UNITED STATES OF AMERICA, Appellee v. ONE MILLION THREE HUNDRED
TWENTY-TWO THOUSAND TWO HUNDRED FORTY-TWO DOLLARS AND FIFTY-EIGHT CENTS
($ 1,322.242.58 ), ETC., ROAD ATLANTA, INC. & REGINALD DONALD
WHITTINGTON (Intervenors), REGINALD D. WHITTINGTON, Appellant
Nos. 90-3368, 90-3406
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
938 F.2d 433; 1991 U.S. App. LEXIS 15014; 20 Fed. R. Serv. 3d
March 1, 1991, Argued
July 12, 1991, Filed
PRIOR HISTORY: On appeal from the United States District Court for the
District of Delaware.
PROCEDURAL POSTURE: Appellant corporation and principal disputed
decisions of the United States District Court for the District of
Delaware, which, for failure to comply with discovery requests,
dismissed their claims that they were the lawful owners of forfeited
property and denied appellant corporation's motion for reconsideration
or relief. The court considered whether it had jurisdiction over the
case and whether appellants' actions should have been dismissed.
OVERVIEW: Appellant corporation and principal disputed decisions of a
district court, which, for failure to comply with discovery requests,
dismissed their claims that they were the lawful owners of forfeited
property and denied appellant corporation's motion for reconsideration
or relief. On appeal, the court held that, contrary to the government's
analysis, it had jurisdiction over the case. Given that the res that had
been forfeited was an incorporeal United States Treasury account, the
rule that the court lost jurisdiction because the res had been moved did
not apply. Further, if the transfer of the res was proper under 21
U.S.C.S. § 881(c)(2) or (3), the transfer did not destroy the court's
jurisdiction. The court held that the district court soundly exercised
its discretion in dismissing appellants' case. They were personally
responsible for the events that led to the district court's rulings.
Their failure to make discovery hampered the government's prosecution of
the case. They consistently violated discovery deadlines, and their
conduct was willful and in bad faith. Alternative sanctions would have
been to no avail. Their claims had no merit. The court affirmed.
OUTCOME: The court affirmed. The court held that, contrary to the
government's analysis, the court had jurisdiction over the case. The
government's analysis of in rem jurisdiction and a statute, even if
correct, was inapplicable to the facts of the case. After considering
the six relevant factors applicable to a dismissal for failure to comply
with discovery, the court held that the district court soundly exercised
its discretion in dismissing the case.
Civil Procedure > Jurisdiction > Personal Jurisdiction & In Rem Actions
> In Rem Actions
HN1 If the res is improperly removed from the district, the court does
not lose jurisdiction under traditional in rem case law.
Civil Procedure > Remedies > Forfeitures
HN2 See 21 U.S.C.S. § 881(c)(2) and (3).
Civil Procedure > Appeals > Standards of Review > Abuse of Discretion
Civil Procedure > Sanctions > Discovery Misconduct
HN3 In determining whether to dismiss claims due to a party's failure to
make discovery, a district court is required to consider the following
factors: (1) the extent of the party's personal responsibility; (2) the
prejudice to the adversary caused by the failure to meet scheduling
orders and respond to discovery;
(3) a history of dilatoriness;
(4) whether the conduct of the party or the attorney was willful or in
(5) the effectiveness of sanctions other than dismissal, which entails
an analysis of alternate sanctions; and (6) the meritoriousness of the
claims. An appellate court reviews the district court's decision for
abuse of discretion.
Business & Corporate Entities > Corporations > Governance
938 F.2d 433, *; 1991 U.S. App. LEXIS 15014, **1; 20 Fed. R. Serv. 3d
Constitutional Law > Procedural Due Process > Self- Incrimination
HN4 A corporation has no privilege under U.S. Const. amend. V and may
not refuse to produce corporate documents based upon the personal
privilege of a corporate custodian.
Civil Procedure > Sanctions > Discovery Misconduct
HN5 For the purpose of determining whether a claim should be dismissed
for the party's failure to make discovery, a claim will be deemed
meritorious when the allegations of the pleadings, if established at
trial, would support recovery or would constitute a complete defense.
Kent A. Jordan, Esq. (Argued), Office of United States Attorney,
Wilmington, Delaware, Attorneys for Appellee. Paul R. Regensdorf, Esq.
