Luis v. United States: Supreme Court Holds That Sixth Amendment Right to Counsel Bars Pretrial Restraint of Untainted Assets

On March 30, 2016, the US Supreme Court issued a 5-3 decision in Luis v. United States, holding that the pretrial restraint of a criminal defendant’s untainted assets violates the Sixth Amendment right to counsel of choice. The four-Justice plurality opinion—written by Justice Breyer and joined by Chief Justice Roberts and Justices Ginsburg and Sotomayor—reached that conclusion by balancing a Medicare fraud defendant’s Sixth Amendment interest in securing paid counsel of choice with personal assets unrelated to the criminal charges, on the one hand, against the government’s interests in punishment and restitution, on the other.¹ Ultimately, the plurality found the government’s interests to “lie somewhat further from the heart of a fair, effective criminal justice system.”²                                                  

Justice Thomas concurred in the judgment but rejected the plurality’s rationale, relying instead on the history of the Sixth Amendment and the common law regarding pretrial restraint.³ The remaining Justices dissented. Together, these opinions reflect the wide range of issues with which courts will grapple as they implement Luis’s Sixth Amendment guarantee—among them the fungibility of money, the relationship between private and court-appointed criminal defense representation, and practical considerations such as applying the rules of financial tracing to distinguish between tainted and untainted funds.

I.        Background

In 2012, Sila Luis was charged with various federal healthcare offenses, including paying illegal kickbacks and conspiring to commit Medicare fraud.⁴ The government alleged that Ms. Luis had fraudulently obtained Medicare payments of almost US$45 million and sought a criminal forfeiture in that amount.⁵  The same day as it filed the criminal charges, the government filed a civil action under 18 U.S.C. § 1345 to freeze Ms. Luis’s assets before her criminal trial, and the district court ultimately entered an order prohibiting Ms. Luis from “dissipating, or otherwise disposing of . . . assets, real or personal . . . up to the equivalent value of the proceeds of the Federal health care fraud ($45 million).”⁶ As authorized by § 1345(a)(2), this order restrained property of “equivalent value” to the amount of fraudulent payments, including assets that the parties had stipulated were not connected to the offense.⁷

Because the amount of restrained funds was greater than the amount of Ms. Luis’s personal assets, she moved to modify the court’s order so that she could retain and pay the criminal defense counsel of her choosing.⁸ She argued that enjoining her from spending her untainted assets on her counsel of choice violated the Sixth Amendment. The district court acknowledged that the order might prevent Luis from paying for her counsel of choice, but it held that “there is no Sixth Amendment right to use untainted, substitute assets to hire counsel.”⁹

On appeal, the Eleventh Circuit affirmed the district court’s decision, reasoning that Ms. Luis’s arguments were foreclosed by three Supreme Court cases: Caplin & Drysdale, Chartered v. United States; United States v. Monsanto; and Kaley v. United States.¹⁰ In Caplin & Drysdale and Monsanto, which were both decided by 5-4 votes on the same day in 1989, the Court rejected the argument that the Sixth Amendment exempts tainted funds needed to pay counsel of choice from pretrial restraint.¹¹ In 2014, revisiting the issue for the first time since 1989, the Kaley Court reaffirmed Caplin & Drysdale and Monsanto, concluding that a grand jury determination of probable cause justified the restraint of tainted funds.¹² None of these cases involved statutes that provided for the restraint of undisputedly untainted assets, however.

II.       Analysis

In Luis, the Court granted certiorari to consider “[w]hether the pretrial restraint of a criminal defendant’s legitimate, untainted assets (those not traceable to a criminal offense) needed to retain counsel of choice violates the Fifth and Sixth Amendments.”¹³ The plurality and Justice Thomas, who concurred solely in the judgment, addressed the Sixth Amendment alone and concluded that it prohibits this kind of pretrial restraint. Justice Kennedy, joined by Justice Alito, filed a dissenting opinion applying the principles articulated in Caplin & Drysdale and Monsanto to Luis. Justice Kagan also dissented, expressing concerns about the Court’s precedents but acknowledging them as controlling law.

A.       Justice Breyer’s Plurality Opinion

Justice Breyer’s plurality opinion concluded that “the pretrial restraint of legitimate, untainted assets needed to retain counsel of choice violates the Sixth Amendment.”¹⁴ The plurality assessed the importance of protecting the right to counsel in this way by using a balancing approach that weighed the competing interests of the government and defendant.¹⁵ The plurality focused on two animating principles: (1) the “nature and importance” of the Sixth Amendment and (2) the “nature of the assets”—namely, the distinction between tainted and untainted funds.¹⁶

