David B. Smith is the author of the two-volume treatise, Prosecution and Defense of Forfeiture Cases (1998). He is Co-Chair of the NACDL Forfeiture Abuse Task Force and
a member of The Champion Advisory Board. © 1998 by David B. Smith, all rights reserved.
In United States v. Bajakajian, 118 S. Ct. 2028 (1998), the Supreme Court held that a "punitive" forfeiture violates the Excessive Fines Clause of the Eighth Amendment if it is grossly disproportional to the gravity of the offense it is designed to punish. The Court held that the test for excessiveness involves solely a proportionality determination. The district courts (and the courts of appeals reviewing the proportionality determination de novo) must compare the amount of the forfeiture to the gravity of the defendant's offense. "If the amount of the forfeiture is grossly disproportional to the gravity of the defendant's offense, it is unconstitutional."1
The Court was unanimous in adopting that test and in rejecting the government's contention that whether a punitive forfeiture is excessive should turn on whether the property can be characterized as an "instrumentality" of the crime.2 The Court observed that the text and history of the Excessive Fines Clause demonstrate the centrality of proportionality to the excessiveness inquiry, but they provided no guidance on how disproportional to a criminal offense a fine must be to be deemed excessive.
While all the Justices agreed that if a fine is grossly disproportional to the gravity of the offense it is excessive, the Court was divided 5-4 on how to apply that general standard to the facts of the case before it. The majority opinion, written by Justice Thomas,3 followed an analysis that makes a wide range of forfeitures subject to challenge on excessiveness grounds. The dissenters, in an opinion by Justice Kennedy, would have rejected the excessiveness challenge to the forfeiture, thereby restricting Excessive Fines Clause protections to a very small category of blatantly unjust forfeitures.4 Because the majority gave the Excessive Fines Clause some real teeth, the government's top forfeiture lawyer acknowledged that the decision is a "serious blow" to the government's forfeiture efforts.5 The decision will clearly make it easier to succeed on an excessiveness claim than it was before in some circuits.
After Customs Service inspectors found Bajakajian and his family preparing to board an international flight carrying $357,144, he was charged with inter alia, attempting to leave the United States without reporting as required by 31 U.S.C. 5316(a)(1)(A), that he was transporting more than $10,000 in currency. The government also sought forfeiture of the $357,144 under 18 U.S.C. 982(a)(1), which provides that a person convicted of willfully violating Section 5316 shall forfeit "any property . . . involved in such an offense." Bajakjian pleaded guilty to the failure to report and elected to have a bench trial on the forfeiture.
The district court found that the entire $357,144 was subject to forfeiture because it was "involved in" the offense, that the funds were not connected to any other crime, and that respondent was transporting the money to repay a lawful debt. Concluding that full forfeiture would be grossly disproportional to the offense in question and would therefore violate the Excessive Fines Clause of the Eighth Amendment, the district court ordered forfeiture of $15,000, in addition to three years probation and the maximum fine of $5000 under the sentencing guidelines. The United States appealed, seeking full forfeiture of the currency as provided in Section 982(a)(1).
The Ninth Circuit concluded that, pursuant to Section 982(a)(1), the entire $357,144 was potentially forfeitable. The Ninth Circuit applied its two-part test for determining whether a forfeiture is constitutional under the Excessive Fines Clause. Under that test, to be constitutionally permissible, (1) the property to be forfeited must be an instrumentality of the crime committed; and (2) the value of the property must be proportional to the culpability of the owner.6
A majority of the panel concluded that the currency was not an instrumentality of the crime of failure to report, because the crime in a currency reporting offense is the withholding of information, not the possession of the currency. Thus, the Ninth Circuit held, forfeiture of any amount would be unconstitutionally excessive. However, because Bajakajian did not cross-appeal from the district court's order requiring forfeiture of $15,000, the Ninth Circuit affirmed the district court's forfeiture order of $15,000.
The Supreme Court declined to address whether the district court went too far (or not far enough) in reducing the amount of the forfeiture to $15,000. The only question before the Supreme Court was whether the full forfeiture of $357,144 was excessive, according to the majority. In holding that the full forfeiture was excessive, the High Court relied on the fact that Bajakjian's offense was solely a reporting offense and that the district court found his violation to be unrelated to any other illegal activities. Bajakajian did not fit into the class of persons for whom the statute was principally designed: money launderers, drug dealers and tax evaders. The Court relied very heavily on the fact that the maximum penalty under the Federal Sentencing Guidelines was a 6-month sentence and a $5000 fine, which confirmed that Bajakjian had a minimal level of culpability. The $357,144 forfeiture sought by the government was far more than the maximum guidelines fine. The Court also noted that the failure to report affected only the government and that it caused no loss to the public fisc. Had his crime gone undetected, the government would have been deprived only of the information that $357,144 had left the country. Thus, there was "no articulable correlation between the $357,144 and any government injury."7
The dissenters accused the majority of not showing deference to the judgment of Congress -- reflected in the statutory maximum penalties -- that the crime of failing to report the currency is a serious one. The dissenters thought that the majority's primary reliance on the sentencing guidelines was misplaced. According to them, "the purpose of the Guidelines . . . is to select punishments with precise proportion, not to opine on what is a gross disproportion. In addition, there is no authority for elevating the Commission's judgment of what is prudent over the congressional judgment of what is constitutional."8
Critical Difference
