“FAIR”ness and Forfeiture: New Bill and Justice Department Order Seek to Reign in Controversial Police Practice

Matt Dearmond, KLJ Staff Editor

To the pleasure of Fifth Amendment advocates, a thirty-year federal policy may be coming to an end. On Tuesday, January 27, Senator Rand Paul (R-KY) reintroduced a bill known as the Fifth Amendment Integrity Restoration (FAIR) Act. The bill would greatly limit law enforcement’s ability to seize the assets of individuals without a warrant or charging them with a crime, and would redirect proceeds from these “civil asset forfeitures” to the Treasury Department’s General Fund. This bill comes less than two weeks after departing Attorney General Eric Holder announced that local and state police would be barred from using federal law to seize cash, cars and other property without warrants or criminal charges, using a Justice Department program known as “equitable sharing.”^[1]  Civil asset forfeiture is controversial for several reasons. For one, the very idea seems repugnant to many basic notions about property rights, as the owner of the property need not be arrested or convicted of a crime to have his or her property taken. Even those supportive of the general concept, however, harbor concerns about the policy’s application, pointing to the disparate impact borne by racial minorities and the poor. For instance, the ability of property owners to legally and effectively reclaim their property is often dependent upon their means and access to resources, such as a lawyer.[2] Representation by legal counsel is often necessary because in all but six states, the burden is on the owner, not the government, to prove that they are “innocent,” and that their property is not otherwise subject to forfeiture.[3]Under the equitable sharing program established in 1984, local and state law enforcement are able to circumvent state law that might have restricted their ability to seize certain assets by working with the Department to “federalize” or “adopt” the investigation, whereby they get to keep the forfeited property and split the proceeds with the Department.[4] In general, there are two forms of forfeitures under the equitable sharing program: “joint investigative” forfeitures, and “adoptive” forfeitures.[5] The first form concerns forfeitures that are the result of cooperative investigative activities between federal and state or local law enforcement agencies, where the percentage of funds shared with state/local agencies is determined by the amount of their involvement.[6] “Adoptive” forfeitures, the more controversial of the two, occur when, as a result of their investigation into a state crime, state/local agencies transfer seized property to federal law enforcement who can then “adopt” the seized property for purposes of federal forfeiture proceedings.[7] Police departments are able to keep up to 80 percent of the proceeds of such seizures, with the rest going to federal agencies.Holder’s announcement, impactful though it may be, is merely a change in Justice Department policy. As such, it lacks the force of law and is perfectly capable of being rolled back altogether by subsequent administrations. The FAIR Act, on the other hand, would codify this denunciation of prior federal forfeiture policy into law, for presidential administrations and executive agencies to come. What’s more, the FAIR Act goes farther than the new policy guidelines issued by the Attorney General in several ways. First, the new guidelines issued by Holder prohibit only “adoptive” forfeitures, while the Act would impose stronger limits on federal authorities’ ability to share forfeited assets with state/local law enforcement, regardless of whether they participated in the seizure.[8] The order explicitly provides that its prohibition does not apply to “seizures by state and local authorities working together with federal authorities in a joint task force,” or “seizures by state and local authorities that are the result of joint federal-state investigations or that are coordinated with federal authorities as part of ongoing federal investigations.”[9] Because of this, commentators have questioned the extent to which Holder’s order actually changes the status quo, citing the fact that between 2008 and 2013 approximately 86 percent of the money state/local agencies got from federal forfeitures were not of the kind covered by this new restriction.[10]Second, though Holder’s order will virtually eliminate all cash and vehicle seizures made by state/local law enforcement for purposes of the federal program, the order contained an exception for seizures of property “directly related to public safety concerns.”[11] This includes seizures involving illegal firearms, ammunition, explosives and property associated with child pornography.[12] The FAIR Act provides no such exception, but requires law enforcement to prove by “clear and convincing evidence” that there was a substantial connection between the property and the offense, and that the owner intentionally or knowingly consented to the use of the property in connection with the offense.[13] This “clear and convincing” standard marks an increase from current law, which merely requires that the government establish by a preponderance of the evidence that an asset is subject to forfeiture.[14]Additionally, the Act seeks to remove the profit incentive from the equation by requiring that money or proceeds from seizures go to the General Fund of the United States Treasury, rather than to a special fund known as the “Department of Justice Assets Forfeiture Fund” for use only by the Justice Department.[15] This is an understandable concern, given how proceeds from civil asset forfeitures are undeniably a large source of funding for law enforcement agencies (sometimes up to 20% or more of a department’s entire annual budget).[16] It was apparently a concern as well for Holder (or at least an incidental benefit), according to an anonymous Justice Department official who said that Holder “believes that the new policy will eliminate any possibility that the adoption process might unintentionally incentivize unnecessary stops and seizures.”[17]Opponents of civil asset forfeiture policy were encouraged by Attorney General Holder’s order, and further encouraged by the introduction of the FAIR Act. However, because Sen. Paul’s bill and the Attorney General’s order apply only to federal law enforcement and the use of federal law, putting a stop to the practice is unlikely to happen without significant reform at the state level.[18] And though many states require seized proceeds to go into the general fund, according to at least one law professor who has studied the subject, at least 26 states allow police to keep 100 percent of the assets they seize.[19] As for Kentucky, 85% of the proceeds from seized property is paid directly to the law enforcement agency which seized the property, to be used directly for law enforcement purposes, while the remaining 15% is paid to the Office of the Attorney General.[20]While it may be tempting to view this populist proposal by Sen. Paul as simply political posturing on the eve of a presidential run, such a characterization probably does not do justice to the deeper issue of changing perceptions about the relationship between communities and law enforcement. Certainly the renewed interest in the issue and the apparent bipartisan support would lend support to that observation.[21] In fact, the goals of the bill that I’ve mentioned are in themselves manifestations of some of the more salient issues regarding law enforcement in America. The redirecting of proceeds to the General Fund rather than the pockets of police departments reflects the recent concern over the militarization and out-of-control spending on the part of law enforcement.[22] There is also an underlying racial component to be considered. As the sponsor of the bill himself has observed, the disparate treatment of minorities under asset seizure policy and by the criminal justice system as a whole is at least partially to blame for increasing racial tension in the U.S.[23]Regardless of one’s opinion on the underlying motivation behind the bill, for those that have long tried to raise these issues from the depths of social media punditry and into actual positive law, the FAIR Act would certainly signal a welcomed legislative victory.

