Opinion
No. CV06-1766-PHX-DGC.
May 24, 2007
ORDER
The Government has filed a motion to stay judgment and a motion to alter or amend judgment pursuant to Federal Rule of Civil Procedure 59(e). Dkt. ##18, 19. The Court will deny the motions.
Relief may be granted under Rule 59(e) if the Court "(1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law." Sch. Dist. No. 1J, Multnomah County, Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993) (citation and internal quotation marks omitted). The Government presents no newly discovered evidence, does not argue that the Court's decision was manifestly unjust, and does not identify an intervening change in controlling law. The Government's motion essentially argues that the Court committed clear error in granting summary judgment to Claimant Edward Leflore. The Court will address each of the Government's arguments.
1. Summary Judgment Standard.
The Government first argues that Claimant did not satisfy his initial burden of "identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file . . . which it believes demonstrate the absence of a genuine issue of material fact." Dkt. #19 at 2 (citing Celotex v. Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quotations omitted)). While it is true that Claimant's pro se motion was less than artful, the Court did not err in construing the motion liberally to assert that the Government could not meet its burden of proof in this case. Such an assertion constitutes a proper basis for summary judgment. See Celotex, 477 U.S. at 317. The Government construed the motion in the same way, as it went to some length to set forth the evidence in its favor. Dkt. #15.
2. Need for Discovery.
The Government suggests that Claimant's motion was filed before adequate discovery had been conducted. Dkt. #19 at 3 n. 2. Rule 56(e) provides a clear mechanism for the Government to raise this issue and seek additional time for discovery, but the Government never did so. See Dkt. #15. Motions under Rule 59(e) are not the place for parties to assert arguments that could have been made, but were not made, in their original briefs. See Northwest Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d 918, 925-26 (9th Cir. 1988).
3. Burden of Proof.
The Government argues that "[a]lthough [it] was not the moving party, the Court nonetheless held the Government to the burden of preponderance of the evidence, which would [only] have been appropriate if it were the moving party or if the matter had proceeded to trial." Dkt. #19 at 1-2. The Government suggests that it is subject to a lower burden at the summary judgment stage — that it must do nothing more than create a question of fact and need not present evidence sufficient to satisfy its preponderance-of-the-evidence burden. Id. at 4-6. For reasons clearly explained by the Supreme Court, the Government is wrong:
[T]he inquiry involved in a ruling on a motion for summary judgment or for a directed verdict necessarily implicates the substantive evidentiary standard of proof that would apply at the trial on the merits. If the defendant in a run-of-the-mill case moves for summary judgment or for a directed verdict based on the lack of proof of a material fact, the judge must ask himself not whether he thinks the evidence unmistakably favors one side or the other but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff. The judge's inquiry, therefore, unavoidably asks whether reasonable jurors would find by a preponderance of the evidence that the plaintiff is entitled to a verdict[.]Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986) (emphasis added). This is the standard applied by the Court in its previous ruling. The Court concluded that the evidence presented by the Government would not enable reasonable jurors to find by a preponderance of the evidence that the Government was entitled to a verdict in this case. Dkt. #16.
4. Substantial Connection.
The Government argues that the Court erred in applying the "substantial connection" test to the seized money. The Court relied on the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA") for the relevant forfeiture standard. Dkt. #16 at 3. That statute provides that when the "Government's theory of forfeiture is that the property was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, the Government shall establish that there was a substantial connection between the property and the offense." 18 U.S.C. § 983(c)(3). Citing a different statute, the Government now argues that when money is seized as "proceeds" of a drug offense, the Government "is required to show only a nexus between the property and the offense, not a `substantial connection.'" Dkt. #19 at 4 (citing 21 U.S.C. § 881(c)(6)).
This argument is new. The Government did not cite 21 U.S.C. § 881(c)(6) in response to Claimant's motion and did not argue that a mere nexus must be proved. The Government, like the Court, cited CAFRA. See Dkt. #15 at 4. As already noted, motions for reconsideration are not the place for parties to assert arguments not raised in their original briefs. Northwest Acceptance Corp., 841 F.2d at 925-26.
Some courts have held that the "substantial connection" standard applies to the forfeiture of proceeds under 18 U.S.C. § 881(c)(6). See, e.g., United States v. $84,615 in U.S. Currency, 379 F.3d 496, 501 (8th Cir. 2004). Such a conclusion comports with the language of CAFRA. Proceeds from drug trafficking certainly are used to "commit or facilitate the commission of" drug offenses or are "involved in the commission of a criminal offense" as required by 18 U.S.C. § 983(c)(3). The Government has not cited, and the Court has not found, Ninth Circuit law supporting the Government's position.
Cases in the Ninth Circuit suggest that the substantial connection test applies to proceeds cases. See, e.g., United States v. One 1986 Ford Pickup, 56 F.3d 1181, 1187 (9th Cir. 1995) (applying substantial connection test in the context of the lower probable cause standard used before passage of CAFRA); United States v. $493,850.00 in U.S. Currency, No. Civ. 03-2345 PHX VAM, 2006 WL 163570 at *8 (D. Ariz. Jan. 23, 2006). The Government cites cases that reach a contrary conclusion. See United States v. $21,000 in U.S. Postal Money Orders, 298 F.Supp.2d 597, 602 (E.D. Mich. 2003); United States v. $10,700 in U.S. Currency, 258 F.3d 215, 222 n. 4 (3d Cir. 2001). The Court concludes that it need not resolve this issue, however, because it was not raised by the Government in briefing on Claimant's motion. Northwest Acceptance Corp., 841 F.2d at 925-26.
