Carpenter et al v. Shulman et al

Filing 55

ORDER granting and denying in part 38 MOTION to Dismiss or, Alternatively, for Summary Judgment. Signed by Judge Stefan R. Underhill on 6/04/2015. (Pannu, C.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
DANIEL CARPENTER, et al.,
Plaintiffs,
v.

No. 3:13-cv-563 (SRU)

JOHN KOSKINEN,
Defendant.
RULING AND ORDER ON DEFENDANT KOSKINEN’S MOTION TO DISMISS, OR
ALTERNATELY, FOR SUMMARY JUDGMENT
On April 20, 2010, Internal Revenue Service (“IRS”) special agents executed a search
warrant on property owned and/or occupied by plaintiffs Daniel Carpenter and Grist Mill
Capital, LLC (“GMC”). Carpenter and GMC filed this action, pursuant to Bivens v. Six
Unknown Agents, 403 U.S. 388 (1971), against defendants Song, Schrader, and 72 Unnamed IRS
Special Agents in their individual capacities, and against defendant John Koskinen, IRS
Commissioner, in his official capacity. Commissioner Koskinen 1 (“the Government”) moved to
dismiss the plaintiffs’ complaint for lack of subject matter jurisdiction, lack of personal
jurisdiction, insufficient process, ineffective service of process, and failure to state a claim upon
which relief can be granted. See generally Fed. R. Civ. P. 12(b). Consistent with Rule 4(m), I
granted the plaintiffs an extension of the time nunc pro tunc to allow the plaintiffs to perfect
service, and I then denied the defendants’ motion to dismiss on Rule 12(b)(4) and 12(b)(5)
grounds as moot. I granted the Government’s motion for failure to state a claim upon which

1. Since the original complaint in this lawsuit was filed on April 19, 2013, the Commissioner of the Internal
Revenue Service has changed several times. The above caption has been amended to name the current
commissioner.

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relief could be granted, Rule 12(b)(6), and dismissed the entire complaint without prejudice to
the plaintiffs filing an amended complaint. Plaintiffs’ counsel timely did so. 2
The Government renews its motion to dismiss the plaintiffs’ request for equitable relief,
arguing that (1) the district court lacks subject matter jurisdiction under Rule 12(b)(1); (2) the
plaintiffs do not claim that they will suffer or are suffering irreparable harm from the deprivation
of their seized property, and thus they fail to state a claim for injunctive relief under Rule
12(b)(6); (3) and because evidence seized during the April 20, 2010 search is being utilized in a
parallel criminal proceeding before U.S. District Judge Robert N. Chatigny, the plaintiffs have
chosen the wrong procedural vehicle for their request. 3 Koskinen Mot. Dismiss Br. 1 (docs. 38–
39). In the alternative, the Government moves for summary judgment and requests that I deny
the plaintiffs’ request for injunctive relief as moot.
For the following reasons and those stated upon the record during oral argument on
December 4, 2014, the Government’s motion is denied in substantial part.

I.

Standards of Review
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction [Rule 12(b)(1)]
The party who seeks to exercise the jurisdiction of the court bears the burden of

establishing the court’s jurisdiction. Thompson v. Cnty. of Franklin, 15 F.3d 245, 249 (2d Cir.
1994). To survive a Rule 12(b)(1) motion, a plaintiff must clearly allege facts demonstrating that
2. The plaintiffs were directed to file their amended complaint no later than June 2, 2014. On May 29, 2014, the
plaintiffs filed their First Amended Complaint (doc. 33). On May 30, the plaintiffs filed a Second Amended
Complaint (doc. 34) to correct typographical errors. The defendants did not object to the filing of the Second
Amended Complaint, and both parties’ motion papers refer to the Second Amended Complaint. Pursuant to Rule
15(a)(2), I accept the Second Amended Complaint as the current operative complaint.
3. On December 12, 2013, a grand jury returned an indictment charging Carpenter and his co-defendant with
multiple counts of mail and wire fraud, money laundering, and conspiracy to commit both of those crimes.
Indictment (doc. 1), United States v. Daniel Carpenter, No. 3:13-cr-226 (RNC) (D. Conn. Dec. 12, 2013). That case
is still pending against Carpenter.

