Anna R. Lavin, Chicago, Ill., for plaintiff.
Elizabeth Stein, Asst. U.S. Atty., Chicago, Ill., for defendant.
In this suit, plaintiff Bernard Shaney Willis seeks damages and equitable relief from defendant United States of America, to redress alleged violations of his fourth and fifth amendment rights resulting from a seizure of his car by officers of the Drug Enforcement Administration (the "D.E.A.") pursuant to 21 U.S.C. § 881(a)(4). Plaintiff attempts to invoke, and to the extent that damages do not exceed $10,000, defendant purports to "concede," jurisdiction under the Tucker Act, 28 U.S.C. § 1346(a)(2). We find, however, that plaintiff has not stated a cause of action cognizable under the Tucker Act because the fourth amendment and due process clause of the fifth amendment do not give rise to a cause of action directly against the United States of America for money damages. Furthermore, plaintiff cannot maintain this suit under general federal question jurisdiction, 28 U.S.C. § 1331, because the action is barred by the doctrine of sovereign immunity. Plaintiff's equitable claims, however, are cognizable because of the creation of a cause of action and waiver of sovereign immunity by the Administrative Procedure Act, 5 U.S.C. § 702. On the merits, however, we grant defendant's motion for summary judgment and deny plaintiff's cross-motion for summary judgment because we find that plaintiff has not alleged any cognizable violations of his constitutional rights.
If it is your intention to file a petition for remission or mitigation of forfeiture, it must be filed in triplicate with this office within 30 days from the date of this letter and must conform to the requirements outlined in the above cited authorities.
If you intend to place the matter in the United States District Court to contest the probable cause for this seizure, a claim and cost bond of $250.00 must be filed with this office on or before September 16, 1981. Indigent persons who desire to place the matter before the court, but who are unable to post the $250.00 bond, may file an Affidavit of Indigency. Further information on this is available from the Drug Enforcement Administration.
If you have any questions regarding the above, please contact Anita L. Paryga at (312) 353-1017.
In response, on September 21, 1981, plaintiff, through an attorney, filed a "Petition for Remission of Seized Property" in which plaintiff claimed that neither he nor his vehicle had been involved in unlawful activity and that the seizure of his car by the D.E.A. had deprived plaintiff of his fifth amendment due process rights. Plaintiff asked for immediate return of the car.
On January 7, 1982, a D.E.A. attorney responded by letter to plaintiff's then-attorney, stating that "[t]he petition is denied since the facts reveal that the petitioner was involved in the use of the vehicle in violation of the law." Seven months later, plaintiff's present counsel wrote to the D.E.A. requesting information about the matter. A D.E.A. attorney replied, stating that D.E.A. reports revealed that the car had been used to transport cocaine, but that plaintiff's failure to file a claim and bond to contest probable cause ended his right to a hearing on the matter. The vehicle remains in storage with the government.
Plaintiff alleges several grounds for relief. In Count I, plaintiff claims that the government violated his fourth and fifth amendment rights because there was no "reasonable cause" for the seizure. In Count II, plaintiff claims that he was not given fair warning that he would be deemed to have waived the opportunity to contest probable cause by failing to post bond, and that as a layman he took "all prudent steps within his limited power" to protect his interests and relied on the expertise of his lawyer. Plaintiff requests that this court use its supervisory powers to protect plaintiff and others in his position "against surreptitiously implied waiver." In Count III, plaintiff claims and seeks a declaratory judgment to the effect that 28 C.F.R. § 9.4, the regulation that establishes procedures for claimants to petition for remission or mitigation but provides that a hearing is not available, fails to conform to the seizure provisions for violations of customs laws, 19 U.S.C. § 1618, and thereby derogates the statutes it purports to implement, 21 U.S.C. § 871, 881(d). These statutes make applicable to narcotics-related seizures the customs laws seizure provisions. Plaintiff alleges that in his case, without a hearing, officers of the defendant failed to ascertain the relevant facts, denying him due process of law. Count IV duplicates Counts I and III. In Count V, plaintiff alleges that the almost four-month interval between plaintiff's filing of his petition for remission and the notification of denial by the D.E.A. violated a requirement of the due process clause for immediate review of summary seizure proceedings. Plaintiff requests as relief on all counts the return of his car, and damages to cover the car's depreciation value, interest, plaintiff's loss of the use of the car, costs in trying to retrieve it, costs of suit and attorney's fees.
The threshold question to be considered in this or any suit against the United States is whether or not the defendant has waived its sovereign immunity. "It long as been established, of course, that the United States, as sovereign, `is immune from suit save as it consents to be sued . . . and the terms of its consent to be sued in any court define that court's jurisdiction to entertain that suit.'" United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 953, 47 L.Ed.2d 114 (1976) (quoting United States v. Sherwood, 312 U.S. 584, 587-588, 61 S.Ct. 767, 770-71, 85 L.Ed. 1058 (1944)). Since Congress alone can waive the United States' sovereign immunity, see United States v. United States Fidelity Co., 309 U.S. 506, 513, 60 S.Ct. 653, 657, 84 L.Ed. 894 (1940); 14 C. Wright, A. Miller E. Cooper, Federal Practice and Procedure § 3654 at 157-158 (1976), this court cannot take the government's failure in this case to contest jurisdiction as a waiver but must raise the immunity question sua sponte.
§ 1346. United States as defendant.
(a) The district courts shall have original jurisdiction, concurrent with the United States Claims Court, of: . . .
(2) Any . . . civil action or claim against the United States . . . not exceeding $10,000 in amount, founded either upon the Constitution, or any act of Congress, or any regulation of an executive department. . . .
28 U.S.C. § 1346(a)(2). Despite the apparent applicability of its language to plaintiff's lawsuit, the Tucker Act does not give this court jurisdiction over either plaintiff's equitable or his legal claims.
As to plaintiff's equitable claims, due to the fact that the Tucker Act establishes district court jurisdiction concurrent with that of the Court of Claims, a court without equitable powers in matters of this kind, the Act "empowers district courts to award damages but not to grant injunctive or declaratory relief." Lee v. Thornton, 420 U.S. 139, 140, 95 S.Ct. 853, 854, 43 L.Ed.2d 85 (1975); See Richardson v. Morris, 409 U.S. 464, 465-466, 93 S.Ct. 629, 630-31, 34 L.Ed.2d 647 (1973). Hence, the government has not by the Tucker Act consented to plaintiff's suit to the extent that it requests equitable relief (return of the car), a declaratory judgment, or exercise of this court's supervisory powers.
As to plaintiff's claims for money damages we find no source for such a cause of action under the Tucker Act. The Supreme Court has determined that the Tucker Act simply waives sovereign immunity as to substantive rights found in other sources of law, and does not itself create any substantive rights. See United States v. Mitchell, 463 U.S. 206, 103 S.Ct. 2961, 2965-66, 77 L.Ed.2d 580 (1983). Accordingly, plaintiff's complaint does not state a claim under the Tucker Act unless an independent source for it exists in the law. We recognize that the Court of Appeals for the Seventh Circuit has left an open question as to the power of a district court to decide sua sponte whether or not a complaint states a claim upon which relief can be granted. Merrill Tenant Council v. United States Department of Housing and Urban Development, 638 F.2d 1086, 1094 (7th Cir. 1981). As we read Mitchell, though, the Tucker Act waives sovereign immunity only as to specific claims based in other sources of law, and where no such source exists, sovereign immunity bars a court from exercising subject matter jurisdiction over a complaint. Parties cannot waive defects in subject matter jurisdiction: "[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action." Fed.R.Civ.P. 12(h)(3) (emphasis added). As a result, we must sua sponte inquire whether or not an independent source of law creates a substantive right for damages by which plaintiff's complaint states a claim under the Tucker Act.
The fact that plaintiff's claims invoke constitutional guarantees does not suffice, for "the claimant must demonstrate that the source of substantive law he relies upon `can fairly be interpreted as mandating compensation by the Federal Government for the damages sustained.'" Id. (citations omitted). For a source of a cause of action such as this one to be found, in other words, the question is not simply whether or not the government violated plaintiff's fourth or fifth amendment rights, but, rather, whether or not those provisions of the Constitution can fairly be read as creating a cause of action for money damages against the government.
We believe that neither constitutional provision can be so read. On its face, neither provision suggests that the government is liable for monetary compensation, as does for example the just compensation clause of the fifth amendment. This facial reading is confirmed by the reasons given by the United States Supreme Court for the creation of the Bivens doctrine in Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), under which a damage remedy exists against federal officers for injuries resulting from violations of fourth amendment rights.
In announcing the existence of the Bivens remedy, the Supreme Court was guided by the principle that federal courts must "`be alert to adjust their remedies so as to grant the necessary relief'" when federally protected rights are violated, id. at 392, 91 S.Ct. at 2002 (quoting Bell v. Hood, 327 U.S. 678, 684, 66 S.Ct. 773, 777, 90 L.Ed. 939 (1946)), because "`[t]he very essence of civil liberty certainly consists in the right of every individual to claim the protection of the laws, whenever he receives an injury,'" id. 403 U.S. at 397, 91 S.Ct. at 2005 (quoting Marbury v. Madison, 5 U.S. 137, 1 Cranch 137, 163, 2 L.Ed. 60 (1803)). The Court rejected the defendant agents' position that state tort law provides an adequate redress for injuries resulting from violations of the fourth amendment. Id. 403 U.S. at 390-95, 91 S.Ct. at 2001-04. As a result, the Court concluded that fourth amendment rights must carry a corresponding remedy against offending officers for money damages.
This result would have been anomalous if it were the case that the fourth amendment gave rise to a cause of action directly against the United States for money damages. Then, the Tucker Act would waive sovereign immunity as to such suits. Federal courts would not have had to "adjust their remedies" to admit the Bivens remedy if another, in fact preferable, avenue of relief, against the government itself, were open. Clearly, the Bivens Court did not consider such a cause of action to be available under, let alone mandated by, the fourth amendment; indeed, Justice Harlan specified in concurrence, "[h]owever desirable a direct remedy against the Government might be as a substitute for individual official liability, the sovereign still remains immune to suit," id. at 410, 91 S.Ct. at 2012 (Harlan, J., concurring).
