Case 3:17-cv-02989-X Document 241 Filed 08/07/19 Page 1 of 11 PageID 11578

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

UNITED STATES OF AMERICA,

NO. 3:17-CV-2989-S
Plaintiff,
v.

$4,480,466.16 IN FUNDS SEIZED FROM

BANK OF AMERICA ACCOUNT
ENDING IN 2653; et al.,

Defendants in rem.

UNITED STATE’S RESPONSE TO CLAIMANTS’ SUPPLEMENTAL BRIEF

The United States responds to claimants’ supplemental brief as follows (Dkt. 240):

1. Disclosure of evidence in response to a motion for summary judgment is

discovery under 18 U.S.C. § 981(g)(1).

Under 18 U.S.C. § 981(g)(1), “in deciding whether to grant a stay, ‘the court must

determine . . . whether civil discovery will adversely affect the ability of the government

to conduct that criminal investigation or prosecution were the civil forfeiture case

allowed to proceed.’” (Dkt. 219 at 4) (quoting United States v. All Funds ($357,311.68)

Contained in N. Tr. Bank of Fla. Account No. 7240001868, 2004 WL 1834589, at *2

(N.D. Tex. Aug. 10, 2004)). Here, claimants’ argument hinges on a self-invented

distinction between evidence presented to them in response to motions for summary

judgment and evidence presented to them in response to traditional discovery requests

under Federal Rule of Civil Procedure 26 to 37. This argument was previously made and

rejected by Judge Fitzwater. (Dkt. 219 at 6-8). Claimants, however, are still trying to

create a workaround to the statutory stay requirement created by Congress, and routinely

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utilized, to protect criminal investigations and prosecutions. Their interpretation, as

shown below, would destroy the sense of the statute and render it ineffective.

A. Strictly construing 18 U.S.C. § 981(g)(1) destroys the sense of the statute.

There is no merit to claimants’ argument that a court should “comply with the

plain language unless literal application of a statute will produce a result demonstrably at

odds with the intentions of its drafters.” (Dkts. 232 at 7, 240 at 15-16, 18-19). Rather,

the court should determine a fair meaning of the text, not attempt to discern the drafters’

intent. Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal

Texts 356, 391-76 (1st ed., 2012). Claimants’ argument that words should be strictly

construed rather than viewed in their natural and obvious sense is incorrect. Id. at 355-

58. In illustrating the point, Justice Scalia explains that, for example,

[a] law forbids a layman ‘to lay hands on a priest.’ Does this mean only that the
layman’s hands must not touch the priest, or does it include kicking, head-butting,
even the use of a weapon (such as a cudgel) on the priest? If the statute is
‘strictly’ construed, the kicking, head-butting, and cudgeling could be done with
impunity. . . . To read a phrase hyperliterally is to destroy its sense.”

Id. at 356-57.

Here, limiting discovery to the procedures outlined in the Federal Rules of Civil

Discovery would similarly destroy the sense of the text. Discovery is defined as the

“pretrial disclosure of pertinent facts or documents by one or both parties to a legal action

or proceeding.” Merriam-Webster, Definition of Discovery, https://www.merriam-

webster.com/disctionary/discovery (last visited Aug. 6, 2019). There is no reason to

further limit the definition of discovery under the statute just because it is labeled “civil

discovery” rather than discovery. Discovery as used in the statute is not limited to

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depositions, requests for production, requests for admission, or interrogatories. To hold

that the information provided by the United States is only discovery if it is formally

produced to claimants under the tools outlined in Rule 26 to 37 would be absurd. In

order to respond to summary-judgment motions, the United States would have to provide

claimants with the same or similar evidence that would be provided under traditional

discovery tools. It is worth mentioning that in this case, the United States would also

have to conduct depositions in order to respond. A less strict reading of the statute that

encompasses disclosure of facts pre-trial is a fair reading and should prevail.

B. Claimants’ proposed interpretation would render the statute ineffective.

Ultimately when interpreting a text, there are various fundamental principles that

apply and should be observed. Scalia & Garner, 52-68.

Principles of interpretation are guides to solving the puzzle of textual meaning,

and as in any good mystery, different clues often point in different directions. It is
a rare case in which each side does not appeal to a different cannon to suggest its
desired outcome. The skill of sound construction lies in assessing the clarity and
weight of each clue and deciding where the balance lies.