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the plaintiff is a proper party to invoke judicial resolution of the dispute. Id. Although the
plaintiff bears the ultimate burden of establishing jurisdiction by a preponderance of the
evidence, “until discovery takes place, a plaintiff is required only to make a prima facie showing
by pleadings and affidavits that jurisdiction exists.” Koehler v. Bank of Bermuda, 101 F.3d 863,
865 (2d Cir. 1996). “When considering a party’s standing, [the court] ‘accept[s] as true all
material allegations of the complaint, and must construe the complaint in favor of the
complaining party.’” Thompson, 15 F.3d at 249 (quoting Warth v. Seldin, 422 U.S. 490, 501
(1975)). A court may refer to evidence outside the pleadings in resolving a motion to dismiss for
lack of subject matter jurisdiction. See Makarova v. United States, 201 F.3d 110, 113 (2d Cir.
2000). If a plaintiff has failed to allege facts supportive of standing, it is within the court’s
discretion to allow or to require the plaintiff to supply, by amendment to the complaint or by
affidavits, further particularized allegations of fact deemed supportive of standing. Thompson,
15 F.3d at 249.
B. Motion to Dismiss for Failure to State a Claim [Rule 12(b)(6)]
A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) is designed
“merely to assess the legal feasibility of a complaint, not to assay the weight of evidence which
might be offered in support thereof.” Ryder Energy Distrib. Corp. v. Merrill Lynch
Commodities, Inc., 748 F.2d 774, 779 (2d Cir. 1984) (quoting Geisler v. Petrocelli, 616 F.2d
636, 639 (2d Cir. 1980)).
When deciding a motion to dismiss pursuant to Rule 12(b)(6), the court must accept the
material facts alleged in the complaint as true, draw all reasonable inferences in favor of the
plaintiff, and decide whether it is plausible that the plaintiff has a valid claim for relief. Ashcroft

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v. Iqbal, 556 U.S. 662, 678–79 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56 (2007);
Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996).
Under Twombly, “[f]actual allegations must be enough to raise a right to relief above the
speculative level” and assert a cause of action with enough heft to show entitlement to relief and
“enough facts to state a claim to relief that is plausible on its face.” 550 U.S. at 555, 570; see
also Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of a complaint,
they must be supported by factual allegations.”). The plausibility standard set forth in Twombly
and Iqbal obligates the plaintiff to “provide the grounds of his entitlement to relief” through
more than “labels and conclusions, and a formulaic recitation of the elements of a cause of
action.” Twombly, 550 U.S. at 555 (quotation marks omitted). Plausibility at the pleading stage
is nonetheless distinct from probability, and “a well-pleaded complaint may proceed even if it
strikes a savvy judge that actual proof of [the claims] is improbable, and . . . recovery is very
remote and unlikely.” Id. at 556 (quotation marks omitted).

II.

Background
The following facts are alleged in the Second Amended Complaint and are assumed to be

true for the purposes of evaluating Koskinen’s motion to dismiss. On April 10, 2010, defendant
Schrader and 72 unknown IRS agents executed a search warrant at 100 Grist Mill Road against
Daniel Carpenter, Grist Mill Capital LLC, and several other LLCs, which maintained their
primary place of business at that address. 2d Am. Compl. ¶¶ 3, 8. During that search, the
individual-capacity defendants seized 322 bankers boxes of documents. Id. ¶ 9.
Since the April 20, 2010 search, the Government has not brought charges related to the
search warrant, nor has it initiated any related civil action against the plaintiffs. Id. ¶ 32.

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Although the Government argues that it has returned 320 bankers boxes of documents, Carpenter
alleges that the Government has returned copies of his original files, which he alleges include
privileged attorney-client communications related to a criminal prosecution against Carpenter
pending in the District of Massachusetts. 4 Id. ¶ 12. Carpenter notes that he has received four
bankers boxes of his original documents seized during the April 20, 2010 search, but he
maintains that the Government has not returned 318 of the original 322 seized bankers boxes.
The Government has held 316 of the 322 seized bankers boxes without providing a
reasonable justification for doing so. With respect to two of the original 322 bankers boxes, the
Government claims that it is actively using documents from those two boxes for pending
prosecutions. One bankers box of documents (“Box 243”) is held by the U.S. Department of
Labor (“DOL”) in connection with criminal charges pending against Carpenter in United States
v. Daniel Carpenter, 3:13-cr-226 (RNC) (D. Conn.). Koskinen MTD Br. 10. A second box has
been held by the IRS in Wisconsin, based on an agreement between the IRS and Carpenter and
his Wisconsin counsel. Koskinen MTD Br. 10; see also United States v. Daniel Carpenter, 3:13cr-226 (RNC), Notice of Related Case 1–2 (doc. 123) (noting that no civil or criminal case has
been initiated in the Wisconsin matter). The plaintiffs do not seek in this case the return of the
two bankers boxes of “responsive” documents; 5 instead, they request that Commissioner
Koskinen return the remaining 316 bankers boxes of original documents seized during the April
20, 2010 search. Id. ¶¶ 32–33.

