Huerta Consulting Services, LLC v. Drug Enforcement Administration

Background

In 2019, the United States and the Drug Enforcement Administration seized $92,101 in cash from Carlos Williams, who worked for Huerta Consulting Services, LLC (HCS). According to the complaint, Williams had exchanged bitcoin for the money in New Jersey and was returning through Penn Station when DEA agents asked to search his suitcase. Williams agreed, the agents found the cash, and they said a detection dog had identified drug residue on it.

The DEA began administrative civil-forfeiture proceedings. The Government stated that it sent Ernesto Huerta a seizure notice by certified mail on November 19, 2019, and that an individual signed the receipt on November 23, 2019. The DEA also posted notice on its forfeiture website for thirty days. HCS alleged that neither Huerta nor his lawyer received the mailed notice. Huerta, acting for HCS, filed a claim for the money on December 17, 2019. The DEA informed his lawyer that the claim did not identify the claimant’s ownership or other interest in the property and later stated that the claim also lacked a representation made under penalty of perjury. The DEA declared the money forfeited on September 22, 2020.

HCS filed this action seeking the return of the cash plus interest. Its first claim alleged that the warrantless seizure and continued retention violated the Fourth Amendment. Its second claim alleged that the forfeiture process violated the Fifth Amendment because HCS did not receive the required notice and because the DEA improperly rejected its claim as deficient. The Government moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), for lack of subject-matter jurisdiction, and Rule 12(b)(6), for failure to state a legally sufficient claim.

Court’s Analysis

The court explained that the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), 18 U.S.C. § 983, is the exclusive remedy for seeking to set aside a declaration of civil forfeiture. Under CAFRA, a court may consider whether the claimant received adequate notice, but generally may not review the merits of the administrative forfeiture after that process has begun.

The court dismissed HCS’s Fourth Amendment claim for lack of subject-matter jurisdiction because it did not concern the adequacy of the forfeiture notice. The court also dismissed for lack of subject-matter jurisdiction HCS’s Fifth Amendment theory that the DEA wrongly rejected its claim as deficient. Those theories sought review of matters outside the limited notice inquiry permitted by CAFRA.

The court separately considered HCS’s allegation that it did not receive notice. It treated the relevant question as whether the Government took reasonable steps, under the circumstances, to notify HCS—not whether HCS actually received the notice. The court found the notice reasonable because the Government sent written notice by certified mail to known claimants and published notice for unknown claimants for thirty days. The court also noted that the DEA received a signed receipt and that HCS employees later filed multiple claims. It therefore dismissed the notice claim for failure to state a claim.

The court rejected HCS’s request to use general equitable authority to review the claims. In a footnote, the court stated that even if such an exception to CAFRA’s limits existed, it would not apply because the DEA informed HCS of defects in its claim and gave it opportunities to correct them.

Disposition

The court granted Defendants’ motion to dismiss. It dismissed the Fourth Amendment claim for lack of subject-matter jurisdiction; dismissed the Fifth Amendment claim for lack of subject-matter jurisdiction except for the notice allegations; and dismissed the notice allegations for failure to state a claim. The Clerk was directed to close the motion at Docket Number 20 and close the case.