Court Tells DEA To Stop Pushing Burden Of Proof Back On Claimants In Forfeiture Case

from the procedures-matter dept

The government has lost its claim to money lifted from two men by the DEA at the Cleveland airport. Despite agents being super-sure the money was either drug profits or intended for drug purchases, no charges were brought. But the DEA decided to keep the money -- $31,000 from one and $10,000 from the other -- for itself.

The Sixth Circuit Court of Appeals says not so fast. The decision [PDF] lets the government know it's jumping the gun on claiming sole ownership of this lifted cash. The opinion starts out with a brief description of how the cash-focused Drug Enforcement Agency starts each airport workday.

The parties dispute most of the facts underlying this action. We begin where they find common agreement, drawing these details from the pleadings. On February 24, 2016, Taiwan Wiggins and Dalante Allison (together, "claimants") were each at the Cleveland Hopkins International Airport for a flight to Orange County, California. The Drug Enforcement Administration (DEA) was aware of the claimants' itineraries and that each had previous felony drug convictions. The DEA observed them at the airport engaging in conversation before they walked together toward the security checkpoint.

As we've discussed before, the DEA takes great interest in certain travelers -- even going so far as to ask TSA agents to be on the lookout for cash during bag inspections and X-ray screenings. Here, the DEA appeared to hit the jackpot (in more ways than one): traveler with previous convictions and tickets to California. As the multiple law enforcement officers have sworn in multiple court statements, the only reason anyone travels to California is to buy drugs. (Conversely, the only reason to leave California is to go sell the drugs they just purchased.)

The DEA took the cash from the two men, ran a dog past it, and announced the dog said the DEA could keep the money. The government then filed for forfeiture under the theory the money was drug-related. Both men submitted affidavits stating the money was theirs and was seized illegally.

The court took the affidavits and set a date for discovery to see if the men could stake a legal claim to the seized cash; i.e. prove it was legally obtained. The DEA decided to do things out of order. It moved to strike the men's claims. The district court agreed, finding the men had made nothing but "naked assertions of ownership" -- far below the evidentiary standard needed to reclaim the seized cash.

Open-and-shut… or so the DEA thought. The men appealed and the Appeals Court finds the lower court also skipped a step when arriving at its conclusion. As it states during its long discussion of forfeiture proceedings, the lower court shifted the burden of proof to the wrong party at this early stage.

Rule G(5) requires claimants to do no more than identify themselves and state their interest in the property subject to forfeiture. The government, on the contrary, wants claimants to provide additional detail, a position that it attempts to justify as a means to ward off false claims and to give it a starting point to draft its special interrogatories pursuant to Rule G(6). Nowhere in the text of Rule G do we see any support for this approach, and our case law demonstrates why it is not necessary. First, the would-be claimant must demonstrate Article III standing, which, at the pleading stage, necessarily requires that the claimant allege the facts necessary to satisfy Lujan’s “irreducible constitutional minimum of standing.” See Lujan, 504 U.S. at 560. Second, a claimant’s ability to proceed under Rule G, which we have called “statutory standing,” is satisfied through mere compliance with the rule, see Real Props. & Premises, 521 F. App’x at 384, and we see no persuasive reason to import a heightened pleading standard that has no basis in the text. And third, we have held that Rule G’s verification requirement is a built-in preventative measure that limits the danger of false claims. One Men’s Rolex Pearl Master Watch, 357 F. App’x at 627.

As the appeals court points out, the government wants too much too soon, and when it doesn't get it, it wants to take the money and run. But so far, all the court has to work with are competing allegations about the legality of the cash, and the government doesn't get to pretend its claim has more value.

Here, where the government alleged that it took a bundle of cash from a claimant’s suitcase, and each claimant stated that he owned the cash, there is a clear allegation of ownership that satisfies Article III. And the claimant’s making of such a statement is what satisfies Rule G’s statutory standing requirement. Therefore, at least at this stage in the litigation, there was no basis on which the district court could strike the claim.

There is no sympathy for the DEA in the Sixth Circuit:

The government sings a sirens’ song about the value of high pleading standards and the benefits it will receive from forcing claimants to support their claims from the outset of a forfeiture proceeding. But all of the government’s arguments rest on flawed assumptions about the procedural rules governing in rem forfeiture cases.

And if the government doesn't like it, it's welcome to take it up with… the government.

If Congress wishes to add an additional layer of protection to the statutory requirements by having claimants state their interest with specificity, it may. But a panel of our court is not the proper body to do so.

To close things out, the court points out in detail the wrongness of the government's position. The government's assertions suggest inverting what little there is of due process in forfeiture proceedings.