4. The Government originally seized 322 bankers boxes of documents, in addition to electronic files, on April 20,
2010. 2d Am. Compl. ¶ 9. It then returned four of those boxes to Carpenter and retained 318 of the original 322
boxes. Id. ¶ 32. Of those 318 boxes still in the Government’s possession, two boxes are being held in connection
with parallel investigations or proceedings—one box is held by the Department of Labor, and the second box is held
by the IRS in Wisconsin. Based on the representations of both parties, the Government still holds the original
documents from 316 bankers boxes seized on April 20, 2010, in addition to numerous electronic files seized that
same day.
5. As discussed in section III.C, Carpenter has sought the return and suppression of box 243 in his criminal case
before Judge Chatigny.

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III. Discussion
The Government primarily argues that the plaintiffs’ request for the return of property
should be denied because Koskinen is immune from suit under the doctrine of sovereign
immunity. It principally argues that the plaintiffs have chosen the wrong procedural mechanism
for requesting the return of property, and accordingly, asserts that this court lacks subject matter
jurisdiction over the issue of the plaintiffs’ seized property. That argument is an overly
formalistic interpretation of Rule 41(g) of the Federal Rules of Criminal Procedure, conflates
procedure with jurisdiction, and ignores controlling case law on the issue of property seized in
connection with criminal investigations. Accordingly, the Government’s motion is denied in
substantial part.
A. Sovereign Immunity
Sovereign immunity shields the federal government and its agents from suit, unless the
government has waived its immunity. Fed. Deposit Ins. Corp. v. Meyer, 510 U.S. 471, 475
(1994) (internal citations omitted). Such a waiver must be “unequivocally expressed” in
statutory text, United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003)
(gathering cases), and the government’s consent to be sued “must be construed strictly in favor
of the sovereign.” United States v. Nordic Vill., Inc., 503 U.S. 30, 34, 39 (1992). Because
sovereign immunity is jurisdictional, a court must first determine whether the federal
government has waived its immunity before it may consider other legal questions in the case.
United States v. Mitchell, 463 U.S. 206, 212 (1983).
The Fourth Amendment provides, “The right of the people to be secure in their persons,
houses, papers, and effects, against unreasonable searches and seizures shall not be violated.”
U.S. Const. amend. IV. It limits the exercise of federal power and “guarantees to citizens of the

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United States the absolute right to be free from unreasonable searches and seizures carried out by
virtue of federal authority.” Bell v. Hood, 327 U.S. 678, 684 (1946); Bivens, 403 U.S. at 392.
The U.S. Constitution conveys subject matter jurisdiction to the district courts to consider a
party’s Fourth Amendment request for equitable relief in the form of the return of property.
Adeleke v. United States, 355 F.3d 144, 150–51 (2d Cir. 2004). Congress has codified the
federal government’s waiver of immunity in Rule 41(g) of the Federal Rules of Criminal
Procedure, 18 U.S.C. § 3114 & 18 U.S.C. app., which provides:
A person aggrieved by an unlawful search and seizure of property
or by the deprivation of property may move for the property’s
return. The motion must be filed in the district where the property
was seized. The court must receive evidence on any factual issue
necessary to decide the motion. If it grants the motion, the court
must return the property to the movant, but may impose reasonable
conditions to protect access to the property and its use in later
proceedings.
(emphasis added).
Both prior to and after the conclusion of civil or criminal proceedings, district courts
maintain equitable jurisdiction to determine if the detention of a person’s property is
unreasonable. Adeleke, 355 F.3d at 151. A “seizure” of property exists when “there is some
meaningful interference with an individual’s possessory interests in that property,” including the
right to exclude others from access to such property. Soldal v. Cook Cnty., 506 U.S. 56, 61
(1992) (citing United States v. Jacobsen, 466 U.S. 109, 113 (1984)). In Jacobsen, government
officials seized a package containing a powdery substance, tested the powder and ultimately
destroyed it. 466 U.S. at 124. Although the court held that the search did not violate Jacobsen’s
Fourth Amendment expectation of privacy, it considered whether destruction of the powder
interfered with the owners’ “possessory interests” and whether such interference was reasonable.
Id. at 124–25; see also United States v. Place, 462 U.S. 696 (1983) (holding that, although a