Moreover, even if the substantial connection test does not apply to drug proceeds, the Court's grant of summary judgment was proper. The burden would remain on the Government to establish by a preponderance of the evidence that Claimant's money was "furnished or intended to be furnished . . . in exchange for a controlled substance [.]" 18 U.S.C. § 881(a)(6). For reasons explained in the Court's order, the Government did not present evidence sufficient for a reasonable jury to find that the $32,000 was purchase money for, or proceeds from, a drug sale. Dkt. #16.
5. Incorrect Case Description.
The Government argues that the Court's reliance on United States v. $49,576.00 U.S. Currency, 116 F.3d 425 (9th Cir. 1997), was misplaced because the Court erred in describing the case's procedural history. The Court analogized the facts of this case to those of $49,576.00, stating that the Ninth Circuit "not only reversed the district court's grant of summary judgment to the Government, but concluded that `the government failed to produce sufficient evidence' to support the forfeiture." Dkt. #16 at 9. The Government's present motion correctly notes that the Ninth Circuit's reversal in $49,576.00 came after a bench trial ruling for the Government, not after a grant of summary judgment. Dkt. #19 at 7. The Government suggests that the evidence in $49,576.00 must therefore "have been sufficient to defeat the claimant's motion for summary judgment" and that the evidence in this case should do so as well. Id. The Court disagrees. By reversing the district court's order of forfeiture following a bench trial, the Ninth Circuit necessarily found that the evidence was not sufficient to satisfy the Government's burden of proof — precisely the ruling this Court made in granting Claimant's motion for summary judgment. By holding that analogous evidence is not sufficient to meet the Government's burden, $49,576.00 squarely supports the Court's grant of summary judgment to Claimant.
6. Weighing of Evidence.
The Government argues that the Court improperly weighed evidence and drew inferences reserved for the fact-finder. Dkt. #19 at 9. The Government takes issue with the Court's determination that the Government had not produced evidence showing that (1) Claimant's proffered explanation for the money was not true; (2) Claimant had five children to support and therefore could not possibly have $32,000 in cash; and (3) Claimant lied when he told authorities that he kept the money at home instead of at a bank. Dkt. #19 at 10. The Court was not, as the Government asserts, "drawing every inference in the moving party's favor." Id. Rather, the Court determined that the inferences the Government would have the Court draw were not "legitimate" or "justifiable" as required by Anderson, 477 U.S. at 255, because there were no underlying facts that would support the drawing of these inferences.
The Court's decision does not imply that there was no dispute regarding the source of the $32,000. But after examining every piece of evidence listed by the Government in support of its position, and after thoroughly analyzing cases that have defined what evidence is necessary to meet the Government's burden of proof, the Court concluded that the evidence presented by the Government was not sufficient for a reasonable jury to find in its favor.
7. Dog Alert.
The Government argues that the Court erred by according the non-sophisticated dog alert minimal weight. Dkt. #19 at 10. As noted in the Court's previous order, however, non-sophisticated dog alerts are of little probative value under Ninth Circuit law. See United States v. Currency, U.S., $42,500, 283 F.3d 977, 982 (9th Cir. 2002); United States v. $22,474 in U.S. Currency, 246 F.3d 1212, 1216 (9th Cir. 2001); $49,576.00 U.S. Currency, 116 F.3d at 427; United States v. U.S. Currency, $30,060.00, 39 F.3d 1039, 1042 (9th Cir. 1994); In re $80,045.00 in U.S. Currency, No. CV-04-1693-PHX-DGC (D. Ariz. Mar. 3, 2005), aff'd, 161 Fed.Appx. 670 (9th Cir. 2006) (memorandum disposition).
The Government did not present evidence that the dog alert in this case was sophisticated, and does not now claim that it could do so. The Government instead implies that a non-sophisticated dog alert is entitled to greater weight than the Court allowed — a position at odds with current Ninth Circuit law — and suggests that it could present evidence concerning the dog's training and qualifications. If that evidence would show that the dog alert in this case was sophisticated, it should have been presented during briefing on the summary judgment motion and cannot support reconsideration now. See Northwest Acceptance Corp., 841 F.2d at 925-26. If the evidence would prove only that the dog alert was non-sophisticated, even if well trained, it would not alter the balance of the evidence.
8. Evidence of Drug Use.
Finally, the Government argues that the Court "appears to have considered only the Claimant's admission of personal use of drugs, rather than both the use of drugs, and the defendant's [sic] prior conviction for possession of marijuana." Dkt. #19 at 11 (quoting Dkt. #16 at 7). The Court fully considered Claimant's drug conviction. See Dkt. #16 at 7.
IT IS ORDERED:
1. Plaintiff's motion to alter or amend judgment (Dkt. #19) is denied.
2. Plaintiff's motion to stay judgment (Dkt. #18) is denied.