FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
LIQUIDATORS OF EUROPEAN FEDERAL Nos. 09-10116
CREDIT BANK, IN LIQUIDATION, D.C. No.
Claimants-Appellants, 3:00-cr-00284-CRB
and
PAVEL IVANOVICH LAZARENKO,
Defendant.
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
LIQUIDATORS OF EUROPEAN FEDERAL
No. 09-10161
CREDIT BANK, IN LIQUIDATION,
Claimants-Appellants, D.C. No.
3:00-cr-00284-CRB
v.
PAVEL IVANOVICH LAZARENKO,
Defendant-Appellee.
229
230 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
LIQUIDATORS OF EUROPEAN FEDERAL No. 09-10183
CREDIT BANK, IN LIQUIDATION, D.C. No.
Claimants-Appellants, 3:00-cr-00284-CRB
v. OPINION
PAVEL IVANOVICH LAZARENKO,
Defendant-Appellee.
Appeals from the United States District Court
for the Northern District of California
Charles R. Breyer, District Judge, Presiding
Argued and Submitted
August 10, 2010—San Francisco, California
Filed January 4, 2011
Before: Susan P. Graber, Consuelo M. Callahan, and
Carlos T. Bea, Circuit Judges.
Opinion by Judge Graber
234 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
COUNSEL
Rory K. Little, McDermott Will & Emery LLP, San Fran-
cisco, California, for the claimant-appellant.
Vijay Shanker, United States Department of Justice, Wash-
ington, D.C., for the plaintiff-appellee.
OPINION
GRABER, Circuit Judge:
Defendant Pavel Ivanovich Lazarenko, former prime minis-
ter of Ukraine, laundered money from illegal activities
through many banks worldwide, including the European Fed-
eral Credit Bank (“Eurofed”), located in the sovereign nation
of Antigua and Barbuda (“Antigua”). Defendant’s activities
raised prosecutorial eyebrows in both the United States and
Antigua. Antiguan officials ordered the liquidation of
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 235
Eurofed, and the High Court of Antigua appointed several
persons as “Liquidators” of Eurofed to assist in the collection
and distribution of Eurofed’s assets to its rightful, law-abiding
owners. Meanwhile, the United States government indicted
Defendant on criminal charges, including money laundering.
See United States v. Lazarenko, 564 F.3d 1026 (9th Cir.)
(describing case history), cert. denied, 130 S. Ct. 491 (2009).
The United States government discovered that some of
Defendant’s assets—the assets at issue here—which origi-
nally had been deposited with Eurofed, were held in two
Eurofed correspondent accounts at Bank of America in San
Francisco. The government seized those assets and sought
criminal forfeiture. Liquidators asserted ownership of the
assets and sought to defeat criminal forfeiture. In an ancillary
proceeding pursuant to 21 U.S.C. § 853(n), the district court
rejected Liquidators’ arguments challenging the criminal for-
feiture and entered a final order of forfeiture. Liquidators
timely appeal. We reverse and remand with instructions that
the district court vacate the forfeiture order and that the dis-
trict court order the government to return the assets to Liqui-
dators.
FACTUAL AND PROCEDURAL HISTORY
We previously have detailed the factual and procedural his-
tory of Defendant’s criminal convictions. Lazarenko, 564
F.3d at 1030-33. Relevant here, the final indictment, filed in
2001, contained a criminal forfeiture allegation pursuant to 18
U.S.C. § 982. The indictment alleged that Defendant “shall
forfeit to the United States all property, real and personal,
involved in such offense, or any property traceable to such
property, including but not limited to [certain specified prop-
erties not including the assets at issue here].” As part of the
substantive allegations, the indictment referred to many dif-
ferent specific bank accounts and specific bank transfers, but
the indictment nowhere referred to the assets presently in dis-
pute. Those assets are approximately $2.5 million in funds
236 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
and Ukrainian bonds on deposit with Bank of America. The
government asserts that those assets are connected to Defen-
dant’s money laundering.
In 2004, the jury convicted Defendant of money laundering
and, about six weeks later, the government filed a motion for
criminal forfeiture. The motion sought forfeiture of the bank
accounts and funds mentioned in the indictment, but the
motion did not name the assets at issue here. Likely because
of the complexity of this case, the district court did not rule
on the motion immediately.