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Terry search was reasonable, the 90-minute seizure of a passenger’s luggage constituted an
unreasonable interference with his possessory rights, in violation of the Fourth Amendment).
The Second Circuit has held that “fundamental to the integrity of the criminal justice
process” is that “property involved in the proceeding, against which no Government claim lies,
be returned promptly to its rightful owner. . . . [T]he district court has both the jurisdiction and
duty to return such property.” Mora v. United States, 955 F.2d 156, 158 (2d Cir. 1992) (citing
with approval United States v. Wilson, 540 F.2d 1100, 1103 (D.C. Cir. 1976)). Where no
criminal proceeding against the movant is pending or has transpired, a motion for the return of
property is “treated as [a] civil equitable proceeding[ ] even if styled as being pursuant to”
Federal Rule of Criminal Procedure 41(g). De Almeida v. United States, 459 F.3d 377, 379–80
(2d Cir. 2006) (citing Mora, 955 F.2d at 158). 6 Although a party may not bring a Bivens action
for money damages against a federal government official acting in his official capacity, 403 U.S.
at 395, that restriction does not apply to requests for certain forms of equitable relief, such as the
return of property. Kentucky v. Graham, 473 U.S. 159, 166–67 (1985).
Although the plaintiffs have not filed a separate motion for the return of property, it is
clear from the face of the Second Amended Complaint that they intended to invoke review under
Rule 41(g). Failure to submit a separate motion may be a procedural defect, but such a defect
does not divest the district court of its jurisdiction over the matter.
B. Return of Non-Responsive Property
1. The Government has Failed to Articulate a Reasonable Basis for Retaining the
Plaintiffs’ Non-Responsive Property

6. Even in the context of property retained after a plaintiff had been sentenced in a criminal matter, the U.S. Court
of Appeals for the District of Columbia held that once the district court’s need for the property had concluded, the
district court had “both the jurisdiction and the duty to return the contested property here regardless and
independently of the validity or invalidity of the underlying search and seizure.” Wilson, 540 F.2d at 1104.

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During the April 20, 2010 search, the IRS seized 322 bankers boxes of documents, as
well as various electronic files, from the plaintiffs’ property at 100 Grist Mill Road, Simsbury,
Connecticut. 2d Am. Compl. ¶ 32. Over a year later, while reviewing the seized documentation,
the IRS notified the DOL that a box contained information that the DOL later used to initiate
criminal proceedings against one of the plaintiffs in this case, Daniel Carpenter. Koskinen Mot.
Dismiss Br. 6–7; see also United States v. Daniel Carpenter, 3:13-cr-226 (RNC). The plaintiffs,
including un-indicted party GMC, allege that since the 2010 search, only four of the boxes have
been returned. 2d Am. Compl. ¶ 32. The Government alleges that “with the exception of two
boxes,” all other bankers boxes “are now in the possession of Daniel Carpenter or his attorneys.”
Koskinen Mot. Dismiss Br. 2–3. The plaintiffs contest that characterization, arguing that the
Government has provided copies of their files, as opposed to returning the original files
themselves, which include business records and documents, client files, and privileged attorneyclient communications related to a separate criminal tax matter against Carpenter in the U.S.
District Court for the District of Massachusetts, United States v. Daniel Carpenter, 1:04-cr10029 (GAO). Pls.’ Opp’n Br. 7–8.
Regardless whether a search was lawfully executed, the Second Circuit has held that a
party possesses an independent Fourth Amendment right to the return of its seized property. In
United States v. Ganias, 755 F.3d 125 (2d Cir. 2014), the Second Circuit held that the
Government’s failure to return non-responsive electronic files seized during the execution of a
warrant constituted an unlawful seizure under the Fourth Amendment. In Ganias, the
Government executed a lawful search warrant to seize the defendant’s computer files, which
were later used to sustain an indictment against Ganias. 755 F.3d at 138–40. Ganias requested
that the original, non-responsive files be returned and that the government destroy “mirror