The same analysis applies to the due process clause of the fifth amendment. The Supreme Court has extended Bivens to recognize a cause of action for damages against federal officers for violations of the "equal protection component" of the due process clause, Davis v. Passman, 442 U.S. 228, 99 S.Ct. 2264, 60 L.Ed.2d 846 (1979), as has the Court of Appeals for the Seventh Circuit for the "due process" component of the due process clause, see e.g. Lojuk v. Quandt, 706 F.2d 1456, 1468-69 (7th Cir. 1983). From these holdings we derive the same negative inference as to the availability of relief directly from the government under the due process clause as we derive with regard to the fourth amendment from Bivens itself. Thus, we believe, as several courts have implied or held, see De Vilbiss v. Small Business Administration, 661 F.2d 716, 718 (8th Cir. 1981); Duarte v. United States, 532 F.2d 850, 852 (2d Cir. 1976), that the fifth amendment does not clearly contemplate redress in the form of damage suits directly against the government.
An alternative source for this cause of action could be found in the forfeiture laws themselves if they carry an implied right of action of the sort sought by plaintiff here. We see no basis, though, for implying a distinct right of action under these statutes which provide explicitly for claimants to post bond and claim seized property in the context of civil forfeiture actions, see 19 U.S.C. § 1608, 1615 (made applicable to 21 U.S.C. § 881(a)(4) by 21 U.S.C. § 881(d)); 21 C.F.R. §§ 1316.76, 13416.78.
Admittedly, the Court of Appeals for the Seventh Circuit at one time held that an individual convicted in violation of the due process clause could sue the government under the Tucker Act to recover the value of a vehicle forfeited pursuant to the erroneous conviction. Pasha v. United States, 484 F.2d 630, 633 (7th Cir. 1973). It is unclear whether the court believed that the action was founded on the fifth amendment or on the forfeiture statutes. In either case, we do not consider Pasha to be binding precedent. The decision predated and we believe was effectively reversed by the subsequent Supreme Court interpretation of the Tucker Act as being merely jurisdictional and requiring an independent source of a substantive right to recover damages, see United States v. Mitchell, 463 U.S. 206, 103 S.Ct. 2961, 2965-66, 77 L.Ed.2d 580 (1983); United States v. Testan, 424 U.S. 392, 398, 96 S.Ct. 948, 953, 47 L.Ed.2d 114 (1976). Similarly, we disagree with a body of law from various circuits assuming, without due consideration of the source of the substantive right, that unlawful forfeiture claims state a cause of action under the Tucker Act. See e.g., Simons v. United States, 497 F.2d 1046, 1049 (9th Cir. 1974); Lowther v. United States, 480 F.2d 1031, 1035 (10th Cir. 1973).
Accordingly, we hold that plaintiff has failed to state a claim under the Tucker Act. We proceed to consider whether any other statutes waive sovereign immunity and provide plaintiff with a cause of action in this suit.
civil actions on claims against the United States, for money damages . . . for injury or loss of property . . . caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.
28 U.S.C. § 1346(b). Despite the seeming applicability of this statutory language, we doubt that Congress intended by this statute to create a federal cause of action and waive sovereign immunity for constitutional challenges such as this case. Again, we note the absence of consideration of the FTCA by the Bivens Court in its examination of the unavailability of an adequate remedy for violations of constitutional rights. Admittedly, the FTCA would have presented the same insufficiencies as state tort law; nonetheless, if the FTCA were applicable, then the Court's failure so to mention in its discussion of state tort law would have been an odd omission. But see Fayerweather v. Bell, 447 F. Supp. 913, 915-16 (M.D.Penn. 1978) (federal prisoner claiming that prison personnel negligently lost his property in violation of fifth amendment states cause of action under FTCA).
Moreover, we do not believe that plaintiff's allegations both suggest "circumstances where the United States, if a private person, would be liable to the plaintiff" and avoid the exceptions carved out of the FTCA by Congress. For the sake of analysis we divide plaintiff's complaint into two components: a claim that DEA agents took his car without cause, and a claim that after the seizure, plaintiff did not receive the process he was due.
(a) Any claim based upon an act or omission of an employee of the Government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid. . . .
28 U.S.C. § 2680. The gravamen of plaintiff's "conversion" complaint is not that the D.E.A. agents took his property without statutory authority, but rather that the statutes and regulations which authorized the seizure are unconstitutional on their face or as applied to him. The FTCA is an improper vehicle for such a complaint; "the primary purpose of [the § 2680(a)] exception was to preclude testing the legality of a statute or regulation by a tort action." Stewart v. United States, 486 F. Supp. 178, 181 (C.D.Ill. 1980).
The second component of plaintiff's complaint, pertaining to the manner in which the officers carried out the statutes and regulations with regard to post-seizure procedures, such as the allegedly improper reading of plaintiff's petition as a waiver of the right to a hearing, and the allegedly unfair delay in notifying him of the denial of remission, purports to suggest a deprivation of procedural due process regardless of whether or not seizure was warranted. Even if this component of plaintiff's complaint could potentially sound in tort, and does not fall within the § 2680(a) "Exceptions" clause, in its present form it does not independently resemble a tort claim as between private parties. Plaintiff has not claimed, for example, emotional distress resulting from the alleged deprivation of due process. As such, the bare allegation of deprivation of due process does not per se give rise to tort liability. See Carey v. Piphus, 55 L.Ed.2d 252, 435 U.S. 247, 258, 262-64, 98 S.Ct. 1042, 1051-53 (1978).
Finally, assuming arguendo that our analysis is incorrect and that the FTCA creates a federal cause of action and jurisdiction for a complaint such as this one, plaintiff's lawsuit is nevertheless timebarred under the FTCA. Congress waived sovereign immunity only as to those complaints filed "within six months . . . of notice of final denial of the claim by the agency to which it was presented." 28 U.S.C. § 2401(b). Plaintiff here received a final denial of his petition by the agency in early January of 1982 and filed this lawsuit on September 30, 1982, more than eight-and-one-half months later. Because the statute of limitations has run, we lack jurisdiction under the FTCA. See United States v. Kubrick, 444 U.S. 111, 117-18, 100 S.Ct. 352, 356-57, 62 L.Ed.2d 259 (1979).
Hence, we believe that plaintiff's claims for money damages are barred since we find no applicable statute by which the United States has waived sovereign immunity to a suit of this sort. We find, on the other hand, that plaintiff's equitable claims are cognizable under section 702 of the Administrative Procedure Act ("APA"), 5 U.S.C. § 702.
Section 702 provides in relevant part, A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial relief thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensable party. The United States may be named as a defendant in any such action, and a judgment or decree may be entered against the United States.
Plaintiff here claims to have suffered legal wrong because of agency action. The APA, unlike the Tucker Act, independently creates a cause of action for equitable relief, see Block v. Community Nutrition Institute, ___ U.S. ___, 104 S.Ct. 2450, 2454, 81 L.Ed.2d 270 (1984); Glacier Park Foundation v. Watt, 663 F.2d 882, 884 (9th Cir. 1981); see also Chrysler Corp. v. Brown, 441 U.S. 281, 316-17, 99 S.Ct. 1705, 1724-25, 60 L.Ed.2d 208 (1979) (availability of review under APA makes implied right of action under separate statute unnecessary), and waives sovereign immunity to such actions, Sea-Land Service, Inc. v. Alaska Railroad, 659 F.2d 243, 244 (D.C. Cir. 1981), cert. denied, 455 U.S. 919, 102 S.Ct. 1274, 71 L.Ed.2d 459 (1982). Furthermore, suits under the APA may be brought, as this one is, directly against the United States without naming an agency or officer as a defendant. See 5 U.S.C. § 703 (suit may be brought against United States, agency, or officer). Therefore, we see no bar to our consideration of plaintiff's equitable claims under the APA.
Plaintiff's primary contention is that federal agents deprived him of property without due process of law by seizing his car without "reasonable cause" and not providing him with a hearing. The statutory scheme pursuant to which the D.E.A. officers seized plaintiff's car requires procurement of a warrant by the seizing officers except in cases where "the Attorney General has probable cause to believe that the property has been used or is intended to be used" to transport narcotics. 21 U.S.C. § 881(b)(4). In such cases, the statute permits summary seizure, but, where the seized goods are valued at less than $10,000.00, the statute provides aggrieved individuals with two remedies in accordance with the customs laws, 19 U.S.C. § 1607-18, see 21 U.S.C. § 881(d). Within twenty days of notice of seizure, any person may file a claim and post a $250.00 bond to become entitled to participate in a judicial forfeiture proceeding. 19 U.S.C. § 1608, 1615; 21 C.F.R. §§ 1316.76, 1316.78. Additionally, within thirty days of notice of seizure, without posting bond, any person may file a petition for mitigation or remission of forfeiture, on which agency officials rather than a court rule without a hearing. 19 U.S.C. § 1618; 21 C.F.R. § 1316.79; 28 C.F.R. §§ 9.1-9.7.
These options were explained to plaintiff in the notice of seizure he received from D.E.A., as reprinted above. Plaintiff's method of responding, whether intentional or inadvertent, was to straddle the available courses of action. In form, plaintiff's response was a petition for remission, in that it was so titled, and was sent within the time for petitioning but after the time and without the requisite bond for filing a claim. In substance, however, plaintiff's "petition" more resembled a judicial claim in that it did not state grounds for remission or mitigation, but rather contested the basis for and constitutionality of the seizure. D.E.A. officers treated the response as a petition for remission. Hence, plaintiff was not accorded a hearing.