Finally, we note our concern that the government's approach would turn the burden of proof in forfeiture actions on its head. Under the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), the government bears the burden of proving by a preponderance of evidence that the subject of a civil forfeiture action is, in fact, forfeitable. Requiring a forfeiture claimant to explain the nature of his ownership at the pleading stage would be asking the claimant to satisfy the government's burden of proof, or at least go a long way toward doing so.

Back the case goes to the lower court with all the correct steps -- and a modicum of due process -- revived. The government may still be able to retain possession of the seized cash, but it needs to provide at least some evidence it wasn't legally obtained first.

Filed Under: 6th circuit, asset forfeiture, burden of proof, dea, forfeiture

Judge Pushes Burden Of Proof Back On DEA Agents Who Seized $11,000 From Traveling College Student

from the recreational-drug-use-is-not-the-same-thing-as-drug-trafficking dept

This could be fun.

Last February, DEA agents took $11,000 from college student Charles Clarke. The funds were to be used to continue his education. The DEA, however, had other plans for the money.

Deciding that Clarke's one-way ticket, odor of marijuana smoke and the inability to instantly prove all of the $11,000 was obtained legitimately, the DEA seized it. Good thing it did, considering there were 13 law enforcement agencies expecting a percentage of the take.

Clarke was initially charged with assault because he struggled to prevent DEA agents from separating him from the cash he says he spent five years saving. That charge was dropped. No other charges were brought. No contraband or weapons were found on his person.

In asset forfeiture cases, those whose property has been seized by the government must challenge the seizure and provide proof of its legitimate origin. All the government has to do to keep the money is wait the challenge out. In a large percentage of cases, the seizure is never contested. The government has unlimited resources. Those challenging forfeitures do not. In fact, they have even less to work with, thanks to the government's prior actions, and fighting seizures can be incredibly expensive.

Fortunately for Clarke, a judge has flipped the script.

Clarke’s lawyers asked for documents from the government with the intent to prove there are constitutional problems with the practice and that it gives police a profit-driven motive to seize property and funds.

The U.S. attorneys were not able to give all the documents to Clarke’s team and so they took the issue up with Judge Bertelsman. He decide to split the case into two parts:

First; the U.S. attorneys have to prove they have grounds to keep Clarke’s money. I.e., they have to prove that Clarke made the money from drug dealing.

Second; if the government proves the money came from drugs, Clarke’s team will have to argue against the issue of civil asset forfeiture itself. I.e., arguing that the practice is profit-driven or worse.

The burden of proof has been shifted back to where it always should have been, especially when seizures continue without accompanying criminal charges. The government can no longer simply claim Clarke's ticket, odor and lack of receipts are indicative of illegal activity. It has been ordered to show its work. This will be difficult because, given the lack of charges against Clarke, it most likely has nothing to present to the judge in the way of evidence.

If it somehow manages to round up some evidence proving its "guilty money" theory, it's still not in the clear. It will then have to defend the idea of civil asset forfeiture if Clarke's lawyers sufficiently demonstrate to the court the program's nasty side effects.

But it's the first part that's the most important. Given the fact that government agencies can seize property without securing convictions, orders like this one force the government to come up with better evidence than "one-way ticket" or "marijuana odor." The DEA must now find some way to connect the money it took to criminal activity, something agencies that participate in forfeiture programs don't have much experience in doing.

Filed Under: asset forfeiture, asset seizure, burden of proof, charles clarke, civil asset forfeiture, dea

YouTube Wins Yet Another Complete Victory Over Viacom; Court Mocks Viacom's Ridiculous Legal Theories

from the winner-and-still-champion dept

A few weeks ago we took a look at the latest filings in the long-running Viacom/YouTube dispute and were somewhat stunned at the ridiculous arguments made by Viacom, suggesting that the burden of proof was on YouTube to prove it did not know the videos on its site infringed on Viacom's copyrights. The idea that copyright law works this way, in which the burden of proof is on the service provider to show a lack of knowledge of infringement, is crazy. Thankfully, the court agreed.

In a ruling released today, the court gave a total victory to Google/YouTube, granting it summary judgment, saying that YouTube was protected from claims of infringement via the DMCA's safe harbors, and mocking Viacom's legal theories at the same time. Might as well jump right in with some quotes, including the money quote that Viacom's legal theory is "extravagant." Elsewhere the judge calls it "ingenious."