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image” copies of those non-responsive files. Id. The Government refused, arguing that, because
it obtained those files through a lawful search, it was not required to return the original files or
delete its “mirror-image” copies. Id. The Second Circuit found the Government’s objection
unpersuasive, holding that failure to return non-responsive files effectively converted a
particularized warrant into an unlawful general warrant, in violation of the Fourth Amendment.
Id. at 139 (“If the Government could seize and retain non-responsive electronic records
indefinitely, so it could search them whenever it later developed probable cause, every warrant to
search for particular [] data would become, in essence, a general warrant.”); see also Doane v.
United States, No. 08-Mag.-17 (HBP), 2009 WL 1619642, at *10 (S.D.N.Y. June 5, 2009)
(holding that when the Government seizes documents, the Second Circuit’s prior decisions “do
not contemplate the indefinite retention of all materials contained within intermingled files.”).
The Second Circuit went on to hold that, because “the Government has demonstrated no legal
basis for retaining the non-responsive documents, its retention and subsequent search of those
documents were unconstitutional.” Id.
Similarly, the Government has provided no rationale for why it should be allowed to
retain the 316 bankers boxes of original documents seized on April 20, 2010. It has not brought
criminal charges or a civil action against the plaintiffs on the basis of the information found in
those bankers boxes, and it has failed to explain why its pending criminal charges against
Carpenter preclude either Carpenter or GMC from requesting the return of their property. 7
Moreover, the Government has held the plaintiffs’ property for more than five years—over twice
the amount of time found to be unreasonable in Ganias.
The Government may retain copies of the plaintiffs’ non-responsive files only if those

7. The Government also contends that in providing the plaintiffs with copies of their original files, it has met its
obligation to return the plaintiffs’ property. As discussed in section III.B.3, infra, that argument is unpersuasive.

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files are related to the government’s investigation of a potential violation of section 7206(2) of
Title 26 of the U.S. Code. In its original warrant request, the Government asserted that it had
probable cause to believe that Carpenter and a non-party to this civil action, Benistar LLC
(“Benistar”), 8 may have violated section 371 of Title 18 of the U.S. Code (conspiracy to defraud
the government) and section 7206(2) of Title 26 of the U.S. Code (aiding and abetting the
preparation and filing of false tax returns). The statute of limitations for a conspiracy charge
expired on April 20, 2015. 18 U.S.C. § 3282(a); see also U.S. Dept. of Justice, Criminal
Resource Manual § 9-652 (2007) (“Statute of Limitations”). The statute of limitations for aiding
and abetting the preparation and filing of a false tax return expires six years after the due date for
that false tax return (here, either on April 15, 2015 or April 15, 2016). 26 U.S.C. § 6531(3);
Internal Revenue Service, Internal Revenue Manual § 9.1.3.6 (2012) (Statute of Limitation for
Criminal Prosecution); U.S. Dept. of Justice, Criminal Tax Manual § 7 (2012). The Government
cannot hold the plaintiffs’ documents in an attempt to gain leverage over Carpenter in its pending
criminal cases against him, nor may it retain the plaintiffs’ documents as part of a long-term
fishing expedition.
2. A Plaintiff Need Not Demonstrate Irreparable Harm to Recover Seized Property
The Government argues that even if the plaintiffs’ Rule 41(g) request is valid, their claim
for relief should be dismissed for failure to plead irreparable harm. In support of its argument,
the Government relies heavily on case law referring to an outdated version of the Federal Rules
of Criminal Procedure. Current case law provides that a plaintiff need not demonstrate
irreparable harm in order to demand the return of non-responsive, seized property.
From 1944 to 1989, a party could not move for return of illegally-seized property unless

8.

Benistar is a co-defendant in Carpenter’s District of Massachusetts criminal case.

