JAMES HAMILTON, PETITIONER V. UNITED STATES OF AMERICA No. 90-449 In The Supreme Court Of The United States October Term, 1990 On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Fifth Circuit Brief For The United States In Opposition TABLE OF CONTENTS Question presented Opinions below Jurisdiction Statement Argument Conclusion OPINIONS BELOW The opinions of the court of appeals (Pet. App. 13-16) and the district court (App., infra, 1a-10a) are not reported. JURISDICTION The judgment of the court of appeals was entered on April 26, 1990, and the petition for a writ of certiorari was filed on July 25, 1990. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED Whether, in this civil forfeiture action, the courts below properly held that petitioner failed to establish his standing to contest the forfeiture. STATEMENT The United States filed this action in the United States District Court for the Northern District of Mississippi, seeking civil forfeiture of $24,000 in currency seized from petitioner's residence during the execution of a warrant authorizing a search for drugs. Following a bench trial, the district court entered judgment for the United States, holding that petitioner had not established his standing to contest the forfeiture and that the United States in any event had established its entitlement to forfeiture. App., infra, 1a-10a). The court of appeals affirmed on the standing ground. Pet. App. 13-16. 1. In September 1986, state law enforcement agents executing a warrant authorizing the search of petitioner's residence seized marijuana, assorted drug paraphernalia, several weapons, and $24,000 in United States currency. The currency was found in packets of $1000 each in two bags hidden within the cinderblock foundation under the house. Next to the currency was a suitcase containing 18 packages of marijuana weighing 18 1/2 pounds. Petitioner was convicted in state court of possession of marijuana with intent to distribute it, and his conviction was affirmed on appeal. Hamilton v. State, 556 So. 2d 685 (Miss. 1990); Pet. App. 14; App., infra, 3a-4a. 2. In November 1987, at the request of local authorities, the United States took possession of the $24,000 and filed a complaint in federal district court seeking forfeiture of the currency under 21 U.S.C. 881(a)(6). That section provides for the forfeiture of, inter alia, all moneys and other things of value furnished or intended to be furnished in exchange for a controlled substance, all proceeds of such an exchange, and all moneys used or intended to be used to facilitate a violation of the federal drug laws. Section 881(a)(6) further provides that no property shall be forfeited "to the extent of the interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner." Petitioner filed a claim to the currency. At trial, however, he did not testify or present any evidence to show that he had an interest in the currency. The district court granted judgment for the United States. App., infra, 1a-10a. It first held that petitioner lacked standing to contest the forfeiture. Id. at 5a-7a. The court pointed out that Section 881(a)(6) excludes from forfeiture only those interests in seized property that belong to an innocent "owner." App., infra, 5a-6a. Here, the court reasoned, petitioner failed to bring himself within that provision because he "did not testify and admittedly did not submit any evidence of an interest in the seized money." Id. at 6a. In the alternative, the court held that there was probable cause to believe that the currency had been obtained in exchange for drugs, in view of its location and proximity to the marijuana and drug paraphernalia, and that it therefore was properly forfeited to the United States. Id. at 7a-8a. The district court also rejected petitioner's contentions that the currency was seized pursuant to an illegal search and that the delay in instituting the civil forfeiture action violated due process. Id. at 8a-10a. 3. The court of appeals affirmed the judgment of forfeiture on the ground that petitioner lacked standing to contest the forfeiture. Pet. App. 13-16. The court of appeals reasoned that only an owner of property has standing under 21 U.S.C. 881(a)(6) to contest a forfeiture, that the burden is on the claimant to establish his standing, and that a court must decide a standing issue even if it is not raised by the parties. Pet. App. 14-15, 16. In this case, the court concluded that petitioner did not carry his burden of establishing standing because he did not testify at trial and admittedly did not offer any evidence that he had an ownership interest in the $24,000. Although the court recognized that petitioner owned the property from which the currency was seized, it determined that any inference of entitlement to the currency that might have arisen from his ownership of the premises was overcome by his failure to present any evidence of his entitlement, by the government's evidence that petitioner was not working at a job that would generate that kind of income, and by petitioner's assertion in a pretrial interrogatory that he had only a one-fifth possessory interest in the currency. Id. at 15. ARGUMENT The unpublished decision of the court of appeals affirming the judgment of forfeiture because petitioner failed to produce evidence that he had an interest in the currency is correct and does not conflict with any decision of this Court or of another court of appeals. Review therefore is not warranted. 