United States v. Maria Ferro , 659 F. App'x 422 ( 2016 )

FILED
NOT FOR PUBLICATION
AUG 19 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 13-56425
Plaintiff–Appellee, D.C. No. 2:06-cv-05014-PJW
v.
MEMORANDUM*
1,679 FIREARMS, 87,983 ROUNDS OF
AMMUNITION; et al.,
Defendants,
MARIA FERRO,
Claimant–Appellant.
UNITED STATES OF AMERICA, No. 13-56707
Plaintiff–Appellant, D.C. No. 2:06-cv-05014-PJW
v.
1,679 FIREARMS, 87,983 ROUNDS OF
AMMUNITION; et al.,
Defendants,
MARIA FERRO,
Claimant–Appellee.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Appeal from the United States District Court
for the Central District of California
Patrick J. Walsh, Magistrate Judge, Presiding
Argued and Submitted June 8, 2016
Pasadena, California
Before: PREGERSON, HAWKINS, and BEA, Circuit Judges.
This civil in rem forfeiture case is before us for a second time. We
previously remanded this case to the district court to conduct a new analysis under
the Excessive Fines Clause of the Eighth Amendment. See United States v. Ferro
(Ferro I), 681 F.3d 1105, 1114–17 (9th Cir. 2012).1 The district court did so and
concluded that claimant Maria Ferro (“Maria”) was entitled to a 20% remission of
the forfeiture of a firearm collection worth $2.55 million—that is, the district court
ruled that an 80% forfeiture of the firearm collection, or $2.04 million, was not an
unconstitutionally excessive fine. Maria appealed, and the government cross-
appealed. We have jurisdiction under 28 U.S.C. § 1291, and we vacate and remand.
I
1
We assume that the parties are familiar with this case and discuss the facts
and litigation history only as necessary to resolve the issues currently before us on
appeal. Our prior opinion discusses the background of this case in greater detail.
See generally Ferro I, 681 F.3d at 1107–10.
2
Both Maria and the government contend that the district court erred in its
excessiveness analysis in various ways. We agree with each party in part.
1. In our first opinion, we held that the district court’s excessiveness analysis
was flawed because it considered only the extent to which a forfeiture of the
firearm collection would be unconstitutionally excessive given the conduct that
subjected the firearms to forfeiture, to wit, Robert Ferro’s (“Robert”) felonious
possession of the firearms. Ferro I, 681 F.3d at 1114–17. We noted that Maria, the
owner of the firearm collection, was the one punished by the forfeiture and,
accordingly, held that the excessiveness analysis must “center on Maria’s
culpability and the various factors mentioned in [United States v. $100,348.00 in
U.S. Currency ($100,348 in Currency), 354 F.3d 1110, 1122 (9th Cir. 2004)].”2
Ferro I, 681 F.3d at 1115–16. On remand, the district court applied the $100,348 in
Currency factors to Robert and Maria separately and found: “Maria and Robert are
equally responsible for the conduct giving rise to the forfeiture and, therefore, their
culpability will be weighed equally, as will their equities.” It found “no mitigating
2
These factors relate to the gravity of the offense giving rise to the
forfeiture: “(1) the nature and extent of the crime, (2) whether the violation was
related to other illegal activities, (3) the other penalties that may be imposed for the
violation, and (4) the extent of the harm caused.” $100,348 in Currency, 354 F.3d
at 1122.
3
factors supporting a remission based on [Robert’s] conduct” but found some
mitigation proper as to Maria and ordered a 20% remission of the forfeiture.
The district court did not heed the guidance we set out in Ferro I. Although
the district court did not articulate a relationship between Robert and Maria’s
ostensibly equal responsibility and what amounts to an 80% forfeiture of the
firearm collection, it is clear that Robert’s conduct and culpability continued to
weigh heavily in the district court’s excessiveness analysis. To reiterate what we
said before, the focus of the excessiveness analysis must be on Maria’s culpability
for the conduct giving rise to the forfeiture, because the forfeiture will punish her,
and only her. Ferro I, 681 F.3d at 1114–17.3 Robert’s conduct rendered the firearm
collection forfeitable and exposed Maria to the possibility of a $2.55 million
“fine.” The purpose of the excessiveness inquiry is to ensure that the “fine” is not
“grossly disproportional,” United States v. Bajakajian, 524 U.S. 321, 334 (1998),
to what Maria did, her mental state in acting or failing to act (whether she acted
3
To the extent the government may be concerned that our decision on this
point will encourage sham transfers of property to avoid forfeiture, we note only
that the government has not argued to us that Robert’s transmutation of his interest
in the firearm collection to Maria was a sham or should otherwise be ignored for
purposes of excessiveness review. As a result, Maria is undoubtedly the sole owner
of the firearm collection, and the forfeiture punishes only her. Accordingly, the
excessiveness analysis must focus on the extent to which a forfeiture of the firearm
collection would be grossly disproportional to her culpability for the conduct
giving rise to the forfeiture. See Ferro I, 681 F.3d at 1114–17.