(Argued), Fleming, O'Bryan & Fleming, Fort Lauderdale, Florida,
Attorneys for Appellant.
Stapleton and Samuel A. Alito, Jr., Circuit Judges, and Cahn, District
* Hon. Edward J. Cahn, Judge of the United States District Court for the
Eastern District of Pennsylvania, sitting by designation.
OPINION BY: ALITO, JR.
OPINION OF THE COURT ALITO, JR., Circuit
Two claimants in this forfeiture action brought by the United States
under 21 U.S.C. § 881 contest the dismissal of their claims for failure
to comply with discovery orders. We will affirm.
In November 1988, the United
States obtained a warrant to seize more than $1.3 million dollars held
in the name of Reginald Donald Whittington in the Bank of Delaware, in
Wilmington, Delaware. In support of the warrant application, the United
States submitted an affidavit by an agent of the Drug Enforcement
Administration. In this affidavit, the DEA agent asserted that he had
been informed by an agent in Fort Lauderdale, Florida, that Reginald
Whittington and his brother, William Whittington, had been involved for
several years in a major drug smuggling and distribution operation and
that both brothers had pled guilty to federal criminal charges relating
to this operation in the Southern District of Florida in 1986. During
the guilty plea proceeding in that case, the affidavit stated, the
prosecution alleged and the Whittingtons acknowledged that William
Whittington had been responsible for arranging the smuggling and
distribution of drugs and that Reginald Whittington had laundered and
invested the proceeds. The affidavit stated that William Whittington had
been sentenced to 15 years' imprisonment and had agreed to forfeit $7
million. According to the affidavit, Reginald Whittington had been
sentenced to 18 months' imprisonment. While Reginald Whittington was
still in prison, the affidavit stated, the agent in Florida received a
telephone call from an anonymous individual who appeared familiar with
the Whittingtons and their operation and who said that the Whittingtons
had hidden $3 million in gold and that Reginald Whittington was going to
retrieve and dispose of this gold after his release from prison in March
1988. The affidavit further stated that in November 1988 Reginald
Whittington deposited 100 kilograms of gold with the precious metals
depository at the Bank of Delaware and that the bank sold the gold at
Whittington's request for $1,322,212.04.
After the seizure warrant was issued and executed, the Bank of Delaware
gave the United States Marshal a check for $1,322,242.58, and the
Marshal deposited this check in the Justice Department's Seized Asset
Deposit Fund, an account with the United States Treasury. A few days
after the seizure, Reginald Whittington filed a document with the United
States District Court for the District of Delaware that was entitled
"CLAIM" and that asserted that Reginald Whittington was "the lawful
owner of the defendant property."
The United States
subsequently filed a complaint for forfeiture in rem. The complaint
alleged that from 1977 to 1982 Reginald and William Whittington imported
tons of marijuana into the United States and realized millions of
dollars in profits. Since 1977, the complaint alleged, Reginald
Whittington's primary source of income had been "derived directly and
indirectly from the importation and sale of controlled substances." In
1985, the complaint stated, "Reginald Whittington purchased 189
kilograms of gold at the Bank of Delaware, using profits made from the
importation of drugs." In November 1988, according to the complaint,
Reginald Whittington brought back and deposited 100 kilograms of gold
with the Bank of Delaware.
Several months after the forfeiture complaint was filed, Road Atlanta,
Inc., a small Georgia corporation 94% of the stock of which is owned by
938 F.2d 433, *435; 1991 U.S. App. LEXIS 15014, **4; 20 Fed. R. Serv. 3d
filed a claim asserting that it was the "lawful owner" of the seized
cash. At the same time, Reginald Whittington and Road Atlanta, Inc.
filed joint motions to intervene in the forfeiture proceeding and to
dismiss the forfeiture proceeding on the ground that it violated the
Whittingtons' plea agreements n1 in the criminal prosecution in the
Southern District of Florida. In the
event that the motion to dismiss was denied, Reginald Whittington and
Road Atlanta sought a transfer of the forfeiture proceeding to the
Southern District of Florida. The motion to intervene was granted
with the government's consent but, after briefing and argument, the
remaining motions were denied in July 1989.
n1 The claimants submitted the text of three agreements: an initial,
eight-page agreement dated March 14, 1986; a second, 20-page agreement
dated December 31, 1986; and a third, 13-page agreement dated September
27, 1987. All of these agreements were signed by the Whittingtons, their
attorneys, and attorneys with the United States Attorney's office in the
Southern District of Florida.
