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Civil Procedure Fall 2014

Cohen Cheat Sheet on Attorney-Client Privilege and Work Product Privilege.

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Although the Supreme Court has shown propensity to make Matthews THE test...not always. In 2014, the Supreme Court examined pre-trial forfeiture in Kaley v. U.S. 134 S.Ct. 1090 (2014). The facts are summarized below, as are the majority and dissenting opinions' take on the applicability and outcome of the Matthews test. Which side do you agree with more?

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Facts

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In 2005, Kerri and Brian Kaley learned that they were under grand jury investigation for stealing and reselling medical devices. They retained lawyers and took out a $500,000 loan that they converted into a certificate of deposit to cover anticipated legal fees. Two years later, a grand jury indicted them and the prosecutor obtained an ex parte order freezing $2.5 million in forfeitable assets, including their certificate of deposit. The Kaleys challenged the order and the prosecution conceded that only $140,000 was “traceable to” the alleged crime and therefore statutorily eligible for pre-trial restraint. Two business days later, the prosecutor obtained a superseding indictment adding a count of money laundering. That count invoked a different, broader forfeiture statute covering property “involved in” the crime. Accordingly, the Magistrate Judge granted the prosecutor’s forfeiture order for all but $63,000 of the $2.5 million, denying the Kaleys’ request for an evidentiary hearing contesting the pre-trial seizure on the basis that it deprived them of counsel. After various appeals and remands, the matter came before the Supreme Court, with the Kaleys arguing that Matthews should be applied and it results in them deserving a pre-trial hearing.

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Holding

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The Supreme Court disagreed. Instead, the Court focused on the fact that (1) probable cause was the standard for pre-trial forfeiture and (2) there is no judicial review of grand jury determinations of probable cause. Therefore, the Kaleys were not entitled to a pre-trial hearing to contest the seizure. The Matthews test did not apply because of “the grand jury's singular [and valid] role in finding the probable cause necessary to initiate a prosecution for a serious crime,” which meant that there were no due process impediments to the statutory authorization for seizure. Nevertheless, as a counterfactual, the Court analyzed the Matthews test, finding that the burden on the government from a hearing was high because it could undermine their case by revealing witnesses and telegraphing their strategy. That burden was matched by the Kaleys’ profound interest in retaining counsel of their choice, but a hearing was inappropriate because it would have minimal value – judicial evaluation of probable cause for asset restraint (in other jurisdictions that grant such hearings) never overturned a grand jury.

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The dissent disagreed, emphasizing that the right to representation by counsel of choice is the defendant’s most precious right. Under that due process rubric, the dissent applies Matthews and finds that (1) the government’s burden from revealing its case and witnesses is minimal given extensive discovery, (2) the defendant’s interest is substantial, and (3) an adversarial hearing has significant probative value. In defending the finding for (3), the dissent argues:

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It takes little imagination to see that seizures based entirely on ex parte proceedings create a heightened risk of error. Common sense tells one side of the story will prove inaccurate more often than those made after hearing from both sides. We have thus consistently recognized that the “fundamental instrument for judicial judgment” is “an adversary proceeding in which both parties may participate.”