Attorney Fees under CAFRA

Can the Government Avoid Paying Attorney Fees By Filing a Motion to Dismiss

Can the government avoid paying the claimant’s attorney’s fees by filing a Motion to Dismiss voluntarily requesting dismissal pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure? Yes, they can.

For this reason, the claimant should object to the government’s motion to dismiss without prejudice and file a response asking the court to deny the motion, or alternatively, dismiss with prejudice so the claimant would still be entitled to attorney’s fees under CAFRA, § 2465(b)(1). Additionally, the attorney should file a motion for attorney fees pursuant to the Court’s discretionary authority to award fees in connection with voluntary dismissal pursuant to Rule 41(a)(2).

In some cases, the government files a Motion to Dismiss voluntarily requesting dismissal pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure so that it can avoid paying the Claimant’s attorney fees. By filing the motion to dismiss, the government can later argue that the claimant did not “substantially prevail” based on the fact that the underlying forfeiture action was voluntarily dismissed without prejudice.

In those cases, the claimant should object to the government’s motion to dismiss, especially if a motion for summary judgment or a motion to suppress because of an illegal seizure is already pending. Even if the case is dismissed at the request of the government, the claimant should file a Motion for Attorney Fees pursuant to 28 U.S.C. § 2465(b)(1).

After an opposing party has served an answer or a motion for summary judgment, “an action may be dismissed at the plaintiff’s request only by court order, on terms that the court considers proper.” Fed. R. Civ. P. 41(a)(2). When considering such a request to dismiss, “the district court must exercise its broad equitable discretion under Rule 41(a)(2) to weigh the relevant equities and do justice between the parties in each case, imposing such costs and attaching such conditions to the dismissal as are deemed appropriate.” McCants v. Ford Motor Co., 781 F.2d 855, 857 (11th Cir. 1986).

In McCants v. Ford Motor Co., 781 F.2d 855, 860, the court noted: A plaintiff ordinarily will not be permitted to dismiss an action without prejudice under Rule 41(a)(2) after the defendant has been put to considerable expense in preparing for trial, except on condition that the plaintiff reimburses the defendant for at least a portion of his expenses of litigation.

Costs may include all litigation-related expenses incurred by the defendant, including reasonable attorney’s fees. See Bishop v. West American Insurance Co., 95 F.R.D. 494, 495 (N.D. Ga. 1982).

In Minh Huynh, 2009 WL 1685139, at *2, the Fifth Circuit recently addressed this situation. In Minh Huynh, the government filed a civil forfeiture action against a BMW vehicle owned by the claimants. Shortly thereafter, the government filed a motion to dismiss the case without prejudice and returned the vehicle to the claimants. In affirming a magistrate judge’s denial of attorney’s fees pursuant to § 2465(b)(1), the Fifth Circuit explained:

[T]he Government’s dismissal without prejudice [does not] bestow prevailing party status on Plaintiffs because it affected no “change in the legal relationship of the parties.” Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 605 . . . (2001); see also, e.g., RFR Indus., Inc. v. Century Steps, Inc., 477 F.3d 1348, 1353 (Fed. Cir.2007) (reasoning that voluntary dismissal that leaves the plaintiff free to refile his claim affects no change in the parties’ legal relationship).

The return of the plaintiff’s car did nothing to prevent the Government from seizing it again. Additionally, the court entered no order with respect to the car addressing the merits of the forfeiture claim prior to its voluntary dismissal. Without the “necessary judicial imprimatur,” Plaintiffs cannot establish prevailing party status as to this action. Buckhannon, 532 U.S. at 605 . . . (emphasis removed). Id.

Likewise, in U.S. v. $13,275.21, 2007 WL 316455, the Western District of Texas applied Buckhannon to conclude that the claimant cannot obtain a mandatory award of attorney’s fees and costs pursuant to section 2465(b)(1)(A) because he did not substantially prevail since the government’s motion to dismiss without prejudice was granted. However, the claimant might be able to obtain a discretionary award of attorney’s fees and costs pursuant to Rule 41(a)(2), which gives the Court the authority to condition a plaintiff’s voluntary dismissal “upon such terms and conditions as the court deems proper.” Id. at *5.

