United States of America v. Counterfeit Merchandise and Proceeds from Sales of Counterfeit Merchandise, Including: et al, No. 3:2010cv03054 - Document 45 (N.D. Cal. 2011)
Court Description: ORDER Granting 38 Claimant Hui Jin Chen's Request for Appointment of Counsel, Motion to Set Aside Entry of Default, and Motion for Leave to File Verified Claim and Answer; and REPORT AND RECOMMENDATION Re 29 Plaintiff's Motion for Default Judgment. Objections to Report and Recommendation due by 5/17/2011. Signed by Magistrate Judge Edward M. Chen on 5/3/2011. (emcsec, COURT STAFF) (Filed on 5/3/2011)
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United States of America v. Counterfeit Merchandise and Proceeds from ...rchandise, Including: et al Doc. 45 1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 UNITED STATES OF AMERICA, 9 11 For the Northern District of California United States District Court 10 12 13 Plaintiff, v. COUNTERFEIT MERCHANDISE AND PROCEEDS FROM SALES OF COUNTERFEIT MERCHANDISE, et al., Defendants. ___________________________________/ 14 No. C-10-3054 JSW (EMC) ORDER GRANTING CLAIMANT HUI JIN CHEN’S REQUEST FOR APPOINTMENT OF COUNSEL, MOTION TO SET ASIDE ENTRY OF DEFAULT, AND MOTION FOR LEAVE TO FILE VERIFIED CLAIM AND ANSWER; AND REPORT AND RECOMMENDATION RE PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT (Docket Nos. 29, 38) 15 16 Currently pending before the Court is Claimant Hui Jin Chen’s (1) motion to set aside entry 17 of default (2) motion for appointment of counsel, and (3) motion for leave to file a verified claim 18 and answer.1 Also before the Court is the Government’s motion for default judgment (Docket No. 19 29). Having considered the parties’ briefs and accompanying submissions, as well as the oral 20 argument of counsel and all other record evidence, the Court hereby GRANTS Ms. Chen’s motions 21 and RECOMMENDS the Government’s motion be GRANTED IN PART. 22 I. FACTUAL & PROCEDURAL BACKGROUND 23 The Government avers that on or about February 10 2010, its agents seized the defendant in 24 rem counterfeit merchandise and cash from multiple locations. The defendant property is described 25 in 11 groups. Forfeiture Complaint (“Compl.”) ¶¶ 6, 7. The Government also arrested and indicted 26 ten defendants in a related action, including Hui Jin Chen. Compl. ¶ 9. On December 3, 2010, the 27 28 1 As a preliminary matter, the Court grants Ms. Chen’s motion for leave to file each of these motions (Docket No. 38). Dockets.Justia.com 1 Government provided notice of this civil forfeiture action to those known to have an interest. See 2 Cert. of Service, filed 12/3/10. The Government also provided public notice of the forfeiture 3 proceeding via a website posting beginning November 16, 2010. See Docket No. 19. Five people 4 filed timely claims with respect to Group (3) and Group (8) of the captioned defendant property. On 5 February 8, 2011, Judge White stayed this action to prevent interference with the related criminal 6 case. See Docket No. 22 (Order). On the same day, the Government moved for entry of default with 7 respect to the remaining defendant properties, and on February 15, 2011 the Clerk entered default 8 with respect to those defendants. See Docket No. 28 (Feb. 23, 2011 Clerk’s Notice). 9 Ms. Chen appeared in court on August 2, 2010 and was released on $200,000 bond. See Order, No. 10-cr-0565 (Aug. 3, 2010) (Docket No. 29). Ronald Tyler of the Federal Public 11 For the Northern District of California United States District Court 10 Defender’s Office was appointed as counsel for Hui Jin Chen in the criminal case. See Docket No. 12 3, No. 10-cr-0565 (Aug. 2, 2010 Min. Entry). In her papers, Ms. Chen avers that she speaks only 13 Mandarin and requires an interpreter. A pretrial hearing is scheduled for June 9, 2011. Ms. Chen’s 14 motion concerns a portion of the defendant property ($3,987 in cash) identified in Group (6) of the 15 defendants herein. 16 17 II. A. DISCUSSION Motion to Set Aside Entry of Default 18 1. 19 Federal Rule of Civil Procedure 55(c) provides that a “court may set aside an entry of default Legal Standard 20 for good cause.” Fed. R. Civ. P. 55(c). “‘Good cause’ has no precise definition, and its meaning 21 depends on the circumstances of the case.” 55 Moore’s Fed. Prac. – Civ. § 55.70[1]. The Court 22 considers three factors in determining whether “good cause” exists: (1) whether the defaulting party 23 engaged in culpable conduct that led to default; (2) whether the defaulting party had a meritorious 24 defense; or (3) whether reopening the default would prejudice the nondefaulting party. See 25 Franchise Holding II, LLC v. Huntington Rests. Group, Inc., 375 F.3d 922, 925-926 (9th Cir. 2004). 