We believe that this course of events did not deprive plaintiff of due process of law. The fact that notice and the opportunity for a hearing were postponed until after seizure does not violate the due process clause in circumstances such as this where the government has an interest in asserting in rem jurisdiction over mobile property thought to have been used for illicit purposes. See Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 676-680, 94 S.Ct. 2080, 2088-90, 40 L.Ed.2d 452 (1974). Plaintiff had the constitutional right after the seizure to be put on notice of his option to receive a hearing. Our reading of the letter sent by D.E.A. to plaintiff is that it so notified him. We believe that the language, "If you intend to place the matter in the United States District Court to contest the probable cause for this seizure, a claim and cost bond of $250.00 must be filed with this office on or before September 16, 1981" instructs in plain English that a hearing is available upon performance of certain acts. Cf. United States v. One 1971 BMW 4-Door Sedan, 652 F.2d 817, 822 (9th Cir. 1981) (similar letter meets minimum due process requirement for notification of right to petition for remission); compare Jaekel v. United States, 304 F. Supp. 993, 998-99 (S.D.N.Y. 1969) (oral notice of seizure with advice to contact an attorney but without notification of pendency of forfeiture proceedings denies due process). Moreover, the letter provided a name and number to call in case of questions. Plaintiff, assisted by an attorney, failed to follow the outlined procedures for obtaining a hearing. While those who received his "Petition" might have interpreted it as a claim, albeit untimely and without the required bond, it was not incumbent upon them to do so. Otherwise, every petition that hints at a challenge of the grounds for seizure would be susceptible to the later interpretation that it was intended as a claim and entitled the petitioner to a judicial hearing.
remit or mitigate the [forfeiture] upon such terms and conditions as he deems reasonable and just. . . . In order to enable him to ascertain the facts, the Secretary of the Treasury may issue a commission to any customs officer to take testimony upon such petition. . . .
19 U.S.C. § 1618. The government contends that this court cannot review the procedures attendant to agency review of the petition because they are a matter of administrative grace. While the APA may preclude us from reviewing the agency's decision on the merits of the petition if this "agency action is committed to agency discretion by law," 5 U.S.C. § 701; see United States v. One 1973 Buick Riviera Automobile, 560 F.2d 897, 900 (8th Cir. 1977); United States v. One 1958 Pontiac Coupe, 298 F.2d 421, 423 (7th Cir. 1962); we have the power under the APA to "hold unlawful and set aside agency action . . . found to be . . . short of statutory right . . ." 5 U.S.C. § 706(2). We can, therefore, determine whether 28 C.F.R. § 9(c) deprives plaintiff of a hearing to which its enabling statute entitles him.
We do not, however, believe that 28 C.F.R. § 9(c) derogates 19 U.S.C. § 1618. That latter provision allows the Secretary to take testimony at his discretion but creates no right in a petitioner to demand that the Secretary do so. Hence, the regulatory prohibition does not deprive plaintiff of a statutorily guaranteed right.
Plaintiff further alleges deprivation of due process because of the almost four-month interval between his petitioning for remission and his receipt of notification of denial. Again, the government claims unreviewability because of the discretionary nature of the agency's treatment of petitions for remission. Here too, however, plaintiff does not ask us to reconsider the merits of his petition but rather to examine the constitutionality of the decision-making process, a task we are empowered to undertake. See 5 U.S.C. § 706. Having created regulations, even if gratuitous, the agency may be required to carry them out in constitutional fashion. See Hewitt v. Helms, 459 U.S. 460, 103 S.Ct. 864, 870, 74 L.Ed.2d 675 (1983). While we know of no ready formula for determining how much time is too much time under the due process clause for the agency to keep a petitioner waiting, we do not see the four-month period as so egregious as to amount to a constitutional violation. Courts have found no deprivation of due process where intervals of this length or longer delay a seemingly more critical time period than this one; that is, the time between filing of claims and institution of forfeiture proceedings, see, e.g., United States v. Eight Thousand Eight Hundred and Fifty Dollars, 461 U.S. 555, 103 S.Ct. 2005, 76 L.Ed.2d 143 (1983) (eighteen month delay); United States v. Oil Screw Gulf Princess II, 543 F. Supp. 1037, 1039-41 (S.D.Car. 1982) and cases cited therein.
Finding no violation of due process, we turn to consider plaintiff's contention that the seizure violated his fourth amendment rights because the seizing officers lacked probable cause to believe that the car had been used to transport narcotics. We recognize our equitable power to order the government to return to the owner goods seized in violation of the fourth amendment, as plaintiff requests. See GoBart Importing Company v. United States, 282 U.S. 344, 355, 358, 51 S.Ct. 153, 157, 158, 75 L.Ed. 374 (1931). Yet if we examine the merits of plaintiff's fourth amendment claim we will in effect circumvent the legislative scheme for forfeiture proceedings at which claimants may, by asserting their claim and posting bond in timely fashion, intervene and challenge the grounds for seizure. We consider the possibility that plaintiff, by his failure to follow the administrative procedures for causing the government to institute a judicial hearing, either consented to the seizure or forfeited the right to contest probable cause.
To identify plaintiff's post-seizure fourth amendment rights we analogize to the more typical pre-search or -seizure rights. Ordinarily, of course, government officials bear the burden prior to search or seizure of appearing before a magistrate and demonstrating probable cause to obtain a warrant. An exception exists for searches and seizures conducted pursuant to consent, which extinguishes the warrant and probable cause requirements. See Schneckloth v. Bustamonte, 412 U.S. 218, 219, 93 S.Ct. 2041, 2043, 36 L.Ed.2d 854 (1973). The apparent rationale for the consent exception is that the individual has agreed to the intrusion into his or her privacy and therefore judicial authorization is not needed to override privacy rights, see Zap v. United States, 328 U.S. 624, 628, 66 S.Ct. 1277, 1279, 90 L.Ed. 1477 (1946) (consent is voluntary waiver of claim to privacy).
Where searches and seizures must be conducted under exigent circumstances in summary fashion, procurement of a warrant is unnecessary but probable cause must exist, and can be challenged after the fact. See Vale v. Louisiana, 399 U.S. 30, 34, 90 S.Ct. 1969, 1971, 26 L.Ed.2d 409 (1970); McDonald v. United States, 335 U.S. 451, 456, 69 S.Ct. 191, 193, 93 L.Ed. 153 (1948). The rationale for applying the consent exception in the pre-search or -seizure context seemingly applies as well after the fact of a summary seizure, so that an individual who chooses not to contest the basis for an exigent search or seizure relieves the government of the need to show that "the exigencies of the situation made that course imperative," McDonald v. United States, 335 U.S. 451, 456, 69 S.Ct. 191, 193, 93 L.Ed. 153 (1948). When the search or seizure is an accomplished fact, however, proof of consent may be more difficult than where consent is the entryway of police to the item to be searched or seized.
Consent ex ante, and by extension ex post, does not require "`an intentional relinquishment or abandonment of a known right or privilege,'" the standard often applied to ascertain waivers of constitutional rights. See Schneckloth v. Bustamonte, 412 U.S. 218, 235-48, 93 S.Ct. 2041, 2051-59, 36 L.Ed.2d 854 (1973) (quoting Johnson v. Zerbst, 304 U.S. 458, 464, 58 S.Ct. 1019, 1023, 82 L.Ed. 1461 (1938)). Rather, consent is effective so long as voluntarily given. Id. at 248-49 (1973). In this case, the voluntariness of plaintiff's actions and omissions through his attorney, specifically, petitioning for remission and failing to file a claim and bond, is not an issue. Yet, these voluntary actions and omissions do not in our judgment constitute "consent" to the seizure, given that plaintiff's petition directly challenged the grounds for the seizure. Just as a pre-seizure statement to police of "Yes, you may not seize my car" would not, without other evidence, constitute consent, plaintiff's omissions in combination with his actions here suggests at least as much a challenge to as an acquiescence in the seizure.
Nevertheless, we believe that despite lack of evidence of consent, plaintiff forfeited his right to contest probable cause. Courts have found in several contexts that fourth amendment rights can be forfeited. See e.g., Nardone v. United States, 308 U.S. 338, 341-42, 60 S.Ct. 266, 267-68, 84 L.Ed. 307 (1939) (defendant must take timely steps to challenge legality of government's means of obtaining evidence, and judge should not consider such claims in midst of trial unless defendant lacked adequate knowledge to make claim at earlier stage); United States v. Bullock, 590 F.2d 117, 121 (5th Cir. 1979) (defendant who failed to raise fourth amendment claim prior to or during trial cannot do so on appeal); United States v. Napela, 28 F.2d 898, 903 (N.D.N.Y. 1928) ("[e]ven the constitutional right to move for a return of property illegally seized, and to object to evidence obtained and offered in violation of the Fourth and Fifth Amendments, may be impaired, if not lost, when not seasonably asserted"); Providence Journal Co. v. Federal Bureau of Investigation, 460 F. Supp. 762, 774-75 (D.R.I. 1978), rev'd on other grds, 602 F.2d 1010 (1st Cir. 1979), cert. denied, 444 U.S. 1071, 100 S.Ct. 1015, 62 L.Ed.2d 752 (1980) (party who failed to press fourth amendment claim at earlier opportunity cannot assert claim in subsequent proceeding); cf. Weeks v. United States, 232 U.S. 383, 393, 398, 34 S.Ct. 341, 344, 346, 58 L.Ed. 652 (1914) (lower court should have granted "timely" and "seasonable" application of accused for return of seized property). In this case, plaintiff failed to avail himself of the opportunity to make the government invoke a judicial hearing on probable cause. Months after the statutorily prescribed time for filing a claim expired, plaintiff filed this suit. This side-stepping of available procedures, cumbersome for the agency and this court, amounts in our view to a forfeiture of the right to obtain a hearing. Cf. Thompson v. Schwaebe, 22 F.2d 518, 519-20 (9th Cir. 1927) (claimant who fails to file claim and post bond after summary seizure cannot, having bypassed adequate legal remedy, sue in equity for return of property).
