Smoke Shop, LLC v. United States ( 2014 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13-3921
THE SMOKE SHOP, LLC,
Plaintiff-Appellant,
v.
UNITED STATES OF AMERICA,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 2:12-cv-01186 — Rudolph T. Randa, Judge.
____________________
ARGUED JUNE 2, 2014 — DECIDED AUGUST 4, 2014
____________________
Before FLAUM and WILLIAMS, Circuit Judges, and DOW,
District Judge. ∗
FLAUM, Circuit Judge. In 2012, the Drug Enforcement
Administration seized over $110,000 worth of smokable “in-
cense products” from a Delavan, Wisconsin retailer called
The Smoke Shop. At the time of seizure, the DEA believed
∗ Of the Northern District of Illinois, sitting by designation.
2 No. 13-3921
that the incense products, which contained synthetic canna-
binoids, were controlled substance analogues and therefore
illegal under federal drug laws. Smoke Shop contested this
assertion and moved for the return of its inventory in federal
district court. Later, the substances in the incense products
were scheduled by the Attorney General, rendering them
contraband. This eliminated Smoke Shop’s hopes of recover-
ing its goods, so it brought a conversion action against the
federal government for damages under the Federal Tort
Claims Act.
The district court dismissed Smoke Shop’s FTCA suit on
two alternative grounds. It found, first, that the government
enjoyed sovereign immunity from Smoke Shop’s suit under
the detained-goods exception to the FTCA. Second, the court
found that Smoke Shop failed to exhaust its administrative
remedies because it did not submit a claim for damages to
either the DEA or the Department of Justice before filing
suit. We affirm on both grounds.
I. Background
This case is before us on a motion to dismiss, so we rely
on the allegations in the plaintiff’s complaint, without
vouching for their truth. Golden v. State Farm Mut. Auto. Ins.
Co., 745 F.3d 252, 255 (7th Cir. 2014).
The Smoke Shop is a small retail store in downtown
Delavan that sells assorted novelties, tobacco products,
smoking accessories, and what Smoke Shop describes as “in-
cense products.” As the government’s testing later revealed,
the incense products in question contained two marijuana-
mimicking synthetic cannabinoids, XLR-11 and UR-144. See
generally Eliza Gray, The Rise of Fake Pot, TIME, Apr. 21, 2014,
No. 13-3921 3
at 26. Despite these intoxicating properties, Smoke Shop’s
complaint avows that the incense products are marked
“NOT FOR HUMAN CONSUMPTION,” and have “numer-
ous legitimate and legal uses … ranging from religious cer-
emonies to the removal of pet odors.”
On September 13, 2012, two DEA agents and three local
police officers came into the store and seized 8,000 packages
containing several different brands of the incense products.
The agents told Smoke Shop’s owner, David Yarmo, that
they were taking the seized inventory to the local police sta-
tion for testing, and that Smoke Shop would get back what-
ever was not found to be illegal. Believing that the products
contained no controlled substances, Yarmo consented to
their seizure.
Several days later, Yarmo went to the local police station
to inquire about his inventory. He was told that the DEA
had shipped the products to a federal testing facility, so
Yarmo next turned to the DEA. Those agents told Yarmo
there was “no way” that the DEA would ever return the in-
cense products and that if Yarmo wanted to get the products
back he would have to “sue them.”
Smoke Shop then filed a motion for the return of proper-
ty in federal district court. See Fed. R. Crim. P. 41(g) (“A per-
son aggrieved by an unlawful search and seizure of property
or by the deprivation of property may move for the proper-
ty’s return … in the district where the property was
seized.”). In response, the government filed a letter inform-
ing the district court that half of the seized products had
tested positive for XLR-11 and UR-144, which the DEA con-
sidered to be controlled substances under the Controlled
Substances Analogue Act, see 21 U.S.C. §§ 802(32), 813,
4 No. 13-3921
841(a)(1). Because the tested incense products were consid-
ered contraband, the government explained, the DEA could
not return them. The letter also indicated that the remaining
products were due to be tested.
The district court held a hearing on the Rule 41(g) motion
in which Smoke Shop’s and the government’s experts debat-
ed whether XLR-11 and UR-144 constituted controlled sub-
stance analogues, and the parties continued to brief the is-
sue. While this dispute was ongoing, however, the Attorney
General exercised his power under the Controlled Substanc-
es Act to schedule XLR-11 and UR-144 as schedule I con-
trolled substances on a temporary basis “to avoid an immi-
nent hazard to the public safety.” 21 U.S.C. § 811(h).