26 The Court may set aside a default if any of the three factors are true. See id. at 926 (emphasizing 27 that the factors are disjunctive). The defendant bears the burden of showing that any factor weighs 28 in favor setting aside the default. See id. However, there is a strong public policy in favor of 2 1 resolving a case on its merits. See Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 2 1985) (noting that default judgments are generally disfavored so that, “[w]henever it is reasonably 3 possible, cases should be decided upon their merits”); United States v. Signed Personal Check No. 4 730 of Yubran S. Mesle, 615 F.3d 1085 (9th Cir. 2010) (“[J]udgment by default is a drastic step 5 appropriate only in extreme circumstances; a case should, wherever possible, be decided on the 6 merits.”). 7 2. 8 Ms. Chen filed a Verified Claim and Statement of Interest in the property stating that the 9 Analysis money at issue belongs to her juvenile child. Docket No. 36. Although she does not describe her defense in factual detail, the Court finds this claim sufficient to raise a plausible defense. Thus, the 11 For the Northern District of California United States District Court 10 Court finds this factor to weighs in Ms. Chen’s favor. 12 The other two factors also weigh in Ms. Chen’s favor. As Ms. Chen points, out, her failure 13 to file a claim does not bar relief unless she acted (or neglected to act) in bad faith. Id. at 1093 14 “[S]imple carelessness is not sufficient to treat a negligent failure to reply as inexcusable, at least 15 without a demonstration that other equitable factors, such as prejudice, weigh heavily in favor of 16 denial of the motion to set aside a default.” Id. There is no evidence of bad faith here. 17 Ms. Chen also argues that the delay would not prejudice the Government since it has 18 “already agreed to a stay of this action as to several other claimants and co-defendants.” Reply at 5. 19 Judge White’s February 8, 2011 Order stays the case is not limited to certain parties: the Order 20 simply states that the case is stayed in light of the pending criminal case because “(1) civil discovery 21 could adversely affect the prosecution of the related criminal case; and (2) proceeding with this civil 22 forfeiture action could adversely burden the right of claimants against self-incrimination. 23 Accordingly, the parties agree, subject to the Court’s approval, to stay this case and to take the 24 currently scheduled case management conference for February 18, 2011 at 1:30 p.m. off calendar 25 until further order of this Court.” Docket No. 22. Even if the stay applied only to the other groups 26 of property for which timely claims were filed (and not Ms. Chen and the Group (6) property she 27 now claims), Plaintiff has not shown it would suffer any prejudice were Ms. Chen allowed to reopen 28 and assert her claim along with the others. 3 1 The Court finds that the equities weigh in favor of granting Ms. Chen’s motion to set aside 2 default. The Court accordingly grants Ms. Chen’s motion to set aside the default as to the cash 3 portion of defendant Group (6), and grants her request for additional time to file a response to the 4 complaint. 5 B. 6 Appointment of Counsel A third party asserting an interest in a forfeiture proceeding is “expressly barred by 21 7 U.S.C. § 853(k)(2) from ‘commencing an action at law or equity against the United States 8 concerning the validity of [its] alleged interest in the property.’ “ United States v. Douglas, 55 F.3d 9 584, 586 (11th Cir. 1995) (quoting 21 U.S.C. § 853(k)(2)); accord United States v. Gilbert, 244 F.3d 888, 907 (11th Cir. 2001). “A third party’s only avenue for protecting his interest is the procedure 11 For the Northern District of California United States District Court 10 set forth in 18 U.S.C. § 853(n), which provides that ‘any person, other than the defendant, asserting 12 a legal interest in property which has been ordered forfeited to the United States pursuant to this 13 section’ may ‘petition the court for a hearing to adjudicate the validity of his alleged interest in the 14 property.’” United States v. Wade, 255 F.3d 833, 837 (D.C. Cir. 2001). In establishing this 15 forfeiture procedure, “Congress intended that third-party petitions ancillary to a criminal forfeiture 16 take the place of civil cases, and that such a procedure would enable innocent parties to adjudicate 17 their property interests swiftly instead of having to file separate civil suits.” Gilbert, 244 F.3d at 907 18 (describing conclusion of Douglas court). See also H.R. Rep. No. 98-1030, at 206-07 (1984), 19 reprinted in 1984 U.S.C.C.A.N. 3182, 3389-90 (“Once the indictment or information is filed, a third 20 party is not to commence a civil suit against the United States; instead the third party should avail 21 himself of the ancillary hearing procedure…. This provision assures a more orderly disposition of 22 both the criminal case and third party claims. Indeed, it is anticipated that the new hearing procedure 23 should provide for more expedited consideration of third party claims than would the filing of 24 separate civil suits.”). 