Viacom's argument that the volume of material and "the absence of record evidence that would allow a jury to decide which clips-in-suit were specifically known to senior YouTube executives" (Viacom Opp. pp. 9-10) combine to deprive YouTube of the statutory safe harbor, is extravagant. If, as plaintiffs assert, neither side can determine the presence or absence of specific infringements because of the volume of material, that merely demonstrates the wisdom of the legislative requirement that it be the owner of the copyright, or his agent, who identifies the infringement by giving the service provider notice. 17 U.S.C. § 512(c)(3)(A). The system is entirely workable: in 2007 Viacom itself gave such notice to YouTube of infringements by some 100,000 videos, which were taken down by YouTube by the next business day. See 718 F. Supp. 2d 514 at 524.

Thus, the burden of showing that YouTube knew or was aware of the specific infringements of the works in suit cannot be shifted to YouTube to disprove. Congress has determined that the burden of identifying what must be taken down is to be on the copyright owner, a determination which has proven practicable in practice.

This was the crux of Viacom's argument. That because they could show a lot of infringement, and here and there point to some evidence that some people at YouTube might have known of general infringement, then the burden should be on YouTube. But the court clearly calls them on this, noting that's not what the law says, nor does it make sense. Instead, under the law, the burden is on Viacom and that makes sense.

From there, the court cut through the claim of "willful blindness" that Viacom (and some of the folks in our comments) were so fond of. The court's basic response is "huh?" Basically it points out that Viacom's argument makes no sense. It points out that the 2nd Circuit appeals court made it clear that red flag knowledge had to be about specific infringements and Viacom keeps talking about general knowledge. This is, of course, what plenty of us pointed at the time and the court clearly sees through Viacom's wacky argument.

Here, the examples proffered by plaintiffs (to which they claim YouTube was willfully blind) give at most information that infringements were occurring with particular works, and occasional indications of promising areas to locate and remove them. The specific locations of infringements are not supplied: at most, an area of search is identified, and YouTube is left to find the infringing clip. As stated in UMG Recordings v. Shelter Capital Partners, LLC, No. 10-55732, 2013 WL 1092793, at *12 (9th Cir. Mar. 14, 2013) ("UMG III"),

Although the parties agree, in retrospect, that at times there was infringing material available on Veoh's services, the DMCA recognizes that service providers who do not locate and remove infringing materials they do not specifically know of should not suffer the loss of safe harbor protection.

The Karim memorandum states that infringing clips of some well-known shows "can still be found," but does not identify the specific clips he saw or where he found them. The Wilkens declaration submitted by plaintiffs asserts that there were over 450 such clips on YouTube at the time, and presumably some of them contained the infringing matter seen by Mr. Karim. To find them would require YouTube to locate and review over 450 clips. The DMCA excuses YouTube from doing that search. Under § 512(m), nothing in the applicable section of the DMCA shall be construed to require YouTube's "affirmatively seeking the facts indicating infringing activity."

Mr. Karim's memorandum does not tie his observations to any specific clips. Application of the principle of willful blindness to his memorandum thus does not produce knowledge or awareness of infringement of specific clips-in-suit, out of the 450 available candidates. Nor does any other example tendered by plaintiffs.

It goes on to reject Viacom's theory that YouTube had the "right and ability to control" infringement on YouTube, by pointing out that its failure to monitor is completely allowed under the DMCA, contrary to Viacom's desire to pretend otherwise:

YouTube's decision to restrict its monitoring efforts to certain groups of infringing clips, like its decisions "to restrict access to its proprietary search mechanisms," do not exclude it from the safe harbor, regardless of their motivation.

Further, it points out that the rest of Viacom's arguments just show "the normal functioning of any service provider, and shows neither participation in, nor coercion of, user infringement activity." Basically, Viacom's bizarre attempt at making all service providers liable across the board has failed.

Finally, the court quickly dismisses Viacom's claim that because YouTube did deals to make its videos accessible via mobile phones, that syndication caused YouTube to lose its safe harbor protections. The court notes that this was just about making the videos accessible, not about YouTube selecting videos, but still letting users pick the videos they want to watch, but via their mobile phones. It notes that contrary to losing the safe harbor provisions, this is actually a reason for why the safe harbors are good, because it "serves the purpose" of the DMCA in "providing access to material stored at the direction of users."

Basically, Viacom has wasted an incredible amount of money on a massive lawsuit based on a very, very shaky premise that the court didn't buy the first time around, or the second time around. Of course, now we fully expect Viacom to throw more good money after bad, and keep trying to convince a court that its entirely unique interpretation of the DMCA makes sense.