As a result of the Attorney General’s action, the district
court dismissed Smoke Shop’s Rule 41(g) motion. The court
opined that the Attorney General’s “decision to schedule
UR-144 and XLR-11 suggests that they were not analogues in
the first instance, and now, Mr. Yarmo must recoup his loss-
es through further litigation against the government.” The
Smoke Shop, LLC v. United States, 949 F. Supp. 2d 877, 879
(E.D. Wis. 2013). Accordingly, the court suggested that
Smoke Shop amend its pleadings to effect this “further liti-
gation.”
Smoke Shop took the court up on its suggestion and filed
an amended complaint against the United States for unlaw-
ful conversion under the Federal Tort Claims Act, seeking
compensatory damages. Smoke Shop alleged that the gov-
ernment took its incense products—collectively worth about
$110,000—with no legal grounds to do so, and that the gov-
ernment only later declared the substances in the products
illegal.
No. 13-3921 5
The district court dismissed Smoke Shop’s complaint un-
der Federal Rule of Civil Procedure 12(b)(6) on two inde-
pendent grounds. First, the court found that Smoke Shop’s
action was barred by sovereign immunity. Though the FTCA
waives the federal government’s immunity for the torts of its
employees, 28 U.S.C. § 1346(b)(1), claims arising from the
detention of goods by law enforcement officers are excepted
from that waiver, id. § 2680(c). To make matters more com-
plicated, the Civil Asset Forfeiture Reform Act amended
§ 2680(c) to “re-waive” the government’s immunity in deten-
tion-of-goods cases where the goods were “seized for the
purpose of forfeiture” and certain other requirements are
met. See id. § 2680(c)(1)–(4). However, the district court
found that CAFRA’s re-waiver did not apply to Smoke
Shop’s claim because the DEA did not, in fact, seize the in-
cense products for the purpose of forfeiture—it seized them
in connection with a criminal investigation.
The district court also concluded that Smoke Shop failed
to exhaust its administrative remedies. Before a plaintiff can
bring an FTCA action in court, she must present an FTCA
“claim” to the appropriate federal agency within two years
after the claim accrues. See id. §§ 2401(b), 2675(a). The district
court found that Smoke Shop’s Rule 41(g) motion did not
qualify as a claim for money damages under § 2675(a), and
that its FTCA action was therefore barred.1
1 The government moved to dismiss the complaint under both Rule
12(b)(1) (lack of subject-matter jurisdiction) and Rule 12(b)(6) (failure to
state a claim). The district court correctly dismissed the complaint pur-
suant to Rule 12(b)(6). We have held that “the statutory exceptions enu-
merated in [28 U.S.C.] § 2680(a)–(n) … limit the breadth of the Govern-
ment’s waiver of sovereign immunity [under the FTCA], but they do not
6 No. 13-3921
II. Discussion
We review the district court’s grant of a motion to dis-
miss de novo. Augutis v. United States, 732 F.3d 749, 752 (7th
Cir. 2013).
A. The FTCA’s detained-goods exception and CAFRA’s re-
waiver provision
The detained-goods exception to the FTCA preserves the
federal government’s immunity from suits arising from “the
detention of any goods, merchandise, or other property by
any officer of customs or excise or any other law enforce-
ment officer.” 28 U.S.C. § 2680(c); see also Ali v. Fed. Bureau of
Prisons, 552 U.S. 214 (2008) (holding that § 2680(c) covers law
enforcement officers of any kind). But in 2000, Congress,
“reacting to public outcry over the government’s too-zealous
pursuit of civil and criminal forfeiture,” passed the Civil As-
set Forfeiture Reform Act. United States v. Khan, 497 F.3d 204,
208 (2d Cir. 2007). Among other reforms, CAFRA “re-
waived” the government’s immunity—that is, once more
opened the government up to suit under the FTCA—for tort
actions stemming from law-enforcement detentions of prop-
erty. But CAFRA’s exception-to-the-exception only applies if
four conditions are met:
accomplish this task by withdrawing subject-matter jurisdiction from the
federal courts.” Parrott v. United States, 536 F.3d 629, 634 (7th Cir. 2008).