25 Counsel was appointed for Ms. Chen in her criminal case. Ms. Chen argues that the Court 26 should appoint as counsel in this forfeiture case as well because it constitutes an ancillary 27 proceeding under the Criminal Justice Act. Title 18 U.S.C. 3006A(c) provides, “A person for whom 28 counsel is appointed shall be represented at every stage of the proceedings from his initial 4 1 appearance before the United States magistrate judge or the court through appeal, including 2 ancillary matters appropriate to the proceedings.” (Emphasis added.) Likewise, the Guide to 3 Judiciary Policy and Procedures § 2.01(F)(5-6) provides, “In determining whether representation in 4 an ancillary matter is appropriate to the proceedings, the court should consider whether such 5 representation is reasonably necessary to accomplish, inter alia . . . to preserve the claim of the CJA 6 client to an interest in real or personal property subject to a civil forfeiture proceeding pursuant to 21 7 U.S.C. § 881, 19 U.S.C. § 1602 or similar statutes . . . . (6) Under 18 U.S.C. § 983(b)(1), if a person 8 with standing to contest the forfeiture of property in a judicial civil forfeiture proceeding under a 9 civil forfeiture statute is financially unable to obtain representation by counsel, and the person is represented by counsel appointed under 3006(a) of title 18, United States Code, in connection with a 11 For the Northern District of California United States District Court 10 related criminal case, the court may authorize counsel to represent the person with respect to the 12 claim.” The Government concedes that the Court has discretion to appoint counsel for a financially 13 eligible person in a forfeiture action in connection with a related criminal case. See 18 U.S.C. § 14 983(b)(1)(A). 15 The Government argues that Ms. Chen has not made a satisfactory demonstration of her 16 financial eligibility, nor has she shown that she made efforts to obtain counsel. Opp’n at 7. 17 However, the Government provides no authority that one seeking counsel in these circumstances 18 must first demonstrate efforts to retain counsel. No such requirement is found in the statute or case 19 law. Instead, the Government points to 28 U.S.C. § 1915(e) which governs the court’s limited 20 authority to appoint counsel for a party proceeding in forma pauperis in a civil case. But that 21 general statute, even if it were otherwise applicable, does not govern where a more specific statute 22 (i.e., the Criminal Justice Act) expressly applies to this proceeding. As to her financial eligibility, 23 the Court finds Ms. Chen eligible based on the fact that she already qualified for appointment of 24 counsel in the criminal case. The Court therefore grants Ms. Chen’s motion for appointment of 25 counsel and appoints Mr. Tyler for said purpose. 26 /// 27 /// 28 /// 5 1 III. 2 3 REPORT AND RECOMMENDATION ON THE GOVERNMENT’S MOTION FOR DEFAULT JUDGMENT A. 4 Jurisdiction This Court has jurisdiction over this matter under 28 U.S.C. §§ 1345 and 1355(a), which 5 vests district courts with original jurisdiction in “any action or proceeding for the . . . enforcement of 6 any . . . forfeiture . . . incurred under any Act of Congress.” See 28 U.S.C. § 1355(a). 7 B. 8 9 Legal Standard Forfeiture is “harsh and oppressive” and thus, is “not favored by the courts.” See U.S. v. $191,910.00 in U.S. Currency, 16 F. 3d 1051, 1069 (9th Cir. 1994). The Ninth Circuit is “particularly wary of civil forfeiture statutes” because they “impose ‘quasi-criminal’ penalties” but 11 For the Northern District of California United States District Court 10 do not provide property owners with the degree of procedural protections provided to criminal 12 defendants. See id. at 1068; U.S. v. Marlof, 173 F. 3d 1213, 1217 (9th Cir. 1999) (quoting 13 $191,000.00 in U.S. Currency, 16 F. 3d at 1068.). Accordingly, strict adherence to procedural rules 14 is paramount in civil forfeiture proceedings. See Marlof, 173 F. 3d at 1217 (denying forfeiture 15 where government “erred” by failing to provide due notice to property owner); $191,910.00 in U.S. 16 Currency, 16 F.3d at 1068-69 (strictly construing currency forfeiture provisions of 19 U.S.C. § 615 17 against government and holding that “the burden on the government to adhere to procedural rules 18 should be heavier than on claimants”). The procedures governing civil forfeiture actions are set 19 forth in the various specific forfeiture statutes, the Civil Asset Forfeiture Reform Act of 2000 20 (CAFRA), 18 U.S.C. § 983, the Supplemental Rules for Certain Admiralty and Maritime Claims 21 (“Supplemental Rules”) and this district’s Admiralty Local Rules. 