We have in this opinion attempted to construe plaintiff's complaint and pleadings liberally, but we wish to emphasize that plaintiff did not by any fair reading of his complaint raise, and as a result we express no opinion on, a number of challenges related to those we have examined. For example, we do not consider whether or not the statutory scheme under which plaintiff's car was seized violates the fourth or fifth amendments by placing the burden of instituting proceedings on the plaintiff, compare, e.g., United States v. Various Articles of Merchandise, 750 F.2d 596, 598 (7th Cir. 1984) (consolidated cases); Jones v. City of Atlanta, 647 F.2d 580, 585 (5th Cir. 1981) (discussing statutes which place burden on government to institute post-seizure proceedings and do not allow forfeiture by default); whether or not the bond requirement creates an unconstitutional condition; or whether or not the burden of proof at forfeiture proceedings violates the fifth amendment, see Note, Due Process Implications of Shifting the Burden of Proof in Forfeiture Proceedings Arising out of Illegal Drug Transactions, 1984 Duke L.J. 822.
For all of the foregoing reasons, we find that plaintiff has not alleged any cognizable violations of his constitutional rights and accordingly we grant the government's motion for summary judgment.


David R. Gienapp, Madison, SD, argued, for appellant.
Kevin V. Schieffer, Sioux Falls, SD, argued, for appellee.
Before BOWMAN, WOLLMAN, and HANSEN, Circuit Judges.
Steven C. Willis appeals from his conviction on seven counts of defrauding a federally insured savings bank, in violation of 18 U.S.C. § 1344 and § 2, one count of conspiring to defraud a federally insured savings bank, in violation of 18 U.S.C. § 371, and one count of bribing an officer of a financial institution, in violation of 18 U.S.C. § 215. Willis raises several arguments that the district court1 committed reversible error during and after his trial, including denying his motion for a new trial, allowing the introduction of his coconspirators' guilty pleas, and imposing his sentence. We affirm.
Willis graduated from law school in 1976, receiving a Masters in Business Administration degree at the same time. After working for two years as a certified public accountant with an accounting firm in Sioux Falls, South Dakota, Willis opened a law office in 1978. Over the next several years he specialized in setting up limited partnerships for various real estate projects, often acting as one of the project's general partners.
According to the evidence at trial, Willis sometimes directed potential investors in his limited partnerships to Steve Ettles. At the time, Ettles, a longtime friend and fraternity brother of Willis, was the manager of the Sioux Falls branch of First Federal Savings Bank ("First Federal"), headquartered in Rapid City, South Dakota. The evidence showed that during this time period Willis sent numerous checks to Ettles in various names, including S.E. Consulting. Willis testified that these checks constituted payments for consulting services rendered by Ettles. To the contrary, Ettles testified that there was no business named S.E. Consulting, that he had performed no consulting duties, and that the payments were kickbacks for loans he had made through First Federal.
In November 1982, Willis approached Charles Hopp about buying Davis Tailors, a dry cleaning business in Sioux Falls. Having concluded that Davis Tailors presented a good investment opportunity, Willis and Hopp entered into a 50/50 partnership to purchase and manage the business. Willis ultimately took over the management of the business, conducting all of Davis Tailors' financial affairs.
In early 1985, Willis, Hopp, and Ettles formed a partnership named RecCo to purchase the Recreation Bowl ("Rec Bowl"), a bowling alley and lounge in Sioux Falls. According to the partners' agreement, Ettles and Willis each had forty percent interests and Hopp had a twenty percent interest. RecCo bought the Rec Bowl on a contract for deed for a total purchase price of $625,000. The purchase agreement called for an immediate down payment of $50,000, a second $50,000 payment within the first year, and the remainder to be amortized through monthly payments.
All three partners needed to finance their contributions to the partnership, including the initial $50,000 down payment. Ettles made loans of $24,000 and $12,000 to Willis and Hopp respectively, although both men were now Ettles's business affiliates and therefore should not have been receiving loans through him. Because Ettles did not want anyone at First Federal to know of his involvement in RecCo, he did not tell his superiors about the loans, in violation of bank policy and federal regulations. Ettles obtained his financing through another Sioux Falls bank.
Hopp, who had some experience in the food and liquor business, managed the bowling alley and the lounge on a day-to-day basis. Willis controlled the business's financial matters. Despite the partners' ambitions, the Rec Bowl quickly developed financial difficulties. The three partners met periodically at the bowling alley to discuss solutions to their cash flow problems. Willis and Hopp obtained additional loans through Ettles at First Federal until January 1987, when Ettles's superiors, still ignorant of Ettles's involvement in RecCo, told Ettles to stop extending credit to Willis and Hopp. By that time, RecCo had also obtained a $25,000 loan from Norwest Bank to help meet the Rec Bowl's operating expenses.
Typically, events tracked the following course. When the partners determined that they needed additional funds to meet a large upcoming payment such a contract-for-deed payment, a loan payment, or a tax payment, one of the partners would assume the responsibility to find a willing borrower with some creditworthiness, if possible. The partner would either call in a favor from the borrower or offer the borrower a $250 payment. The borrower would then visit Ettles at First Federal, where Ettles and the borrower would complete the loan application and the borrower would endorse the loan proceeds check over to Ettles or another partner. Ettles would fill in on the application a seemingly proper, though factually incorrect, purpose for the loan. He would normally state that the unsecured loan was for personal expenditures or personal investment so that no one at First Federal would suspect that the loan proceeds were actually going to RecCo or Davis Tailors.
With respect to a loan taken out by Becky Hewitt, an employee at Davis Tailors, the evidence showed that Willis had been involved in completing the loan application. Hewitt's application contained false information regarding her salary and assets, as well as a false statement regarding the expected use of the loan proceeds. Hewitt testified that she did not enter any of the false information and was not even aware of it. To the contrary, Willis testified that he may have filled in the incorrect numbers but that Hewitt had supplied the information that he had written down.
For the most part, the partners were not able to repay these loans as they came due. As a result, they often had to convince the borrowers to renew the loans. Ettles also drafted letters of credit without First Federal's knowledge for several of the nominee borrowers, obligating the bank to repay the loan to itself if the loan was defaulted. When the partners failed to make timely payments on one of the nominee loans, the borrower presented his letter of credit to First Federal, which had no record of the letter's existence because Ettles had never placed a copy in the master file. The bank reluctantly acknowledged the letter of credit and ultimately wrote off the loan. The letter of credit raised the bank's suspicions regarding Ettles, who by this time had left the bank. The bank's investigation ultimately led to federal bank fraud charges against Ettles, Hopp, and Willis.
Ettles faced charges not only for the RecCo loans, but also for his dealings with Stuart Swann, a Sioux Falls developer. Ettles reached a plea agreement with the government whereby he pled guilty to bank fraud concerning the RecCo nominee loans, accepting gifts from Willis and Swann for procuring loans, and conspiring to defraud a federally insured bank. Ettles also promised to cooperate with the government's investigation and to testify against any of the other individuals involved in the two schemes. In exchange, the government agreed to drop any other charges against Ettles and to move the district court to reduce Ettles's offense level by two levels for acceptance of responsibility.
A federal grand jury returned a nine-count indictment against Hopp and Willis. Although Hopp initially entered a not guilty plea, he ultimately chose to enter a plea agreement. He pled guilty to one count of conspiring to defraud the bank and promised to cooperate with the government in exchange for the dismissal of the remaining counts against him. Hopp testified at Willis's trial and was later sentenced to ninety days' work release.
Willis elected to take his case to trial. The jury heard testimony for five days, ultimately returning a guilty verdict on all nine counts. The district court sentenced Willis to thirty-six months' imprisonment on the bank fraud and conspiracy counts, enhancing Willis's offense level by two levels for obstruction of justice, by six levels for the amount of loss, by two levels for more than minimal planning, and by four levels for his role as an organizer in the offense. The court also sentenced Willis to a concurrent thirty-six month term of imprisonment on the pre-Guidelines bribery count. Finally, the district court ordered Willis to pay restitution in the amount of $23,806.74.
Willis raises numerous arguments on appeal. He claims that the district court erred in denying his motion for a new trial based on the government's failure to produce discoverable material. Second, he argues that the district court improperly admitted evidence concerning the guilty pleas and convictions of Ettles and Hopp. Next, he claims that the district court improperly limited his cross-examination of Ettles and Howard Legge, a supervisor at First Federal. Finally, he raises several claims that the district court erred in imposing his sentence. We will address his arguments in turn.
After his trial but before the district court had entered the judgment of conviction, Willis moved the district court for a new trial based on newly discovered evidence. He claimed that he had discovered evidence that the government had failed to turn over prior to trial, in violation of Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), and the Jencks Act, 18 U.S.C. § 3500. The district court denied Willis's motion without an evidentiary hearing.
On appeal, Willis claims that the district court erred in denying the motion. He states that the government failed to produce the following evidence which would have affected the jury's determination of his case: (1) the complete plea agreement between the government and Ettles, namely, that the government allegedly dropped eighteen counts against Ettles in exchange for his plea, cooperation, and testimony; (2) the sentencing transcripts of Ettles and Stuart Swann, which allegedly show that Ettles initially came up with the idea of seeking nominee borrowers in the earlier scheme not involving Willis and Hopp; and (3) FBI reports describing conversations between Ettles and FBI agents. Willis argues that these items would have allowed him to effectively impeach Ettles's credibility at trial, which he claims was the linchpin of the government's case.
The evidence is material only if there is a reasonable probability that, had the evidence been disclosed to the defense, the result of the proceeding would have been different. A "reasonable probability" is a probability sufficient to undermine confidence in the outcome.
United States v. Bagley, 473 U.S. 667, 682, 105 S.Ct. 3375, 3383, 87 L.Ed.2d 481 (1985). This standard of materiality applies to all situations where the prosecution failed to produce evidence favorable to the defense, regardless of the type of request made by the defense. Bagley, 473 U.S. at 682-83, 105 S.Ct. at 3383-84. Also, the government's obligation to produce favorable testimony and the standard of materiality apply with equal force to impeachment evidence as well as directly exculpatory evidence. Id. at 676, 105 S.Ct. at 3380.