Similarly, the FTCA’s administrative exhaustion requirement is better
thought of as a “condition precedent to the plaintiff’s ability to prevail,”
not a jurisdictional rule (as we will discuss in part II.B). Kanar v. United
States, 118 F.3d 527, 530 (7th Cir. 1997); accord Glade ex rel. Lundskow v.
United States, 692 F.3d 718, 723 (7th Cir. 2012).
No. 13-3921 7
(1) the property was seized for the purpose of
forfeiture under any provision of Federal law
providing for the forfeiture of property other
than as a sentence imposed upon conviction of
a criminal offense;
(2) the interest of the claimant was not forfeit-
ed;
(3) the interest of the claimant was not remitted
or mitigated (if the property was subject to for-
feiture); and
(4) the claimant was not convicted of a crime
for which the interest of the claimant in the
property was subject to forfeiture under a Fed-
eral criminal forfeiture law.
28 U.S.C. § 2680(c).
We must decide whether the DEA’s seizure and deten-
tion of Smoke Shop’s incense products qualifies for
CAFRA’s re-waiver. The first condition is the one the parties
contest: whether the products were “seized for the purpose
of forfeiture,” a phrase to which our court has yet to give a
definitive construction.
Adopting the reasoning of Foster v. United States, 522 F.3d
1071 (9th Cir. 2008), the district court found that CAFRA’s
re-waiver did not apply to these facts. Foster interpreted the
requirement that the property have been “seized for the
purpose of forfeiture” to mean that the property must have
been seized solely for the purpose of forfeiture. Id. at 1075.
The Ninth Circuit thus held that “the fact that the govern-
ment may have had the possibility of a forfeiture in mind
when it seized Plaintiff’s property” was insufficient to bring
8 No. 13-3921
the detention within the scope of CAFRA’s re-waiver “when
criminal investigation was [also] a legitimate purpose of the
initial seizure.” Id. In other words, the Ninth Circuit inter-
preted § 2680(c)(1) to preserve the government’s immunity
whenever a federal officer seized the plaintiff’s property
pursuant to a criminal investigation at least in part—even if
the officer may have envisioned that the goods would be for-
feited down the line.
The Ninth Circuit reasoned that its interpretation gave
effect to the congressional purposes behind the FTCA’s de-
tained-goods exception, including “ensuring that certain
governmental activities not be disrupted by the threat of
damage suits.” Kosak v. United States, 465 U.S. 848, 858 (1984)
(internal quotation marks omitted); see also Foster, 522 F.3d at
1078. Reading CAFRA’s re-waiver as extending to any law
enforcement investigation in which the officers might con-
template forfeiture would undermine that objective. For in-
stance, “[a]ny waiver of sovereign immunity for damage to
[property seized during an investigation] could hamper law
enforcement officers’ effectiveness in carrying out the im-
portant purposes underlying the seizure and redirect their
attention from the possibility of danger in executing the
search warrant to the possibility of civil damages.” Foster,
522 F.3d at 1078.
The Ninth Circuit also grounded its reading in
§ 2680(c)(1)’s text. The court explained that “the statute’s use
of the definite phrase ‘the purpose of forfeiture,’ as opposed
to an indefinite phrase ‘a purpose of forfeiture,’ suggests that
the property be seized only for the purpose of forfeiture. Had
Congress drafted the text to provide for re-waiver ‘if the
property was seized and forfeited,’ then it would apply when
No. 13-3921 9
both purposes underlie a single seizure. Congress, however,
did not do so.” Id. at 1077–78.
Our court has not adopted Foster’s “sole-purpose test” in
applying CAFRA’s re-waiver provision. However, we em-
ployed Foster in an unpublished decision (as have two other
circuits). Pearson v. United States, 373 F. App’x 622, 624 (7th
Cir. 2010); Shigemura v. United States, 504 F. App’x 678, 680
(10th Cir. 2012); Bowens v. U.S. Dep’t of Justice, 415 F. App’x
340, 343 (3d Cir. 2011). And in another case, we more or less
applied Foster’s logic: we found that because the government
demonstrated that a detention occurred “for a criminal in-
vestigation and not for purposes of forfeiture,” CAFRA’s re-
waiver did not apply. On-Site Screening, Inc. v. United States,
687 F.3d 896, 898 (7th Cir. 2012).
We now formally adopt Foster’s sole-purpose test. We
agree that an alternative reading of § 2680(c)(1)—one that
would waive the government’s immunity whenever an of-
ficer envisioned the possibility of the seized goods’ forfei-
ture—would eviscerate the FTCA’s detained-goods excep-
tion in the context of criminal investigations. When the gov-
ernment seizes property for law enforcement purposes, “in
practice, forfeiture often follows eventually. Thus, in every
criminal seizure the government necessarily must anticipate
at least the possibility of a future forfeiture, a dual motiva-
tion that would be nearly impossible to disprove in any par-
ticular case.” Foster, 522 F.3d at 1079.