22 Pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure, a district court may enter 23 default judgment where the clerk, under Rule 55(a), has previously entered the defendant’s default 24 based upon a failure to plead or otherwise defend an action. See Fed. R. Civ. P. 55; see also 25 PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002). Entry of default 26 against a defendant, however, does not automatically entitle a plaintiff to default judgment. See 27 Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir.1986) (affirming the district court’s denial of 28 default judgment despite the defendant’s alleged failure to answer the complaint). Rather, the 6 1 decision to grant a motion for default judgment is within the court’s discretion. See Aldabe v. 2 Aldabe, 616 F. 2d 1089, 1092 (9th Cir. 1980). Upon entry of default, the factual allegations of the 3 Government’s complaint are assumed to be true, except those relating to damages. See Geddes v. 4 United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977); Televideo Sys., Inc. v. Heidenthal, 826 F.2d 5 915, 917 (9th Cir. 1987). See also Fed. R. Civ. P. 8(d) (“Averments in a pleading to which a 6 responsive pleading is required, other than those as to the amount of damage, are admitted when not 7 denied in the responsive pleading.”). 8 In the present matter, default was entered as to the remaining defendants (all defendants February 15 and February 23, 2011.2 See Docket Nos. 26, 28. Consequently, the factual allegations 11 For the Northern District of California named in complaint except defendant Group (3) and Group (8) as timely claims have been filed) on 10 United States District Court 9 of the Government’s complaint are deemed to be true and the Court is vested with the authority to 12 enter default judgment. The Court’s decision whether to exercise its discretion to do so is guided by 13 two overlapping inquiries. First, the Court considers the Government’s claims in light of the factors 14 set forth by the Ninth Circuit in Eitel v. McCool, 782 F. 2d 1470, 1471-72 (9th Cir. 1986). Second, 15 the Court determines whether the Government has met the specific procedural requirements 16 governing forfeiture actions. 17 C. 18 19 Application of the Eitel Factors In Eitel, the Ninth Circuit set forth the following factors to be considered in determining whether entry of default judgment is appropriate: 20 (1) the possibility of prejudice to the plaintiff; (2) the merits of plaintiff’s substantive claims(s); (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 21 22 23 24 See Eitel v. McCool, 782 F. 2d 1470, 1471-72 (9th Cir. 1986). In the present matter, a denial of 25 default judgment would likely prejudice the government as further proceedings would require the 26 Government to expend further time and effort for no reason, as no additional claims have been filed 27 2 28 The Court assumes Judge White, in granting a stay in the case (see Docket No. 22), did not intend to forestall entry of default against the defendant property for which no claims were filed. 7 1 with respect to the defendant property. There is no evidence that default was due to excusable 2 neglect given that, as discussed below, the Government provided adequate service and notice to the 3 parties known to have an interest in the property. The sum of money at stake in the action, though 4 not insubstantial, is not so large as to warrant a denial of the motion. See United States v. Approx. 5 $57, 890 in U.S. Currency, No. C-10-01829 WHA, 2010 WL 3987397, at *4 (N.D. Cal., Oct 12th, 6 2010). Likewise, claimants have had ample time to submit a claim consistent with the Supplemental 7 Rules in order to challenge the Government’s forfeiture, but failed to do so. Finally, although it is 8 preferable to decide a case on its merits, when no party appears to oppose the action despite having 9 notice (as is the case here, with the exception of Ms. Chen, discussed supra), there is likely no 11 For the Northern District of California United States District Court 10 dispute on the merits. Before entering default judgment, however, the Court must ensure that the allegations of 12 Plaintiff’s complaint, which are assumed to be true, are sufficient to warrant forfeiture of the 13 Defendant property under the relevant statutes. The Court addresses the sufficiency of the 14 Government’s claim below. 