On August 25, 1989, the United States served interrogatories upon
Reginald Whittington and served requests for production of documents
upon both claimants. No responses were provided by either claimant
within 30 days (i.e., by September 25) as required by Fed. R. Civ. P.
33(a) and 34(b). Counsel for the claimants first promised to provide
responses by October 6, 1989. When that deadline was not met, counsel
for the claimants promised to provide responses within one week and
stated that he did not "anticipate that the entire week would be
required." This commitment was also broken.
On November 7, 1989, the government attorney wrote to counsel for the
claimants requesting that he call at his "earliest convenience so that
they could avoid litigating a motion to compel discovery." This letter
apparently elicited no response.
On December 29, 1989, the government attorney sent a letter to the
claimants' local counsel, with a copy to their Florida counsel, stating
that a motion to compel discovery would be filed unless full discovery
responses were delivered by January 4, 1990. When no responses were
received, the government moved for an order compelling the claimants to
respond to the discovery requests. The claimants submitted no response
to this motion, and on January 29, 1990, the district court entered an
order requiring them to furnish complete responses to all the discovery
requests within 10 days. Pursuant to Fed. R. Civ. P. 37(a)(4), the
court's order also directed the claimants to pay for the government's
expenses in bringing the motion to compel. Although the claimants paid
this sanction (a sum stipulated to be $425.00), the claimants provided
no responses to the outstanding discovery requests. Accordingly, on
February 26, 1990, the government moved for dismissal of their claims
under Fed. R. Civ. P. 37(b)(2)(C). The claimants did not respond to this
motion, and on March 5, 1990, the district court entered an order
dismissing their claims and declaring that the defendant property was
forfeited to the United States.
On March 15, 1990, Road Atlanta, Inc. (but not Reginald Whittington)
moved for reconsideration or relief from the court's order pursuant to
Fed. R. Civ. P. 59 and 60. This motion provided little explanation for
the claimants' failure to comply with the government's discovery
requests or the court's order compelling discovery. Aside from vague
suggestions that some efforts to locate requested documents had been
made, the only explanation provided was the following comment: "It
should be pointed out that the original criminal action which was
brought in the Southern District of Florida created issues with respect
to the ability to respond and the appropriateness of response to the
United States Government, vis-a-vis documents relative to the earlier
pending criminal case." The motion also stated that some corporate
records had been furnished to the government subsequent to dismissal of
the claims and that attempts were being made to locate other corporate
records on public file in Georgia. The government opposed Road Atlanta's
motion, asserting that Road Atlanta still had not responded to eight of
the government's ten requests for production of documents. The
government's response also represented that counsel for Road Atlanta had
stated that Reginald Whittington would not respond to any discovery
requests but would assert his Fifth Amendment privilege against
compelled self-incrimination. After the forfeiture order was entered,
the money was transferred from the Justice Department's Seized Asset
Deposit Fund to another Treasury account, the Justice Department's Asset
Forfeiture Fund. On April 3, 1990, the district court wrote to Road
Atlanta's counsel stating that its motion would be denied unless within
two weeks counsel "presented to the court positive proof that Road
Atlanta will provide meaningful responses to the United States'
legitimate discovery requests, as opposed to Mr. Whittington's merely
asserting blanket fifth amendment rights." Precisely two weeks later,
counsel for Road Atlanta responded to the court's letter. Counsel
asserted that many financial records had already been furnished and that
two individuals, a representative of the corporation's accounting firm
and an individual who "functioned essentially as Road Atlanta's manager
during the pendency of the criminal
938 F.2d 433, *437; 1991 U.S. App. LEXIS 15014, **8; 20 Fed. R. Serv. 3d
proceeding in Fort Lauderdale," would be available to testify regarding
those records. Counsel confirmed, however, that "Reginald D. Whittington
has and will continue to invoke his Fifth Amendment privilege."
