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Gina Fiore; Keith Gipson v. Anthony Walden; Unknown Agents of the Federal Government

September 12, 2011

GINA FIORE; KEITH GIPSON, PLAINTIFFS-APPELLANTS,
v.
ANTHONY WALDEN; UNKNOWN AGENTS OF THE FEDERAL GOVERNMENT,
DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the District of Nevada Edward C. Reed, Senior District Judge, Presiding D.C. No. 2:07-cv-01674-ECR-LRL

The opinion of the court was delivered by: Berzon, Circuit Judge:

FOR PUBLICATION

OPINION

Argued and Submitted February 12, 2010-San Francisco, California

Before: Alfred T. Goodwin, Marsha S. Berzon, and Sandra S. Ikuta, Circuit Judges.

Opinion by Judge Berzon;

Dissent by Judge Ikuta

OPINION

Federal law enforcement officers seized funds from passengers who were temporarily in the Atlanta airport changing planes. The travelers, Gina Fiore and Keith Gipson, explained that the funds were legal gambling proceeds, not evidence of drug transactions. Their story turned out to be true. Fiore and Gipson claim the seizure and later efforts to institute forfeiture proceedings were unconstitutional. They sued in Las Vegas, where they were heading, lived at least part time, and suffered the inconvenience of arriving with absolutely no money, as well as other financial injuries. The district court dismissed this Bivens*fn1 action against the federal officers for lack of personal jurisdiction. We reverse and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

In July and August of 2006, Fiore and Gipson, professional gamblers, traveled from Las Vegas, Nevada, where both maintained residences, to casinos in Atlantic City, New Jersey, and San Juan, Puerto Rico, before returning to Las Vegas.*fn2

On their return trip on August 8, 2006, they left from San Juan, boarded a connecting flight in Atlanta, Georgia, and then flew to Las Vegas, their final destination.

In San Juan, an agricultural x-ray inspection and other additional screening showed no contraband in Fiore's or Gipson's luggage. At a Transportation Security Administration (TSA) checkpoint, Fiore and Gipson were subjected to heightened security procedures because they were traveling on one-way tickets. They were screened for minute traces of illegal drugs; none was found. Search of their carry-on bags revealed approximately $48,000 in Gipson's carry-on bag and $34,000 in Fiore's carry-on bag, all carried openly. Gipson also had approximately $15,000 on his person. These funds, totaling approximately $97,000 in United States currency, included approximately $30,000 in seed money for gambling - their "traveling bank" - brought with them from Las Vegas.*fn3

After this cash was discovered, San Juan Drug Enforcement Administration (DEA) Agent Michael Cuento and two other agents arrived and questioned Fiore. Gipson was not questioned directly, but stood by and participated in the conversation. Fiore explained that she and Gipson had been staying and gambling at the El San Juan Casino property. When asked for identification, Fiore and Gipson showed their California drivers' licenses and stated that they had California residences, as well as residences in Las Vegas.*fn4 They further informed the DEA agents "that Las Vegas was the final destination of most if not all of the funds in their possession" and that they were returning to their Las Vegas residences. Agent Cuento escorted Gipson and Fiore to their plane and told them that they might be questioned further in Las Vegas. The two therefore called their attorneys in Las Vegas and arranged to meet them at the airport.

When they arrived at the Atlanta Hartsfield-Jackson International Airport for their connecting flight to Las Vegas, neither Gipson nor Fiore left the transit area near the departure gates. At their gate, DEA Agent Anthony Walden and another DEA agent approached Fiore and began questioning her.

Fiore said again that she was not carrying contraband, weapons, or drugs. She explained that she and Gipson were professional advantage gamblers*fn5 and that the money in their possession was their gambling bank and winnings. In addition, Fiore showed Walden her trip record,*fn6 which dated back to July 10, 2006, and listed casinos and gaming results. Gipson, sequestered from Fiore for questioning, explained that the documents evidencing that his trip was for gambling were in his checked bag.

After about ten minutes of questioning, another DEA agent arrived in the boarding area with a drug-detecting dog. The dog did not react to Fiore's carry-on bag but pawed Gipson's bag once. The agents informed Fiore and Gipson that the dog's reaction sufficiently signaled contraband to indicate that their money was involved in drug transactions and then seized all the funds that Fiore and Gipson had in their possession. Although Fiore and Gipson asked to be allowed at least taxi fare for their arrival in Las Vegas, the agents denied the request. Walden told Fiore and Gipson that if they later produced receipts showing the legitimacy of the funds, their money would be returned. With this understanding, Fiore and Gipson boarded their flight to Las Vegas. When they arrived in Las Vegas, Fiore and Gipson learned that their checked luggage also had been searched in Atlanta.

On August 30, 2006, and September 15, 2006, Fiore and Gipson sent Walden, from Las Vegas, various documents showing the legitimacy of their funds, including federal tax returns demonstrating that they were professional gamblers; the itinerary, hotel records, and receipts from their trip, which showed the legitimacy of their seized money; and a win record on El San Juan Casino letterhead stationery stating that Gipson left the hotel with over $30,000 in winnings immediately before leaving for Las Vegas via Atlanta. Fiore and Gipson asked that their money be returned to them as Walden had promised.