15 1. 16 The Government seeks forfeiture of items and currency pursuant to 18 U.S.C. § 2323(a). The Government’s § 2323 Claim 17 Section 2323 of Title 18 of the United States Code, provides for the forfeiture to the United States 18 Government of the following property: 19 (A) Any article, the making or trafficking of which is prohibited under section . . . . [18 U.S.C. §] 2320 . . . . 20 21 (B) Any property used, or intended to be used, in any manner or part to commit or facilitate the commission of an offense referred to in subparagraph (A). 22 23 (C) Any property constituting or derived from any proceeds obtained directly or indirectly as a result of the commission of an offense referred to in subparagraph (A). 24 25 18 U.S.C. § 2323. Section 2320 makes it a crime to traffic in counterfeit goods. See 18 U.S.C. § 26 2320. More specifically, § 2320(a)(1) states, 27 28 Whoever intentionally traffics or attempts to traffic in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services, or intentionally traffics or attempts to 8 1 traffic in labels, patches, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or packaging of any type or nature, knowing that a counterfeit mark has been applied thereto, the use of which is likely to cause confusion, to cause mistake, or to deceive, shall, if an individual, be fined not more than $2,000,000 or imprisoned not more than 10 years, or both, and, if a person other than an individual, be fined not more than $5,000,000. 2 3 4 5 6 18 U.S.C. § 2320(a)(1). Property subject to forfeiture under § 2320 is specifically governed by 18 7 U.S.C. § 2323. See 18 U.S.C. 2320(b) (“Forfeiture, destruction, and restitution relating to this 8 section shall be subject to section 2323, to the extent provided in that section, in addition to any 9 other similar remedies provided by law.”). Property subject to forfeiture under 18 U.S.C. § 981 is to be seized “pursuant to a warrant 11 For the Northern District of California United States District Court 10 obtained in the same manner as provided for a search warrant under the Federal Rules of Criminal 12 Procedure . . . .” See 18 U.S.C. § 981(b)(2). In the present matter, the Defendant property was 13 seized pursuant to the execution of federal search warrants at multiple locations on February 10, 14 2010. See Compl. ¶¶ 1,7. Absent cause to believe these warrants were obtained or executed 15 improperly, the Court must assume the warrants and the items seized in their execution are all valid 16 and in compliance with the Federal Rules of Criminal Procedure and other governing statutes. The 17 Government brought the forfeiture action on July 12, 2010. See Pls.’ Mot. at 3. After the Court 18 entered an order unsealing this civil forfeiture action (Docket No. 7), the Government proceeded to 19 give notice to those known to have an interest on December 3, 2010. See Mot. at 3. Accordingly, 20 the Court finds that the forfeiture claim as to the various items and currency is sufficient under 18 21 U.S.C. § 2323(a). 22 D. Procedural Requirements for Forfeiture 23 1. 24 The Supplemental Rules for Certain Admiralty and Maritime Claims (“Supplemental Rules”) The Supplemental Rules 25 govern judicial forfeitures of property. See United States v. 5145 N. Golden State Blvd., 135 F.3d 26 1312, 1315 (9th Cir. 1998). Pursuant to the Supplemental Rules, the United States initiates 27 forfeiture proceedings by filing a complaint. Supp. R. C(2); Supp. R. G(2). Under both Rules C(2) 28 and G(2), the complaint must be verified and describe the property at issue with reasonable 9 1 particularity. Rule G(2) also requires that the complaint include sufficient factual allegations to 2 support a “reasonable belief” the United States will be able to meet its burden at trial. Supp. R. 3 G(2)(f). 4 If the property is located in the United States, the Government must then publish notice of 5 the forfeiture action either in a newspaper of general circulation in the district (Supp. R. C(4); Supp. 6 R. G(4)(a)(iv)(A)) or by posting a notice on a government forfeiture website for thirty consecutive 7 days. Supp. R. G(4)(a) (iv)(C). This notice must include the time for filing a claim. Supp. R. 8 G(4)(b)(ii)(B). 