Willis initially claims that the government failed to inform the defense of the complete plea agreement between the United States and Ettles. He asserts that the government agreed to forego prosecuting additional counts relating to both the RecCo loans and the Swann transactions in exchange for Ettles's guilty plea and cooperation. Willis claims that had he known of this at trial he could have more effectively impeached Ettles's credibility by showing that Ettles was testifying solely to curry the government's favor in his own prosecution. Willis relies on Reutter v. Solem, 888 F.2d 578, 581-82 (8th Cir.1989), in which we reversed the district court's denial of habeas corpus relief where the prosecution had failed to inform the defense that the state's "star witness" had a commutation hearing pending at the time of the defendant's trial and the prosecution's suggestions to the parole board would be accorded considerable weight.
In response, the government acknowledges that it did not produce Ettles's plea agreement. It states, however, that the plea agreement was filed with the district court in June 1991, ten months before Willis's trial. Ettles's written plea agreement stated that it was the entire agreement between the parties. It also stated on its face that no further criminal charges would be brought against Ettles relating to his conduct as an officer of First Federal in exchange for his guilty plea and cooperation.
In light of the above, we find no Brady violation. Ettles's plea agreement was a matter of public record, fully available to Willis. Counsel for Willis certainly knew that Ettles had entered a plea agreement involving the RecCo and Swann schemes because he acknowledged having seen Ettles's and Hopp's plea agreements on the morning that the trial began. Additionally, he had earlier sent an investigator to the federal prison in Yankton, South Dakota, to interview Ettles. Counsel also surely must have expected that Ettles, as a coconspirator, would play a substantial part in the government's case at Willis's trial. Accordingly, he may not now complain that he did not investigate a coconspirator's criminal court file in the same case to locate items with which to impeach the coconspirator. The plea agreement in the public file would have given counsel the terms of the bargain, with which he could have impeached Ettles.
The failure by the prosecution to turn over material contained in a public file does not result in the denial of a fair trial when defense counsel fails to exercise diligence in investigating the file. Lugo v. Munoz, 682 F.2d 7, 10 (1st Cir.1982); see also United States v. Oliver, 908 F.2d 260, 262-62 (8th Cir.1990) (no Brady violation where defense counsel knew name and possible location of witness not within prosecutor's exclusive control but did not exercise reasonable diligence in locating address of witness to interview her). Likewise, we hold that the government's failure to turn over Ettles's plea agreement in this case when it was contained in Ettles's district court file did not deny Willis a fair trial. Counsel for Willis acknowledged that he knew of the plea agreements but failed to investigate Ettles's file. Due process does not require the prosecution to turn over its entire file or to do the defense counsel's work. See United States v. Pou, 953 F.2d 363, 366 (8th Cir.), cert. denied, --- U.S. ---- & ----, 112 S.Ct. 1982 & 1983, 118 L.Ed.2d 580, 581 (1992).
This case is unlike Reutter v. Solem. In Reutter, the state knew that the commutation hearing of one of its key witnesses, David Trygstad, had been postponed until after Trygstad had testified in Reutter's trial. In fact, the assistant attorney general who was prosecuting Reutter was a member of the parole board scheduled to hear Trygstad's petition. 888 F.2d at 580. Nonetheless, the state did not tell Reutter about Trygstad's scheduled hearing. We held that the state's failure to disclose that fact violated Reutter's due process rights because it prevented Reutter's counsel from effectively cross-examining Trygstad concerning his motivation and bias. Id. at 581. There was no indication in that case, however, that Reutter's counsel had any reason to think that Trygstad, who had already been sentenced, was now seeking commutation of his sentence before the parole board. To the contrary, Willis knew of Ettles's plea agreement and sentencing and yet did nothing.
Second, Willis argues that the government failed to produce the sentencing transcripts for Ettles and Swann. Willis claims that these transcripts contain evidence that it was Ettles's idea to recruit nominee borrowers in the Swann scheme. Thus, he argues that he could have impeached Ettles's testimony that it was Willis who initiated the recruitment of nominee borrowers for RecCo.
We reject this argument for the same reason given with respect to Ettles's plea agreement. Because these transcripts were ordered by individuals connected to Ettles and Swann, the government was unaware that they had even been transcribed until Willis included them in his motion for a new trial. All of the sentencing transcripts were filed in the district court's files and were equally available to the prosecution and the defense. Moreover, we note that counsel for Willis cross-examined Ettles on the fact that he had entered a guilty plea to a charge arising from the Swann transactions as well as the RecCo loans. Having known of Ettles's plea, defense counsel had a duty to use reasonable diligence in investigating Ettles's court file. Thus, we cannot say that Willis was denied his right to a fair trial.
Finally, Willis argues that district court should have granted a new trial because the government failed to turn over FBI routine investigation reports ("FBI 302s") concerning conversations that agents had with Ettles. Willis contends that, at the very least, the district court should have reviewed the FBI 302s in camera to see if they contained Jencks or Brady material.
The Jencks Act requires the production of any statements made by a government witness after the witness has testified on direct examination for the prosecution. In this case, the district court's discovery order directed the government to produce Jencks Act statements before trial. The Act defines those statements to which it applies as, among others, "(1) a written statement made by said witness and signed or otherwise adopted or approved by him [and] (2) a stenographic, mechanical, electrical or other recording, or a transcription thereof, which is a substantially verbatim recital of an oral statement made by such witness and recorded contemporaneously with the making of such oral statement." 18 U.S.C. § 3500(e)(1)-(2).
Willis has failed to raise a colorable claim that the FBI 302s that he seeks are "statements" for purposes of the Jencks Act. Before trial, the government told Willis that it was producing the three FBI 302s that had been shown to and adopted by government witnesses and therefore qualified as Jencks Act statements. Willis has failed to offer any reason to believe that the government was not telling the full truth. He has not produced any support for a claim that the 302s concerning interviews with Ettles were signed or adopted by him (or even seen by him) or that they contained substantially verbatim statements that were contemporaneously recorded.
We also find that Willis's claim fails under Brady. The only support for Willis's claim that the FBI 302s are material under the Bagley standard arises from statements made by an FBI agent at Ettles's sentencing hearing. In response to a question by the prosecutor concerning one of Ettles's objections to his presentence report, the agent stated that Ettles had told him during an interview that Willis had come up with the idea of seeking nominee borrowers for RecCo, but that Ettles had admitted discussing the idea with his two partners. This statement shows that Ettles directly inculpated, rather than exculpated, Willis. Accordingly, even if the 302s contained a few seemingly inconsistent statements with which Willis could have further impeached Ettles, we are confident that the reports as a whole were not material under Bagley because they directly inculpated Willis. Willis has failed to show how these reports undermine confidence in the trial's outcome.
Next, Willis argues that the district court incorrectly applied Eighth Circuit precedent in allowing the government to introduce evidence concerning Ettles and Hopp's plea agreements and guilty pleas. Although the government stepped close to the line on this issue, we disagree with Willis's contention that the district court committed reversible error.
The district court has broad discretion in admitting evidence, and its decision will be overturned on appeal only if its ruling constitutes an abuse of that discretion. United States v. Collins, 949 F.2d 1029, 1031 (8th Cir.1991). Moreover, "[t]he discretion accorded lower courts in determining admissibility of evidence 'is particularly broad in a conspiracy trial.' " United States v. Kroh, 915 F.2d 326, 331 (8th Cir.1990) (en banc) (citation omitted).
In this circuit, the rule is well-established that "a confederate's guilty plea is admissible, even on the Government's direct examination of the witness, as evidence of the witness' [sic] credibility, or of his acknowledgement of participation in the offense." Kroh, 915 F.2d at 331 (emphasis in original) (quoting United States v. Hutchings, 751 F.2d 230, 237 (8th Cir.1984), cert. denied, 474 U.S. 829, 106 S.Ct. 92, 88 L.Ed.2d 75 (1985)); see also United States v. Drews, 877 F.2d 10, 12 (8th Cir.1989); United States v. Braidlow, 806 F.2d 781, 783 (8th Cir.1986). "The witness's plea or evidence thereof, however, 'cannot be used as substantive evidence of the defendant's guilt,' and the jury should be so instructed." Kroh, 915 F.2d at 331 (quoting Hutchings, 751 F.2d at 237).
Where evidence concerning confederates' guilty pleas was not used as substantive evidence of the defendant's guilt and was followed by a limiting instruction, we have given broad discretion to the court in ruling on the admission of such evidence. See Kroh, 915 F.2d at 331-32 (no error where government mentioned confederate's plea three times in course of six-day trial and court twice gave limiting instruction); Braidlow 806 F.2d at 783 (evidence of guilty pleas not improperly used or emphasized and limiting instruction given each time evidence of pleas introduced); Hutchings, 751 F.2d at 237 (no abuse of discretion in admitting evidence of defendant's employee's guilty plea to aiding and abetting defendant in relation to the offenses charged against defendant where evidence not emphasized and limiting instruction given). Moreover, we have even upheld the district court's admission of witness-coconspirators' written plea agreements. Drews, 877 F.2d at 12 (no suggestion by government that it had independently verified coconspirators' testimony and limiting instruction given).
In this case, the Assistant United States Attorney (the "prosecutor") mentioned Ettles and Hopp's pleas five times during the course of a complex five-day trial. Defense counsel did not object to the prosecutor's mentioning of the guilty pleas during opening statements. Accordingly, Willis has waived any objection concerning those statements. See United States v. Trent, 949 F.2d 998, 999 (8th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 3005, 120 L.Ed.2d 880 (1992).