After receiving this response, the district court denied Road Atlanta's
motion. The court noted that "counsel for Road Atlanta has represented
to this Court that Reginald Donald Whittington will not present
testimony relating to the source of the defendant money , but instead,
Whittington will invoke his Fifth Amendment rights in response to any
question as to the source of the funds." The order stated that "in the
absence of testimony from Whittington, the United States has not
received, and will not receive, meaningful testimony and/or discovery as
to the source of the funds." Both Road Atlanta and Reginald Whittington
filed timely notices of appeal.
Before discussing the merits of this appeal, we must consider the
government's argument that we lack jurisdiction due to the "removal of
the res from the district court's jurisdiction." Government brief at 13.
The government contends that a long established principle of in rem
jurisdiction requires that the res remain within the jurisdiction of the
trial court until the end of the appellate process and that the removal
of the res, unless accidental, fraudulent or improper, destroys
jurisdiction. See The Rio Grande, 90 U.S. (23 Wall.) 458, 23 L. Ed. 158
(1874); United States v. $29,959.00 United States Currency, 931 F.2d 549
(9th Cir. 1991). The government further argues that Congress
incorporated this principle when it enacted 21 U.S.C. § 881, the
forfeiture statute under which the present proceeding was maintained. In
recent years, several courts of appeals have accepted this argument.
United States v. $84,740.00 United States Currency, 900 F.2d 1402 (9th
Cir. 1990)(forfeiture brought pursuant to 21 U.S.C. § 881(a) (6));
United States v. Tit's Cocktail Lounge, 873 F.2d 141 (7th Cir. 1989)
(same); United States v. One Lear Jet
Aircraft, 836 F.2d 1571 (11th Cir.) (en banc), cert. denied, 487
U.S. 1204, 101 L. Ed. 2d 881, 108 S. Ct. 2844 (1988) (forfeiture
proceeding pursuant to 8 U.S.C. § 1324(b)); United States v. $79,000.00
United States Currency, 801 F.2d 738 (5th Cir. 1986). Others have
rejected the argument. United States v. $95,945.18 United States
Currency, 913 F.2d 1106 (4th Cir. 1990) (discussing 21 U.S.C. § 881(a)
(6)); United States v. Aiello, 912 F.2d 4 (2d Cir. 1990); cert. denied,
498 U.S. 1048, 111 S. Ct. 757, 112 L. Ed. 2d 777, (1991) (same); United
States v. An Article of Drug Consisting of 4,680 Pails, 725 F.2d 976
(5th Cir. 1984) (action brought in rem to seize drugs pursuant to
section 304 of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 301
et seq.). Because we believe that the
government's analysis of in rem jurisdiction and 21 U.S.C. § 881, even
if correct, is not applicable to the facts of the present case, we hold
that we have jurisdiction to entertain this appeal. The
government's position regarding removal of the res from the district
court's jurisdiction subsumes two separate arguments. The first argument
concerns geography, i.e., that jurisdiction is generally lost if the res
is removed from the district in which the forfeiture proceeding has been
brought. The second argument concerns judicial power, i.e., that
jurisdiction is lost if the res is released from the court's control.
See United States v. Aiello, 912 F.2d at 5-6. In the present case, we
are not persuaded that either argument applies.
Turning to the question of geography, we do not think that rules
concerning physical location can be applied in any meaningful sense to
an incorporeal res such as that involved in this case. The res at issue
here is merely an entry in a Justice Department account with the United
States Treasury. In other words, the res is an obligation on the part of
the Treasury to disburse the specified sum to the Department of Justice.
Deeming this obligation to be located at any particular place within the
United States would be a complete fiction. If we are compelled, however,
to determine where this obligation is "located," we cannot say that the
obligation does not exist in every part of the country, including the
District of Delaware. In the present case, the government appears to
agree that the res remained in the District of Delaware when it was
initially seized and deposited in one Treasury account, the Justice
Department's Seized Asset Deposit Fund. If this Treasury account is
deemed to exist within the District of Delaware, we see no reason why
another Treasury account, the Justice Department's Asset Forfeiture
Account, should not also be regarded as existing within that District.