We would be wary of the Foster interpretation if it mar-
ginalized CAFRA’s re-waiver. After all, Congress meant to
carve out some category of detained-goods suits and render
the government liable on those claims. But the legislative
history of CAFRA suggests that the seizure of property pur-
10 No. 13-3921
suant to a criminal investigation was not the problem Con-
gress was seeking to address. Instead, CAFRA’s reforms tar-
geted the abuse of forfeiture actions, which—like criminal in-
vestigations—are often carried out by law enforcement pur-
suant to seizure warrants. See 18 U.S.C. § 981(b)(2) (“Seizures
pursuant to this section shall be made pursuant to a warrant
obtained in the same manner as provided for a search war-
rant under the Federal Rules of Criminal Procedure … .”). A
House Judiciary Committee report shows that Congress was
predominantly concerned with making property owners
whole where the government unsuccessfully brings a forfei-
ture action and damages or loses the seized property while
the action is pending. See H.R. Rep. No. 106–192, at 18 (1999)
(“Seized property awaiting forfeiture can be quickly dam-
aged … . It cannot be categorized as victory when a boat
owner gets back, for instance, a rusted and stripped hulk of a
vessel.”). In an earlier report, the House Judiciary Commit-
tee described CAFRA’s proposed changes to the FTCA as
allowing “property owners who prevail in forfeiture actions
[to] sue the government for any negligent destruction or
damage to the property.” H.R. Rep. No. 105-358, at 49 (1997).
Our adoption of Foster thus leaves CAFRA’s exception intact
in the areas where it was intended to be employed.
Indeed, Smoke Shop frames its argument in Foster’s
terms. That is, Smoke Shop argues that the incense products
were seized for the sole purpose of forfeiture—which, if
plausibly alleged in the complaint, would permit Smoke
Shop to take advantage of CAFRA’s re-waiver. In support of
its claim that the DEA was not pursuing a criminal investi-
gation when it seized the products, Smoke Shop points out
that the DEA did not have a search warrant to search the
store, and that no federal criminal charges were ever filed
No. 13-3921 11
against the business or Yarmo. Smoke Shop also stresses that
a DEA agent told Yarmo that he would never get his prod-
ucts back and that he would have to file suit. Smoke Shop
acknowledges that the government never initiated a forfei-
ture action with respect to the seized goods. But it argues
that a formal action was unnecessary, because under 21
U.S.C. § 881(f), controlled substances are summarily forfeit-
ed. See id. § 881(f)(1) (“All controlled substances in schedule I
or II that are possessed, transferred, sold, or offered for sale
… shall be deemed contraband and seized and summarily
forfeited to the United States.”). Because the government
viewed these incense products as contraband all along,
Smoke Shop argues, it must have envisioned the products’
forfeiture under 21 U.S.C. § 881 from the moment it seized
them.
But Smoke Shop’s theory is unpersuasive. First, though it
invokes 21 U.S.C. § 881 to support its argument that the sei-
zure was “for the purpose of forfeiture” under 28 U.S.C.
§ 2680(c)(1), Smoke Shop does not realize that § 881 would
seem to wholly undermine its case that it meets the condi-
tion set out in § 2680(c)(2): that “the interest of the claimant
was not forfeited.” Putting aside the parties’ disagreement
over whether the incense products constituted controlled
substance analogues at the time of their initial seizure, there
is now no dispute that these products are schedule I con-
trolled substances as a result of the Attorney General’s
scheduling them. As such, by operation of § 881(f)(1), Smoke
Shop’s interest in the products was forfeited. And this result
makes sense: we imagine that Congress did not intend for
plaintiffs to obtain damages for lost items that were eventu-
ally deemed contraband (even if the plaintiff tried to fight
that designation initially, as Smoke Shop did here). That
12 No. 13-3921
said, the government never raised this argument about the
interaction between 21 U.S.C. § 881(f)(1) and 28 U.S.C.
§ 2680(c)(2).