Filed Under: burden of proof, copyright, dmca, red flag knowledge, safe harbors, youtube
Companies: google, viacom, youtube

Viacom Filing Attempts To Rewrite DMCA, Shift Burden Of Proof, Wipe Out Safe Harbors And Require Mandatory Filtering

from the are-they-serious? dept

It's been about a year since the 2nd Circuit appeals court sent the Viacom v. YouTube case back to the district court. As we noted at the time, the original district court ruling, which said YouTube was protected by the DMCA's safe harbors, was a good ruling, well reasoned and argued by the court. In contrast, the appeals court ruling dipped into very troubling waters. While it agreed with the district court that YouTube needed "specific" knowledge of infringing works, rather than "general" knowledge that some works were infringing, it also went into questionable territory by arguing that YouTube could be found guilty of "willful blindness," despite the DMCA statute not including any such concept and also being pretty clear that you need specific knowledge in the form of a DMCA-compliant notification.

On Friday, the latest set of (slightly redacted) filings in the case back at the district court were revealed. They were filed in the past few months, but sensitive info was finally redacted and the "public" copies have now been released. Google has, not surprisingly, basically asked the court to reiterate its original ruling, noting that even following the appeals court sending it back, the situation hasn't changed: YouTube obeyed the DMCA's notice-and-takedown procedures and is protected under the DMCA's 512(c) safe harbors (pdf). Google highlights how YouTube has followed notice-and-takedown procedures from early on, and even in the early days blocked some videos that it thought might be infringing. It also notes that Viacom itself pulled a bunch of videos from the lawsuit after it finally signed up to use ContentID and realized that it was beneficial to Viacom's own business. More importantly, as we've pointed out a bunch of times, many videos had to be removed from the case because Viacom had uploaded them itself and even had "confidential (and ever changing) instructions to its copyright-monitoring agent" concerning what to pull off of YouTube. Even worse, apparently, even today, Viacom hasn't fully figured out if all of the clips they're suing over were really infringing. It turns out that many of them are identical to the ones that Viacom itself uploaded as authorized copies (and there's evidence Viacom often uploaded the same clips multiple times itself on purpose).

The basic point: there's no way for Google to know what Viacom uploaded on purpose and what is unauthorized unless it receives direct notification about it. Just like the DMCA safe harbors require. Not only that, but they show that Viacom knew this as fact. First, Viacom tried to buy YouTube itself, and internal memos from Viacom execs noted that "user generated content appears to be what's driving" YouTube's success and even that "consumption of branded content on YT is low." They also specifically stated that YouTube "has many" non-infringing uses.

As for the specific issues raised by the appeals court, YouTube points out that for "willful blindness" to apply, Viacom needs to show that specific clips in this lawsuit were involved in cases where there is evidence of willful blindness by YouTube. That's because the lawsuit is just about those particular clips. If Viacom wants to go after a general willful blindness on the part of YouTube, that's way beyond what the law allows -- and the court is specific about this, noting that Viacom needs to show willful blindness to specific infringements concerning videos in the lawsuit.

But, of course, Viacom doesn't bother to show a single piece of evidence alleging willful blindness by YouTube in regards to any one of the clips in the lawsuit. Instead, in its opposition filing it once again tries to rewrite the law in its favor, trying to create a ridiculously broad general "willful blindness" standard that effectively wipes out the DMCA's 512(c) safe harbors. First, it relies almost entirely on an email sent by an ex-employee of YouTube, in which he claims there is a lot of infringement on the site, but does not name any specific videos. As Google points out, just having someone say there's infringing works on YouTube doesn't (a) show what files need to be removed or (b) even prove the works are actually infringing (see: Viacom uploading its own videos) or, most importantly (c) prove that YouTube failed to remove infringing videos when it learned they were infringing. Viacom doesn't even seem to try to show any of those things. Also, the fact that the email came from an ex-employee certainly doesn't prove that YouTube had knowledge of the specific infringements.

As the filing notes:

The type of generalized guesswork that Viacom engages in bears no resemblance to the showing of specific knowledge of clips-in-suit that the Second Circuit demanded.

In fact, Viacom's filing is really incredible. Having completely lost (at both district and appeals court levels) its ridiculous claim that "general knowledge" of some infringement somewhere on the site leads one to lose safe harbors, Viacom simply tries the same argument again, pretending that the "willful blindness" standard is basically a stand-in for "general knowledge." That's hogwash on many levels, and frankly, I'm surprised that Viacom's pricey lawyers would bother with that argument. The district court already rejected it and the appeals court was pretty clear that Viacom needed to show willful blindness on specific items, not generally.