Id. at 59. One part of striking that balance involves ensuring that an interpretation would

not render the statute ineffective. Id. at 63-65. This follows from the idea that “(1)

interpretation always depends on context, (2) context always includes evident purpose,

and (3) evident purpose always includes effectiveness.” Id. at 63.

Without getting into a detailed analysis regarding each cannon of construction, it

is clear that claimants are asking the Court to interpret CAFRA using various cannons.

One of which is the presumption of consistent usage. This contextual cannon is intuitive

in that it suggests “where the document has used one term in one place, and a materially

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different term in another, the presumption is that a different term denotes a different

idea.” Id. at 170. This cannon, however, “assumes a perfection of drafting that, as an

empirical matter, is not often achieved. . . . [D]rafters more than rarely use the same

word to denote different concepts, and often (out of a misplaced pursuit of stylistic

elegance) use different words to denote the same concept.” Id.

Claimants point specifically to the language choices made in the various

subsections of 18 U.S.C. § 981 itself. (Dkt. 240 at 16-18). In order to obtain a stay,

Section 981(g)(1) requires the United States to show that “civil discovery will affect the

ability of the [g]overnment to conduct a related criminal investigation” while (g)(2)

requires claimants to show that “continuation of the forfeiture proceeding will burden the

right of the claimant against self-incrimination in the related investigation or case.” Both

subsections, however, are governed by 18 U.S.C. § 981(g)(3), which states that “[w]ith

respect to the impact of civil discovery described in paragraphs (1) and (2), the court may

determine that a stay is unnecessary if a protective order limiting discovery would protect

the interest of one party without unfairly limiting the ability of the opposing party to

pursue the civil case.” In other words, in order to grant a stay or a protective order under

either (g)(1) or (g)(2), courts should look to the impact of civil discovery. The word

choices in (g)(1) and (g)(2) seems to denote the same concept rather than to create a

distinction, otherwise (g)(3) would be ineffective and illogical.

Claimants further request the Court look to titles and headings of various civil

procedure rules and to other statutes under CAFRA. (Dkt. 240 at 15-19). Their approach

creates similar problems. For example, they suggest their interpretation is necessary as

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“Congress recognized the [g]overnment should not be permitted to hold property without

proving its case.” (Dk. 240 at 19). The object of 18 U.S.C. § 981(g)(1) is to allow the

government to do just that when it is required to protect criminal investigations. To hold

that claimants can use summary judgment motions to improperly obtain discovery, that

would otherwise be restricted, would be contrary to this purpose and would render the

statute ineffective. This is especially true in situations such as this one where discovery

has yet to be completed.

2. The court can grant a 120-day extension under Federal Rule of Civil
Procedure 16 or 56.

Claimants contend that this Court cannot allow discovery under Federal Rules of

Civil Procedure 16(b)(4) or, alternatively, under 56(d). Not so. The United States has

shown good cause exists to allow a modification of the scheduling order and to allow the

United States, at a minimum, time to engage in the discovery needed in order to respond

to the motions for summary judgment. Here, the grounds on which the United States

relied are clear and enable the court to apply the four-factor test outlined by the

claimants. Grant v. Rathbun, 2016 WL 1750572, at *3 (N.D. Tex. May 3, 2016)

(showing motions for modification of a scheduling order need not explicitly address the

four factors the court may use in order to determine whether good cause exists). Judge

Fitzwater did not find the claimants’ nearly identical arguments persuasive when he

granted a 30-day extension, and they are not persuasive now. (Dkt. 136). Claimants’

position boils down to two main arguments: (1) the United States has not diligently

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pursued discovery and (2) any additional extension of time to conduct discovery would

further exacerbate the supposed due process violations that exist in this case.

A. The United States diligently conducted discovery, and there is good

cause to allow an extension.

Claimants contend the United States wasted the discovery period it was given, but

they once again fail to make any mention of the intervening circumstances that caused the

delay, which the United States detailed for the Court in its supplemental briefing. (Dkt.