4
negligently, recklessly, or intentionally), the consequences of her action or
inaction, and other factors that evidence her culpability for the conduct that gave
rise to the forfeiture. Cf. $100,348 in Currency, 354 F.3d at 1122; United States v.
Real Prop. Located in El Dorado Cty. (El Dorado), 59 F.3d 974, 985–86 (9th Cir.
1995), abrogated in part on other grounds by Bajakajian, 524 U.S. 321, as
recognized by Ferro I, 681 F.3d at 1115.4
For this reason, we caution the district court against considering the amount
of the remission in percentage terms. The question is not Robert and Maria’s
relative responsibility for having caused Robert to gain possession of the firearms,
but what level of remission is required to avoid a “fine” that is unconstitutionally
excessive as to Maria given her culpability for the conduct that gave rise to the
forfeiture. The value—not the percentage—of the property to be forfeited is of
4
We do not mean to suggest that Robert’s conduct could never be relevant
to the excessiveness analysis. To the contrary, we can imagine circumstances in
which his conduct could be probative of Maria’s culpability. For example,
$100,348 in Currency, 354 F.3d at 1122, calls for consideration of “the extent of
the harm caused.” If Robert had caused substantial harm with Maria’s firearms, it
could be permissible to consider that harm in analyzing whether a forfeiture of the
firearms would be unconstitutionally excessive as to Maria. (Indeed, tort law
generally recognizes a tort of negligent entrustment, which can make an owner of
property liable for damages when another person harms a third party with the
property. See, e.g., Todd v. Dow, 23 Cal. Rptr. 2d 490, 494–95 (Ct. App. 1993).)
However, these are not the facts of this case. There is no claim that Robert’s
possession of the firearms caused any harm to anyone.
5
primary importance; to state the obvious, all else being equal, an 80% forfeiture of
property worth $2.55 million would be far more punitive than an 80% forfeiture of
property worth $255,000.5 Also, while it is tempting to consider the wealth of the
individual to be fined in assessing the proper fine—because to be a deterrent, the
fine must “sting”—that factor alone cannot be considered as determinative. A
billionaire who drove his car imprudently, but caused no accident, should get a
significant fine, but even were there no statutory limits, he should not be fined
millions.
2. In Ferro I, we noted that, “[i]n assessing whether a fine is excessive, this
court is ‘not required to consider any rigid set of factors.’” Ferro I, 681 F.3d at
1115 (quoting $100,348 in Currency, 354 F.3d at 1121). We remonstrated the
district court for “mechanistically appl[ying] four factors stated by this court in
$100,348 in Currency” to determine “whether the forfeiture ‘[was] grossly
disproportional to the gravity of Robert Ferro’s offenses.’” Id.; see supra note 2
(listing factors). The government contends that, on remand, the district court
repeated this mistake and “mechanistically applied” the same factors to Robert and
5
The district court valued the firearm collection based on an appraisal of the
collection’s market value. We note that the subjective value of forfeitable property
to the property’s owner can also be a factor in an excessiveness analysis. See El
Dorado, 59 F.3d at 985; see also von Hofe v. United States, 492 F.3d 175, 188 (2d
Cir. 2007).
6
Maria rather than to Robert alone. In particular, the government argues that the
district court should have considered the factors from El Dorado, 59 F.3d at 986,
for evaluating the “culpability of the owner.”6
We agree that the district court again hewed closely to the factors in
$100,348 in Currency and, on remand, it should consider all factors relevant to
Maria’s culpability for the conduct that gave rise to the forfeiture. See Ferro I, 681
F.3d at 1115. However, it should also consider any factors relevant to the other
side of the excessiveness inquiry: the “harshness of the forfeiture.” See El Dorado,
59 F.3d at 985–96; supra note 6 (listing factors); cf. von Hofe, 492 F.3d at 188
(giving extra scrutiny to a forfeiture of the family home).7 Our agreement with the
6
El Dorado, 59 F.3d at 985, provided a nonexhaustive list of factors to
consider in evaluating the “harshness of the forfeiture”: “(1) the fair market value
of the property; (2) the intangible, subjective value of the property, e.g., whether it
is the family home; and (3) the hardship to the defendant, including the effect of
the forfeiture on defendant’s family or financial condition.” The case also provided
a nonexhaustive list of factors to consider in evaluating the “culpability of the
owner”: “(1) whether the owner was negligent or reckless in allowing the illegal
use of his property; or (2) whether the owner was directly involved in the illegal
activity, and to what extent; and (3) the harm caused by the illegal activity,
including (a) (in the drug trafficking context) the amount of drugs and their value,
(b) the duration of the illegal activity, and (c) the effect on the community.” Id. at
986.
