Philadelphia Faces Class-Action Lawsuit Over Property Seizures

I. Introduction

            Chris Sourovelis has lived in Philadelphia for 30 years, and has owned his North Philadelphia home since 2007.[1]  This March, his son was caught selling forty dollars worth of drugs outside of their home.[2]  This would have been the end of the story, or a mere two lines in the crime blotter, had it not been for what followed.  Shortly thereafter, and without any prior notice, the Philadelphia Police evicted the Sourovelises and seized their house.[3]  They were barred from living in their home for one week, and permitted to move back only if they banned their son from visiting.[4] The Sourovelises fought back, suing the City of Philadelphia in a class action suit for violations of their due process rights under the Fourteenth Amendment.[5]  More significantly, the Sourovelises and several other plaintiffs have the backing of the Institute for Justice, which is a public interest law firm devoted to private property.[6]  The particular facts of the Sourovelis’s case, the pending class action certification,[7] and the expertise of a major public interest law firm could make this case of national interest.  If the plaintiffs litigate the case to a final ruling and prevail, then an injunction could force Philadelphia to reform its seizure programs so that they comport with due process.  Such a ruling could serve as a basis for trimming back many similar city and state asset forfeiture programs across the nation.

II. The Crown v. The Ship

            The Sourovelis’s house was seized pursuant to a process known as civil asset forfeiture.  Civil asset forfeiture has its roots in English admiralty law.[8]  England enforced laws against ships themselves, thereby allowing the government to recover when they could not find the owner (who was often located overseas).[9]  American law imported this procedure, where it then evolved into the current forfeiture system.[10]  An essential part of the forfeiture proceeding that has survived various changes is its’ civil in rem, as opposed to in personam nature.[11] That is, the proceeding is a civil suit (as opposed to criminal), and the state proceeds against the property itself, not the owner.[12] This often results in colorful case names, such as United States v. Approximately 64,695 Pounds of Shark Fins[13] and State v. Silver Chevrolet Pickup.[14]

III. The War on Drugs, Expansion and Federal-Level Reform

            The use of civil asset forfeiture has waxed and waned over the years.  It underwent great expansion under the War on Drugs.  In 1970, Congress passed the Comprehensive Drug Abuse Prevention and Control Act (hereinafter “The Act”);[15] it included a provision authorizing the government to seize controlled substances, raw materials, manufacturing equipment, and vehicles used in the drug trade.[16]  The Act was subsequently broadened in 1984 to include proceeds “traceable” to a drug transaction and real property used to “facilitate” the commission of an offense.[17]

            Noting this potential for abuse, Congress acted in the year 2000 by passing the Civil Asset Forfeiture Reform Act (hereinafter referred to as “CAFRA”).[18] Enacted with the intent “[t]o provide a more just and more uniform procedure for federal civil asset forfeitures,”[19] CAFRA provided modest reform, raising the requirements for the government in two main areas: (1) the burden of proof; and (2) an “innocent owner” defense.

a. Burden of Proof

            In pre-CAFRA seizure proceedings, the government only had to prove its case by the lowest legal standard: probable cause.[20] CAFRA changed this and demanded that the government prove its case by a preponderance standard.[21]  This is still a lower standard than the “clear and convincing” standard that Rep. Hyde, the Bill’s sponsor, initially sought.[22]  However, the preponderance standard applies to both the crime, and the link between the crime and the seized property.[23] Although an empirical analysis of CAFRA indicates that it has provided property owners little relief, the law does provide a blueprint for reforming seizure laws.[24]

b. Innocent Owner Defense

            In addition to the burden of proof, CAFRA also provided an “Innocent Owner Defense” that allows the owner of seized property to prove, by a preponderance standard, that he either did not know of the wrongdoing that gave rise to forfeiture or upon learning of the wrongdoing, did everything he could to prevent it (such as notifying law enforcement).[25]  Other procedural safeguards included the appointment of counsel for owners of property subjected to forfeiture, albeit in limited circumstances.[26]

IV. State Laws

            While CAFRA provided a de jure of bulwark against the government’s use of seizure, rather than  de facto, the more pernicious actors are state and local law enforcement agencies.  Rather than take a cue from federal law, states have made seizure even easier.[27]  The problem in Philadelphia is particularly acute: Between 2002 and 2012, Philadelphia has seized $64 million in assets; $44 million of that in cash.[28]  This averages to nearly $6 million annually; 40% of which goes to the Philadelphia District Attorney’s office.  Further, neither CAFRA nor state laws have addressed the inherent conflict of interest: the law enforcement departments are the beneficiaries of the property they seize. The ultimate disposition of the seized property is clouded by conflicts of interest: prosecutors, not judges or juries, determine the status of the property.[29]  In the case of Philadelphia homeowners, they are forced to repeatedly trek to “Courtroom 478” – often multiple times – to have a hearing on their property.[30]