It also tries to completely flip the burden of proof, arguing that as long as Viacom can show that infringing works were on the site, YouTube has to show that they "lacked such knowledge or awareness of Viacom's clips-in-suit." That's not how the law works. Viacom is actually arguing that the DMCA requires proving the negative. Furthermore, it argues that YouTube's failure to implement an anti-piracy filter that Viacom wanted is more proof of willful blindness. That's similarly ridiculous. The DMCA has been held, repeatedly, to not include a proactive duty to monitor. Failing to do so at the insistence of Viacom (even as YouTube was establishing its own filter anyway) is hardly proof of willful blindness to the infringement of specific clips (and given Viacom's "dizzying array" of authorized videos on the site, such a filter would hardly prove infringement). Incredibly, Viacom insists that it's YouTube trying to flip the burdens in the DMCA, but either Viacom's lawyers have totally misread... um... everything, or they're lying to the court.

They're correct that to get safe harbors the service provider needs to meet certain "burdens," but those are laid out in 512(c). It needs to be a service provider that does not have actual knowledge and when it gets the knowledge, it acts expeditiously to remove or disable access to the material. Those are pretty clearly laid out. Viacom is making things up pretending that the burden also includes the idea that if a copyright holder claims its works are there then the burden shifts to the service provider to prove the negative that it wasn't willfully blind to infringement. Viacom literally argues:

It is not Viacom's burden to prove specific knowledge or awareness. That factual issue is relevant only to the affirmative defense that YouTube is asserting; knowledge of specific infringements is not an element of Viacom's copyright infringement claims against YouTube. At trial, it will be enough for Viacom to prove that the clips-in-suit were on the website, along with some other elements of infringement liability.

Got that? Stuff on the site, plus "some other elements" and boom, no more safe harbors. That's crazy. That's clearly not the purpose of the safe harbors, because that would mean there are no DMCA safe harbors.

As YouTube noted in response:

Viacom does not even try to make the showing of clip-specific knowledge required by the Second Circuit’s ruling. It instead reverses course and claims that it is YouTube’s burden to affirmatively establish its lack of knowledge as to each specific clip-in-suit. Viacom’s novel burden-shifting argument is wrong. It is contrary to the Second Circuit’s decision, all the case law, and the structure of the DMCA itself. Viacom also ignores the record. YouTube has identified more than sufficient evidence of its lack of knowledge of infringement— including the very fact that the voluminous record in this case contains no evidence of such knowledge. Viacom’s inability to offer any evidence from which a jury could find that YouTube had actual or red-flag knowledge of even a single clip-in-suit requires that summary judgment be entered in YouTube’s favor.

Viacom goes on to argue that even though the DMCA is explicit (in 512(m)) that there is no duty to monitor, there really is a duty to monitor! How do they tap dance into that position? By arguing that while there's officially no duty to monitor, if you fail to monitor because it might show you infringing works, then you are guilty of willful blindness. Got that? There's no duty to monitor, but failing to monitor shows that you were making yourself willfully blind. If that's true, then 512(m) makes no sense, which is what Viacom (and other copyright maximalists) have always wanted (in fact, we noted just this three years ago about this case). They want a requirement for others to be their personal copyright cops and 512m gets in the way of that, so Viacom is trying to rewrite it here. In doing this, it relies heavily on the ruling in the Tiffany v. Ebay case -- but that's a very different story, involving trademark (for which the safe harbors don't apply), not copyright.

Viacom also regularly cites shows like South Park, the Daily Show and others despite the fact that Viacom explicitly (in its "rules" sent to BayTSP, its DMCA monitor) had many, if not most, of those clips left on the site as authorized.

There are a few other points up for debate -- concerning things like whether or not YouTube got financial benefits directly from infringement, whether or not reformatting YouTube videos for smartphones removes safe harbors and a few small other points that we won't get into here. Those are unlikely (hopefully) to be the center stage issue, and this post is long enough as is. Frankly, I remain surprised that Viacom's arguments seem so obviously weak. Ever since the case began, I've been surprised at how weak Viacom's arguments are. From the beginning, I expected them to have a stronger lawsuit. Having read the latest filings, it really feels like Viacom went all in early, and rather than admit it never had the goods, it's just going to try crazier and crazier arguments and hope that a court gets confused. Seems like a good way to completely throw away money.

Anyway, if you feel like digging into the three filings (YouTube's motion for summary judgment, Viacom's opposition and YouTube's reply), they're all embedded below for your reading pleasure.

Filed Under: burden of proof, copyright, dmca, filters, mandatory filters, safe harbors, videos
Companies: google, viacom, youtube