JOSE A. CABRANES, Circuit Judge:
In this appeal, we must decide whether to recognize, nostra sponte, "plain error"
Our review of the record leads us to conclude that, although the several claims of error asserted by the appellant are without merit, the District Court's application of legal standards antedating adoption of the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA"), Pub.L. No. 106-185, 114 Stat. 202 (codified principally at 18 U.S.C. § 983) constituted plain error and affected appellant's substantial rights. Consequently, we vacate the judgment of the United States District Court for the Western District of New York (David G. Larimer, Judge) and remand the cause for further proceedings consistent with this opinion.
On April 27, 2007, Dominic Pellegrino ("Pellegrino" or "appellant"), now a 66-year-old retired deputy sheriff, was caught selling prescription drugs illegally to a confidential informant. Based on this information, law enforcement obtained a search warrant for Pellegrino's residence, where, upon executing the warrant on May 3, 2007, they found additional prescription pills — some of which contained controlled substances — and empty prescription bottles. Pellegrino was arrested on May 16, 2007 and charged in state court with having violated New York's narcotics laws. On July 11, 2008, he pleaded guilty in state court to one count of criminal possession of a controlled substance in the seventh degree, in violation of N.Y. Penal Law § 220.03.
On June 30, 2008, the federal government (the "government") commenced the instant civil forfeiture action in the District Court pursuant to 21 U.S.C. § 881(a)(6) ("§ 881(a)(6)"),
This appeal followed.
"We review an order granting summary judgment de novo, drawing all factual inferences in favor of the non-moving party." Viacom Int'l, Inc. v. YouTube, Inc., 676 F.3d 19, 30 (2d Cir.2012). Summary judgment is required if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Lyons v. Lancer Ins. Co., 681 F.3d 50, 56 (2d Cir.2012).
On appeal, Pellegrino raises three arguments: (1) the District Court "abused its discretion" by failing to "accommodate" his invocation of the Fifth Amendment; (2) the District Court improperly "sanctioned" him for discovery violations by granting summary judgment; and (3) the District
Pellegrino's first argument is that the District Court "abused its discretion" by failing to "accommodate" his invocation of the Fifth Amendment right to remain silent. See In re Sims, 534 F.3d 117, 132 (2d Cir.2008) (explaining the term of art "abuse of discretion" as a ruling based on "an erroneous view of the law or on a clearly erroneous assessment of the evidence, or ... a decision that cannot be located within the range of permissible decisions." (internal quotation marks and alteration omitted)). Pellegrino did not, however, invoke his Fifth Amendment privilege until the eve of his deposition, well over three years after discovery had begun. And in those proceeding years, Pellegrino refused to respond to the government's interrogatories, document requests, and requests for admission, but never by invoking his Fifth Amendment right to silence. It was not abuse of discretion for the district court, suspicious of Pellegrino's gamesmanship, to discredit unauthenticated documents that Pellegrino first produced in opposition to summary judgment.
Moreover, Pellegrino's reliance on United States v. Certain Real Property & Premises Known As: 4003-4005 5th Ave., Brooklyn, NY, 55 F.3d 78 (2d Cir.1995), is misplaced because it requires district courts to "make special efforts to accommodate" a claimant, but only "upon [his] timely motion." Id. at 83 (internal quotation mark omitted). A district court is not required to review discovery materials — which can be voluminous, if not vast — in search of arguable privileges that have not been so much as identified by a litigant. At no point in the proceedings before Judge Larimer, did Pellegrino make any motion — much less a "timely motion" based on articulable grounds of Fifth Amendment privilege — for any such "accommodation." Indeed, Pellegrino did not bring to the District Court's attention his invocation of the Fifth Amendment until the filing of his opposition to the government's motion for summary judgment, notwithstanding a conference with the magistrate judge on March 1, 2011 to discuss the status of discovery. Accordingly, in the absence of any authority requiring district courts to grant such an "accommodation" sua sponte, we conclude that Pellegrino's argument is without merit.
Pellegrino next argues that, by granting summary judgment to the government, the District Court improperly "sanctioned" him for failing to comply with discovery requests and for invoking the Fifth Amendment. Yet the Court granted summary judgment, not as a penalty for a violation of the rules governing discovery, see Black's Law Dictionary 1458 (9th ed.2009) (defining a "sanction" as "[a] penalty or coercive measure that results from a failure to comply with a law, rule, or order"), but in response to the government's motion pursuant to Rule 56 of the Federal Rules of Civil Procedure.
