ct. 1917, 1935, 44 L.Ed.2d 539 (1975). Looking be-
The language of
The legislative history of
a forfeiture provision which will permit any property used in illegal gambling, including money to be seized and subjected to judicial forfeiture procedures. This provision will be of tremendous assistance in closing down gambling establishments and keeping them out of business.
116 Cong.Rec.H. 32,295 (daily ed. Oct. 7, 1970) (statement of Rep. Poff). This comment provoked no further discussion.
Since the passage of the Organized Crime Control Act (OCCA), the forfeiture provisions of two closely-related statutes have been held to provide for the seizure of land and buildings, though, like Section 1955, neither originally specifically mentioned real property. The Racketeer Influenced and Corrupt Organizations (RICO) statute,
Claimant makes much of the fact that Congress amended the RICO and CCE statutes in 1984 to allow explicitly for the forfeiture of real property, in spite of the above-cited cases holding that such forfeitures were contemplated by the statute. Claimant reasons that Congress’ failure to amend
Finally, the purpose of
to suppress a public wrong, ... although they impose penalties or forfeitures, [are] not to be construed, like penal laws generally, strictly in favor of the defendant, but ... are to be fairly and reasonably construed, so as to carry out the intention of the legislature.
United States v. Stowell, 133 U.S. 1, 12, 10 S.Ct. 244, 246, 33 L.Ed. 555 (1890). Allowing the forfeiture of buildings and land that house illegal gambling operations, as well as the equipment and currency that may be within, best advances the stated goal of the statute.
III. CONCLUSION
This Court is mindful that the forfeiture remedy is harsh. In this case, however, the government met its burden of proving that there was no genuine issue of material fact. Moreover, forfeiture of the defendant real property is permitted under
CUDAHY, Circuit Judge, concurring:
I concur in the judgment and in Judge Cummings’ careful opinion. I write separately only to emphasize that the most difficult questions presented by this appeal need not be addressed because they have been waived. Under other circumstances, the government‘s constitutional arguments here might appear overly expansive. For example, at oral argument the government suggested that
Civil forfeiture actions have traditionally proceeded upon the theory that property devoted to criminal activity may itself be found guilty of wrongdoing. See United States v. U.S. Coin & Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971). The Supreme Court has occasionally pierced this legal fiction, however, to recognize the quasi-criminal nature of in rem actions and accord them fourth and fifth amendment protections generally reserved for criminal proceedings. E.g., id. at 718, 91 S.Ct. at 1043 (acknowledging that ” ‘proceedings instituted for the purpose of declaring the forfeiture of a man‘s property by reason of offences [sic] committed by him, though they may be civil in form, are in their nature criminal’ for Fifth Amendment purposes“) (quoting Boyd v. United States, 116 U.S. 616, 634, 6 S.Ct. 524, 534, 29 L.Ed. 746 (1886) (emphasis supplied in Coin & Currency)); Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 85 S.Ct. 1246, 14 L.Ed.2d 170 (1964); Boyd v. United
When the government exacts a forfeiture grossly disproportionate to the offense, eighth amendment analysis may be applicable even to a nominally civil proceeding. See United States v. Real Estate Known as 916 Douglas Ave., 903 F.2d 490, 495 (7th Cir.1990) (Flaum, J., concurring) (observing that “there might be situations where the application of the broadly-written [drug forfeiture] provision would raise eighth amendment concerns“); United States v. Property at 4492 S. Livonia Road, 889 F.2d 1258, 1270 (2d Cir.1989) (same); United States v. Premises Known as 3639-2nd St., 869 F.2d 1093, 1098 (8th Cir.1989) (Arnold, J., concurring) (noting that “one can imagine applications of the forfeiture statutes that would be so draconian as to violate the Excessive Fines Clause“). Cf. Browning-Ferris Indus. v. Kelco Disposal, Inc., --- U.S. ---, 109 S.Ct. 2909, 2920, 106 L.Ed.2d 219 (1989) (suggesting that the eighth amendment‘s excessive fines clause may apply to civil actions by the government to extract exorbitant forfeitures). It would defy common sense to prohibit disproportionate forfeiture of the property of a defendant who has been convicted of a criminal violation, see, e.g., United States v. Busher, 817 F.2d 1409 (9th Cir.1987) (finding the eighth amendment applicable to criminal forfeiture proceedings), while placing no limits on the power of government to seize any real estate related to an offense in an ostensibly civil in rem action.
Seizure of the On Leong building may not be disproportionate to the gambling offense here. It is, however, a three-story landmark structure with an unusual cultural history and substantial economic value. A forfeiture of this genre and magnitude may be authorized and appropriate, but it seems to me to mark a significant departure in the enforcement of
Notes
Any property, including money, used in violation of the provisions of this section may be seized and forfeited to the United States. All provisions of law relating to the seizure, summary, and judicial forfeiture procedures, and condemnation of vessels, vehicles, merchandise, and baggage for violation of the customs laws; the disposition of such vessels, vehicles, merchandise, and baggage or the proceeds from such sale; the remission or mitigation of such forfeitures; and the compromise of claims and the award of compensation to informers in respect of such forfeitures shall apply to seizures and forfeitures incurred or alleged to have been incurred under the provisions of this section, insofar as applicable and not inconsistent with such provisions. Such duties as are imposed upon the collector of customs or any other person in respect to the seizure and forfeiture of vessels, vehicles, merchandise, and baggage under the customs laws shall be performed with respect to seizures and forfeitures of property used or intended for use in violation of this section by such officers, agents, or other persons as may be designated for that purpose by the Attorney General.