United States v. Approximately 81,454 Cans of B ( 2009 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 08-2637
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
A PPROXIMATELY 81,454 C ANS OF B ABY F ORMULA ,
Defendant.
A PPEAL OF:
K ALOTI W HOLESALE, INC.
Appeal from the United States District Court
for the Eastern District Wisconsin.
No. 07–CV–565—Lynn Adelman, Judge.
A RGUED F EBRUARY 9, 2009—D ECIDED M ARCH 25, 2009
Before P OSNER and SYKES, Circuit Judges, and D OW,
District Judge.Œ
P OSNER, Circuit Judge. In February of 2007, federal agents
seized, pursuant to a search warrant, more than 80,000
Œ
Judge Robert M. Dow, Jr., of the Northern District of Illinois,
sitting by designation.
2 No. 08-2637
cans of powdered baby formula from the warehouse of
the appellant, a grocery wholesaler, on suspicion that
they had been stolen from retail stores. Many of the cans
still had retail-store markings or evidence of altered
labels; apparently the appellant had stripped labels off
cans on which the “use by” date (printed on the bottom
of the can rather than on the label) had passed and
pasted them on other cans, which were still salable. Unlike
“best when purchased by” dates, at issue in our recent
decision in United States v. Farinella, 2009 WL 615408(7th Cir. Mar. 12, 2009), the “use by” dates on baby
formula are mandatory: to sell after that date the
appellant would have had to retest the baby formula to
demonstrate that it still met nutritional requirements, and
also would have had to establish a new “use by” date
and repackage the formula with the new date. See 21
U.S.C. § 350a; 21 C.F.R. § 107.20. The appellant was not
interested in doing that.
Also found in the warehouse were materials used for
removing and altering labels. And the appellant’s business
records indicated that it had bought the cans of baby
formula at prices below wholesale, which is consistent
with their being stolen goods.
The government filed a civil forfeiture suit, 18 U.S.C.
§ 981, which is pending in the district court. The ap-
pellant asked the judge for permission to sell the baby
formula on the ground that its “use by” dates were ap-
proaching; indeed, about 80 percent of them have ex-
pired already, and the rest will do so by the end of the
year.
No. 08-2637 3
Rule G(7)(b)(i) of the Supplemental Rules [of civil
procedure] for Admiralty or Maritime Claims and Asset
Forfeiture Actions, which governs procedure in civil
forfeiture suits brought by the federal government, pro-
vides that the court in which such a suit is pending “may
order all or part of the property [sought to be forfeited]
sold if: (A) the property is perishable or at risk of deteri-
oration, decay, or injury by being detained in custody
pending the action.” The rule does not set forth criteria
for deciding such a motion. The judge denied the
motion on the ground that the sale of the baby formula
might endanger the babies who ate it. The denial precipi-
tated this appeal.
The judge’s ruling was not a final decision, appealable
under 28 U.S.C. § 1291. But the appellant contends
that it is appealable under the “collateral order” doctrine.
That doctrine permits the immediate appeal of an
order that involves issues separate from those in the
underlying litigation in the district court and that
would impose irreparable harm on the objecting party.
E.g., Will v. Hallock, 546 U.S. 345, 349-50 (2006). The first
criterion is satisfied; the issue presented by the appeal is
unrelated to the issue in the underlying litigation. The
issue on appeal is the safety of the baby formula; the
issue in the district court is whether the baby formula
was stolen. If it is perfectly safe, it can be sold and the
proceeds placed in escrow, to be conveyed to the ap-
pellant if it is ultimately determined that the baby
formula was not stolen.