Pellegrino's final argument on appeal is that the District Court's decision, which permitted the seizure of the $185,336.07 in illegal drug sale proceeds under 21 U.S.C. § 881(a)(6), violated the Eighth Amendment's ban on disproportionate punishment. We have not spoken directly on the question of whether the Eighth Amendment's prohibition on disproportionate punishment applies to § 881(a)(6); we do so now, and hold that it does not. In Austin v. United States, 509 U.S. 602, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993), the Supreme Court held that, notwithstanding statutory language that "no property right ... exist[s]" in the property described under 21 U.S.C. § 881(a)(1)-(11), the Excessive Fines Clause of the Eighth Amendment applies to forfeitures of conveyances and real estate under 21 U.S.C. § 881(a)(4) and 21 U.S.C. § 881(a)(7). Id. at 622, 113 S.Ct. 2801. In reaching this conclusion, the Court stated that "Congress understood those provisions as serving to deter and to punish" rather than "serv[ing] solely a remedial purpose." Id.
The current case, however, deals with subsection (a)(6) — which concerns proceeds from illicit drug sales. See note 4, ante. All of our sister courts of appeal that have considered this provision have concluded that the forfeiture of "guilty property," such as illicit drug proceeds, "has been traditionally regarded as non-punitive" as to which the Eighth Amendment's restrictions on punishment do not apply. United States v. Real Prop. Located at 22 Santa Barbara Drive, 264 F.3d 860, 874-75 (9th Cir.2001) (internal quotation marks omitted); see also United States v. One Parcel of Real Prop. Described as Lot 41, Berryhill Farm Estates, 128 F.3d 1386, 1395 (10th Cir.1997); Smith v. United States, 76 F.3d 879, 882-83 (7th Cir.1996); United States v. Buchanan 70 F.3d 818, 830 n. 12 (5th Cir.1995); cf. United States v. Alexander, 32 F.3d 1231, 1236 (8th Cir.1994). In so doing, these courts have viewed the forfeiture of drug proceeds as categorically distinct from the forfeiture of conveyances and real estate. See United States v. Tilley, 18 F.3d 295, 300 (5th Cir.1994) ("[T]he forfeitures of conveyances and real estate have no correlation to, or proportionality with, the costs incurred by the government and society because of the large and unpredictable variances in the values of real estate and conveyances in comparison to the harm inflicted upon government and society by the criminal act," whereas "the forfeiture of drug proceeds will always be directly proportional to the amount of drugs sold. The more drugs sold, the more proceeds that will be forfeited."). We agree with this view and hold that the Eighth Amendment does not apply to forfeitures under 21 U.S.C. § 881(a)(6).
The District Court found that all of the seized money constituted proceeds of illegal drug sales. See Sum of $185,336.07, 858 F.Supp.2d at 250. Accordingly, "no property right [] exist[s] in them," 21 U.S.C. § 881(a); see also Adames v. United States, 171 F.3d 728, 733 (2d Cir.1999), and therefore seizure of the unlawfully obtained money cannot violate the Eighth Amendment. We hold, therefore, that Pellegrino's Eighth Amendment argument is meritless.
Our review of the District Court's entry of summary judgment reveals that the Court applied an outdated
United States v. Marcus, 560 U.S. 258, 130 S.Ct. 2159, 2164, 176 L.Ed.2d 1012 (2010) (internal quotation marks and citations omitted). These factors are present here and warrant a remand.
Prior to the enactment of CAFRA, civil forfeiture proceedings were analyzed under a two-step burden-shifting framework. Under the first step, "the initial burden in judicial forfeiture proceedings was placed on the government to establish probable cause for forfeiture." United States v. $557,933.89, More or Less, in U.S. Funds, 287 F.3d 66, 77 (2d Cir.2002) (describing and applying the pre-CAFRA framework). In the case of a bank account, the government was required to show probable cause that "the funds represent proceeds traceable to a drug transaction." United States v. All Right, Title & Interest in Real Prop. & Appurtenances Thereto Known as 785 St. Nicholas Ave. & 789 St. Nicholas Ave., 983 F.2d 396, 403 (2d Cir.1993). The government was not required, as part of its initial burden, to demonstrate "a substantial connection between the drug activities and the property in question, but only a nexus between them." Id. Once the government met its initial burden, the ultimate burden of proof then shifted to the claimant "to show by a preponderance of the evidence that the property was not subject to forfeiture." United States v. Parcel of Prop., 337 F.3d 225, 227 (2d Cir.2003).