In any event, Smoke Shop’s complaint fails to make out a
plausible case that its situation qualifies for § 2680(c)(1).
Though we accept the facts alleged in the complaint as true,
Smoke Shop’s assertion that “[t]he defendants seized the
property for the purpose of forfeiture” is the type of legal
conclusion not entitled to this presumption of truth. Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009). Putting statements like these
aside, we must determine whether the remaining factual al-
legations “plausibly suggest an entitlement to relief.” Id. at
681. “If the allegations give rise to an obvious alternative ex-
planation, then the complaint may stop short of the line be-
tween possibility and plausibility of entitlement to relief.”
McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011)
(alterations, citations, and quotation marks omitted).
When examined in context, the facts alleged in Smoke
Shop’s complaint give rise to an obvious alternative explana-
tion: that the DEA seized Smoke Shop’s inventory in connec-
tion with its investigation of a possible drug crime. DEA
agents raided the store with local law enforcement officers in
tow. The agents did not have a search warrant, but they
didn’t need one, as Yarmo consented to the search and sei-
zure of his inventory. All along, the DEA maintained that it
was testing the products to see if they contained an illegal
substance under federal drug laws. And sure enough, tests
revealed that the products did contain substances that the
government considered illegal under the Controlled Sub-
stances Analogue Act.
No. 13-3921 13
True, the government never charged Smoke Shop with a
crime. But just because the government had not yet indicted
does not mean that we must assume—contrary to the cir-
cumstances of the seizure and testing—that one was not con-
templated. And in fact, Smoke Shop tells us in its brief on
appeal that six months after the seizure, Yarmo was served
with a grand jury subpoena seeking financial documents
and other information from Smoke Shop. We may “consider
new factual allegations raised for the first time on appeal
provided they are consistent with the complaint,” Chavez v.
Ill. State Police, 251 F.3d 612, 650 (7th Cir. 2001), and this alle-
gation further confirms our commonsense intuition that the
DEA was conducting a criminal investigation. Cf. McCauley,
671 F.3d at 616 (“Making the plausibility determination is ‘a
context-specific task that requires the reviewing court to
draw on its judicial experience and common sense.’” (quot-
ing Iqbal, 556 U.S. at 679)). Thus, Smoke Shop has not plausi-
bly alleged that the DEA seized the incense products solely
for the purpose of forfeiture. This situation therefore falls
outside the scope of CAFRA’s re-waiver provision—and
within the scope of the detained-goods exception—and the
district court was right to dismiss Smoke Shop’s FTCA suit
on this ground.
B. Presentation of a claim under 28 U.S.C. § 2675(a)
We also affirm the district court on its alternative hold-
ing: Smoke Shop’s failure to exhaust its administrative rem-
edies before filing its FTCA action.
28 U.S.C. § 2675(a) states that “[a]n action shall not be in-
stituted upon a claim against the United States for money
damages for … loss of property … unless the claimant shall
have first presented the claim to the appropriate Federal
14 No. 13-3921
agency and his claim shall have been finally denied by the
agency in writing.” In other words, the FTCA bars would-be
tort plaintiffs from bringing suit against the government un-
less the claimant has previously submitted a claim for dam-
ages to the offending agency, because Congress wants agen-
cies to have an opportunity to settle disputes before defend-
ing against litigation in court. See McNeil v. United States, 508
U.S. 106, 112 & n.7 (1993).
The term “claim” is undefined in the statute. But a corre-
sponding regulation instructs that a proper administrative
claim under the FTCA contains four elements: (1) notifica-
tion of the incident; (2) a demand for money damages in a
sum certain; (3) the title or legal capacity of the person sign-
ing; and (4) evidence of the person’s authority to represent
the claimant. 28 C.F.R. § 14.2(a); see also Kanar v. United
States, 118 F.3d 527, 528 (7th Cir. 1997).
Several courts consider 28 U.S.C. § 2675(a)’s exhaustion
requirement to go to the court’s subject-matter jurisdiction
over the FTCA action, see, e.g., Valadez-Lopez v. Chertoff, 656
F.3d 851, 855 (9th Cir. 2011); Estate of Trentadue ex rel. Aguilar
v. United States, 397 F.3d 840, 852 (10th Cir. 2005), and one of
our early decisions confronting the meaning of the FTCA’s
administrative claim requirement, Best Bearings Co. v. United
States, 463 F.2d 1177, 1179 (7th Cir. 1972), operated under
this same assumption. For many of those courts (though not
Best Bearings), it followed that the definition in 28 C.F.R.