With respect to the other times that the prosecutor mentioned the guilty pleas, we cannot say that the district court abused its discretion in admitting the evidence or argument. In the case of Hopp's plea, the prosecutor dealt only briefly with the plea in the midst of the direct examination, and the district court immediately gave an appropriate limiting instruction. Although the prosecutor did begin her direct examination of Ettles by asking him whether he had pled guilty to bank fraud on the same facts as were alleged in Willis's indictment, her questions outlining the terms of the plea comprise only one and a half pages of transcript. Moreover, the district court again immediately gave the jury a limiting instruction. The prosecutor then did not mention Ettles's plea during the remainder of her lengthy direct and redirect examination. We also find that it was proper for the prosecutor to introduce evidence concerning Ettles's promise to testify truthfully to rehabilitate Ettles's credibility when recalled as a rebuttal witness. See Kroh, 915 F.2d at 332 (holding that it was proper for government to ask about similar "truthful testimony" promise on redirect to impeach the confederate's cross-examination testimony).
It is clear that at no time was the evidence of Ettles and Hopp's guilty pleas used as substantive evidence of Willis's guilt. We hold that when considered in the context of five days of testimony and in light of the district court's limiting instructions both during Ettles and Hopp's testimony and at the end of the trial, the district court did not abuse its discretion in admitting evidence of the confederates' guilty pleas.
Willis next argues that the district court violated his right to confront the witnesses against him guaranteed by the Sixth Amendment by improperly cutting off his cross-examination of Ettles and Howard Legge, one of the officers at First Federal responsible for reviewing Ettles's actions.
The Confrontation Clause of the Sixth Amendment guarantees to a defendant the opportunity for effective cross-examination of witnesses against him, including inquiry into the witnesses' motivation and bias. Delaware v. Van Arsdall, 475 U.S. 673, 678-79, 106 S.Ct. 1431, 1434-35, 89 L.Ed.2d 674 (1986). The Confrontation Clause, however, does not prevent a trial judge from placing limits on defense counsel's cross-examination of government witnesses. Id. at 679, 106 S.Ct. at 1435. "On the contrary, trial judges retain wide latitude insofar as the Confrontation Clause is concerned to impose reasonable limits on such cross-examination based on concerns about, among other things, harassment, prejudice, confusion of the issues, the witness' safety, or interrogation that is repetitive or only marginally relevant." Id.; see also United States v. Klauer, 856 F.2d 1147, 1149 (8th Cir.1988). "A trial court's decision to limit cross-examination will not be reversed 'unless there has been a clear abuse of discretion and a showing of prejudice to defendant.' " Klauer, 856 F.2d at 1149 (quoting United States v. Lee, 743 F.2d 1240, 1249 (8th Cir.1984)).
Willis's extensive cross-examination of Ettles comprises forty-nine pages of trial transcript. The only limitation on the cross-examination occurred when defense counsel attempted to pin Ettles down concerning the dollar amount of kickbacks that he had received from Stuart Swann in the unrelated fraudulent scheme. At that point, the district court sustained the government's objection as to the dollar amount. The district court did allow defense counsel to elicit testimony from Ettles that he had in fact received cash kickbacks from Swann and that he had pled guilty to a charge involving those kickbacks.
We fail to see how the district court abused its discretion in a way that prevented Willis from confronting Ettles. The Swann scheme was a totally unrelated fraud and thus only marginally relevant to the RecCo loans that were the focus of Willis's trial. Moreover, the district court did allow Willis to force Ettles to admit that he had in fact received kickbacks from Swann in addition to Willis. Any testimony concerning the specific amount would have had no real relevance to the case against Willis.
The government also called Howard Legge, a former First Federal vice president in charge of consumer lending. Legge testified on direct examination regarding the bank's internal procedures and regulations and the necessity of following those procedures to ensure informed decision-making by First Federal. On cross-examination, defense counsel asked Legge whether there were situations other than the RecCo nominee loans in which Ettles's superiors at First Federal had found him to be violating the bank's policies. When defense counsel attempted to ask Legge about a specific instance of Ettles's failure to follow bank policy, the government objected. The district court sustained the objection.
Willis argues that had he been able to further cross-examine Legge on this point, he would have been able to bolster the defense's theory that Ettles was acting entirely on his own in improperly making the nominee loans and that Ettles hid his improprieties concerning the RecCo loans from Willis to avoid detection of all of Ettles's other schemes.
We cannot agree that the district court's ruling constituted an abuse of discretion. Ettles's testimony that he had improperly completed the loan applications for the RecCo nominee borrowers was uncontested. Thus, the issue that remained for the jury to decide was whether Willis had known of and been involved with the false loan applications. That Ettles had engaged in improper practices with other individuals at other times had no real relevance to the question of Willis's knowledge and participation. Accordingly, the district court did not err in restraining Willis's counsel from using Legge to place Ettles on trial for unrelated events.
Willis raises several arguments concerning his sentence. First, he argues that the district court incorrectly imposed, sua sponte, a two-level enhancement for obstruction of justice under U.S.S.G. § 3C1.1 without providing sufficient notice. Willis relies on Burns v. United States, in which the Supreme Court held that "before a district court can depart upward on a ground not identified in the presentence report or in a presentencing submission by the Government, [Federal Rule of Criminal Procedure] 32 requires that the district court give the parties reasonable notice that it is contemplating such a ruling." --- U.S. ----, ----, 111 S.Ct. 2182, 2187, 115 L.Ed.2d 123 (1991) (emphasis added).
Willis's Presentence Report ("PSR") stated that "[t]he probation officer has no information indicating the defendant impeded or obstructed justice." Nonetheless, at the sentencing hearing the district court informed Willis that it was considering imposing an obstruction enhancement. After hearing argument on the issue by defense counsel, the court ultimately decided to impose the enhancement based on the evidence it had heard at trial.
Willis's argument that the district court could not impose the enhancement without giving prior notice of its intention to do so is foreclosed by our recent opinion in United States v. Adipietro, 983 F.2d 1468 (8th Cir.1993). In Adipietro, the district court, sua sponte, imposed a three-level enhancement under U.S.S.G. 3B1.1(b) for being a manager or supervisor in a criminal activity involving five or more participants, although the presentence report had recommended only a two-level enhancement under section 3B1.1(c). In response to the same notice argument now advanced by Willis, we held that "Burns does not mandate that adequate notice be given before a district court [sua sponte] addresses an adjustment or enhancement." Id. at 1473 (emphasis in original); see also United States v. Canada, 960 F.2d 263, 267 (1st Cir.1992) (holding that guidelines themselves provide sufficient notice of potential adjustments to meet Rule 32's requirements where PSR contained similar "no information" language). Likewise, given the fact that Willis knew of the potential bases for enhancement in the guidelines and the potential factual bases in the trial testimony, he cannot now claim that he was surprised and unable to comment at the sentencing hearing.
Willis also argues that the district court's reasons for imposing the obstruction enhancement were insufficient. We disagree. The district court found that Willis had given perjurious testimony during the course of the trial, especially regarding the Hewitt loan application, and that the trial testimony had shown that Willis had sent kickback checks to Ettles in the name of a fictitious company to avoid detection. The court relied on evidence that it had heard at trial, and we cannot say that its express factual findings were clearly erroneous. See United States v. Womack, 985 F.2d 395, 398 (8th Cir.1993) (perjury justifies obstruction enhancement under U.S.S.G. § 3C1.1); United States v. Johnson, 962 F.2d 1308, 1313 (8th Cir.1992) (review district court's factual findings supporting obstruction enhancement for clear error), cert denied sub nom. Woodards v. United States, --- U.S. ----, 113 S.Ct. 1418, 122 L.Ed.2d 788 (1993).
Willis challenges the district court's six level increase to his base offense level based on the court's calculation of the amount of loss caused to the bank by Willis's fraud. We review the district court's calculation of loss under U.S.S.G. § 2F1.1 as a factual issue under the clearly erroneous standard. See United States v. George, 986 F.2d 1176, 1179 (8th Cir.1993); United States v. Earles, 955 F.2d 1175, 1180 (8th Cir.1992). We review de novo, however, the district court's interpretation of the guidelines and the application of that interpretation to the case's particular facts. See United States v. Mills, 987 F.2d 1311, 1315 (8th Cir.1993).
In fraudulent loan application cases ..., the loss is the actual loss to the victim (or if the loss has not yet come about, the expected loss). For example, if a defendant fraudulently obtains a loan by misrepresenting the value of his assets, the loss is the amount of the loan not repaid at the time the offense is discovered, reduced by the amount the lending institution has recovered, or can expect to recover, from any assets pledged to secure the loan.
U.S.S.G. § 2F1.1, comment. (n. 7(b)) (as amended, effective November 1, 1991).
Willis argues that the addition of subsection (b)'s language in the 1991 version of Application Note 7 mandates that the district court should have calculated the loss in Willis's case as the actual (net) loss suffered by First Federal after Willis and his partners had repaid part of the nominee loans. We do not agree.
Although the language in subsection (b) speaks in terms of actual loss calculated after a bank's recovery, we believe that the 1991 version of Application Note 7 still allowed the district court to calculate the loss in a fraudulent loan application case on the alternative basis of the amount of loss intended by the fraudfeasor. The first paragraph in Application Note 7 specifically stated that "if an intended loss that the defendant was attempting to inflict can be determined, this figure will be used if it is greater than the actual loss." U.S.S.G. § 2F1.1, comment. (n. 7) (Nov. 1991). Moreover, we note that the Sentencing Commission clarified this point in the 1992 version of Note 7 by expressly stating in subsection (b) that "where the intended loss is greater than the actual loss, the intended loss is to be used." U.S.S.G. App.C., amend. 470 (Nov. 1992). Although the clarification contained in the 1992 amendment does not compel our conclusion regarding the 1991 version of Application Note 7, it does support our interpretation of the 1991 version.