The plurality began by discussing the “fundamental character” of the Sixth Amendment right to criminal counsel enshrined by the Court’s 1963 decision in Gideon v. Wainwright.¹⁷ Against this backdrop, the plurality explained that the Sixth Amendment “grants a defendant a fair opportunity to secure counsel of his own choice.”¹⁸ Although this “fair opportunity” has limits, it applies with full force to defendants like Ms. Luis. Indeed, the plurality observed that “[t]he Government cannot, and does not, deny Luis’ right to be represented by a qualified attorney whom she chooses and can afford.”¹⁹

The plurality then considered the distinction between tainted and untainted funds, a principle it described as “the difference between what is yours and what is mine.”²⁰ First, the Justices determined that Caplin & Drysdale and Monsanto do not apply to untainted funds.²¹ Second, they adopted a balancing approach that weighed the competing interests of the government and defendant.²² On one side, the plurality acknowledged, is the defendant’s right to counsel of choice; on the other, the government’s interests in punishment and restitution.²³ Although the latter interests are “important,” the plurality concluded that they do not outweigh a defendant’s Sixth Amendment right.²⁴ The Justices also expressed concern that a ruling authorizing the restraint of untainted funds “would unleash a principle of constitutional law that would have no obvious stopping place.”²⁵ In particular, such a ruling could lead Congress to enact many similar pretrial restraint statutes, expanding the government’s reach to “a broad range of . . . behavior.”²⁶ Finally, the plurality acknowledged that pretrial restraints are particularly harmful for defendants who lack tainted assets to freeze because they are, in fact, innocent.²⁷

The plurality concluded by signaling its hopes for how lower courts should implement the Court’s judgment. In particular, it emphasized that courts can borrow existing law from other contexts, such as the rules of financial tracing, and that such determinations are part of the normal work of the lower courts.²⁸

B.       Justice Thomas’s Concurrence in the Judgment

Justice Thomas concurred in the Court’s judgment only. Rejecting the plurality’s balancing approach, his opinion relied instead on “the Sixth Amendment’s text and common law backdrop.”²⁹ According to Justice Thomas, the Sixth Amendment “implies the right to use lawfully owned property to pay for an attorney” because “constitutional rights necessarily protect the prerequisites for their exercise.”³⁰ Beyond this, the common law forfeiture tradition “draws a clear line between tainted and untainted assets.”³¹ Under the common law, a defendant could sell his lawfully owned assets between the offense and conviction—including to pay the costs of his defense or even for his own support in prison—but he had no right to tainted assets, which the government could seize prior to trial.³² For this reason, Justice Thomas concurred in the judgment but rejected the plurality’s “atextual balancing analysis.”³³

C.       Justice Kennedy’s Dissenting Opinion

Justice Kennedy, joined by Justice Alito, dissented. Rejecting both the plurality’s balancing approach and the concurrence’s textual and historical analysis, Justice Kennedy contended that the principle articulated in Caplin & Drysdale and Monsanto—“that a defendant has no Sixth Amendment right to spend forfeitable assets (or assets that will be forfeitable) on an attorney”—controlled this case.³⁴

In particular, Justice Kennedy declined to recognize a difference between assets that are traceable to the offense and those that are not; for him, the relevant consideration was whether the government has shown the assets to be forfeitable.³⁵ In either situation, Justice Kennedy maintained, the government does not own the property until conviction or judgment of forfeiture, so the plurality’s distinction between the government’s property interest in tainted and untainted funds was misplaced.³⁶ As such, he concluded that the reasoning of Caplin & Drysdale and Monsanto applied with full force here, since those earlier cases rested “on the Government’s entitlement to recoup money from criminals who have profited from their crimes, not on tracing or identifying the actual assets connected to the crime.”³⁷

Throughout the opinion, Justice Kennedy raised concerns about the administrability and fairness of the Court’s ruling. Because money is fungible, he contended, distinguishing between tainted and untainted funds “creates arbitrary distinctions between defendants.”³⁸ This could also create “perverse incentives”³⁹ and “reward[] criminals who hurry to spend, conceal, or launder stolen property by assuring them that they may use their own funds to pay for an attorney after they have dissipated the proceeds of their crime.”⁴⁰

D.       Justice Kagan’s Dissenting Opinion

Justice Kagan filed a short dissenting opinion in which she explained that she was “not altogether convinced” that the Court’s decision in Monsanto was justified, but “the correctness of Monsanto is not at issue today.”⁴¹ In light of this, she agreed with Justice Kennedy and Justice Alito that Monsanto controlled and that the government’s pre-conviction property interest in tainted and untainted funds is the same.⁴² She concluded by observing that as much as she “sympathize[d] with the plurality’s effort to cabin Monsanto,” the plurality’s analysis drew “irrational” distinctions between defendants that were not supported by the Sixth Amendment.⁴³

E.       The Relevance of a Fragmented Court

Under the analytical framework established by Marks v. United States, “[w]hen a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds.”⁴⁴ Here, the Luis plurality and concurrence agreed only on the basic holding that the pretrial restraint of untainted assets violates a criminal defendant’s Sixth Amendment right to counsel of choice, while diverging as to the rationale.