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[1] Robert O’Harrow Jr., Holder limits seized-asset sharing process that split billions with local, state police, The Washington Post, Jan 16, 2015, http://www.washingtonpost.com/investigations/holder-ends-seized-asset-sharing-process-that-split-billions-with-local-state-police/2015/01/16/0e7ca058-99d4-11e4-bcfb-059ec7a93ddc_story.html?hpid=z1.

[2] Marian R. Williams et al, Policing for Profit: The Abuse of Civil Asset Forfeiture, Institute for Justice, March, 2010, http://www.ij.org/images/pdf_folder/other_pubs/assetforfeituretoemail.pdf.

[3] Id. at 23.

[4] David McCabe, Rand Paul: Stop feds from seizing property, The Hill, Jan. 27, 2015, http://thehill.com/blogs/blog-briefing-room/news/230871-rand-paul-pushes-bill-to-block-the-feds-from-seizing-property.

[5] Williams et al, supra note 2, at 25.

[6] Id.

[7] Id.

[8] S. 255, 114th Cong. § 3(b) (2015) [hereinafter FAIR Act].

[9] Office of the Attorney General, Prohibition on Certain Federal Adoptions of Seizures by State and Local Law Enforcement Agencies, (2015), available at http://www.justice.gov/sites/default/files/opa/press-releases/attachments/2015/01/16/attorney_general_order_prohibiting_adoptions.pdf.

[10] Jacob Sullum, Cops Are Still Robbers: Eric Holder's new forfeiture policy affects only a small share of seizures, Jan. 26, 2015, http://reason.com/archives/2015/01/26/cops-are-still-robbers.

[11] Office of the Attorney General, supra note 9.

[12] Id.

[13] FAIR Act, supra note 8, at § 2(3).

[14] 18 U.S.C. 983(c)(1).

[15] Compare 21 U.S.C. 881(e)(2)(B)), and FAIR Act, supra note 8, at § 3(b)(1)(A).

[16] Michael Sallah et al., Stop and Seize, The Washington Post, (2014), http://www.washingtonpost.com/sf/investigative/collection/stop-and-seize-2/.

[17] O’Harrow Jr., supra note 1.

[18] Leon Neyfakh, Helicopters Don’t Pay For Themselves: Why Eric Holder’s civil forfeiture decision won’t stop civil forfeiture abuse, Slate, Jan 16, 2015, http://www.slate.com/articles/news_and_politics/crime/2015/01/will_eric_holder_s_civil_forfeiture_announcement_change_anything.html.

[19] Id.

[20] KRS § 218A.420(4) (2007).

[21] McCabe, supra note 4.

[22] See Sallah, supra note 16.

[23] Ashley Killough, Rand Paul: Civil Forfeiture part of racial problems in U.S., CNN, Jan. 27, 2015, http://www.cnn.com/2015/01/27/politics/rand-paul-bill/.