This does not mean that a sentencing court is always free to use the face value of fraudulently obtained loans as the loss amount for applying the adjustments in section 2F1.1. Application Note 7 specifically directs the sentencing court to use either intended or actual loss, and as we noted in Edgar, "intended loss is not the same as possible or potential loss." 971 F.2d at 95. Where the district court finds, however, that the defendant intended to defraud the bank of the entire amount of the loans obtained by a false loan application, it remains free to use the total amount as the loss for purposes of section 2F1.1. Cf. United States v. Ravoy, 994 F.2d 1332, 1334-35 (8th Cir.1993) (upholding district court's finding that loss amount in equity skimming case should include the lender's loss on a property sold by defendants to individual who subsequently defaulted on mortgage where evidence showed that defendants intended the loss during time they held the property); Mills, 987 F.2d at 1316 (upholding district court's finding of loss as full amount of money taken from victims although defendant had later repaid some of the money in response to threats of legal action); United States v. Saunders, 957 F.2d 1488, 1494 (8th Cir.) (affirming district court's calculation of loss as entire amount of nonsufficient funds checks written by defendant although defendant's girlfriend had covered some of the checks), cert. denied, --- U.S. ----, 113 S.Ct. 256, 121 L.Ed.2d 187 (1992), and cert. denied sub nom., Coleman v. United States, --- U.S. ----, 113 S.Ct. 991, 122 L.Ed.2d 143 (1993).
At the sentencing hearing, the district court rejected Willis's argument that it should use the actual net loss suffered by First Federal as the amount of loss under section 2F1.1. The court agreed with the government that Willis had intended to defraud First Federal to the extent of the entire amount of the seven nominee loans, calculated in the PSR to total more than $77,000. We cannot say that this finding is clearly erroneous. All of the loans were unsecured, with the exception of the loan to Becky Hewitt, for which Willis put up as collateral a Davis Tailors' van worth only some two thousand dollars. Moreover, Willis and his partners repeatedly persuaded the nominee borrowers into renewing the loans when the partners were unable to make the necessary payments.
The district court increased Willis's offense level by four levels under U.S.S.G. § 3B1.1 for being an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive.
Willis initially challenges the enhancement on the grounds that it double counted conduct that the district court used to support a two-level adjustment for more than minimal planning under section 2F1.1(b)(2). Willis relies on United States v. Romano, 970 F.2d 164, 167 (6th Cir.1992), in which the Sixth Circuit held that " § 3B1.1(a) already takes into account the conduct penalized in § 2F1.1(b)(2) because, by its very nature, being an organizer or leader of more than five persons necessitates more than minimal planning."
We respectfully disagree with the Sixth Circuit's conclusion. The sentencing guidelines do not expressly forbid the application of both section 2F1.1(b)(2) and section 3B1.1. Moreover, as Judge Siler noted in dissent in Romano, the enhancement under section 2F1.1(b)(2) "increases the base offense level for the crime itself, whereas § 3B1.1 provides an aggravating role enhancement because the defendant was the organizer or leader of a criminal activity with several participants." The two sections consider different aspects of the defendant's conduct. Section 2F1.1(b)(2) increases the punishment where the defendant's crime evidenced planning and forethought, showing a disregard for the rule of law. Section 3B1.1 recognizes the additional culpability that a defendant should bear for being a leader or organizer of a criminal activity that involves more than five participants. The Sentencing Commission based the enhancement for the defendant's role in the offense on the grounds that leaders or organizers "tend to profit more from [the crime] and present a greater danger to the public and/or are more likely to recidivate." U.S.S.G. § 3B1.1, comment. (backg'd). We agree with Judge Siler's conclusion that "if the crime has its base offense level increased for more than minimal planning it should be enhanced again if the defendant is the one who organized or led the planning of the offense." Romano, 970 F.2d at 168 (Siler, J., dissenting).
With respect to the district court's factual findings, "[w]e will reverse a determination of a defendant's role in criminal activity only if it is clearly erroneous." United States v. Schwarck, 961 F.2d 121, 123 (8th Cir.1992). We find no error here. The district court found that Willis was the "dominating force in this conspiracy." The trial testimony showed that Willis exercised control over the financial affairs at both Davis Tailors and the Rec Bowl and directed the proceeds from the nominee loans to avoid detection and keep the businesses afloat. Moreover, Willis was actively involved in recruiting most of the nominee borrowers.
We have considered Willis's additional claims of error and find them to be without merit.


While Canada and the United States share a legal heritage grounded in the principles of English common law, a host of procedural and substantive differences exist between the judicial systems of the two nations. As economic activity, tourism and other contacts between the two countries has expanded in recent years, a growing number of prospective clients face legal issues which implicate “cross-border” concerns. When approached by a plaintiff whose interests may reach across the international border, an understanding of the subtle differences between the American and Canadian legal systems is critical. A working knowledge of the areas in which the two systems diverge – especially in the fields of tort law – can increase the likelihood that the law most favorable to your client’s interests are applied to the facts presented.
Products liability law is one subspecies in the tort field where this maxim holds particularly true. While products liability litigation in Canada is governed by traditional principles of negligence, the American system has generally adopted a “strict liability” approach to injuries caused by defective products – an approach which focuses more on the product itself, and less on the manufacturer’s knowledge or intent at the time the product was made. The American approach holds significant advantages for an injured plaintiff – provided that the plaintiff can first convince an American court to apply American law to its case. But when a Canadian plaintiff is injured by an American-manufactured product, how do the courts determine where the trial should be held, and which country’s law to apply? Do American courts look merely to the law of the place where the injury occurred for answers, or are other factors important as well? Could a Canadian injured in Canada by an American-made product seek redress in U.S. courts, under U.S. law?
Many of these questions were addressed in Tepei v. Uniroyal Goodrich Tire Company, et. al., a products liability and personal injury action for six British Columbia plaintiffs which my firm recently brought to judgment in Washington state. Arising out of an October 1996 tire blowout and rollover accident on Interstate 5 in southwest Washington, the Tepei case took over seven years to conclude – in large part because of the wrangling between the parties over whether Washington or British Columbia law should apply to the product liability claims alleged against the tire manufacturer. At the conclusion of an eight week trial on April 23, 2004, the Lewis County, Washington jury awarded $9.1m US in damages to the six plaintiffs – a verdict which the Vancouver Sun reported as the largest judgment ever entered against an ICBCinsured driver for negligence. While the jury ultimately concluded that the driver’s negligence was the sole cause of the plaintiffs’ injuries, the Tepei case offers its most important lessons for future B.C. plaintiffs who find themselves injured by American products, and illustrates how thorough knowledge of the laws on both sides of the border is essential to maximizing your client’s recovery whenever United States law is implicated in litigation.
Facts of the Case On October 27, 1996, the Tepei family was involved in a single vehicle accident when the right rear tire on their 1991 Toyota Previa minivan blew out approximately 10 miles south of Chehalis, Washington. The Tepeis – father Peter, mother Dina, and six children – emigrated to Canada from Romania in 1983. Originally settling in Ontario, the family eventually migrated west to Port Coquitlam to be closer to relatives in Oregon and Washington. The Tepeis made regular trips to the Portland area to visit their extended family, and were returning from a wedding in Portland on the day of the accident. Peter was driving the vehicle, with Dina in the front passenger seat, their two daughters Angelica and Camelia in the middle bench seat, and their three sons Adrian, Ben and Dan in the rear of the van. The only member of the Tepei family not in the car on the day of the accident was the family’s oldest son, Christian. Tragically, Christian had been involved in an auto accident in 1995 which rendered him a paraplegic, making long-distance travel difficult.
Heading north from the Portland area, Peter Tepei noticed on two occasions that his minivan appeared to be “running rough” – but he assumed that the car’s handling had something to do with the pavement, and the problem quickly passed. As the vehicle reached milepost 67 on Interstate 5, both driver and passengers heard a loud bang, followed by repetitive noises coming from the right rear wheel well of the vehicle. Peter, who had worked as a truck driver both in Romania and Canada, soon suspected that the noise was coming from his tire. He maintained control of the vehicle for approximately 15 to 20 seconds after first recognizing there was a problem, but was unable to get to the shoulder of the road or significantly slow his vehicle on account of adjacent traffic on the highway. The right rear tire eventually suffered a catastrophic loss of air pressure, causing Peter to lose control of the vehicle approximately three seconds after the final blowout occurred. The Previa flipped over the median barrier of the highway, eventually coming to rest upside-down in the southbound lanes of Interstate 5. Adrian, Angelica Ben and Camelia were ejected from the vehicle, while the other family members remained inside the van. Amazingly, all family members survived the collision.
The Tepeis had purchased the Toyota Previa in February of 1996 from a used car lot in Port Moody. The right rear tire on the vehicle was a Uniroyal Tiger Paw XTM, which had been manufactured at Uniroyal’s Ardmore, Oklahoma plant in October of 1990. Uniroyal had since been purchased by Michelin North America, meaning that Michelin would be subject to successor liability for any injuries proven to be caused by Uniroyal’s product. The tire in question had been on the vehicle at the time the Tepeis purchased it, and still had approximately 20 percent of its usable tread remaining. It was unknown whether the tire was original issue equipment for the Previa, or if it had been purchased after-market by the van’s previous owner.
The immediate injuries sustained by the family members in the collision were severe. Adrian suffered a broken collarbone and collapsed lung, as well as a closed head injury. Angelica sustained multiple compound fractures to her thoracic and anterior vertebrae. Ben had a severe compound fracture to his right elbow, while Dan presented with a T-11 transverse process fracture. Remarkably, despite being ejected, Camelia Tepei was the least injured member of the family, sustaining only lacerations and facial scars, while Dina Tepei suffered soft tissue neck and back injury along with the severe emotional distress caused by witnessing the horrific trauma sustained by five of her six children.
As time passed, some of the family members recovered, while others found themselves suffering from after-effects of the collision which were not immediately apparent at the scene. Both Dina and Camelia’s injuries resolved with modest medical treatment, although the emotional trauma caused by the accident remained. Angelica spent twelve days in the hospital post-accident, and developed chronic back pain which significantly limited her daily activities. Ben’s elbow fracture did not heal properly, leading to three months in the hospital, significant connective tissue and bone loss, and a permanently withered dominant arm/forearm. Adrian, who spent several days in the hospital post-collision, was later found to have sustained frontal lobe damage as a result of his head injury, leading to memory loss and aggression control problems.