§ 14.2(a) was not authoritative, because the Attorney General
lacked the delegated power from Congress to determine the
extent of Article III jurisdiction. See, e.g., GAF Corp. v. United
States, 818 F.2d 901, 920 & n.110 (D.C. Cir. 1987).
No. 13-3921 15
However, our court no longer treats § 2675(a) as a juris-
dictional prerequisite. See Glade ex rel. Lundskow v. United
States, 692 F.3d 718, 723 (7th Cir. 2012). And for good reason:
For the federal courts to adjudicate a case, there must be a
case or controversy within the meaning of Article III (a re-
quirement not at issue here), and a statutory grant of author-
ity (here, the provision of the FTCA, 28 U.S.C. § 1346(b)(1),
granting federal courts the authority to adjudicate actions for
the torts of government employees). Section 2675(a)’s ex-
haustion requirement is neither of these; it is better charac-
terized as a “condition precedent to the plaintiff’s ability to
prevail.” Kanar, 118 F.3d at 530. Read this way, the word
“claim” in § 2675(a) is simply a term in need of definition—
i.e., a statutory gap for the Attorney General to fill pursuant
to congressional delegation. Id. And our reading of § 2675(a)
better aligns with the Supreme Court’s guidance that the la-
bel “jurisdictional” should be used “not for claim-processing
rules, but only for prescriptions delineating the classes of
cases … falling within a court’s adjudicatory authority.”
Kontrick v. Ryan, 540 U.S. 443, 455 (2004); accord Gonzalez v.
Thaler, 132 S. Ct. 641, 648–49 (2012).
In any event, as a result of our decision in Kanar, there is
not much of a practical difference between our circuit’s posi-
tion—which considers 28 C.F.R. § 14.2(a) to be definitional—
and the circuits that consider § 2675(a) as limiting the federal
courts’ power to adjudicate FTCA actions. The courts in the
latter category require a claimant to file “(1) a written state-
ment sufficiently describing the injury to enable the agency
to begin its own investigation, and (2) a sum certain damag-
es claim.” Blair v. IRS, 304 F.3d 861, 864 (9th Cir. 2002); accord
GAF Corp., 818 F.2d at 919 n.106 (collecting cases). By its
terms, the regulation demands slightly more. See 28 C.F.R. §
16 No. 13-3921
14.2(a) (including the additional requirement that the person
signing establish her title and authority to pursue the claim).
But in Kanar, we reasoned that § 2675(a) does not require
would-be FTCA plaintiffs to comply with “every jot and tit-
tle” of the regulation. 118 F.3d at 530. So long as the proper
agency had the opportunity to settle the claim for money
damages before the point of suit, we said, technical deficien-
cies in the administrative claim could well be a case of “[n]o
harm, no foul.” Id. at 531. Thus, the underlying purpose of
our approach to § 2675(a)’s requirement—like the courts that
eschew the regulation—is to ensure that the claimant “does
not hinder the settlement process that a claim is supposed to
initiate.” Id.
Smoke Shop admits that it did not file a formal adminis-
trative claim with the DEA or the U.S. Attorney’s office be-
fore filing its FTCA action. But Smoke Shop maintains that
its motion to the district court under Federal Rule of Crimi-
nal Procedure 41(g) gave the government constructive notice
of its claim—so, no harm, no foul. The district court disa-
greed, concluding that asking for the return of seized prop-
erty is not the equivalent of presenting a proper administra-
tive claim under the FTCA.
Smoke Shop’s Rule 41(g) motion certainly satisfied the
first, third, and fourth requirements of 28 C.F.R. § 14.2(a).
But the government maintains that the Rule 41(g) motion
lacked the second requirement: a demand for money dam-
ages in a sum certain. Smoke Shop merely asked for the in-
cense products back—it made no claim to money damages
should the property not be returned.