9 In addition to published notice, the United States must also provide direct notice of the forfeiture action to potential claimants under Supplemental Rule G. The notice must be sent by a 11 For the Northern District of California United States District Court 10 means that may be reasonably calculated to reach the defendant. Supp. R. G(4)(b)(iii)(A). “Notice to 12 a person from whom the property was seized who is not incarcerated when notice is sent may be sent 13 to the last address that person gave to the agency that seized the property.” Supp. R. G(4)(b)(iii)(E). 14 2. 15 In addition to the Supplemental Rules discussed above, the Government must also comply 16 with the local rules governing forfeiture proceedings, in particular, Admiralty Local Rules 6-1 and 17 6-2. The Admiralty and Maritime Local Rules “apply ... to proceedings that are governed by the 18 Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil 19 Procedure ... [including] statutory ... forfeiture proceedings analogous to maritime actions in rem.” 20 Admir. L.R. 1-2. Admiralty Local Rule 6-2 addresses entry of default judgment in in rem actions, 21 providing that default judgment may be entered in an in rem action if: 22 23 The Local Admiralty Rules (a) Notice has been given as required by Admiralty Local Rule 6-1; (b) The time to answer has expired, and (c) No one has filed a verified statement of right or interest in the property. 24 25 See Admir. L.R. 6-2; see also U.S. v. $7,250 United States Currency, 2004 WL 1465716, 1 (N.D. 26 Cal. March 31, 2004) (applying Admir. L.R. 6-2 to determine whether plaintiff was entitled to entry 27 of default judgment in forfeiture action brought under 28 U.S.C. § 881(a)(6)); U.S. v.1999 Lexus 28 GS400, 2007 WL 1056791, 3 (N.D. Cal. April 6, 2007) (applying Admir. L.R. 6-2 to determine 10 1 whether plaintiff was entitled to entry of default judgment in forfeiture action brought under 28 2 U.S.C. §§ 881(a)(6) & (11)). 3 Admiralty Local Rule 6-1(a) requires that the following notice be given in an in rem action: 4 (1) By publication as required in Fed. R. Civ. P. Supp. C(4); (2) By service upon the master or other person having custody of the property; and (3) By service under Fed. R. Civ. P. 5(b) upon every other person who has not appeared in the action and is known to have an interest in the property. 5 6 7 8 Admir. L.R. 6-1(a). Failure to meet the notice requirements of Rule 6-1 is grounds for setting a 9 default aside. Admir. L.R. 6-1(c). 3. 11 For the Northern District of California United States District Court 10 The Government filed a verified complaint that describes the property subject to forfeiture, 12 the specific forfeiture statute at issue and the facts supporting forfeiture. In addition, the Court has 13 already determined that the United States’ claim under section 2323 is sufficient. The Court 14 therefore concludes that The Government has met the requirements set forth in the Supplemental 15 Rules, discussed above, for complaints in civil forfeiture actions. Adequacy of the Complaint 16 4. 17 The Court considers the pending motion for default judgment under Admiralty Local R. 6-1. 18 See United States v. 1999 Lexus GS400, No. C-05-1139-PJH (Docket Nos. 41, 42) (applying similar 19 pre-Supp. G rules and granting default judgment provided the Government demonstrates compliance 20 with notice requirements). Rule 6-1 requires the government to satisfy notice requirements set forth 21 in Supplemental Rules G(3) and G(4) to the FRCP. See Admiralty Local R. 6-1(a), 12-1 (Supp. R. 22 G governs civil forfeiture actions in rem arising from a federal statute). Supplemental Rule G(4) 23 requires that a published notice “(A) describe the property with reasonable particularity; (B) state the 24 times under Rule G(5) to file a claim and to answer; and (C) name the government attorney to be 25 served with the claim and answer.” Fed. R. Civ. P. G(4)(a)(ii). The published notice requirement 26 may be satisfied by “posting a notice on an official internet government forfeiture site for at least 30 27 consecutive days.” Id. at G(4)(a)(iv)(C). Adequacy of Notice 28 11 1 To demonstrate satisfaction of the published public notice requirement, the Government has 2 filed a “Declaration of Publication” (Docket No. 19) by paralegal Carolyn Jusay, who states that the 3 attached notice was posted at www.forfeiture.gov for at least 30 days beginning on November 17, 4 2010. This notice complies with Supplemental Rule G(4). 