III.      Implications

In Luis, the Court placed the first meaningful restrictions on pretrial restraint of funds since it decided Caplin & Drysdale and Monsanto in 1989. The Court’s decision creates a procedural hurdle that prosecutors must overcome in the early stages of a criminal case if they wish to freeze a defendant’s assets; specifically, they must now distinguish between tainted and untainted assets and freeze only those assets that are traceable to the alleged crime, at least insofar as the defendant seeks to use untainted assets to retain counsel. Luis thus makes it harder for the government to restrain untainted assets in cases involving complex financial transactions—a category that includes many federal healthcare, financial services, and other white collar matters. In some cases, Luis may ultimately dissuade the government from seeking to restrain funds.

Luis is an important ruling for white collar defendants, who have long struggled with the effects of Caplin & Drysdale and Monsanto. For defendants with the means to retain private defense attorneys, the grant of certiorari in Luis was a rare opportunity for the Court to revisit the Sixth Amendment’s right to counsel of choice, which it has deemphasized in recent decades in favor of the right of indigent defendants to court-appointed representation. By adopting the defense’s proposed Sixth Amendment carve-out for untainted funds, the Court recognized the continuing vitality of this fundamental constitutional right for defendants with means as well as those without.

The most pressing questions now concern how lower courts will implement Luis’s Sixth Amendment guarantee. Even if courts borrow from existing law, as the plurality suggests they should, they will need to develop a body of law specific to pretrial restraint. This will require incorporating Luis into the already complex analysis that courts use to determine the proper timing and procedure for temporary restraining orders, hearings, and injunctions under statutes like Section 1345. Will a defendant be allowed to retain her untainted funds at the outset of the case, for use at her discretion, or will courts authorize a blanket freeze and release funds only for the limited purpose of paying legal fees and expenses? Will courts second-guess how much a person chooses to spend on defending herself against criminal charges and a potential loss of liberty?⁴⁵ Will courts read Luis as allowing defendants to use untainted funds in order to exercise other constitutional rights, based on a broad reading of the plurality’s rationale that untainted funds belong to defendants pre-conviction, “free and clear”?⁴⁶

Attorneys who defend clients in matters governed by pretrial restraint statutes—including federal healthcare and banking offenses—should be familiar with the rationales expressed in Luis and with relevant doctrines, including tracing laws, used to separate tainted and untainted funds. They should also be prepared to advise clients on issues related to paying counsel with clearly untainted funds (e.g., assets obtained prior to the alleged offense) versus assets whose connection to the charged offense is disputed.

Luis also raises questions about whether the Department of Justice will revisit its policy on third-party forfeiture with respect to attorney fees—or even whether new constitutional arguments will try to foreclose the Department’s ability to seek forfeiture of funds that a criminal defendant has already paid to counsel.⁴⁷ On the one hand, in many cases, counsel might invoke Luis to persuade the Justice Department to release funds restrained pretrial for payment of counsel; on the other, Luis’s clear distinction between tainted and untainted funds may lead prosecutors to refuse to release tainted funds under any circumstances (including, for example, where it previously would have released such funds to avoid a Sixth Amendment challenge).

Beyond these practical concerns, the plurality’s reasoning suggests that at least four Justices view the public and private criminal defense systems as intertwined for purposes of Sixth Amendment analysis. At one point, the plurality noted that widespread restraint of untainted funds could drive defendants into the already overburdened public defender system, and cited evidence from the Department of Justice itself that public defenders are “overworked and underpaid.”⁴⁸ Although the plurality stopped short of suggesting that public representation is systemically inadequate for Sixth Amendment purposes, the plurality’s recognition of public defenders’ large caseloads shows that the Court may account for the effectiveness of public representation when analyzing the scope of the Sixth Amendment right to counsel in the future.

Finally, despite the uncommon split among the Justices as to both the Court’s holding and its reasoning, a majority of the Court may be sympathetic to further arguments rooted in the Sixth Amendment. For example, in future right to counsel cases, the Luis plurality may find common ground with Justice Kagan, who “sympathize[d]” with the plurality but dissented primarily on stare decisis grounds.⁴⁹ Further, Justice Thomas’s concurring position, although at odds with the plurality’s specific reasoning, arguably provides more protection for a certain group of defendants: those with enough untainted funds to pay an attorney. Justice Thomas believed that original meaning, rather than interest-balancing, dictated the result in Luis, such that even the most compelling government interests should not outweigh a defendant’s Sixth Amendment right to pay for counsel of choice with untainted funds. And finally, Chief Justice Roberts, who notably dissented from the Court’s decision in Kaley,⁵⁰ joined the Luis plurality—suggesting his continued support for leveling the playing field between prosecutors and the defense bar.