7
Here, the analog from von Hofe would be what part of Maria’s net worth
was represented by the firearm collection, and what were her economic prospects
for the future.
7
government on this point should not be construed as agreement with its
interpretation and application of the “culpability of the owner” factors from El
Dorado. We leave it to the district court, in the first instance, to consider the
parties’ arguments regarding these factors.
3. In its application of the third factor from $100,348 in Currency, 354 F.3d
at 1122—“the other penalties that may be imposed for the violation”—the district
court erred. The district court determined that Maria had faced the potential of
criminal liability—including a statutory maximum fine of $250,000, a Sentencing
Guidelines fine of $75,000, and a significant prison sentence—for aiding or
abetting Robert’s felon-in-possession-of-firearm crime.8 However, the district
court never suggested that Maria had the “specific intent to facilitate” Robert’s
crime or assist or participate in the crime required to give rise to aider-or-abettor
liability. See United States v. Shorty, 741 F.3d 961, 970 (9th Cir. 2013); see also
United States v. Canon, 993 F.3d 1439, 1442 (9th Cir. 1993); cf. von Hofe, 492
F.3d at 190. Moreover, in examining the available penalties, the district court
8
At oral argument, Maria argued that only the monetary penalty, and not the
term of imprisonment, is relevant. We disagree. In evaluating excessiveness, we
have consistently considered the full range of penalties available for the conduct,
and not just the monetary penalties. See, e.g., United States v. Mackby, 339 F.3d
1013, 1017–18 (9th Cir. 2003); United States v. 3814 NW Thurman St., 164 F.3d
1191, 1197–98 (9th Cir. 1999).
8
found probative that “the law provides for the forfeiture of the weapons.” The
firearm collection has already been found forfeitable; it would be circular
reasoning to consider the forfeitability of the firearms in determining whether the
forfeiture must be remitted to avoid a violation of the Excessive Fines Clause.
We also question the utility of the “other penalties” factor for present
purposes. Although we often look at the available penalties, we generally do so
where the person being punished is the person whose conduct gave rise to the
forfeiture. See, e.g., United States v. Beecroft, __ F.3d __, 2016 WL 32403404, at
*7–*8 (9th Cir. June 13, 2016). As the Second Circuit noted in von Hofe, 492 F.3d
at 189–91, the case most comparable to this case, the “other penalties” factor is
more difficult to apply and carries less force when the person being punished by
the forfeiture is not the person who committed the illegal acts that gave rise to the
forfeiture.9
9
Consideration of this factor as to Robert may nonetheless supply a useful
benchmark. For his illegal possession of the firearms, Robert received 65 months’
imprisonment and a $75,000 fine. Maria presumably bore no more culpability for
Robert’s illegal possession than he did—she was not the illegal possessor, was not
criminally charged, and did not know that Robert’s possession of the firearms was
illegal, whereas he did. The district court could consider the punishment that
Robert received for the conduct that gave rise to the forfeiture in determining the
extent to which a forfeiture of Maria’s firearms would be “grossly disproportional”
to Maria’s culpability for her part in Robert’s possession of the firearm collection.
9
4. The government argues that the district court’s statement that Maria had
“acted with willful blindness” should preclude any finding of excessiveness. We
disagree. For criminal-law purposes, “willful blindness” of a fact is treated as
equivalent to knowledge of that fact. See, e.g., United States v. Mapelli, 971 F.2d
284, 285–86 (9th Cir. 1992). Here, Maria had actual knowledge of all of the facts
that gave rise to the forfeiture—Robert’s possession of the firearms and his status
as a felon, see Ferro I, 681 F.3d at 1113—and thus there was no reason to invoke
“willful blindness” as a legal concept.10 What Maria apparently lacked was an
10
The district court’s use of the term “willful blindness” seems to have been
shorthand for what it discussed elsewhere in its decision: that Maria had generally
turned a “blind eye” to Robert’s possession of the firearms, had taken no interest in
the firearms, had allowed Robert unfettered possession of them, and had not
investigated the legality of his possession.