5 Supplemental Rule G(4)(b) also requires notice to known potential claimants. Such notice 6 must state “(A) the date when the notice is sent; (B) a deadline for filing a claim, at least 35 days 7 after the notice is sent; (C) that an answer or a motion under Rule 12 must be filed no later than 21 8 days after filing the claim; and (D) the name of the government attorney to be served with the claim 9 and answer.” Id. at G(4)(b)(ii). It may be provided by any means reasonably calculated to reach the potential claimant, and actual notice is sufficient.3 Id. at G(4)(b)(iii). The Government provides a 11 For the Northern District of California United States District Court 10 Certificate of Service (Docket No. 9), stating that the attorney for each of the criminal defendants 12 were served with, inter alia, a notice of forfeiture action, via certified mail on November 19, 2010. 13 The government does not provide a citation to the record for the notice, but it appears to be Docket 14 No. 8 (filed December 3, 2010) in this case. 15 The notice is dated November 17, 2010. That date, however, appears to be a signature date, 16 not necessarily the date notice is sent. Additionally the notice copies, in part, the text of Supp. R. 17 G(4)(b)(ii)(B): “All persons . . . who have received direct notice of the forfeiture action must file a 18 verified claim . . . thirty-five (35) days after the notice is sent . . . .” Notice at 3:4-7. But it does not 19 actually state a date certain for the deadline. Although this notice does not strictly comply with the 20 Supplemental Rule G, these notices were sent to the attorneys for the criminal defendants consistent 21 with Supp. R. G(4)(b)(iii)(B). Even Ms. Chen’s attorney has noted that he had actual notice as of 22 December 3, 2010. There is nothing to suggest the criminal defendants – the persons most likely to 23 file claims – did not receive notice. Here, the Court finds the technical deficiencies of the notice 24 were harmless. Finally, the notice names an Assistant U.S. Attorney to be served, satisfying the 25 26 27 28 3 Actual notice, however, only precludes an argument for relief due to the failure to send a notice, and does not necessarily obviate the requirement that the notice contains the required content. See Supp. R. G(4)(b)(v). 12 1 final requirement. The Court accordingly finds that the Government provided sufficient notice to 2 known potential claimants. 3 5. 4 Supplemental Rule G(5)(a)(ii)(A) governs the time for filing a claim. The rule requires that a 5 person who asserts an interest in or right against the property file a verified statement identifying the 6 interest or right within the time stated in the direct notice sent to the claimant under Rule G(4)(b). 7 An answer or a Rule 12 motion must be filed within twenty days of filing the claim. Supp. R. 8 G(5)(b). Here, notice of the civil forfeiture action was posted on an official government internet site 9 (www.forfeiture.gov) for at least 30 consecutive days, beginning on November 17, 2010, as is Expiration of Time to Answer required by Rule G(4)(a)(iv)(c) of the Supplemental Rules for Admiralty or Maritime Claims and 11 For the Northern District of California United States District Court 10 Asset Forfeiture Actions. No claim or other motion has been filed by any potential claimants in this 12 case other than those who filed as to Group (3) and Group (8) and Ms. Chen, and the time for a 13 responsive filing has expired. Thus, there is no reason to think any potential claimant will be 14 unfairly prejudiced by a default judgment as to the unclaimed defendant property herein. 15 IV. CONCLUSION AND RECOMMENDATION 16 For the foregoing reasons, the Court hereby GRANTS Ms. Chen’s motions to (1) set aside 17 the entry of default as to the $3,987 identified in defendant Group (6), and (2) appoint counsel for 18 Ms. Chen in this forfeiture case, and (3) be given leave to file an answer. She shall do so within 30 19 days of the date of this Order. 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 13 1 The Court RECOMMENDS that the Government’s motion for entry of default judgment be 2 GRANTED IN PART and default judgment be entered against the defendant property other than 3 Group (3), Group (8), and the $3,987 cash identified in Group (6). 4 Any party may file objections to the Report and Recommendation herein with the district 5 judge within ten days after being served with a copy. See 28 U.S.C. § 636(b)(1)(B); Fed. R. Civ. P. 6 72(b); Civil L.R. 72-3. 7 This order disposes of Docket No. 38. 8 9 IT IS SO ORDERED. 11 For the Northern District of California United States District Court 10 Dated: May 3, 2011 12 _________________________ EDWARD M. CHEN United States Magistrate Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14
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