Lawmakers Are Not Above the Law

Hillary Chambers, KLJ Staff Editor

Many of our fellow Kentucky citizens were disturbed when a member of the state legislature, charged with DUI, defended himself by claiming he was immune from prosecution.[1] On January 6, 2015, the first day of the legislative session, Senator Brandon Smith was charged with DUI.[2] To many people’s surprise, he filed a motion to dismiss citing Section 43 of the Kentucky Constitution, which says that legislators are “privileged from arrest during their attendance of their respective Houses, and in going to and returning from the same.”[3] Although Smith subsequently asked his attorney to withdraw the motion, the episode sparked interest in the immunity clause he initially sought to use in order to have his case dismissed.[4] What was the clause intended to do? Do we still need the clause in our Constitution? Do we still want the clause in our Constitution?In Swope v. Commonwealth, the Kentucky Supreme Court made it clear that “[Section] 43 of the Constitution was never intended as a sanctuary for members who had committed a public offense.”[5] In that case, a member of the 1964 General Assembly of Kentucky was charged with breach of the peace after getting into a dispute with someone upon his return from Frankfort.[6] Similar to Smith’s withdrawn motion, William Swope claimed the court did not have jurisdiction to try the offense of breach of the peace against a member of the General Assembly under the provisions of Section 43.[7] The court considered parliamentary privilege in England to decide whether Swope should be immune from prosecution.[8] The crimes of treason, felony, and breach of the peace are expressly excluded from the immunity provided by Section 43; in England, those words were intended to exclude all crimes from the operation of parliamentary privilege, meaning only prosecutions of a civil nature were protected.[9]When the Constitution was adopted, there were state laws authorizing imprisonment for debt in aid of civil process, and the exemptions in state and federal Constitutions were meant to provide immunity in those cases.[10] Today, there is no such law in Kentucky.[11] Therefore, the reason for incorporating Section 43 in the Constitution has virtually disappeared.[12] In Swope, the state legislator was not immune from prosecution, and the judgment convicting him of breach of the peace was affirmed.[13] The lack of case law on this issue shows that not many legislators try to utilize or abuse the immunity clause, but what if Senator Smith would have gone forward with his initial plan and been successful? It would have left many outraged. Most would tend to agree with Kentucky Senate President Robert Stivers when he said, “[n]o member of the general assembly is above the law.”[14] After taking a look at why the clause was incorporated in the Constitution and seeing that the purposes have disappeared, it becomes apparent that Section 43 serves no real purpose. If there were more widespread abuse of the clause, it is likely there would be a stronger push to repeal Section 43 altogether. A law that was necessary in 1891 is no longer necessary in 2015.

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[i] See Kentucky Lawmaker Wants DUI Charge Dismissed Based on Rule From 1891, Huffington Post, Jan. 26, 2015, http://www.huffingtonpost.com/2015/01/26/brandon-smith-dui_n_6550090.html.

[ii] Id.

[iii] Id.

[iv] State Senator to Withdraw Motion in DUI Case, The Courier-Journal, Jan. 28, 2015,http://www.courier-journal.com/story/news/politics/2015/01/28/brandon-smith-dui/22454591/.

[v] Swope v. Com., 385 S.W.2d 57, 59 (Ky. 1964).

[vi] Id. at 57.

[vii] Id.

[viii] Id. at 58.

[ix] Id.

[x] Id.

[xi] Id.

[xii] Id.

[xiii] Id. at 59.

[xiv] Kentucky Lawmaker Wants DUI Charge Dismissed Based on Rule From 1891, Huffington Post, Jan. 26, 2015, http://www.huffingtonpost.com/2015/01/26/brandon-smith-dui_n_6550090.html.

The War on Drug Makers: Kentucky's New Angle to Hold Big Pharma Accountable Draws on Successes Against Big Tobacco

