In 2007, Kerri Kaley and her husband, Brian, were indicted on charges arising from a plan to steal and then re-sell prescription medical devices.  Based on the indictment, the federal government also got a restraining order to freeze their assets.  The Kaleys asked the district court to lift the asset freeze so that they could pay their lawyers:  although they did not dispute that the frozen assets could be traced to the conduct for which they were indicted, they argued that the charges against them were “baseless.”  Both the district court and the U.S. Court of Appeals for the Eleventh Circuit denied the request, holding that it was prohibited because the Kaleys had no right to a hearing to challenge the grand jury’s determination that there was probable cause to support the charges against them.  This morning a divided Supreme Court agreed, preserving a frequently used tool in the government’s arsenal for prosecuting crimes.  (My preview of the case is available here, while my report on the October oral argument is available here.) 

Writing for the majority, Justice Elena Kagan’s opinion characterized the Court’s holding as a fairly straightforward one that follows from two of the Court’s earlier cases, Caplin & Drysdale, Chartered v. United States and United States v. Monsanto.  Those cases collectively, in the Court’s view, stand for the proposition that “[w]ith probable cause, a freeze is valid” – even if the frozen assets are needed to pay a lawyer.  The Kaleys, the Court explains, are simply arguing “about who should have the last word as to probable cause” – the grand jury, which has already found probable cause, or instead a judge.

In the Court’s view, the answer to that narrow question is an easy one:  the grand jury.   The majority’s opinion begins by emphasizing the “fundamental and historic commitment of our criminal justice system . . . to entrust . . . probable cause findings to grand juries”; that commitment, the Court observes, is unwavering, even when it may result not only in a trial but also in detention pending trial.  And if judicial review of a grand jury’s probable cause determination is not available for these more serious (at least in the Court’s view) consequences that flow from the probable cause determination, then it is not required for a defendant whose assets have been frozen.  By contrast, the Court notes, the Kaleys’ proposed rule could have “strange and destructive consequences”:  if judicial review of the probable cause determination were available, a judge could decide that prosecutors lacked probable cause to freeze the defendant’s assets, but there would still be probable cause for the trial to proceed and, if necessary, to keep the defendant himself in custody.

The Court’s opinion concludes by considering, and rejecting, the Kaleys’ argument that they would prevail if the Court used the balancing test that it outlined in Mathews v. Eldridge to determine whether they had received an adequate opportunity to challenge the asset freeze.  Even if the Mathews v. Eldridge test applied – which the majority does not concede – the Kaleys would still not be entitled to a hearing to challenge the grand jury’s probable cause determination.  The Court acknowledges that the Kaleys’ constitutional right to retain their lawyer of choice is a “vital interest at stake,” but it returns again to its holding in Monsanto that “an asset freeze depriving a defendant of that interest is erroneous only when unsupported by a finding of probable cause” – a fairly easy standard to meet.

Chief Justice John Roberts was perhaps the most vociferous critic of the government’s position at oral argument, so it is no surprise that he dissented from the Court’s holding today.  What is surprising, though, is that his dissent was joined not only by Justice Stephen Breyer but also by Justice Sonia Sotomayor – a very unusual if not unprecedented combination.   The dissent is highly critical of the consequences of the Court’s decision, complaining that it will allow the government “to initiate a prosecution and then, at its option, disarm its presumptively innocent opponent by depriving him of his counsel of choice—without even an opportunity to be heard.”  Such a result, the dissent laments, “is fundamentally at odds with our constitutional tradition and basic notions of fair play.”

A summary in Plain English:  To ensure that a criminal defendant’s assets are available to be forfeited if he is convicted, a federal law allows federal trial courts to freeze the defendant’s assets before trial.  Twenty-five years ago, the Court held that such pre-trial freezes did not violate the Constitution, even if the defendant wanted to use the assets to pay his lawyer, as long as there is probable cause to believe both that the defendant has committed an offense that can lead to forfeiture and that the assets result from the allegedly criminal conduct.  In this case, Kerri and Brian Kaley are a married couple who were indicted on charges arising from the sale of stolen medical devices; a federal trial court then froze their assets, including the money that they had intended to use to pay their lawyers to defend them.  They argued that the charges against them were “baseless” and that they should be entitled to a hearing to challenge the grand jury’s determination that there was probable cause to believe that they committed the crimes with which they were charged.  But the lower courts rejected that argument, and today the Supreme Court affirmed.  It held that the grand jury, and the grand jury alone, can determine whether there is probable cause; that determination cannot be reviewed by a judge.

Posted in Kaley v. U.S., Featured, Merits Cases, Plain English / Cases Made Simple

Recommended Citation: Amy Howe, Opinion analysis: No right to challenge probable cause finding underlying asset freeze – even to pay your lawyers, SCOTUSblog (Feb. 25, 2014, 5:57 PM), http://www.scotusblog.com/2014/02/opinion-analysis-no-right-to-challenge-probable-cause-finding-underlying-asset-freeze-even-to-pay-your-lawyers/