Luis v. United States: What Happens Now?

Last week the Supreme Court ruled that a criminal defendant has a Sixth Amendment right to spend her own, lawfully obtained money to hire a lawyer. If you think that statement is self-evident, you have missed three decades of fierce litigation over the scope of the government’s pretrial asset restraint powers. And like with many of the Court’s decisions, what seems on its face like a clear rule may prove challenging for courts to apply in practice.

The ruling came in Luis v. United States. The United States has charges pending against Sila Luis for alleged health care fraud offenses, and it persuaded a district judge to restrain all of her assets prior to trial, despite conceding that the restraint would reach an unquantifiable amount of Luis’s “untainted” assets—i.e., those with no connection to the charged conduct. The government felt that this broad asset restraint was the best means for ensuring that her total assets—approximately $2 million—would be available for eventual forfeiture and restitution in the event she was later convicted. Luis sought the release of sufficient untainted funds to allow her to hire the best defense lawyer she could afford.

In a plurality opinion joined by Chief Justice Roberts and Justices Ginsberg and Sotomayor, Justice Breyer concluded that the government’s interest in preserving a criminal defendant’s assets for eventual forfeiture does not trump her constitutional right to spend legitimately-acquired assets on an attorney—a right the plurality described as “a fundamental constituent of due process of law.” The plurality distinguished precedents in which the Court held that tainted assets can be restrained and forfeited even if the defendant needs those funds to pay for a lawyer. See Caplin & Drysdale, Chartered v. United States, 491 U.S. 617 (1989); United States v. Monsanto, 491 U.S. 600 (1989). In those circumstances, the defendant has no claim to those assets, because they do not belong to him.

For the plurality, the distinction between tainted assets and innocent assets is constitutionally crucial: “It is the difference between what is yours and what is mine.” The government’s weak claim to untainted assets—analogous to the claim of an unsecured creditor in bankruptcy—cannot trump the defendant’s exercise of a fundamental constitutional right. In a concurring opinion Justice Thomas provided the decisive fifth vote. Though he rejected the plurality’s “atextual” balancing approach, he embraced the tainted versus innocent asset distinction, finding support for it in the text and history of the Sixth Amendment and the common law of forfeiture. (For more detailed discussions of the four opinions the Court issued in this case, see here and here.)

On their faces, the opinions by Justice Breyer and Justice Thomas read like broad statements of principle that have the potential to severely limit the government’s power to restrain a criminal defendant’s assets prior to trial. Though the plurality indicated that a defendant has only a right to use untainted assets to pay “reasonable” attorney’s fees (more on that later), as Justice Kennedy pointed out in dissent there is no clear reason why that would be so in light of the sharp distinction the plurality (and Justice Thomas) drew between tainted and untainted assets as a matter of constitutional principle.

How far the Luis opinion will reach in practice is less clear. For one, prior to Luis, most federal courts of appeals had understood what the Court made clear—that the Sixth Amendment gave a criminal defendant the right to use untainted assets to pay for a lawyer. Just as importantly, the primary statute governing criminal asset restraint and forfeiture, 21 U.S.C. §853, does not allow for the pretrial restraint of untainted assets. And the statute at issue in this case, 18 U.S.C. §1345—which does allow for pretrial restraint of “equivalent property”—has been relatively seldom-used. It is therefore possible to see the Court’s ruling in Luis as a prophylactic measure, one that heads off possible future government (and Congressional) overreaching, rather than as a decision that will require the government to radically change its current practices.

There is reason to wonder, however, whether the Luis decision may impact pretrial asset seizure in more subtle ways, particularly with respect to how courts allocate the burden of demonstrating that assets are tainted or untainted. As a general matter, the government need only establish probable cause to believe that the assets in question bear the requisite nexus to the offense conduct to qualify for pretrial restraint (by persuading either the grand jury or the judge). Under current practice in most of the federal circuits, a defendant who wants to contest the restraint is entitled to a hearing if she can show (1) that she needs the restrained funds to exercise her Sixth Amendment right to counsel, and (2) that there is reason to believe that the probable cause finding as to the traceability of tainted assets was in error.