Katy Meyer, KLJ Staff Editor

While Kentucky may be nationally renowned for its basketball, bourbon, and horses, it has also achieved infamy on the national stage for its continued struggle with prescription drug abuse and addiction.¹ To combat this epidemic, Kentucky legislators and government officials have been forced to take new, and often creative, steps. One example of this is Kentucky’s lawsuit against Purdue Pharma, L.P.²To date, there have been very few successful cases holding drug manufacturers accountable for the effects of their drugs, as most have been dismissed on summary judgment.³ However, Kentucky’s lawyers have taken on a new angle, claiming that the drug manufacturer’s “aggressive and deceptive” marketing techniques violate state law by misleading doctors as to the addictive nature of the drug.⁴ The claims are based on Medicaid fraud and false advertising, among other things.⁵While Kentucky’s suit is unique in that it brings a new perspective to the myriad of litigation against drug manufacturing companies, the assertions are not entirely novel. By introducing these claims as a framework to recover against the drug companies, Kentucky actually moves litigation against drug companies forward in a way that emulates the pattern of litigation against tobacco companies in the 1990s. While claims against tobacco companies started out with unsuccessful products liabilities claims in the 1950s, plaintiffs saw success in the 1990s when states began suing the tobacco companies under state consumer protection and antitrust laws and arguing that the companies had caused significant costs for public health systems.⁶ More than forty states were involved in this litigation, which settled in 1996 and cost the tobacco industry billions of dollars.⁷If the progression of Kentucky’s claim thus far is any indication, plaintiffs seeking relief from drug companies could see similar success under this model. The state won a hard-fought battle to keep the action in Pike County state court over Purdue’s removal and change of venue motion,⁸ and the court has ruled to allow the state to use Purdue’s admissions of liability concerning misbranding of the drug from a 2007 case.⁹Kentucky’s suit could set an important precedent for the future of litigation against drug companies and have far-reaching effects. While this suit alone could cost Purdue Pharma $1 billion, the company is worried about its larger, national impact as well.¹⁰ Kentucky’s action against the drugmaker has already caused national waves - Chicago and two counties in California have already filed suits based on similar claims.¹¹  The case is not only being compared to the lines of cases against tobacco companies in the 1990s and early 2000s for its approach – many commentators have noted that if the Kentucky suit is successful, it could trigger a similar line of cases and recovery to the tobacco litigation as well.¹²

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¹ Kentucky has an age-adjusted drug-poisoning death rate significantly higher than the national average, and the second-highest drug-poisoning rate of all the states, edged out only by West Virginia, according to a study released by the Center for Disease Control’s National Vital Statistics System. See Margaret Warner, et al., Trends in Drug-poisoning Deaths Involving Opiod Analgesics and Heroin: United States, 1999-2012, 4 fig. 2 (December 2014), available at  http://www.cdc.gov/nchs/data/hestat/drug_poisoning/drug_poisoning_deaths_1999-2012.pdf.

² See Laura Unger, Lawsuit seeks to make drugmaker pay for OxyContin abuse, USA Today, (December 29, 2014), available at http://www.usatoday.com/story/news/nation/2014/12/29/kentucky-battles-purdue-pharma-in-court-over-oxycontin-abuse/20803459/.

³ Richard C. Ausness, The Role of Litigation in the Fight Against Prescription Drug Abuse, W. Va. L. Rev. 1117, 1122 (2014).

⁴ Amended Complaint at ¶¶ 2, 10, 42, 81, Kentucky ex rel. Conway v. Purdue Pharma, L.P. (In re OxyContin Antitrust Litig.), 821 F. Supp. 2d 591, 594 (S.D.N.Y. 2011).

⁵ “Plaintiffs assert claims for: (1) violation of the Kentucky Medicaid Fraud Statute, KRS § 205.8463 and § 446.070; (2) violation of KRS § 15.060, which authorizes Kentucky's Attorney General to institute an action to recover fraudulent monies that have been paid out of the state's treasury; (3) violation of the Kentucky False Advertising Statute, KRS § 517.030 and §446.070; (4) public nuisance; (5) unjust enrichment and restitution; (6) indemnity; (7) negligence; (8) violation of state antitrust law; (9) strict liability; (10) common-law fraud; (11) conspiracy and concert of action; and (12) punitive damages. The Commonwealth seeks damages based on the Medicaid-related expenses it has incurred, as well as other equitable and injunctive relief.” Kentucky ex rel. Conway, supra note iv, at 594.

⁶ Tobacco Litigation: History and Recent Developments, NOLO.com, http://www.nolo.com/legal-encyclopedia/tobacco-litigation-history-and-development-32202.html]

⁷ Id.

⁸ Kentucky ex rel. Conway, supra note iv, at 591; See also Jack Brammer, Kentucky’s lawsuit against Purdue Pharma to remain in Pike, Kentucky.com, http://www.kentucky.com/2013/09/30/2852769/kentuckys-lawsuit-against-oxycontin.html.

⁹ United States v. Purdue Frederick Co., 495 F. Supp. 2d 569, 570 (W.D. Va. 2007).

¹⁰ David Armstrong, Drugmaker Warns that OxyContin Suit Could be ‘Crippling’, Bloomberg (October 20, 2014), http://www.bloomberg.com/news/2014-10-20/purdue-says-kentucky-suit-over-oxycontin-could-be-painful.html.

¹¹ Unger, supra note ii.

¹² Armstrong, supra note x.