239 at 12). Claimants’ continue to reference this supposed ten-month discovery period

that began in December 2017. (Dkt. 240 at 6-7). The actual discovery period unimpeded

by the dismissal of the complaints or motions to stay, however, is significantly less.

When the Court dismissed the second amended complaint, it even acknowledged “its

discretionary authority to adjust any deadlines that are affected by granting the

government leave to amend or where adjustments are warranted for good cause.” (Dkt.

131 at 9 n.8). The fact remains in this case that no depositions have been taken and no

substantive discovery responses have been provided. The ex parte affidavit details for

this Court why the government has not taken further action regarding discovery and why

it cannot do so now without harming the criminal investigation. (See Dkts. 198, 224,

229).

In a case cited by the claimants to show that good cause does not exist, the court

denied modification of a scheduling order as inappropriate and prejudicial delay to the

defendants based on a very different posture from this case. Atl. Cas. Ins. Co. v.

PrimeLending, A PlainsCapital Co., 2016 WL 7386208, at *3 (N.D. Tex. Dec. 21, 2016);

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(Dkt. 240 at 7). Compare that case, where discovery had closed, summary judgment

motions had been filed, and a trial date had been set, with this case, where depositions

were cancelled and claimants opted not to answer discovery requests due to the

complaint’s dismissal. Contrary to claimants’ assertions, the United States has not

attempted to subvert the court’s previous scheduling orders or improperly added

additional defendants in rem, and the history of this case shows the opposite is true.

(Dkt. 239 at 12).

In addition, the fact that the United States previously sought a 30-day extension is

irrelevant and moot. (Dkt. 128). Due to the change in circumstances, namely the

contentious nature of this case as well as the number of declarations submitted with the

motions for summary judgment, the United States needs more than 30 days in order to

complete discovery. The fact that the United States wishes to engage in discovery does

not mean that its “case is a sham.” (Dkt. 240 at 12). In fact, “the government is not

required to prove its case simply to get in the courthouse door.” United States v. Real

Prop. Located at 5208 Los Franciscos Way, Los Angeles, Cal., 385 F.3d 1187, 1193 (9th

Cir. 2004). “It is true that CAFRA imposes upon the government the ultimate burden of

establishing forfeiture by a preponderance of the evidence, but the statute also provides

expressly that the government may use evidence gathered after the filing of a forfeiture

complaint to meet this burden.” Id. The United States is entitled to engage in discovery,

and it wishes to do just that.

B. Allowing an extension would not compound or create any due process

violation.

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In 2000, Congress enacted CAFRA, which consolidated and amended the judicial

forfeiture requirements and increased due process safeguards. United States v. 74.05

Acres, 428 F. Supp. 2d 57, 64 (D. Conn. 2006); Pub. L. 106-185. As claimants

acknowledged, Congress enacted CAFRA “to ‘provide a more just and uniform

procedure for Federal civil forfeitures.’” (Dkt. 240 at 18). In enacting CAFRA,

Congress actually expanded the United States’ ability to request a stay and extended it to

include ongoing investigations. See, e.g., United States v. All Funds Deposited In

Account No. 20008524845, First Union Nat’l Bank, 162 F. Supp. 2d 1325, 1327 (D.

Wyo. 2001). Congress also chose to make a stay mandatory if the United States met the

necessary requirements and to remove the “good cause” requirement. See 18 U.S.C. §

981(g)(1). The United States acknowledges that while the result of the seizures may

seem harsh, the United States has followed the laws enacted by Congress and no due

process violation has occurred. (Dkts. 262).

Claimants repeatedly assert that “[t]he Supreme Court has held that a

determination of whether a delay in holding a forfeiture trial violates the Due Process

Clause is similar to a speedy trial analysis.” (Dkt. 240 at 12). In the case cited by

claimants, the Supreme Court used a speedy trial analysis—commonly referred to as the

Barker test—when determining whether the United States initiated a civil forfeiture

proceeding in a way that comported with a claimant’s due process rights. United States

v. Eight Thousand Eight Hundred & Fifty Dollars ($8,850) in U.S. Currency, 461 U.S.