V. Reform In Sight?

            While some victims of forfeiture have attempted to bring suit against state and local police forces, the suits have stopped short of broad reform, ending in settlement before a judge can decide on the legal issues.[31]  Notably, a suit against Shelby County, Texas for similar abusive forfeiture policies did result in changes to the department’s seizure policy, but little else.[32]  The Institute for Justice has been extensively researching this issue for years, such as compiling state-by-state “Report Cards” that assess the fairness of their asset seizure programs.[33]  Pennsylvania’s seizure provisions are 42 Pa. Cons. Stat. § 6801 and § 6802;[34] the state was given a grade of “D” pursuant to the report.[35]

            This brings us to the case at bar and why it is particularly important: Sourovelis involves highly sympathetic plaintiffs and an issue that the Institute for Justice has campaigned for over several years.  Although policy pieces have made various recommendations for states to reform their own laws,[36] the issue that this case highlights is whether courts will step in and curtail states’ rights.  Judging by their long-standing and thoroughly researched campaign, it appears that the Institute for Justice will not be satisfied with anything less than a ruling that ensures property owners protections rooted in the Fourteenth Amendment.[37]  The next question is: what steps will federal courts take to reform these asset seizure practices so that they conform to the Constitution?

            Regarding the substantive law, the court could take a restrained approach and make the Pennsylvania state law essentially coextensive with CAFRA by reading in certain safeguards, such as establishing proof of both the crime and the link between the crime and the property by a preponderance of the evidence. The court could go even further and demand higher standards of proof —either a clear and convincing standard or a beyond a reasonable doubt standard— that are even stricter than CAFRA. In light of CAFRA’s shortcoming to curtail abusive forfeiture practices,[38] the Sourovelis court should scrutinize Philadelphia’s programs more intensely.

            The harder issues are the procedural ones: the repeated trips to the courtroom, the pre-adjudicative seizures, and the inherent conflict of interest.  The plaintiffs seek to preliminarily and permanently enjoin these procedures.[39]  If the court awards injunctive relief, the specifics of the injunction, tailored to the facts of the case, could provide a model by which other federal courts could use to curtail other state seizure laws.

            Although CAFRA provides no guidance on these issues, the Institute for Justice’s comprehensive report, Policing for Profit, does.[40] The four states whose seizure programs earned the highest letter grades – Maine, North Carolina, Vermont, and North Dakota – have incorporated safeguards or dispensed with the practice entirely (in the case of North Carolina).[41]  In Maine and North Dakota, all funds forfeited go directly to the state’s general fund, instead of to the seizing police department.[42] It’s possible that the Sourovelis court will accordingly divert any seized assets from the Philadelphia DA’s office and into the Philadelphia general fund.

            But even these top-graded states’ laws have not addressed the most troubling aspects of Philadelphia’s programs: pre-adjudicative seizures and proceedings administered by the DA’s office.  To ensure unbiased resolution of these cases, seizures need to be resolved judicially by a neutral state court, not administratively by the DA’s office.  And any seizure prior to adjudication needs to be pursuant to a preliminary injunction, which requires the seizing party to show irreparable harm.[43]  An injunctive order by Sourovelis court would necessarily incorporate these changes to Philadelphia’s asset seizure practices to square them with the Constitution.

*Andrew Schwerin is a May 2015 J.D. Candidate at Rutgers School of Law—Camden and serves as the Submissions and Symposium Editor for the Rutgers Journal of Law & Public Policy.

[1] Complaint-Class Action ¶ 9, Sourovelis v. City of Philadelphia, No. 14-4687 (E.D. Pa. 2014)  available at http://endforfeiture.com/wp-content/uploads/2014/08/PhillyForfLawsuitFILED.pdf.

[2] Nick Sibilla, Philadelphia Earns Millions By Seizing Cash And Homes From People Never Charged With A Crime, FORBES, Aug. 26, 2014, available at http://www.forbes.com/sites/instituteforjustice/2014/08/26/philadelphia-civil-forfeiture-class-action-lawsuit/.

[3] Id.

[4] Id.

[5] Id.; Complaint-Class Action ¶¶ 190-235.

[6] George F. Will, About, INSTITUTE FOR JUSTICE, https://www.ij.org/about (last visited Sept. 16, 2014).

[7] Complaint-Class Action ¶¶ 182-89.

[8] Eric Moores, Note: Reforming the Civil Asset Forfeiture Reform Act, 51 ARIZ. L. REV. 777, 781 (2009) (citing Tamara Piety, Scorched Earth: How the Expansion of Civil Forfeiture Doctrine Has Laid Waste to Due Process, 45 U. MIAMI L. REV. 911, 931 (1989)).

[9] Id.

[10] Id.

[11] Rachel L. Stuteville, Comment: Reverse Robin Hood: The Tale of How Texas Law Enforcement Has Used Civil Asset Forfeiture to Take From Property Owners and Pad The Pockets of Local Government–The Righteous Hunt for Reform Is On, 46 TEX. TECH. L. REV. 1169, 1176-1178 & n.85.

[12] Id. at 1178.

[13] 520 F.3d 976 (9th Cir. 2008).

[14] 140 S.W.3d 691, 691 (Tex. 2004).

[15] 21 U.S.C. § 801.

[16] Id. at § 881(a)(4).

[17] Id. at § 881(a)(6) – (7); see also Moores supra note 8, at 781; see also Stuteville, supra note 11, at 1179.