Of all the family members, Dan Tepei’s situation was most tragic. A gregarious, outgoing person before the accident, Dan became withdrawn and increasingly forgetful in the months following the collision. His co-workers noticed an immediate change in his behavior – eventually leading his employer to let him go from his job as a stone cutter, citing safety concerns. Approximately six months after the collision, Dan was institutionalized as a result of increasingly violent outbursts and erratic behavior. He was eventually diagnosed as suffering from a schizophrenia-like psychosis, which his family and medical providers attributed to a head injury sustained in the collision.
My Initial Involvement in the Case Shortly after their accident, the Tepeis retained Matt Fahey of Epstein Wood in Vancouver to pursue claims for injuries against their father’s ICBC policy, in his capacity as driver of the vehicle. ICBC’s initial investigation, in turn, suggested that the tire itself might be partially or wholly at fault for causing the accident. Early in its claims investigation, ICBC retained William Max Nonamaker, a tire failure analyst from Akron, Ohio with years of experience inside and outside the tire industry. Mr. Nonamaker’s initial evaluation of the remnants of the Tepeis’ right rear tire suggested that the tire may have had a foreign substance manufactured into the body of the tire itself, which he felt might have contributed to the belt separation and blowout that eventually occurred. Since the Tepeis’ case would need to be pursued in Washington state, either as a predicate to asserting an underinsured motorist claim under the Insurance (Motor Vehicle) Act, or as an independent action against the American manufacturer of the tire, Matt Fahey approached me about assisting him with prosecution of the action in Washington state. As one of a limited number of attorneys cross-licensed in both British Columbia and Washington, my firm was uniquely situated to join with Mr. Fahey and the Tepeis in navigating the thickets of Canadian and American law that this case was certain to pass through on its way to final judgment.
The Loan Agreement One of the first issues that the parties needed to confront was the role that Peter Tepei would play in the case. As the driver of the vehicle in which his family was traveling, Peter was an essential defendant in any action we would file on behalf of the family. Likewise, a judgment against Peter would have to be obtained before the family could proceed with an underinsured action against ICBC – an action I was certain would follow any lawsuit, given the severity of the plaintiffs’ injuries and Peter’s $200,000 CDN liability limits under his own ICBC policy.
Washington law gave us added incentive to retain Peter as a defendant through to judgment in the action. Washington’s compensatory damages scheme permits “fault-free” plaintiffs to hold multiple defendants jointly and severally liable for all injuries caused. If the plaintiffs settled with Peter prior to trial, his share of liability would be forever extinguished by the settlement – preventing us from having a chance of collecting Peter’s share of any damages against the tire manufacturer, in the event that both parties were found to have shared fault for the collision.
Still, as a family member, Peter’s interests were not entirely adverse to those of the plaintiffs. He knew better than anyone the extent to which his family had suffered, and wanted to see his family receive fair compensation for their injuries. Further, Peter expressed a strong belief that the tire was primarily at fault for the accident, and wished to have an opportunity to exonerate himself through the litigation process.
In July of 1999, prior to filing suit in this action, the plaintiffs, Peter Tepei and ICBC reached an agreement which provided some immediate financial and strategic benefits to the plaintiffs while ensuring that any eventual damages awared would be governed by Washington’s joint and several liability laws. The plaintiffs received $150,000 CDN from Peter Tepei, paid by ICBC out of the partial proceeds of Peter Tepei’s Autoplan coverage. In exchange for this payment, which was defined by the parties as an ‘advance loan’ and not a settlement, the plaintiffs agreed not to execute any judgment against Peter obtained in the Washington state action beyond his $200,000 CDN policy limits. The parties further agreed that Peter’s counsel would assist the plaintiffs in the prosecution of claims against the tire manufacturer, and established a pro-rata repayment of ICBC’s legal fees incurred in Peter’s defense in the event that the parties succeeded in establishing liability on the part of Michelin (Uniroyal’s successor-in-interest). Finally, the parties agreed that the loan agreement in no way impaired the ability of the plaintiffs to pursue an UIM claim against ICBC in the event of a judgment entered solely against Peter Tepei.
The “loan agreement” provided several tangible benefits to the plaintiffs. It provided some immediate financial benefit to my clients – funds which were used both to satisfy uncompensated expenses arising from the accident, and to defray some of the costs of what we expected would be costly litigation against Michelin regarding the tire’s role in the accident. The agreement also provided a framework for the position that Peter Tepei and his counsel would play in respect to the litigation – establishing that while Peter would contest his own liability for the collision, he would join us in aggressively pursuing a case against Michelin, and would not challenge the damages claims asserted by the plaintiffs. Most importantly, the fact that Peter Tepei left $50,000 CDN in liability “on the table” to be determined in the Washington action ensured that Peter would remain in the action through to judgment and preserve joint and several liability with Michelin in the event of a plaintiff verdict (an assumption that Michelin later challenged, as you will see). Shortly after negotiating the loan agreement, the plaintiffs filed their complaint in Lewis County, Washington Superior Court, alleging negligence claims against Peter Tepei and strict liability defective products claims against Uniroyal/Michelin.
From the outset, it became clear to us that Michelin intended to contest our allegations of defective manufacture and design with every legal means available. Initial discovery began during the year 2000, but did not progress rapidly (in large part due to the fact that several of the plaintiffs had yet to reach a point of medical stability where the full extent of their claims could be evaluated by the parties). Michelin retained outside counsel in Los Angeles to take the lead in managing the litigation. In addition, the manufacturer retained the law firm of Perkins Coie in Seattle to assist them in addressing the cross-border issues implicated by a Canadian family suing a U.S. manufacturer for a U.S. accident. Perkins Coie is perhaps best known in the Seattle legal community for its relationship with the Boeing Corporation, which has faced numerous product liability lawsuits brought by foreign nationals in the U.S. courts over the years. The appearance of Perkins Coie as co-counsel suggested that Michelin intended to contest U.S. jurisdiction and the applicability of U.S. law to our accident – despite the fact that the accident had occurred in Washington, and the Uniroyal Tiger Paw was designed and manufactured in the United States.
In February of 2001, Michelin filed a motion in Lewis County seeking to have our lawsuit dismissed to British Columbia under the doctrine of forum non conveniens. As in Canada, courts in the United States are vested with discretionary power to decline jurisdiction over any case where the interests of justice and convenience would be strongly favored by removal to an alternative forum. However, the American courts have developed a framework for balancing the factors for and against FNC dismissal which varies from the Canadian approach.
The seminal forum non conveniens case outlining the American approach, Gulf Oil Corp. v. Gilbert1 ,requires that a defendant seeking FNC dismissal first establish that an adequate alternative forum exists for the action to be heard. The “adequate alternative” test is generally an easy threshold for a defendant to cross. A forum may be considered “adequate” for FNC purposes even if it offers drastically reduced compensation to an injured plaintiff, or bars certain elements of a plaintiff’s claims. So long as “the remedy provided by the alternative forum is [not] so clearly inadequate or unsatisfactory that it is no remedy at all”2 , the “adequate forum” prong of Gulf Oil is generally satisfied.
In contrast, “public interest” factors implicate broader policy concerns relevant to the fora at issue, including  the congestion of court dockets in the proposed fora  the risk of imposing jury duty on people of a community with no significant relation to the litigation  the local interest in having localized controversies decided at home, and  the preference for holding trial in the forum whose law is most likely to apply to the issues presented in the litigation.
The Gulf Oil factors, which were first endorsed and employed by the Washington Supreme Court in 1976 , encourage the trial court to conduct a complex balancing of competing interests – which inevitably lead to factspecific decisions arising out of the reported cases. While the discretionary nature of the doctrine and the strong preference of the American courts to respect a plaintiff’s choice of forum certainly worked in my clients’ favour, Michelin was able to find ample fodder from which to craft an argument in favor of FNC dismissal to British Columbia, where both liability and damages law would work strongly in Michelin’s favor.
To enhance their chances of securing a dismissal, Michelin offered to waive any defense they would possess under the British Columbia statute of limitations were the case dismissed to Canada. The litigation was filed in Washington within its three year statute of limitations for tort actions, but after the two year statute had expired in British Columbia. Wisely, Michelin recognized that a dismissal to Canada which ended in an outright dismissal on statute of limitations grounds would deprive the plaintiffs of any remedy at all – thus bringing into question whether B.C. would function as an “adequate alternative forum” for the case.
In response, the plaintiffs argued that Michelin’s offer to waive the statute of limitations defense did not guarantee that a B.C. court would accept jurisdiction over the case. Discovery had established that while Michelin was licensed to do business in Washington, it conducted no business activities in British Columbia. Significant questions regarding personal jurisdiction and statute of limitations concerns remained, raising the possibility that B.C. might not accept the case – thus failing to satisfy the “adequate alternative” prong of the Gulf Oil test.
1 330 U.S. 501 (1947). 2 Piper Aircraft v. Reyno, 454 U.S. 235, 254 (1981). 3 Gulf Oil, 330 U.S. at 508-09. 4 See Johnson v. Spider Staging Corp., 87 Wn.2d 577, 555 P.2d 997. 5 See generally RCW 7.72 et. seq., and the cases interpreting same. 6 RCW 7.72.030(2)(a). 7 RCW 7.72.030(3). 8 RCW 7.72.030(1)(a). 9 See Meyers v. Boeing Co., 115 Wn.2d 123, 133 at n.6, 794 P.2d 1272(1990). 10 See Washington Civil Rule 9(k)(3). 11 See Johnson, footnote 4, supra. 12 Restatement(Second) of Conflict of Laws §6(2). 13 Restatement(Second) of Conflict of Laws §145(2). 14 E.g., see Kozoway v. Massey-Ferguson, Inc., 722 F. Supp. 641 (D. Colo. 1989).
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