The critical difference between the majority and the dissenters is that the majority took a realistic and practical approach in looking to the guidelines for an appropriate benchmark. If the statutory maximal are used as the benchmark then virtually all forfeitures escape excessiveness review because, at least in federal cases, the statutory maximum fines are usually enormous even if there is only one count of conviction. In Bajakjian's case the statutory maximum fine was $250,000. If that were the benchmark it would be difficult to argue that a forfeiture of $357,144 was grossly disproportionate to the seriousness of the offense. In most federal drug cases, the statutory maximum fine is either $2 million or $4 million. Few forfeitures exceed those amounts. Thus, under the dissenters' analysis, virtually no one accused of a drug offense could possibly succeed with an excessiveness challenge. One may ask why deference to congressional judgment should extend so far in applying a constitutional provision.The Court was undoubtedly aware that the government had consistently argued in lower court cases that, assuming proportionality played any role in an excessiveness determination, any forfeiture less than the statutory maximum fine was ipso facto not excessive. And most of the lower courts had accepted that argument without much reflection. (In most of these cases the excessiveness claim was weak anyhow and the statutory maximum is only one factor in the court's analysis.) The better reasoned cases, however, focused on the maximum fine permitted by the sentencing guidelines.9
Austin Is Still Good Law
The majority opinion is not wholly satisfactory. It contains language suggesting that "traditional" in rem civil forfeitures may be excluded altogether from excessiveness review on the ground that they are not considered "punishment" against the property owner for an offense. Of course, Austin v. United States,10 rejected the historical fiction that in rem civil forfeitures do not impose punishment on individuals. The Court recognizes that and purports to adhere to Austin in two footnotes.11 However, the main text of the opinion is at times in considerable tension with the footnotes reiterating that Austin is still good law. The government will argue that the opinion somehow modifies Austin's holding by withdrawing excessiveness protection from "traditional" civil forfeitures. The opinion never clarifies what in rem civil forfeitures it considers "traditional," although it appears that that category would at least include Customs Service forfeitures with a long historical pedigree. The Court contrasts such "traditional" civil forfeitures with "modern" civil forfeitures such as the ones in Austin which are "fines" for Eighth Amendment purposes if they constitute punishment even in part.12Ironically, the dissenters chide the majority for appearing "to remove important classes of fines from any excessiveness inquiry at all," in conflict with Austin.13 Let us hope that the Supreme Court remains faithful to Austin's analysis, which requires an excessiveness inquiry in any forfeiture case that cannot be fairly classified as purely remedial in nature.
Notes
1. 118 S. Ct. at 2038.2. The government had been making the same argument to the lower courts ever since Austin v. United States, 509 U.S. 602 (1993), with little success. Only the Fourth Circuit bought the argument. United States v. Chandler, 36 F.3d 358 (4th Cir. 1994), cert. denied, 115 S. Ct. 1792 (1995).
In Austin, the Court held that the Excessive Fines Clause applies to civil forfeitures that are not wholly remedial in nature; but the Court did not decide how to determine when a forfeiture is excessive. After Austin, the lower courts adopted various tests for excessiveness, most of which required an inquiry into the strength of the physical connection ("nexus") between the property and the offense and the disproportionality of the forfeiture penalty to the gravity of the offense. 1 David B. Smith, Prosecution and Defense of Forfeiture Cases, 12.11[2] (1997). A few courts focused solely on the disproportionality question. Although the Supreme Court did not deign to discuss any of the lower court cases, its analysis closely follows the decision in United States v. Property Located at 427 & 429 Hall St., 74 F. 3d 1165 (11th Cir. 1996). Accord United States v. One 1970 36.9' Columbia Sailing Boat, 91 F. 3d 1053, 1057 (8th Cir. 1996); United States v. One Parcel of Real Property at 461 Shelby County Road, 857 F. Supp. 935, 937 (N.D. Ala. 1994).
Thus, although the Court technically affirmed the Ninth Circuit's decision in Bajakajian, the High Court's analysis was quite different than the Ninth Circuit approach, which required a forfeiture to satisfy both a nexus or "instrumentality" requirement and a proportionality requirement. United States v. Bajakajian, 84 F. 3d 334 (9th Cir. 1996).
3. Justice Thomas was joined by Justices Stevens, Souter, Breyer and Ginsburg. Thomas' breaking ranks with the "conservative" wing of the Court was not as surprising as many observers thought. He has repeatedly expressed his strong misgivings about the government's overzealous pursuit of harsh forfeitures while reluctantly voting to affirm various forfeitures because he was not convinced they were unconstitutional. See e.g., Thomas' anguished concurring opinion in Bennis v. Michigan, 516 U.S. 442, 116 S. Ct. 994, 1001-02 (1996). In this case, Justice Thomas was able to conclude that the relevant constitutional provision had been breached.
What is perhaps surprising and certainly disappointing is that the "conservative" wing of the Supreme Court -- other than Thomas -- cannot bear to vote against the government in a forfeiture case despite the fact that forfeiture reform has become something of a hot button issue for many conservative groups and politicians.
4. Justice Kennedy was joined by Justices O'Connor, Scalia and Chief Justice Rehnquist.
5. Based on prior experience, this observer predicts that the decision will not cause the Department of Justice (DOJ) (much less the even more obdurate Treasury Department) to fundamentally alter its aggressive and self-interested pursuit of forfeitures. The government's efforts will continue, essentially unabated, until a new Congress reigns in these overzealous prosecutors with their tunnel vision. The DOJ will think up specious arguments to limit the impact of Bajakajian and pro-government judges will accept whatever baloney the government is dishing out tomorrow.
6. United States v. Real Property Located in El Dorado County, 59 F.3d 974, 982 (9th Cir. 1995).
7. 118 S. Ct. at 2031.
8. 118 S. Ct. at 2044.
9. Smith, Prosecution and Defense of Forfeiture Cases, 12.11[2] (1997).
10. 509 U.S. 602 (1993).
11. 118 S. Ct. at 2034-35 nn.4 and 6.
12. 118 S. Ct. at 2035 n.6.
13. 118 S. Ct. at 2041.