Even if all Treasury accounts are deemed by some fiction to be located
at a place outside the District of Delaware, we still have jurisdiction
here. If Treasury accounts are located outside Delaware, the res in this
case left the District of Delaware when it was deposited into the Seized
Asset Deposit Fund prior to forfeiture. If this deposit constituted a
proper shipment outside the district, n2 the shipment must have been
made under 21 U.S.C. § 881(c) (2) or (3) n3; these provisions, in a
departure from traditional in rem rules, authorize storage of seized
property outside the district of seizure pending completion of the
forfeiture proceeding. The government agrees that a shipment for storage
outside the district pursuant to these provisions does not destroy
jurisdiction. n4 Presumably the government could argue that jurisdiction
was subsequently destroyed because the res was not returned to the
District of Delaware after forfeiture and pending appeal. But the
government has not made this ar-
938 F.2d 433, *438; 1991 U.S. App. LEXIS 15014, **13; 20 Fed. R. Serv.
3d (Callaghan) 81
gument, and neither traditional in rem rules (which would not have
permitted storage outside the district in the first place) nor cases
decided under 21 U.S.C. § 881(c)(2) and (3) support this proposition.
Consequently, we see no basis for concluding that the geographical
location of the res in this case deprives us of jurisdiction.
n2 HN1 If the res is improperly removed from the district, the court
does not lose jurisdiction under traditional in rem case law See The Rio
Grande, 90 U.S. (23 Wall.) 458, 465, 23 L. Ed. 158 (1874); United States
v. $57,480.05 United States Currency, 722 F.2d 1457, 1458 (9th Cir.
1984). 3 HN2 21 U.S.C. § 881(c)(2) and (3) provide that whenever
property is seized under any of the provisions of this subchapter, the
Attorney General may:
(2) remove the property to a place designated by him; or
(3) require that the General Services Administration take custody of the
property and remove it, if practicable to an appropriate location for
disposition in accordance with law.
n4 The government contends that Congress enacted 21 U.S.C. § 881(c) 2)
and (3) to make clear that such transfers for storage outside the
district do not destroy jurisdiction. The government notes that 21 U.S.C.
§ 881(d) generally incorporates the laws relating to customs seizures
and forfeitures; that one such provision, 19 U.S.C. § 1605, provides
that jurisdiction over seized property is not affected by the storage of
the property outside the district pending disposition of the forfeiture
complaint; and that the legislative history shows that Congress felt
that this provision was needed in order to create an exception to the
general rule that seized property must remain within the district. S.
Rep. No. 2326 83rd Cong., 2nd Sess. 3, reprinted in 1954 U.S. Code Cong.
& Admin. News 3900, 3906. We express no view on the correctness of this
With respect to the question of judicial power, the government has not
explained why the federal courts lost control of the res at issue here
when, after forfeiture, this sum was transferred from the Justice
Department's Seized Asset Deposit Fund to the Justice Department's Asset
Forfeiture Fund. Both funds hold Justice Department monies. Both funds
are accounts with the United States Treasury. The government has
informed us that the Seized Asset Deposit Fund was created
administratively pursuant to 28 U.S.C. § 524(c)(1) to hold seized cash
pending forfeiture and that the Asset Forfeiture Fund was created by 28
U.S.C. § 524(c)(1) to hold the proceeds of forfeited property, but the
government has not explained why the federal courts have greater legal
authority with respect to the former fund than with respect to the
latter. In the absence of any such explanation, we have no grounds for
holding that transfer of the res from one fund to the other deprived the
federal courts of jurisdiction. We therefore hold that we possess
jurisdiction to entertain this appeal, and we will thus turn to the
HN3 In determining whether to dismiss the claims of Reginald Whittington
and Road Atlanta, the district court was required to consider the
(1) the extent of the party's personal responsibility; (2) the prejudice
to the adversary caused by the failure to meet scheduling orders and
respond to discovery; (3) a history of dilatoriness; (4) whether the
conduct of the party or the attorney was willful or in bad faith; (5)
the effectiveness of sanctions other than dismissal, which entails an
analysis of alternate sanctions; and (6) the meritoriousness of the
claims. Poulis v. State Farm Fire & Casualty Co., 747 F.2d 863, 868 (3d
Cir. 1984) (emphasis in original). We must review the district court's
decision for abuse of discretion. Id. at 870. In doing so, we will
address the Poulis factors seriatim.
