Ninth Circuit holds that District Court's exercise of in rem jurisdiction under Congressional intent to 'relax' requirements violates Due Process
United States v. Younes Nasri, et al., 9th Circuit Opinion filed October 29, 2024. (No. 22-55685 D.C. No. 3:21-cv-01134-WQH-BLM)
The issue before the Ninth Circuit panel in United States v. Younes Nasri, et al., was whether the district court had constructive possession over assets in a foreign bank account under a civil forfeiture action brought by the United States pursuant to 28 U.S.C. § 1355. The forfeiture action aimed to recover fugitive Nasri's ill-gotten gains. Younes Nasri, a Canadian citizen residing in Dubai, challenged the court’s jurisdiction alleging that neither he nor the assets had ties to the United States.
After indicting Nasri on criminal racketeering and drug conspiracy charges for the sale of Phantom Secure encrypted Blackberry cellular phones, the government attempted to recover Nasri's assets under 18 U.S.C. § 981 and 21 U.S.C. § 881. Pursuant to 28 U.S.C. § 1355, the United States brought a civil forfeiture action in U.S. District Court for the Southern District of California in San Diego.
Nasri responded by filing a claim of innocent ownership over the assets in district court, and the United States moved to strike the claim under the fugitive disentitlement statute, 28 U.S.C. § 2466. Nasri subsequently challenged the court’s jurisdiction over the assets by claiming that neither he nor the assets had ties to the U.S. The district court, purporting to exercise in rem jurisdiction over the assets, granted the government’s motion to strike Nasri’s claim, finding that (1) it had in rem jurisdiction over the assets, (2) the fugitive disentitlement statute does not violate due process, and (3) Nasri qualified as a fugitive under the statute even if avoiding prosecution was not the “sole reason” he remained outside the United States.
On appeal the panel found that the district court’s exercise of in rem jurisdiction violated due process. It vacated the court’s order granting the government’s motion to strike Nasri’s claim of innocent ownership over the assets, the full majority concluding that due process requires a court to have control, or constructive control over the property in a forfeiture action in order to establish in rem jurisdiction over the property.
The panel found that the scope of notice provided by the government to Nasri was unclear and that the United States lacked sufficient indicia of control or possession over the assets. Most significantly, the Ninth Circuit held that the district court’s purported exercise of in rem jurisdiction over property located abroad over which it apparently had no connection, possession, or control, was contrary to the most fundamental principles of due process.
The panel remanded the matter to the district court to assess whether the court has control or constructive control over the assets so as to satisfy due process when asserting in rem jurisdiction. Judge Bybee and Judge Desai concluded that the in rem proceeding violated the Due Process Clause. Judge Bybee wrote that because the United States does not hold the property, the proceeding was premature and nonjusticiable, and the district court’s opinion was advisory.
Judge Desai wrote that Article III’s redressability requirements were met. She disagreed with Judge Bybee’s concurring opinion suggesting redressability was lacking in some instances. Judge Desai wrote that constructive control avoided the risk of the court issuing an advisory opinion. Despite her view that constructive control cured the problems identified by Judge Bybee’s concurrence, she agreed with the view that a better path forward was treating these actions as quasi in rem actions.
Dissenting, Judge Bennett wrote that the majority’s holding reached a conclusion opposite to what was required by both the plain language of the relevant statute and Ninth Circuit precedent and was wrong on the merits. Judge Bennet wrote that the majority improperly addressed a due process issue that Nasri waived.
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On the issue of lack of notice, Judge Bennett wrote that Nasri had both actual notice and an actual opportunity to be heard. Adding that the majority's decision intruded into matters committed to the legislative and executive branches of government, as well as interfering in foreign relations, and the U.S. government’s ability to fight both domestic and international crime.
(Quoting/paraphrasing "Summary" prepared by court staff.)
Link: United States v. Younes Nasri, et al., 9th Circuit Opinion 10/29/24 pdf.
[This post does not constitute legal advice. It also does not give rise to an attorney-client relationship. This post is provided as news of general interest to the public.]
Before: Jay S. Bybee, Mark J. Bennett, and Roopali H. Desai, Circuit Judges.
Opinion by Judge Desai; Concurrence by Judge Bybee; Concurrence by Judge Desai; Dissent by Judge Bennett.
The panel unanimously concluded this case is suitable for decision without oral argument. (See, Fed. R. App. P. 34(a)(2)).
Ninth Circuit Opinion at link.