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the court also granted a motion for suppression of that evidence. Doane, at *7; Fed. R. Crim. P.
41(e) (1989). As a result, district courts often deferred ruling on a Rule 41(g) 9 motion “unless
the movant could show (1) the search was illegal, (2) that he is without an adequate remedy at
law, and (3) that he would suffer some irreparable injury if relief is not granted.” Id. (citing
Premises Known & Described as 55 W. 47th Street Suites 620 & 650 v. United States, 712 F.
Supp 437, 440–41 (S.D.N.Y. 1989); see also United States v. Roberts, 852 F.2d 671, 673 (2d Cir.
1988)). The irreparable harm element was included to ensure that a pre-indictment motion to
suppress evidence would not unduly interfere with a grand jury investigation. Id. Under the
current formulation of the Federal Rules of Criminal Procedure, however, courts have declined
to apply the pre-1989 standard to Rule 41(g) motions.
In 1989, the Federal Rules of Criminal Procedure were amended to provide an
independent mechanism for the recovery of seized property and to allow the government to
request that the return of seized property contain “reasonable conditions . . . to protect access and
use of the property in subsequent [criminal] proceedings.” Fed. R. Civ. P. 41(e), Advisory
Comm. Note (1989); 3A Charles A. Wright, et al., Federal Practice and Procedure § 673 n.10 (3d
ed. 2009). Under the reformulated rule—which controls this proceeding and all related criminal
proceedings involving Carpenter—the return of property did not necessarily deprive the
Government of access to evidence required for grand jury proceedings, obviating the need for a
movant to demonstrate irreparable harm. Although the Second Circuit has not ruled directly on
the issue, other district courts have declined to impose the pre-1989 irreparable harm requirement
to pre-indictment Rule 41(g) motions. Doane, at *8–9; United States v. E. Side Ophthalmology,
9. In 2002, Rule 41(e) was restyled as Rule 41(g) for clarity; it was not amended substantively by the 2002
amendments. Bertin v. United States, 478 F.3d 489, 492 n.1 (2d Cir. 2007) (citing Adeleke, 355 F.3d at 147 n.1); see
also Committee Note to the 2002 Amendments (“The language of Rule 41 has been amended as part of the general
restyling of the [Federal Rules of Criminal Procedure] to make them more easily understood. . . These changes are
intended to be stylistic only.”).

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No. 95-Mag.-2424, 1996 WL 384891, at *2–4 (S.D.N.Y. 1996) (“there is no justification for
providing unindicted persons with less procedural protections than accorded those under
indictment”). Instead, those district courts have adopted the framework proposed by the
Advisory Committee in its notes to the 1989 amendments, which evaluates the reasonableness of
the Government’s continued interference with the complainant’s property rights.
The Government now attempts to shift to the plaintiffs its burden of demonstrating why it
is reasonable to retain seized files that are unrelated to a criminal or civil proceeding, as required
by Rule 41(g). It argues that the plaintiffs bear the burden of demonstrating that the continuing
and limitless deprivation of their property will cause them irreparable harm. Here, as in Doane,
the Government has not argued that the return or suppression of the 316 bankers boxes of nonresponsive documents would interfere with a grand jury investigation or other proceeding. I join
other district courts within the Second Circuit and hold that a plaintiff need not plead or
demonstrate that he has experienced irreparable harm in order to prevail on a Rule 41(g) motion
seeking return of non-responsive documents.
3. Mootness
The Government argues that because it has returned copies of the seized documents to
“Carpenter or his attorneys,” it has met its obligation to the plaintiffs and has rendered any
controversy moot. That position is inconsistent with case law, which provides that a live, Fourth
Amendment controversy exists so long as the plaintiffs are deprived of their property. Soldal,
506 U.S. at 61–63; Ganias, 755 F.3d at 137. By retaining the plaintiffs’ original files, including
files that have no relation to any pending criminal or civil proceeding against either plaintiff, the
Government continues to interfere with the plaintiffs’ “exclusive control over the files for an
unreasonable time.” Ganias, 755 F.3d at 137. The return of copies of the plaintiffs’ original