Whether the second criterion for an immediate appeal
is satisfied is a little less clear. It is true that if the district
4 No. 08-2637
judge’s refusal to permit a sale is allowed to become final,
much or perhaps all of the baby formula will become
unsalable before the forfeiture proceeding is resolved. But
that is irreparable harm only if the appellant has no
monetary remedy should the government lose the forfei-
ture suit. It might have a remedy in damages under the
Federal Tort Claims Act if the government’s action in
holding on to the baby formula until it became unsalable
was negligent (see the exception within an exception
in 28 U.S.C. § 2680(c)), or a possible Bivens action
for the deprivation of property without due process of
law. We do not explore these possibilities, partly because
they are highly speculative but mainly because neither
party’s brief suggests the possibility of any monetary
remedy if through passage of time the baby formula
becomes unsalable.
And so we arrive at the merits of the appeal.
In a forfeiture suit, the government would have the
burden of proving that the property was subject to forfei-
ture, and this would mean, in the present case, proving
that the baby formula had been stolen. The appellant
argues that the burden of proof with regard to the sale
order should also rest on the government. Otherwise, it
argues, its goods will be rendered valueless even if the
government should fail to prove that they were stolen.
The argument fails on several independent grounds.
First, the appellant could have sought an expedited
hearing on a motion (which it made) to release the prop-
erty to it pending the forfeiture proceeding. 18 U.S.C.
§ 983(f). It did not do so. Second, the judge was explicit
No. 08-2637 5
that even if he placed the burden of proving whether to
permit an immediate sale on the government, he would
deny the motion because of his concern for safety. And
third, there is no rule or even presumption that the
burden of proof is uniform across all issues in a case. E.g.,
R.J. Corman Derailment Services, LLC v. International
Union of Operating Engineers, Local Union 150, 335 F.3d
643, 647-48 (7th Cir. 2003); Mayall v. Peabody Coal Co., 7 F.3d
570, 573 (7th Cir. 1993). The plaintiff in a tort or contract
suit has the burden of proving liability and damages; but
if the defendant interposes a defense, for example of
statute of frauds, statute of limitations, or assumption of
risk, the burden of proving the defense is on him. As
the appellant itself emphasizes in asserting the applicabil-
ity of the collateral-order doctrine to its appeal, the
issue presented by the Rule G(7)(b)(i)(A) motion is differ-
ent from the issue in the forfeiture proceeding, and we
do not see why the burden of proof should not be on the
moving party—which is the default rule for burdens of
proof.
And whichever party has the burden of proof, the district
court did not abuse its discretion in denying the appel-
lant’s motion—the proper standard of appellate review,
since the rule does not state any criteria to guide the
judge. Without prescribed criteria, the judge can range
widely in deciding what factors to consider, and what
weight to give them, in making his ruling. He has, in
other words, considerable discretion, which implies
a deferential standard of appellate review. “The more
numerous and imponderable the factors bearing on a
decision, the harder it will be for a reviewing court to
6 No. 08-2637
pronounce the decision unreasonable and hence an
abuse of discretion.” Call v. Ameritech Management
Pension Plan, 475 F.3d 816, 822 (7th Cir. 2007).
The judge conducted a hearing at which evidence was
presented that one can of baby formula inspected by the
government had been found to be mislabeled as to con-
tents, which could endanger babies who have food aller-
gies, and also that solvents used by the appellant in
changing the labels, along with the generally unhygienic
condition of the warehouse in which the cans were
delabeled and relabeled, created a threat of contam-
ination of the contents. There was conflicting evidence,
and the appellant argues that it should have been given
an opportunity to test a sample of several hundred cans to
determine whether there was contamination of any
of them, or any dangerous discrepancy between relabel
and contents. But while if none of the cans in the
inspected sample turned out to be a danger this would
be strong statistical evidence that the mislabeled can
found by the government was the only one in the entire
lot, it would not be conclusive evidence, and we cannot
say that the judge abused his discretion in insisting that
even a very slight danger was reason enough to bar the
sale. Cf. Caterpillar, Inc. v. Herman, 131 F.3d 666, 669-70
(7th Cir. 1997); Davis v. United States, 716 F.2d 418, 430
(7th Cir. 1983); In re City of New York, 522 F.3d 279, 285
(2d Cir. 2008).
A FFIRMED.
3-25-09