Smoke Shop’s omission of the money-damages element
is only fatal if it can be said to have “hinder[ed]” or “thwart-
No. 13-3921 17
ed” the settlement process “that Congress created as a prel-
ude to litigation.” Kanar, 118 F.3d at 531. Unfortunately for
Smoke Shop, we have never held that a request for the re-
turn of property—unaccompanied by a statement that the
claimant would seek money damages if the property was
not returned—satisfies § 2675(a). In fact, in Best Bearings, we
said just the opposite. 463 F.2d at 1179 (“The request for re-
turn of the [seized] bearings was not presentation of plain-
tiff’s claim to the government agency as required by
§ 2675(a) … .”). True, Best Bearings assumed that § 2675(a)
was a jurisdictional requirement, a position we have now
abandoned. See Glade, 692 F.3d at 723. Yet this conceptual
shift does not undermine the logical underpinnings of Best
Bearings’ holding that a request for the return of seized
property is not the equivalent of a demand for money dam-
ages. Yarmo did submit a declaration that itemized the
seized inventory, including each product’s respective value.
But it was by no means clear that Smoke Shop was asking
the government for money damages in those amounts in lieu
of the property’s return—it seems that Yarmo merely want-
ed to convey to the court the importance of the loss to his
business. Thus, Smoke Shop simply did not tell the govern-
ment that it intended to bring a tort suit against it.
Smoke Shop argues that it put the government on con-
structive notice that it intended to fight this matter. It was
foreseeable to the government, Smoke Shop argues, that if
the attempt to get the products back using Rule 41(g) didn’t
work, Smoke Shop would likely seek money damages next.
But Smoke Shop loses sight of the fact that the FTCA is an
exception to the immunity the federal government ordinari-
ly enjoys from tort actions. As such, Congress can make
“[m]en … turn square corners” before haling the govern-
18 No. 13-3921
ment into court—“[i]f [the government] attaches even purely
formal conditions to its consent to be sued those conditions
must be complied with.” Rock Island, A. & L. R. Co. v. United
States, 254 U.S. 141, 143 (1920) (Holmes, J.); cf. McNeil, 508
U.S. at 111–13 (submitting a claim after initiating FTCA liti-
gation does not fulfill § 2675(a), even if the litigation has not
advanced substantially). Congress decided that it wanted
agencies to have a chance to settle damages claims before
facing litigation. And without being presented with an actu-
al claim for money damages, the DEA and the U.S. Attor-
ney’s office were ill-equipped to make a fully informed as-
sessment of Smoke Shop’s claim.
As in our past cases, Smoke Shop’s oversight hindered or
thwarted the settlement process envisioned by the FTCA. See
Kanar, 118 F.3d at 531 (attorney’s failure to comply with the
agency’s request that he provide proof of his capacity to rep-
resent the claimant hindered the settlement process and
barred the claimant’s FTCA suit); Best Bearings, 463 F.2d at
1179 (business’s request to the FBI and the U.S. Attorney’s
office for the return of seized property did not satisfy
§ 2675(a)); Antonelli v. Sherrow, 246 F. App’x 381, 385 (7th Cir.
2007) (prisoner’s letters to ATF agents demanding the return
of a seized computer did not qualify as FTCA claims because
the letters did not request money damages). In all of those
cases, the agency had the same “constructive notice” of the
claimant’s position that Smoke Shop alleges the DEA had
here. But constructive notice that an individual has a griev-
ance with the agency does not facilitate settlement negotia-
tion of the individual’s claim for money damages—or at
least, not as directly as the FTCA demands.
No. 13-3921 19
Nothing prevented Smoke Shop from submitting an ad-
ministrative claim to the government at the time of the sei-
zure. In fact, Smoke Shop’s failure to do so—and its decision
to file a criminal procedure motion with the district court
instead—may have led the government to believe that
Smoke Shop was forgoing the civil-litigation route, or at
least that Smoke Shop was not contemplating it at that time.
Thus, Smoke Shop’s failure to exhaust is a second ground for
us to affirm the district court. 2
III. Conclusion
Smoke Shop’s action is barred by the detained-goods ex-
ception to the FTCA. Smoke Shop also failed to exhaust its
administrative remedies by submitting a proper claim for
money damages before filing its FTCA suit. We thus AFFIRM
the district court’s dismissal of Smoke Shop’s suit.
2 In its brief on appeal, Smoke Shop also argues that “[c]onstruing the
statutes as the district court did ignores the promise of the due process
clause of the Fifth Amendment that property will not be taken absent
due process.” Smoke Shop’s argument on this front is waived, as it did
not pursue a due process theory in the district court, and we find that its
constitutional argument—comprised of ipse dixit and little else—is un-
developed on appeal. Puffer v. Allstate Ins. Co., 675 F.3d 709, 718 (7th Cir.
2012).