The funds, however, were not returned to Fiore and Gipson. Instead, the matter was forwarded to DEA headquarters in Virginia for additional investigation.*fn7 According to the complaint, the DEA's background searches on Fiore and Gipson showed them to be "squeaky clean." Nonetheless, according to the complaint, Walden and another DEA agent provided a false probable cause affidavit to the United States Attorney in the Northern District of Georgia, to assist in bringing a forfeiture action. Specifically, Fiore and Gipson allege in the complaint that this probable cause affidavit falsely stated that Gipson had been uncooperative and had refused to respond to questions; that Fiore and Gipson had given inconsistent answers during questioning; and that there was sufficient evidence for probable cause to forfeit the funds as drug proceeds. Also, according to the complaint, Walden left out exculpatory evidence he knew about when he submitted the affidavit: that Fiore and Gipson had no history of unlawful drug use or trade; that they had documentation showing them to be advantage gamblers; that their bags had passed through an agricultural x-ray and other inspections used for contraband detection without incident; that Fiore and Gipson had provided actual receipts for most of the funds that they carried; and that the $30,000 Gipson was carrying could be traced directly to a legal source, his winnings at El San Juan Casino.

The case was referred to Assistant United States Attorney (AUSA) Dahil Goss. After determining that Walden had in fact omitted information, with the result that the probable cause affidavit he provided was misleading, Goss concluded that there was no probable cause for the forfeiture of the funds. Goss contacted Fiore and Gipson and offered to return their funds in exchange for a release, presumably of any possible legal claims, but they refused to execute one. Nonetheless, Goss directed the DEA to return Fiore and Gipson's money. The $97,000 was returned to them in Las Vegas on March 1, 2007, nearly seven months after the seizure at the Atlanta airport and six months after Fiore and Gipson had provided Walden with the requested documentation showing the legal source of their funds.

Fiore and Gipson brought a Bivens action in the District of Nevada against Walden and three other, unnamed DEA agents or attorneys*fn8 in their individual capacities, alleging that Walden and the other agents had violated their Fourth Amendment rights by: (1) seizing their money without probable cause; (2) continuing to hold the funds for nearly six months after receiving information conclusively demonstrating the legal source of the cash; (3) knowingly compiling a false and misleading probable case affidavit to support a forfeiture action; and (4) referring the matter to the United States Attorney for prosecution on the basis of deficient and/or falsified information, while willfully withholding known exculpa-tory information.

Walden moved to dismiss for lack of personal jurisdiction, under Fed. R. Civ. P. 12(b)(2), and for improper venue, under Fed. R. Civ. P. 12(b)(3). The district court determined that Walden's search of Fiore's and Gipson's bags and initial seizure of their funds occurred in, and was expressly aimed at, Georgia. Therefore, the district court concluded, there was not personal jurisdiction over Walden in Nevada.*fn9 The district court did not separately consider whether Walden's actions regarding the allegedly false probable cause affidavit justified personal jurisdiction.

On appeal, Fiore and Gipson challenge dismissal of their case for lack of personal jurisdiction over Walden, the only defendant-appellee. They also argue that Nevada is the appropriate venue. We review de novo a district court's rulings on personal jurisdiction and improper venue. Brayton Purcell, 606 F.3d at 1127.

II. DISCUSSION

A. Personal Jurisdiction

[1] "'When subject matter jurisdiction is premised on a federal question, a court may exercise specific jurisdiction over a defendant if a rule or statute authorizes it to do so and the exercise of jurisdiction comports with the constitutional requirement of due process.' " Myers v. Bennett Law Offices, 238 F.3d 1068, 1072 (9th Cir. 2001) (quoting AT&T Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 589 (9th Cir. 1996)). Where, as here, there is no applicable federal statute governing personal jurisdiction, we look to the law of the state in which the district court sits. See Fed. R. Civ. P. 4(k)(1)(A).

[2] Nevada's long-arm statute permits personal jurisdiction over a defendant unless the exercise of jurisdiction would violate due process. Myers, 238 F.3d at 1072; Trump v. Eighth Judicial Dist. Court, 857 P.2d 740, 747 (Nev. 1993); Nev. Rev. Stat. 14.065(1). Our analysis therefore focuses exclusively on due process considerations. The due process analysis, in turn, centers on whether Walden has "certain minimum contacts" with Nevada, such that the exercise of jurisdiction "does not offend 'traditional notions of fair play and substantial justice.' " Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).

Our court uses a three-part test (the Schwarzenegger test) for determining specific personal jurisdiction - that is, personal jurisdiction premised on the particular circumstances underlying the lawsuit sought to be litigated:*fn10

(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;

(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and

(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

Schwarzenegger, 374 F.3d at 802 (citation and internal quotation marks omitted) (emphases added).