555, 562 (1983) (internal citations omitted). The issue in that case was a narrow one

where the defendant only argued “that the Government’s delay in filing a civil forfeiture

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proceeding violated due process rights to a hearing at a meaningful time.” Id. The

United States has already outlined for this Court why the Barker test used in Eight

Thousand Eight Hundred & Fifty Dollars ($8,850) in U.S. Currency does not apply to

this case. (Dkt. 235 at 8-10). And in fact, in this case, Judge Fitzwater acknowledged

and considered claimants’ due process concerns when granting the initial stay without

referencing the Barker factors in his order. (Dkt. 219 at 9-10).

Even in using the Barker factors in determining whether a due process violation

has occurred, courts have acknowledged that “[t]he court cannot, and does not attempt to

accurately predict the tipping point. Context is key. Any given term of future delay, for

instance, necessarily must be viewed in light of the status of the criminal investigation, as

well as the pendency of any criminal prosecution.” United States v. $307,970.00, in U.S.

Currency, 156 F. Supp. 3d 708, 718 (E.D.N.C. 2016). Courts may consider when

looking at the delay what portion is attributable to a legitimate criminal investigation,

what portion is attributable to the claimants actions, and what portion is attributable to the

slow-progress of civil litigation. Id. at 720. Any prejudice must be viewed in terms of

concrete evidence, and a court does not have to rely on claimants’ speculation. Id. at 718.

Prejudice is limited to delays that have hampered the “claimant in presenting a defense on

the merits, through, for example, the loss of witnesses or other important evidence.”

United States v. 2121 Celeste Rd. SW, 189 F. Supp. 3d 1208, 1268 (D.N.M. 2016)

(internal citations omitted).

The question to be answered here is: what is the context for the delay in this case?

In looking at the amount of time that has elapsed, the Court can subtract the delay caused

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by motions to dismiss or motions to stay, which is a substantial contributor. Id. at 718.

In addition, the Court can look to the fact that claimants and the United States have

typically availed themselves of the full time allowed in order to respond or reply to

motions. Id. Claimants do not seem to acknowledge that, although allowed, they also

have contributed to the overall delay. And the potential prejudice, when limited to issues

that will hamper their defense on the merits, include only speculative facts regarding

potential memory or potential travel cost issues. (Dkt. 233 at APP.006). Based on the

context of this case, no due process violation has occurred.

Even if the Court determines that due process concerns exist, the proper remedy is

not dismissing the case or limiting discovery. It is not true that “the Court is

constitutionally obligated to dismiss this case—not further delay it.” (Dkt. 240 at 14).

Claimants have cited no case to show that the proper remedy is dismissal of the case.

Where courts have been concerned about a delay and potential due process implications,

the remedy has been to lift the stay and set a case for trial, not to dismiss the complaint.

United States v. $1,111,120.00 in U.S. Currency, 2014 WL 619436, at *3 ((S.D. Fla. Jan.

16, 2014). Similarly, dispensing with discovery is not the proper remedy, and claimants

have not cited any cases where courts have followed that procedure.

CONCLUSION

For all the reasons stated above, the Court should conclude that disclosure of

evidence in response to summary-judgment motions constitutes civil discovery under 18

U.S.C. § 981(g) and, on that basis, should grant the United States’ request to extend the

stay. In addition, once the stay is lifted, the Court should allow 120 days for discovery.

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Respectfully submitted,

ERIN NEALY COX

UNITED STATES ATTORNEY

/s/ Beverly K. Chapman

BEVERLY K. CHAPMAN
Assistant United States Attorney
Illinois Bar No. 6317514
1100 Commerce Street, Third Floor
Dallas, TX 75242-1699
Telephone: 214-659-8600
Facsimile: 214-659-8812
beverly.chapman@usdoj.gov

CERTIFICATE OF SERVICE

I certify that on August 7, 2019, I electronically filed this document with the Clerk
for the United States District Court, Northern District of Texas, using the electronic case
filing (“ECF”) system. The ECF system will send a “Notice of Electronic Filing” to all
parties/counsel for record who have consented in writing to accept the Notice as service
of this document by electronic means. Notice was also sent by first-class mail on August
8, 2019, to the following non-ECF filer:

William Don West

1550 E. Braxton Place
Logan, Utah 84321
Claimant

/s/ Beverly K. Chapman

BEVERLY K. CHAPMAN
Assistant United States Attorney

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