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documents does not cure the ongoing deprivation of the plaintiffs’ property. Moreover, the
Second Circuit has noted that withholding non-responsive documents or files, including copies
of those documents and “mirror-image” files, constitutes an unreasonable violation of the
plaintiffs’ Fourth Amendment rights. See id. at 138–40. In light of the particular facts in this
case and prior case law in this circuit, the Government has failed to demonstrate that it may
lawfully retain original, non-responsive documents for however long it pleases and for whatever
reason. The Government has also failed to cite to any authority in this Circuit that has held that
the return of mere copies of a person’s property satisfies the Fourth Amendment’s prohibition
against unreasonable seizures. Accordingly, its mootness argument fails.
Because the Government has failed to demonstrate that its ongoing retention of the 316
bankers boxes of original documents is reasonable, and because it has deprived the plaintiffs of
their property for over five years, it shall return to the plaintiffs the originals of the nonresponsive documents held in the 316 bankers boxes, and it shall destroy any and all copies,
electronic or otherwise, of all non-responsive documents (including computer “mirror images”)
seized during the April 20, 2010 search.
C. Return of Property Utilized in Parallel Proceedings
When seized property is utilized in separate and ongoing proceedings, the Second Circuit
has encouraged district courts to avoid creating parallel proceedings that may result in
inconsistent outcomes. De Almeida v. United States, 459 F.3d 377, 382 (2d Cir. 2006). In this
case, the parties do not contest that two bankers boxes of documents are currently being utilized
by the Government in connection with a criminal prosecution and in a pending investigation.
The standard for determining whether to exercise Rule 41(g) jurisdiction over evidence
being utilized in other proceedings differs from the standard governing non-responsive evidence.

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When evidence is being utilized in separate and ongoing proceedings, Rule 41(g) motions are
available as equitable relief “only when there is no adequate remedy at law and the equities favor
the exercise of jurisdiction.” Id. (citing United States v. One 1987 Jeep Wrangler Auto., 972
F.2d 472, 479 (2d Cir. 1992)). The Second Circuit has noted that in cases where seized property
is being used in a separate and ongoing proceeding, Rule 41 jurisdiction “is to be exercised with
great restraint and caution since it rests upon the court’s supervisory power over the actions of
federal law enforcement officials.” Id. (internal citations and quotes omitted). For example, in
the context of civil and criminal forfeiture, the Second Circuit has held that where “the claimant
is afforded the opportunity to test the legality of a seizure in” the original proceedings, the
claimant should seek relief in that forum to avoid creating a parallel proceeding. Id.
In De Almeida, parties who were not defendants in an ongoing criminal case filed a
separate Rule 41(g) motion requesting the return of property seized in the course of that criminal
proceeding. The Second Circuit held that a district court should decline to exercise its
jurisdiction so long as the parties had an opportunity to seek the return of their property through
the forfeiture process in the related criminal proceeding. Id. at 382–83. Although this case does
not involve a forfeiture proceeding, De Almeida offers a framework for determining whether to
exercise jurisdiction over the two outstanding bankers boxes of “responsive” documents.
In the instant case, the plaintiffs have not requested the return of the single bankers box
of information being utilized in United States v. Daniel Carpenter, No. 3:13-cr-226 (RNC) (D.
Conn.), or the bankers box of documents being held by the IRS in Wisconsin. Pls.’ Mot. Dismiss
Br. 9. Carpenter also has filed Rule 41 motions and motions to suppress evidence in his District
of Connecticut criminal proceeding. United States v. Daniel Carpenter, 3:13-cr-226 (RNC),
Mot. Suppress (docs. 82 & 83). Those motions pending in his criminal case before Judge

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Chatigny indicate that the plaintiffs will have the opportunity to seek the return of their property
in other for a. Accordingly, I decline to exercise jurisdiction over any request to return
documents in the two boxes actually being utilized by the Government.

IV. Conclusion
Based on all the information in the record to date, oral argument, and the reasons set forth
in this order, the Government’s motion to dismiss the plaintiffs’ official-capacity claims for the
return of property (doc. 38) is granted in part and denied in substantial part. The plaintiffs
have stated an adequate claim for equitable relief regarding return of the 316 bankers boxes of
non-responsive documents. Accordingly, I deny the Government’s motion with respect to its
argument that the court lacks subject matter jurisdiction to adjudicate the plaintiffs’ request. At
this time, I decline to exercise jurisdiction with respect to the two bankers boxes of “responsive”
documents, without prejudice to the plaintiffs requesting the return of their property in United
States v. Daniel Carpenter, 3:13-cr-226 (RNC) (D. Conn.), or in other related civil and criminal
proceedings. I deny the Government’s motion with respect to the remaining 316 bankers boxes
of non-responsive, original documents. The Government shall return to the plaintiffs the
originals of the non-responsive documents held in the 316 bankers boxes, and it shall destroy any
and all copies, electronic or otherwise, of all non-responsive documents (including computer
“mirror images”) seized during the April 20, 2010 search.

It is so ordered.
Dated at Bridgeport, Connecticut, this 4th day of June 2015.
/s/ STEFAN R. UNDERHILL
Stefan R. Underhill
United States District Judge

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