1. The courts have uniformly held that in order to contest a forfeiture, a claimant must first demonstrate a sufficient interest in the property to establish his standing to do so. See, e.g., United States v. One (1) 1976 Cessna Model 201L Aircraft, 890 F.2d 77, 79-80 (8th Cir. 1989); United States v. Property at 4492 S. Livonia Rd., 889 F.2d 1258, 1262 (2d Cir. 1989); Mercado v. United States Customs Service, 873 F.2d 641, 644 (2d Cir. 1989); United States v. Premises Known as 526 Liscum Drive, 866 F.2d 213, 216 (6th Cir. 1989); United States v. United States Currency, in the Amount of $103,387.27, 863 F.2d 555, 560 n.10 (7th Cir. 1988); United States v. One Parcel of Real Property Known as the Rod and Reel Fish Camp, 831 F.2d 566, 567-568 (5th Cir. 1987); United States v. $38,000.00 in United States Currency, 816 F.2d 1538, 1543-1544 (11th Cir. 1987); United States v. $5,644,540.00 in United States Currency, 799 F.2d 1357, 1365 (9th Cir. 1986). The court below correctly invoked that settled principle in this case. Petitioner does not challenge the court of appeals' legal ruling that a claimant in a civil forfeiture action must establish his standing. Instead, petitioner argues (Pet. 6-9) that the district court should not have applied that principle in the circumstances of this case because the standing issue was not specifically identified in the pretrial order. As this Court has recently reiterated, however, a standing issue may (and indeed must) be decided by the court, even if it is not raised by the parties, because standing must appear affirmatively in the record and because the burden is on the party who seeks the exercise of jurisdiction in his favor to demonstrate his standing. FW/PBS, Inc. v. City of Dallas, 110 S. Ct. 596, 607-608 (1990); Juidice v. Vail, 430 U.S. 327, 331-332 (1977); Jenkins v. McKeithen, 395 U.S. 411, 421 (1969) (opinion of Marshall, J.). The district court therefore properly addressed the standing issue and properly held that petitioner did not have standing in this case (in light of his failure to produce any evidence that he had an interest in the property), even though that issue was not specifically identified in the district court's pretrial order. /1/ Contrary to petitioner's contention (Pet. 7-8), the decision below does not conflict with the decision of any other court of appeals. The appellate decisions cited by petitioner simply sustained district court rulings that declined to allow a party to raise an issue that was precluded by a pretrial order entered pursuant to Fed. R. Civ. P. 16(e). Those decisions do not stand for the quite different proposition petitioner advances -- namely, that it is reversible error for a district court to allow consideration of an issue that was not identified in the pretrial order. And in fact district courts have been held to have the discretion to do so where, as here, the circumstances warrant. See generally 6A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure Section 1527, at 279-286 (2d ed. 1990) (collecting cases). Moreover, the decisions petitioner cites did not involve jurisdictional questions, which, unlike most other issues, can be raised at any time. Petitioner's further contention (Pet. 9-10) that the district court's consideration of the standing issue violated due process is also without merit. Since the requirement of standing is a fundamental and elementary principle of law -- in the forfeiture context as elsewhere -- petitioner was on notice that he was required to establish his standing in order to prevail in the forfeiture action. /2/ 2. The courts below correctly concluded that petitioner failed to carry his burden of establishing his standing because he did not testify or present any evidence at trial that he had an interest in the $24,000. First, the court of appeals properly questioned whether an inference of a sufficient interest in the currency might have been drawn solely from petitioner's interest in the residence in which it was found. This Court has recently held that standing may not be predicated on