On Review of a Decision of the Drug Enforcement Agency (RI-94-0015)
Before: Sloviter and Cowen, Circuit Judges, and Oberdorfer, District Judge* *Hon. Louis F. Oberdorfer, United States District Court for the District of Columbia, sitting by designation.
The opinion of the court was delivered by: Sloviter, Circuit Judge.
Submitted Pursuant to Third Circuit LAR 34.1(a) December 14, 1998
(Filed December 21, 1998)
Appellant CIGNA Corp. ("CIGNA") seeks review of the 1994 administrative forfeiture of a Lear jet by the Drug Enforcement Administration ("DEA"). CIGNA contends that because the value of the aircraft seized exceeded $500,000, it was improper for the DEA to use administrative forfeiture instead of judicial forfeiture. Additionally, CIGNA raises several constitutional grounds for reversing the forfeiture. For the reasons stated herein, we will deny CIGNA's Petition for Review.
Peter Yskamp purchased the Lear jet in 1991 for use in a charter operation certified by the Federal Aviation Administration ("FAA"). James E. Haldan held a lien on the jet pursuant to a security agreement signed in August 1991, a few days before Yskamp purchased the jet, but that agreement was not filed with the FAA (as required by law) until after seizure of the plane more than three years later. CIGNA insured the jet under a standard policy which was later amended at Yskamp's request to cover losses caused by war or confiscation.
In September 1994, DEA officers who had become suspicious of the activities of certain suspects tracked them to the Bermuda Dunes airport in California. The suspects unloaded luggage from a truck into Yskamp's jet. After the suspects boarded the jet, the officers approached and requested permission to search it, which was granted. On board, the officers found 12 pieces of luggage containing 300 kgs of cocaine.
When questioned afterwards, Yskamp conceded that this flight and a prior one with the same suspects were odd, because the bulk of the payment was in cash, the travelers had significantly more luggage in one direction than the other, and the turn-around time was short. Additionally, when questioned by the DEA, pilots for Yskamp stated initially (but later retracted when Yskamp was present) that they had informed him of their suspicions, and that he told them to ignore these concerns.
Following the DEA's seizure of the jet, Yskamp filed a claim for loss with CIGNA, which CIGNA approved and paid under his amended insurance policy. As provided in the contract, CIGNA then became Yskamp's subrogee. CIGNA also paid the outstanding loan balance owed Haldan, even though Haldan was not named on the policy, and then claimed status as Haldan's subrogee, as well. Finally, by paying Yskamp's insurance claim, CIGNA became owner of the jet outright in addition to his subrogee.
Pursuant to the administrative forfeiture provision in 19 U.S.C. § 1607, the DEA mailed notices of seizure dated October 11, 1994, to Yskamp and Haldan. The mailed notices contained information on the first date set for public notice of the seizure, the appraised value of the property seized ($1 million), and the federal judicial district in which the seizure took place. The notices also explained that the party could post a $5000 bond and pursue judicial forfeiture proceedings as an alternative pursuant to the statute.
Attorney John Scott Hoff (CIGNA's counsel here) notified the DEA of his representation of both CIGNA and Yskamp on October 11, 1994. Included with this notice was a petition for expedited release of the jet. The DEA then issued a notice of seizure addressed to Yskamp c/o Hoff as his attorney. CIGNA wrote to the DEA on November 15, 1994, confirming its understanding that the DEA would proceed on the petition for expedited release and stating that CIGNA's decision whether to post bond was still pending.
CIGNA failed to post the judicial bond and, on December 16, the DEA administratively forfeited the jet. Several days later, the DEA denied CIGNA's expedited release petition, but agreed to treat CIGNA's submission as a petition for discretionary mitigation or remission and agreed to CIGNA's filing of additional documentation for that purpose.
Following the submission of additional information, the DEA denied the mitigation or remission petition. The DEA concluded, inter alia, that neither Yskamp nor CIGNA had taken reasonable steps to assure that the jet was not used for conveying illegal drugs. CIGNA filed a petition for reconsideration of the forfeiture based on the DEA's failure to consider CIGNA's status as subrogee of Haldan's interest. The DEA denied that petition in August 1996.
In September 1996, CIGNA, together with Yskamp, timely filed in the Court of Appeals for the Ninth Circuit a Joint Petition for Review of the DEA's order of forfeiture. The court dismissed the claims of Yskamp as well as those of CIGNA as subrogee of both Yskamp and Haldan for lack of jurisdiction, reasoning that Yskamp was not an aggrieved party, and that Haldan was merely an unsecured creditor with whom CIGNA had no relationship creating subrogation. The court then transferred the remainder of the case to this court on ...