[18] Civil Asset Forfeiture Reform Act, Pub. L. No. 106-185, 114 Stat. 202 (2000).

[19] Civil Asset Forfeiture Reform Act, 114 Stat. 202.

[20] Moores supra note 8, at 799 (quoting Rep. Henry Hyde, Chairman, House Judiciary Comm., Forfeiture Reform: Now or Never? (May 3, 1999), http://www.aclu.org/crimjustice/searchseizure/10304leg19990503.html).

[21] Id.

[22] Id. (quoting Rep. Henry Hyde, Chairman, House Judiciary Comm., Forfeiture Reform: Now or Never? (May 3, 1999), http://www.aclu.org/crimjustice/searchseizure/10304leg19990503.html); see also Stuteville supra note 11 at 1195-96 (noting that several states, including Vermont and Maine, have instituted a clear and convincing standard, and recommending that Texas do the same, or even institute a higher, “beyond a reasonable doubt” standard.)

[23] Stuteville, supra note 11 at n.127 (quoting Stefan D. Cassella, ASSET FORFEITURE LAW IN THE UNITED STATES, 17-22 (2d ed. 2013)).

[24] Moores, supra note 8, at 783-84 (noting that in 1996, 4 years prior to the enactment of CAFRA, $338 million was deposited in the fund; in 2008, the fund collected $1.3 billion).

[25] See 18 U.S.C. § 983(d).

[26] Stuteville, supra note 11, at 1180 (citing 18 U.S.C. § 983(b)(1)(A), (b)(2)(A)).

[27] Sarah Stillman, Taken, NEW YORKER, Aug. 12, 2013, available at http://www.newyorker.com/magazine/2013/08/12/taken.

[28] Sibilla, supra note 2.

[29] Id; Complaint-Class Action ¶ 89.

[30] Sibilla, supra note 2 (quoting Isaiah Thompson, The Cash Machine, PHILADELPHIA CITY PAPER, Nov. 28, 2012, available at http://citypaper.net/article.php?The-Cash-Machine-19189 (“An analysis of more than 8,000 asset forfeiture cases filed in 2010 showed that the 17 percent of cases (or roughly 1,400) in which respondents appeared at least once took more than eight times as long, an average of 260 days, as first-listing judgments.”)

[31] Stillman, supra note 27.

[32] Id. (“Facing the prospect of a long, arduous trial, Tenaha and Shelby County officials agreed to settle, though they denied wrongdoing. Earlier this month, the settlement was examined for fairness by a district judge, and upheld.”)

[33] Scott Bullock, Policing for Profit Part II: Grading the States, Institute for Justice, available at http://www.ij.org/part-ii-grading-the-states-2 (last visited Sept. 16, 2014 at 11:00 PM).

[34] The statute provides that the government can seize property by a preponderance of the evidence and that property owners bear the burden of proof in innocent owner claims. The statute requires that “absence of knowledge or consent” must be reasonable under the circumstances, but does not expressly provide the burden of proof that the owner must meet. See 42 PA. CONST. STAT. § 6802(j)(2014).

[35] Pennsylvania, INSTITUTE FOR JUSTICE, available at http://www.ij.org/asset-forfeiture-report-pennsylvania (last visited Sept. 16, 2014 at 11:00 PM).

[36] See, e.g. Stuteville, supra note 11; see also Moores, supra note 8.

[37] U.S. CONST. amend. XIV, §1. (“[N]or shall any State deprive any person of life, liberty, or property, without due process of law.”)

[38] See supra note 24.

[39] Complaint-Class Action ¶ 2.

[40] Marian R. Williams, Ph.D, et al., Policing for Profit: The Abuse of Civil Asset Forfeiture, INSTITUTE FOR JUSTICE, (Mar. 2010), available at http://www.ij.org/policing-for-profit-the-abuse-of-civil-asset-forfeiture-4.

[41] See Bullock, supra note 33; for a quick overview of these states’ safeguards, see also Stuteville, supra note 11, at 1192-97.  It is notable that North Carolina does not have civil asset forfeiture under state law.  However, federal authorities can still seize assets and then transfer them to cooperating state and local police through a program known as “equitable sharing.” Because North Carolina relies on equitable sharing, they received an overall grade of “C+.” Asset Forfeiture Report: North Carolina, Policing for Profit, Institute for Justice, available at http://www.ij.org/asset-forfeiture-report-north-carolina (last visited October 13, 2014). While a full discussion of equitable sharing, is outside the scope of this article, both Moores (supra note 8) and Stuteville (supra note 11) discuss it.

[42] Bullock supra note 33.

[43] See Am. Fed’n of State, Cnty. & Mun. Emps. v. Shapp, 280 A.2d 375, 376-77 (Pa. 1971). The three-pronged test for preliminary injunctive relief demands that the moving party show (1) immediate, irreparable, and noncompensable harm in the absence of such relief; (2) that “greater injury would result by refusing” such relief instead of granting it; and (3) that such relief preserves the status quo. See id. (citing Ala. Binder & Chem. Corp. v. Pa. Ind. Chem. Corp., 189 A.2d 180 (Pa. 1963)).