In United States v. Certain Real Property, 543 F. Supp. 2d 1291 (N.D. Ala. 2008), the Northern District of Alabama applied Buckhannon as the governing standard. In that case, however, the court ultimately granted the claimant’s motion for attorney fees.

After the government filed a motion to dismiss the complaint without prejudice, the claimant filed a response indicating that they did not oppose dismissal but requested that the action be dismissed with prejudice so they would still be entitled to attorney’s fees under CAFRA, § 2465(b)(1). Id. at 1292. The court noted its discretionary authority to determine whether a Rule 41(a)(2) dismissal should be with or without prejudice, and the Court dismissed the case with prejudice. Id.

In court determined that the claimant’s acquittal in the underlying criminal case eliminated any possibility that the government would pursue renewing its civil forfeiture action. Id. Having dismissed the case with prejudice, the Court decided that the claimants had “substantially prevailed” making them entitled to an award of attorney’s fees pursuant to § 2465(b)(1)(A). Id. at 1293.

For this reason, the claimant should object to the government’s motion to dismiss without prejudice, and file a response asking the court to deny the motion, or alternatively, dismiss with prejudice so the claimant would still be entitled to attorney’s fees on a mandatory basis under CAFRA, § 2465(b)(1). The Claimant should also move for attorney fees pursuant to the Court’s discretionary authority to award fees in connection with voluntary dismissal pursuant to Rule 41(a)(2).

In the response to the government’s motion for dismissal without prejudice, it is important for the claimant to respond by showing: the claimant’s effort and expense in preparing for trial; excessive delay or lack of diligence on the part of the government; insufficient explanation of the need for dismissal; and
the present stage of litigation (i.e., whether a motion to suppress or motion for summary judgment is pending).

Additionally, the claimant’s response to the government’s request to dismiss without prejudice should show: the substantial rights that would be lost by the dismissal including the fact that a dismissal without prejudice plainly prejudices the claimant because it prevents the claimant from obtaining statutory attorney’s fees pursuant to the Civil Asset Forfeiture Reform Act of 2000, 28 U.S.C. § 2465(b)(1); why the government’s conduct evinced bad faith; why the government sought the dismissal to gain a “strategic advantage” or as an exercise of “procedural gamesmanship” so that the motion for summary judgment or motion to suppress the illegal search would not be granted and it would not be liable for attorney fees; the government did not offer a plausible reason for seeking dismissal other than gaining a strategic advantage; the government did not believe it had a meritorious case for forfeiture; it matters whether the government or the claimants had superior title to the property; the dilatory tactics by the government as evidenced by the duration of the action; the amount of effort and resources expended; and the dismissal would not result in a waste of judicial time and effort.

Additionally, the claimant should argue that the duration of the litigation and their pending dispositive motion at the time the government requested dismissal weigh against voluntary dismissal without prejudice.

The loss of a basis for statutory attorney’s fees constitutes plain legal prejudice. In other words, the loss of a right to attorney’s fees is sufficient legal prejudice that requires dismissal with prejudice. The claimant should also move for attorney’s fees, costs, and interest under the Civil Asset Forfeiture Reform Act, see 28 U.S.C. § 2465(b)(1). A dismissal without prejudice would likely prevent the claimant from recovering attorney fees and costs under CAFRA, or at least make such recovery significantly more difficult. Under CAFRA, a claimant is entitled to attorney fees, litigation costs, and interest if he “substantially prevails” in a civil forfeiture proceeding. 28 U.S.C. § 2465(b)(1).

If a court is convinced that dismissal without prejudice at the government’s request would cause legal prejudice to a claimant by unfairly depriving the claimant of the ability to seek attorney fees under CAFRA, then the court may deny the government’s motion. See United States v. $107,702.66 in U.S. Currency, No. 7:14-CV-00295-F, 2016 U.S. Dist. LEXIS 12211, 2016 WL 413093, at *3-4 (E.D.N.C. Feb. 2, 2016); see also United States v. Ito, 472 F. App’x 841, 842 (9th Cir. 2012).