1. The extent of the party's personal responsibility. The record in this
case clearly shows that Reginald Whittington bears personal
responsibility for the claimants' persistent failure to comply with the
govenment's discovery requests and the court's order compelling
discovery. The claimants' appellate brief makes clear that Whittington's
own record of noncompliance resulted from a decision that he made
personally. The claimants' brief (at 22) asserts that Whittington
refused to respond to any of the discovery requests based upon a blanket
assertion of Fifth Amendment privilege. We likewise infer that
Whittington was personally re-
938 F.2d 433, *439; 1991 U.S. App. LEXIS 15014, **17; 20 Fed. R. Serv.
3d (Callaghan) 81
sponsible for Road Atlanta's conduct. As noted above, Whittington was
involved in deciding how to respond to his own discovery obligations;
Whittington owned 94% of Road Atlanta's stock (his brother William owned
the remaining 6%); and Whittington and Road Atlanta have been jointly
represented throughout this case by the same attorneys. Accordingly, it
is clear that the claimants are personally responsible for the events
that led to dismissal of their claims and the denial of Road Atlanta's
post- dismissal motions.
Although at this point we are simply discussing the question whether the
claimants were personally responsible for the refusal to comply with
discovery, we note that Reginald Whittington's belated and blanket
assertion of Fifth Amendment privilege did not justify the claimants'
conduct during the course of the proceedings in district court. If
Whittington wished to assert his Fifth Amendment privilege in response
to any of the interrogatories or requests for production of documents
served by the government, he was required to assert timely objections in
response to individual discovery requests. Fed. R. Civ. P. 33(a), 34(b).
Likewise, if Road Atlanta was unable to respond to any of the
government's discovery requests due to Whittington's assertion of Fifth
Amendment privilege, n5 Road Atlanta was required to submit timely
responses asserting its inability to comply on this ground. Fed. R. Civ.
P. 34(b). Instead, both claimants simply ignored all discovery requests,
ignored the court's order compelling discovery, and apparently never
mentioned Whittington's Fifth Amendment privilege in relation to the
discovery requests until after the claims had been dismissed. Even then,
Whittington asserted a blanket claim of privilege, although it seems
very unlikely that he could legitimately claim the privilege with
respect to some of the discovery requests that he refused to obey. n6
Thus, the Fifth Amendment provides no justification for the claimants'
conduct in the district court.
n5 As HN4 a corporation, Road Atlanta, Inc. has no Fifth Amendment
privilege and may not refuse to produce corporate documents based upon
the personal privilege of a corporate custodian. Braswell v. United
States, 487 U.S. 99, 101 L. Ed. 2d 98, 108 S. Ct. 2284 (1988).
n6 Interrogatory No. 9, for example, asked Whittington to supply the
names and addresses of anyone with whom he had consulted in preparing
his answers to interrogatories. Similarly, Whittington was asked to
execute a release requesting various Internal Revenue Service forms. See
Doe v. United States, 487 U.S. 201, 215-218, 101 L. Ed. 2d 184, 108 S.
Ct. 2341 (1988).
2. Prejudice to the adversary. The record in this case shows that the
government was significantly hampered in the prosecution of its
forfeiture proceeding by the claimants' failure to provide discovery or
obey the court's order. The proceeding was delayed, and the attorney for
the government was required to move to compel discovery. See Poulis v.
State Farm Fire & Casualty Co., 747 F.2d at 868. As the district court
noted, the claimants' failure to provide discovery impaired the
government's ability to establish the source of the seized money. See
May 9, 1990 Order.
3. A history of dilatoriness. As shown by the chronology of the events
recounted above, the claimants in this case consistently violated
discovery deadlines. They did not provide discovery within the period
prescribed by Fed. R. Civ. P. 33(a) and 34(b); they did not comply with
the extended deadlines to which government counsel agreed; they did not
respond to subsequent entreaties to provide discovery prior to the
filing of the motion to compel; they flagrantly disobeyed the court's
order compelling discovery; they flatly ignored the motion for
dismissal; and even after dismissal, Reginald Whittington failed to
provide any discovery whatsoever, and Road Atlanta, Inc. provided only a
small portion of the documents that had been requested by the government
nearly nine months earlier.