B. Operative Facts

In response to Fiore and Gipson's first amended complaint, Walden moved to dismiss for lack of personal jurisdiction and improper venue. His motion included a declaration stating that he was a police officer for the City of Covington, Georgia, and was deputized as a federal narcotics investigator assigned to the DEA Task Force Group 1 at the Atlanta airport. The purpose of the task force was to interdict illegal drugs, seize the drugs and any proceeds found, and prosecute individuals transporting illegal drugs or drug proceeds. Walden also stated that (1) he is a Georgia resident who had never resided, owned property, conducted business, or even been in Nevada; (2) he intercepted Fiore and Gipson at the Atlanta airport after he was informed by San Juan law enforcement officers that Fiore and Gipson had boarded a plane to Atlanta en route to their final destination, Las Vegas, Nevada; (3) when he asked plaintiffs for identification, they presented drivers' licenses that "were not issued by the State of Nevada"; (4) after the seizure, Walden and the other DEA agents "immediately transferred the seized cash to a secure location" for storage; (5) "[w]ithin approximately one hour of the seizure, [Walden] was no longer in possession of the seized cash"; and (6) Walden "did not possess the authority to return the cash to [Fiore and Gipson] once it was seized."*fn11

Walden stated that he seized the funds because of concern that Fiore and Gipson had approximately $97,000 in their possession and lacked sufficient documentation to substantiate the legitimacy of the funds. He further declared that he did not contact Fiore and Gipson's attorney or anyone else in Nevada to verify their explanations about the sources of the funds.

The district court did not conduct an evidentiary hearing regarding personal jurisdiction.*fn12 Consequently, "the plaintiff need only make 'a prima facie showing of jurisdictional facts to withstand the motion to dismiss.' "*fn13 Brayton Purcell, 606 F.3d at 1127 (quoting Pebble Beach, 453 F.3d at 1154). " '[U]ncontroverted allegations in plaintiff's complaint must be taken as true,' " id. (quoting Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002)) (alteration omitted), and, in deciding whether a prima facie showing has been made, "the court resolves all disputed facts in favor of the plaintiff." Pebble Beach, 453 F.3d at 1154. Nonetheless, "mere 'bare bones' assertions of minimum contacts with the forum or legal conclusions unsupported by specific factual allegations will not satisfy a plaintiff's pleading burden." Swartz v. KPMG LLP, 476 F.3d 756, 766 (9th Cir. 2007).

[3] In determining whether there is personal jurisdiction, we have drawn inferences from the facts alleged in the complaint, but have not expressly addressed the standard for doing so.*fn14 Other circuits have been more explicit than we have about the authority to draw reasonable inferences in favor of the plaintiff in determining whether the plaintiff has made a prima facie showing of personal jurisdiction over the defendant.*fn15 At the same time, the federal courts of appeal do not draw unreasonable or far-fetched inferences in favor of the plaintiff.*fn16

[4] We agree with these various circuits regarding the standard for drawing inferences from the complaint when addressing personal jurisdiction questions: We will draw reasonable inferences from the complaint in favor of the plaintiff where personal jurisdiction is at stake, and will assume credibility. This approach is in line with the pleading standard set forth by the Supreme Court in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). See id. at 1949 ("A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.").

[5] Here, the key facts in the complaint include Fiore and Gipson's statements that they are Nevada residents; that at the time the funds were seized, they both maintained residences in Las Vegas to which they were returning; and that Walden knew, at least by the time he wrote the probable cause affidavit, that the funds they had on their persons and in their carry on luggage while changing planes in Atlanta were legitimate proceeds of their gambling trade.

C. Application of the Schwarzenegger Test

Throughout the ensuing discussion, we concentrate on the false affidavit/forfeiture proceeding aspect of this case, because, as we explain below, we ultimately remand with respect to the initial search and seizure claim, for consideration of the application of the doctrine of pendent personal jurisdiction. See Action Embroidery Corp. v. Atlantic Embroidery, Inc., 368 F.3d 1174, 1180 (9th Cir. 2004); pp. 17225-27, infra.

1. Purposeful Direction

The first part of the Schwarzenegger test is subdivided into purposeful direction, which most often applies in tort cases, and purposeful availment, which most often applies in contract cases. 374 F.3d at 802; see Pebble Beach, 453 F.3d at 1155. Fiore and Gipson have alleged a tort action,*fn17 which calls for purposeful direction analysis.

We analyze purposeful direction under the three-part test derived from Calder v. Jones, 465 U.S. 783 (1984), commonly referred to as the Calder-effects test. See Brayton Purcell, 606 F.3d at 1128; see also Calder, 465 U.S. at 788-91; Schwarzenegger, 374 F.3d at 803. Under the Calder-effect test, " 'the defendant allegedly must have [(a)] committed an intentional act, [(b)] expressly aimed at the forum state, [(c)] causing harm that the defendant knows is likely to be suffered in the forum state.' " Brayton Purcell, ...


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