10
appreciation of the legal consequences of those facts—that is, that Robert could not
legally possess the firearms account his status as a felon.11
The cases cited by the government hold that an owner of property cannot
claim an “innocent owner” defense to forfeiture by being “willfully blind” to the
facts that gave rise to the forfeiture; they do not suggest that “willful
blindness”—or, for that matter, knowledge—negates the possibility that the
forfeiture may nonetheless be unconstitutionally excessive. See, e.g., United States
v. Collado, 348 F.3d 323, 327–28 (2d Cir. 2003). We have already found that
11
More precisely, Maria failed to recognize that Robert’s change in status
from non-felon to felon meant that he could no longer possess the firearms. Robert
legally purchased the firearms and could have possessed them legally until he was
convicted of a felony. As we have noted, Robert transmuted his interest in the
firearm collection to Maria before his state felony conviction was entered. Maria
acknowledges that she was negligent in failing to appreciate the significance of
Robert’s felon status and in taking no action to dispossess Robert of the firearms.
The district court recognized that Maria, like most people, did not
understand the federal felon-in-possession law. Indeed, what separates this case
from many forfeiture cases, such as those involving drug-related crime, is that the
conduct giving rise to the forfeiture—possession of firearms—is not inherently
illegal. See Staples v. United States, 511 U.S. 600, 611 (1994) (“Even dangerous
items can . . . be so commonplace and generally available that we would not
consider them to alert individuals to the likelihood of strict regulation. . . .
[D]espite their potential for harm, guns generally can be owned in perfect
innocence.”). That is, the firearms are not forfeitable because they were possessed
but because Congress has made it illegal for felons, like Robert, to possess them.
The district court may factor the reasonableness of Maria’s failure to understand
this distinction into its assessment of Maria’s culpability for the conduct that gave
rise to the forfeiture.
11
Maria was not entitled to an “innocent owner” defense, see Ferro I, 681 F.3d at
1113, and so the question remains to what extent a forfeiture of the firearm
collection would be “grossly disproportional” to Maria’s culpability for the
conduct that gave rise to the forfeiture of firearms in this case: Robert’s possession
of the firearms after he had completed serving his earlier state prison sentence.
II
We briefly address two remaining issues raised by the parties.
1. After we remanded this case to the district court, the government
discovered that, in 1998, Maria pleaded guilty to, and was convicted of, two state
misdemeanors.12 The government asked the district court to consider these
convictions as evidence of Maria’s culpability because, under Cal. Penal Code
§ 12021(c)(1) (1998), Maria was herself prohibited from owning or possessing
firearms for ten years due to one of these convictions. The district court stated that
it “wasn’t really going to consider [the convictions], and that [the convictions were
not] going to change [the court’s] decision.” The government argues that the
district court abused its discretion when it refused to consider the convictions.
12
Maria was convicted of misdemeanor violations of Cal. Penal Code
§ 148(a) (resisting, delaying, or obstructing an officer) and Cal. Penal Code
§ 243(b) (battery of an officer), for which she received 36 months’ probation. In
2002, the convictions were dismissed under Cal. Penal Code § 1203.4.
12
We disagree. The district court was not asked to judge Maria’s culpability
generally. Rather, it correctly limited its inquiry to Maria’s culpability with respect
to the conduct that gave rise to the forfeiture at issue, framing the question it had to
answer thus: “What is Maria’s culpability in her husband’s possession of the
firearms?” Maria’s own ownership and possession of the firearms—which was
ostensibly illegal under state law, not federal law, and which did not give rise to
this federal forfeiture action—is irrelevant to answering that question. And, of
course, excluding irrelevant evidence is altogether proper, not an abuse of
discretion. See Fed. R. Evid. 402.
2. In its decision on remand, the district court discussed certain
inconsistencies in Maria’s submissions and testimony over the course of this
lengthy litigation. Maria argues that her “testimony throughout this forfeiture
proceeding has been remarkably consistent” given the circumstances of this case,
and that the district court clearly erred in finding otherwise. However, the district
court made no finding that Maria was not credible, and the facts on which it based
its decision align with Maria’s own testimony. The district court did not clearly err.
See United States v. Hinkson, 585 F.3d 1247, 1261 (9th Cir. 2009) (en banc) (the
clear-error standard requires upholding a factual determination unless it is illogical,
implausible, or without support in inferences that may be drawn from the record).
13
III
We commend the district court for its conscientious attempts at resolving
this very difficult case. Nonetheless, we conclude that a third try is necessary
because of errors in the district court’s excessiveness analysis. Accordingly, we
vacate the district court’s order on remission and remand for further proceedings
consistent with this disposition. Each party shall bear its own costs on appeal.
VACATED AND REMANDED.
14