4. Whether the parties' conduct was willful or in bad faith. As
previously noted, it is apparent that the claimants' refusal to provide
discovery in this case resulted in large measure, if not entirely, from
a deliberate decision made by Reginald Whittington. Thus, there can be
no doubt that the claimants' conduct was willful. Moreover, we believe
that the claimants exhibited bad faith by essentially ignoring all
discovery requests and the court's order compelling discovery until
after their claims had been dismissed.
5. Alternative sanctions. It seems very doubtful that any alternative
sanctions would have been successful in the present case. Before
dismissing the claims, the district court imposed monetary sanctions,
but the claimants simply paid the sum and continued to disobey their
court-ordered discovery obligations. In light of this conduct, it is
doubtful whether additional monetary sanctions would have been
effective. Moreover, since Reginald Whittington failed to provide any
discovery and Road Atlanta failed to furnish most of the documents
requested by the government, we doubt whether any of the lesser
sanctions set out in Fed. R. Civ. P. 37(b)(2)(A) or (C) (designating
certain facts to be established, refusing to al- low the disobedient
party to support or oppose designated 938 F.2d 433, *440; 1991 U.S. App.
LEXIS 15014, **21; 20 Fed. R. Serv. 3d (Callaghan) 81
claims, prohibiting introduction of designated evidence, striking
pleadings, or staying further proceedings) would have been practicable.
Nor do we believe that the district court was obligated to tolerate
further delay in the disposition of the forfeiture proceeding due to the
claimants' failure to comply with their discovery obligations.
6. Meritoriousness of the claim. HN5 For present purposes, " a claim . .
. will be deemed meritorious when the allegations of the pleadings, if
established at trial, would support recovery . . . or would constitute a
complete defense." Poulis v. State Farm Fire & Casualty Co., 747 F.2d at
869-70. In United States v. $55,518.05 in U.S. Currency, 728 F.2d 192,
196 (3d Cir. 1984), we considered whether a claimant in a forfeiture
proceeding had met this test by alleging in his answer that the seized
money "'was neither furnished nor intended to be furnished by any person
in exchange for a controlled substance.'" We held (728 F.2d at 196) that
this "conclusionary language" was insufficient to establish a
meritorious defense for the purpose of setting aside a default judgment.
We noted (id.) that the claimant had "fail ed to set forth any
allegations containing facts which, if proven at trial, would constitute
a meritorious defense to the forfeiture."
Here, the claimants likewise failed to allege any facts that would, if
proven at trial, show that the seized money was not traceable to illegal
drug transactions. Instead, they relied in the district court and
continue to rely on appeal primarily upon the defense that the seizure
and the forfeiture proceeding violated portions of Reginald
Whittington's plea agreement. Specifically, the claimants maintain that
the government violated portions of the agreements providing that
information gathered during the criminal investigation in Florida would
not be shared with other federal agencies and that no further
forfeitures would be sought from Reginald Whittington.
Appellants' Brief at 17-19.
Based upon the claimants' motion and the appended plea agreements, these
arguments do not appear to be meritorious. Under the first plea
agreement, the government promised not to disclose grand jury
information except as permitted by Fed. R. Crim. P. 6(e). The claimants
assert that the seizure warrant was obtained based on information that
was communicated to authorities in the District of Delaware in violation
of this provision, but the claimants have not identified any specific
facts asserted in the affidavit supporting the warrant that were not
readily apparent from public records regarding the Whittingtons' guilty
pleas and sentencing in open court. Similarly, the claimants have not
identified any provision in any of the agreements that appears on its
face to prohibit the present forfeiture proceeding. The first two
agreements do not appear to contain any provisions relating to this
question, and the final agreement merely states that the parties "agreed
that no other property or assets shall be subject to forfeiture under
the provisions of the three agreements , other than those assets
included and listed on Exhibits A and B to the third agreement ". On its
face, this provision simply rules out the forfeiture, pursuant to the
various plea agreements, of property not listed on the designated
exhibits; this provision does not appear to say anything about other
forfeiture proceedings. Moreover, the claimants have not identified any
portion of the agreement that purports to make this provision binding on
any government agency other than the United States Attorney's office for
the Southern District of Florida.
In sum, the six factors listed in Poulis
strongly support the district court's decision to dismiss the claims of
Reginald Whittington and Road Atlanta for failure to comply with their
discovery obligations. We hold that the district court soundly exercised
its discretion, and we will therefore affirm its decision.