In response to criticism of the broad scope of the government's civil forfeiture authority, see United States v. Davis, 648 F.3d 84, 92-93 (2d Cir.2011), Congress in 2000 enacted CAFRA, which "consolidated and dramatically overhauled the procedures for civil judicial forfeiture proceedings." United States v. $557,933.89, More
Although the District Court here twice stated that it was applying a "preponderance of the evidence" standard, Sum of $185,336.07, 858 F.Supp.2d at 247, 250, in substance it applied the pre-CAFRA framework. The Court stated at the outset of its decision:
Sum of $185,336.07, 858 F.Supp.2d at 247-48.
This legal framework, supported by citations to pre-CAFRA cases, is not applicable to this forfeiture action, which was commenced after the year 2000, the effective date of CAFRA. See CAFRA, Pub.L. No. 106-185, 114 Stat. 202 (2000); $557,933.89, More or Less, in U.S. Funds, 287 F.3d at 76 n. 5 (noting that "the new forfeiture proceedings apply only to proceedings commenced on or after August 23, 2000"). The District Court stated three outdated standards from pre-CAFRA case law: (1) it required the government to show "reasonable grounds" for forfeiture based on the less-stringent "probable cause" requirement, see, e.g., Daccarett, 6 F.3d at 55; (2) it rejected the more demanding "substantial connection" test laid out in CAFRA, see 18 U.S.C. § 983(c)(3), in favor of the outdated "nexus" test, which courts no longer apply; and (3) most problematically, it placed the ultimate burden of proof on Pellegrino by using a burden-shifting framework which CAFRA had overhauled.
The District Court then applied this outdated burden-shifting framework in its analysis. It first found "that the Government
Accordingly, the District Court committed error that was clear and obvious under current law.
This error affected Pellegrino's substantial rights because the evidence of record falls well short of demonstrating, by a preponderance of the evidence, under CAFRA, that all of the seized money constituted proceeds from federal drug crimes. On May 25, 2004, Pellegrino made his first deposit into the seized brokerage account in the amount of $100,000. From October 2004 through April 2007, Pellegrino made steady deposits into the seized account that amounted to roughly $25,000 per year. Based on the volume of controlled substances seized from Pellegrino's home, the testimony of a confidential informant, and the absence of any legitimate source of income, the Court found that all of these funds — including the initial $100,000 deposit — were the proceeds of illegal drug sales. See Sum of $185,336.07, 858 F.Supp.2d at 248-49.
Yet the evidence does not support this conclusion as to the initial $100,000 deposit. First, the District Court found, without adequate evidentiary support, that Pellegrino's illegal drug activities spanned a four-year period, beginning in 2003 and ending with his arrest in 2007. In making this finding of fact, the Court relied primarily upon the "testimony of a confidential informant that he had engaged in over 700 purchases of controlled substances from [Pellegrino] over the previous four years." See Sum of $185,336.07, 858 F.Supp.2d at 248 (emphasis added). Yet the confidential informant's own affidavit attests to "approximately 700 [prescription drug] transactions" with Pellegrino during the time period "[o]n or about and between Spring 2005 through May 2007." App'x 84, ¶ 2, 4 (emphasis added).
These errors merely underscore the weakness of the government's case at the summary judgment stage, and the extent to which the District Court's application of the less-strenuous pre-CAFRA legal framework prejudiced Pellegrino.
Lastly, the District Court's application of the pre-CAFRA legal standard undermined the fairness of its decision — particularly because that error was obscured by repeated references in the opinion to a "preponderance of the evidence" standard that was defined in the form prescribed by pre-CAFRA law. Moreover, the decision deprived Pellegrino, a 66-year-old retiree, of what may well be a substantial amount of legitimate savings. Based on the foregoing, we exercise our discretion to recognize plain error in the circumstances presented by this case. See note 6 and accompanying text, ante. The proper course, in our view, is to remand for further proceedings at which the CAFRA legal-standards are properly applied.
To summarize, we hold that:
For the reasons stated above, we