inferences and presumptions, and instead must be affirmatively shown. Lujan v. National Wildlife Federation, 110 S. Ct. 3177, 3189 (1990); FW/PBS, Inc. v. City of Dallas, 110 S. Ct. at 608-610. Moreover, as the court of appeals further noted, any such inference that might have been drawn as an initial matter in this case was overcome by petitioner's failure to produce any evidence to corroborate it, by the government's evidence that petitioner was not engaged in any gainful activity that would have generated that sort of income, and by petitioner's assertion in a pretrial interrogatory that he had only a one-fifth possessory interest in the currency. Pet. App. 15. Petitioner does not appear to challenge this fact-bound assessment of the evidence, and it does not in any event warrant further review. 3. Finally, even if we assume, arguendo, that petitioner had standing to contest the forfeiture, the district court nevertheless correctly entered a judgment of forfeiture in favor of the United States. Under 21 U.S.C. 881(a)(6), the United States was only required to establish probable cause to believe that the $24,000 was furnished or intended to be furnished in exchange for a controlled substance; the burden then shifted to petitioner to come forward with evidence of a legitimate source of the funds. 21 U.S.C. 881(d), incorporating 19 U.S.C. 1615; see Wood v. United States, 41 U.S. (16 Pet.) 342, 366 (1842); Taylor v. United States, 44 U.S. (3 How.) 197, 211 (1845); United States v. Parcels of Land, 903 F.2d 36, 38 (1st Cir. 1990); United States v. Premises Known as 526 Liscum Drive, 866 F.2d at 216; United States v. One 1986 Mercedes Benz, 846 F.2d 2, 4 (2d Cir. 1988); United States v. A Single Family Residence & Real Property Located at 900 Rio Vista Blvd., 803 F.2d 625, 628 (11th Cir. 1986). Here, the presence of the $24,000 in 24 separate packets, located next to a suitcase containing 20 pounds of marijuana and placed in the cinder block foundation under the house -- coupled with the contemporaneous seizure of more marijuana, weapons, and assorted drug paraphernalia inside the house -- plainly was ample to establish probable cause to believe that the currency was connected to drug trafficking. Petitioner did not then carry his burden of rebutting that showing by introducing evidence of another, legitimate source or intended use of the funds. In these circumstances, even if the courts below erred in relying on petitioner's failure to introduce any evidence of a legitimate, non-drug-related interest in the property to establish his standing to challenge the forfeiture, the absence of any such evidence required that his claim be rejected on the merits, as the district court held. App., infra, 4a-5a, 7a. There is, in short, no unfairness in the judgment of forfeiture. CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. KENNETH W. STARR Solicitor General ROBERT S. MUELLER, III Assistant Attorney General THOMAS E. BOOTH Attorney NOVEMBER 1990 /1/ Petitioner asserts (Pet. 6) that standing could be inferred from the fact that the government's theory of the civil forfeiture action was that the presence of the marijuana in the house justified a finding that it belonged to petitioner, and that the discovery of the money at the house justified a finding that it belonged to petitioner as well. Contrary to petitioner's contention, however, since this is an in rem forfeiture action, in which the currency (not petitioner) is the defendant, it was not necessary for the government to prove that either the marijuana or the currency belonged to anyone in particular. The discovery of the currency -- in packets of $1000 each, together with marijuana at a hidden location under the house -- was sufficient to support a finding of probable cause to believe that the currency was the proceeds of or used or intended to be used in or to facilitate a drug transaction by someone. Consistent with this view, the complaint did not allege that the defendant currency belonged to petitioner, and the district court concluded that "(t)he storage of the unexplained $24,000.00 in close proximity to a suitcase of eighteen pounds of marijuana in the cinder block foundation of the claimant's house indicates that the money seized is drug-related," especially since it was packaged in a manner known to be used by drug dealers. App., infra, 8a. /2/ Petitioner's argument (Pet. 10-11) that the decision below conflicts with this Court's decisions concerning the requirements for establishing standing under the Fourth Amendment is meritless, because no Fourth Amendment issue is presented in this case. The fact that petitioner owned the premises on which the currency was located did not, in itself, give him an ownership interest in the currency. APPENDIX