Nothing in Luis suggests that defendants should be excused from the first requirement—after all, the plurality’s holding is that the restraint of untainted assets “needed to retain counsel of choice” violates the Sixth Amendment. But it is perhaps less evident that defendants should continue to bear the initial burden of showing that the restrained assets are untainted. Given the importance of the right and the harm caused by erroneous deprivation, once a defendant demonstrates that she needs the restrained funds to hire a lawyer, it might make sense to require an affirmative showing by the government that the restraint does not reach untainted assets, and therefore does not infringe on the “fundamental” right to counsel of choice.

Moreover, because “probable cause” is a fairly loose standard, courts concerned about the consequences of depriving defendants of the right to counsel might require the government to meet a higher burden of proof. As the Luis plurality noted, the erroneous deprivation of the right to counsel of choice is considered a “structural” error not amendable to harmless error analysis, such that any subsequent conviction must be overturned. And while allegations of probable cause to believe that assets are derived from criminal activity are sufficient for the purposes of pretrial restraint, they can later fall short of the mark when the government is required to meet a higher evidentiary burden of proof. See, e.g., United States v. Rutgard, 116 F.3d 1270 (9th Cir. 1997) (an allegation that an entire business was “permeated by fraud”—such that all of its income is traceable to crime—might satisfy probable cause, but it does not satisfy an evidentiary standard for forfeiture or conviction).

If the Luis decision leads to greater number of defendant victories in pretrial disputes over restrained assets, lower courts may confront an additional question: What constitutes a “reasonable” attorney’s fee? Courts are well-accustomed to allocating funds to attorneys representing indigent defendants under the Criminal Justice Act, and to making determinations about the reasonableness of fees in a wide variety of other contexts. But it is not clear that courts have significant experience in determining what constitutes a “reasonable” amount of a defendant’s own money she can spend on her defense.

It is also unclear what kind of showing a defendant will have to make in order to demonstrate that refusal to release a particular sum will effectively deprive the defendant of the counsel of choice. The right the Court recognized, after all, is not a right to have one’s defense conducted in a particular way—it’s the right to a particular attorney. So a court might well deny a defendant’s application for a sum she claims she needs to pay the lawyer she wants to hire, on the theory that the same lawyers could take on the representation for less money, and simply spend less time on the case.

Beyond these issues, additional questions about the possible repercussions of the Luis decision remain (though fuller exploration is beyond the scope of this piece). Given that the right to counsel is now closely tied to the traceable versus non-traceable distinction, will we see more interlocutory appeals from such determinations? Perhaps even more importantly, will such appeals stay the ongoing proceedings? Following Luis, courts deciding whether to issue a stay might give greater weight than they do now to the prospect of the defendant suffering “irreparable harm” if the prosecution continues. And what if no interlocutory appeal is taken, but on appellate review of the conviction the court of appeals determines that the defendant’s untainted funds were improperly restrained? If erroneous deprivation is a “structural” error that overturns the conviction, both the government and the courts are likely to be more sensitive to Sixth Amendment claims arising from pretrial asset restraint following Luis.

Similarly, who will benefit from the rule the Court announced? Under the Court’s general approach to retroactivity, only defendants whose convictions are still on direct review would be able to argue that they were unconstitutionally denied the right to spend untainted funds on a lawyer. But a “new” rule of criminal law will be applied even to final convictions if it is “substantive”—i.e., if it “alters the range of conduct or the class of persons that the law punishes,” Schriro v. Summerlin, 542 U.S. 348, 353 (2004)—or if it is a “watershed” rule of criminal procedure that “implicat[es] the fundamental fairness and accuracy of the criminal proceeding,” Saffle v. Parks, 494 U.S. 484, 495 (1990). The scope of Luis’s retroactive effect will likely be most important in the Fourth Circuit, which is alone among the federal courts of appeals in holding that the main forfeiture statute allows for the pretrial restraint of untainted assets. Luis does not expressly overrule this line of cases, but it casts doubt upon them. And if the Luis decision is retroactive, then defendants whose untainted assets were frozen prior to trial may be able to raise belated Sixth Amendment challenges to their convictions.

In short, if the precise effects of the Luis decision are difficult to predict, it seems likely that defendants, the government, and the courts will be grappling with its implications for a long time to come.

This post was co-authored by Kevin Arlyck, an associate in Orrick's Supreme Court and Appellate Practice.