In an issue of first impression, the court held that where a seizure of property was effected for both the “purpose of forfeiture” and the purpose of criminal investigation, the United States is immune from a subsequent tort suit over the seizure.
Reba and David Myers formerly owned “Dollar Stretcher,” a convenience store in Winchester, Virginia. That store sold large quantities of cigarettes which law enforcement agents of the Department of Homeland Security, or DHS, had evidence to believe were being resold in New York to avoid New York’s higher excise taxes.
During their criminal investigation, the agents, armed with warrants, seized 1,560 cartons of cigarettes from the Dollar Stretcher store, and the DHS then held them for several years, during which time the cigarettes passed their shelf life of one year. When DHS ultimately offered to return the cigarettes, Reba refused them as they could no longer be sold and thus had no value.
The Myerses commenced this action against the DHS and the United States under the Federal Tort Claims Act, or FTCA, seeking compensatory damages for the loss of the value of the seized cigarettes, which they contend was approximately $100,000. The district court dismissed the Myerses’ complaint. It concluded that the United States was entitled to sovereign immunity pursuant to the “detention of goods” exception to the waiver of immunity provided by the FTCA.
The Myerses contend that the district court erred in failing to allow their claim to proceed against the United States under an exemption from the “detention of goods” exception — a “re-waiver” of immunity — which is afforded when “the property was seized for the purpose of forfeiture.” They note that even though one warrant authorizing the seizure of their property was issued under Federal Rule of Criminal Procedure 41(c) to obtain evidence of a crime, another warrant was issued on the same day authorizing the seizure of property for the purpose of civil forfeiture. Consequently, they argue, the “re-waiver” of immunity for claims related to property seized for the purpose of forfeiture applies, and therefore they are entitled to pursue their action against the United States.
In circumstances where a seizure of property was effected for both the “purpose of forfeiture” and the purpose of criminal investigation, courts of appeals have concluded that the United States is still immune, construing the re-waiver provision to apply only if the property was seized solely for the purpose of forfeiture. While this court has not heretofore construed the re-waiver provision, it does so now and follows these other circuits. So long as the property is seized and detained for a criminal investigative purpose, for which the United States did not waive its sovereign immunity, this court is not free to override that immunity, even if the property was also seized for a purpose as to which immunity is waived.
In this case, the government was engaged in a large criminal investigation involving not only Reba’s store but also other stores in Virginia that participated in smugglers’ efforts to purchase cigarettes in Virginia and resell them in New York to avoid the higher excise taxes in New York. If suits challenging seizures of property made in furtherance of this criminal investigation were permitted, even though the seizures were also made for purposes of forfeiture, the suits would interfere with the criminal investigation, a result that Congress specifically sought to avoid with the “detention of goods” exception to its waiver of immunity.
Allowing such suits would effectively override the immunity of the United States specifically preserved for the seizure and detention of property accomplished to further criminal investigations. While it is true that Congress did intend to allow suits challenging seizures of property for civil forfeiture, in doing so, it did not modify the United States’ continuing immunity for the seizure and detention of property in furtherance of criminal investigations. Accordingly, when both purposes are in play, the immunity that the United States has is not waived.
Myers v. Mayorkas, Case No. 22-1304, May 3, 2023. 4th Cir. (Niemeyer), from WDVA at Harrisonburg (Dillon). Shane Nathaniel Waller for Appellants. Laura Taylor for Appellees. VLW 023-2-125. 15 pp.