Several months later, in January 2005, the government
obtained a civil warrant to seize the assets at issue here. See
United States v. Lazarenko (Liquidators), 476 F.3d 642, 646
(9th Cir. 2007) (describing history of civil forfeiture action);
United States v. $1,379,879.09 Seized from Bank of Am., 374
F. App’x 709, 710 (9th Cir. 2010) (unpublished decision)
(same). In March 2005, the government filed a civil complaint
against the assets. Liquidators moved for summary judgment
on statute of limitations grounds. Because the government
learned of the underlying money-laundering offenses by 1999
at the latest, the five-year statute of limitations barred the
2005 civil forfeiture complaint. Eventually, the government
conceded that the statute of limitations barred its civil forfei-
ture action. On October 26, 2005, the district court therefore
granted Liquidators’ motion for summary judgment in the
civil action.1
That same day, at the government’s request, the district
court also issued a criminal seizure warrant over the same
assets. The government retained possession of the assets. In
January 2006, Liquidators filed a “motion for return of the
illegally seized funds.” Additionally:
1
The district court thereafter awarded attorney fees to Liquidators for
the work related to the civil forfeiture proceedings. See $1,379,879.09
Seized from Bank of Am., 374 F. App’x at 710-11 (affirming the grant of
attorney fees).
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 237
In March 2006, Liquidators applied ex parte to Judge
Jenkins for an immediate hearing on their motion for
return of the illegally seized funds. Liquidators
claimed that United States v. Crozier, 777 F.2d 1376
(9th Cir. 1985), afforded them the right to a constitu-
tionally mandated and immediate hearing. They rea-
soned that waiting to commence the ancillary
proceedings contemplated by 21 U.S.C. § 853(n)
until the district court sentenced Lazarenko would
not sufficiently protect their due process rights to a
reasonably prompt opportunity to contest the seized
property to which they claim ownership. . . .
After holding a telephonic conference with all
interested parties, the district court denied Liquida-
tors’ ex parte application. The district court found
that setting a hearing on Liquidators’ motion after
sentencing Lazarenko comported with due process,
as Congress has provided for ancillary proceedings
on the heels of a sentence imposed upon conviction
of a particular crime, 21 U.S.C. § 853(n). Soon
thereafter, the district court granted the United
States’ application for a preliminary order of forfei-
ture under 18 U.S.C. § 982(a)(1) and Federal Rule of
Criminal Procedure 32.2(b).
Liquidators, 476 F.3d at 646-47 (some citations omitted). Liq-
uidators thereafter appealed from both orders and, alterna-
tively, asked us to grant a writ of mandamus compelling the
district court to order the government to return the assets to
Liquidators immediately.
In that interlocutory appeal, Liquidators argued, among
other things, that three legal doctrines independently barred
this criminal forfeiture action: (1) the statute of limitations,
(2) res judicata, and (3) the act of state doctrine. The govern-
ment argued that we lacked jurisdiction to reach the merits of
those arguments because of the procedural posture of the
238 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
appeals. Specifically, the government asserted that there were
no due process concerns because Liquidators could raise their
legal challenges to the criminal forfeiture action in a soon-to-
be-commenced ancillary proceeding under § 853(n).
We dismissed the appeals and the mandamus petition for
lack of jurisdiction. We summarized in the conclusion:
We hold that Liquidators may adequately protect
their interest in the funds and bonds in the ancillary
proceeding under § 853(n). Congress designated no
other means for third parties to vindicate their inter-
est in forfeited property. Because Liquidators may
present all legal arguments that might bar the gov-
ernment’s forfeiture in the proceedings below, and
because the district court is prepared to undertake the
ancillary proceedings promptly, we further hold that
Liquidators fail to satisfy the constitutional and pru-
dential components of standing and ripeness.
Id. at 653 (emphasis added). In our reasoning, we clarified
that, during the ancillary proceeding, Liquidators could pre-
sent its legal arguments concerning, among other theories, the
statute of limitations, res judicata, and the act of state doc-
trine. Id. at 650 & n.2.
On remand, the district court initiated the ancillary pro-
ceeding under 21 U.S.C. § 853(n). During that proceeding, the
government argued—contrary to the earlier position that it
had asserted to us—that the relevant statutes and rules of
criminal procedure barred Liquidators from raising their legal
challenges to the forfeiture. The district court agreed with the
government but also held, in the alternative, that the three
legal challenges fail on their merits. The district court also
rejected Liquidators’ factual challenges to the forfeiture.
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 239
Accordingly, the district court entered a final order of forfei-
ture in favor of the government. Liquidators timely appeal.2
STANDARD OF REVIEW
We review de novo questions of law, statutory interpreta-
tion, interpretation of Federal Rules of Criminal Procedure,
and claims of res judicata. United States v. Roblero-Solis, 588
F.3d 692, 698 (9th Cir. 2009) (questions of law); United
States v. Burkholder, 590 F.3d 1071, 1074 (9th Cir. 2010)
(statutory interpretation); United States v. Estrada-Eliverio,
583 F.3d 669, 671-72 (9th Cir. 2009) (interpretation of the
Federal Rules of Criminal Procedure); Intri-Plex Techs., Inc.
v. Crest Group, Inc., 499 F.3d 1048, 1052 (9th Cir. 2007) (res
judicata).
DISCUSSION
As they have throughout these proceedings, Liquidators
seek resolution of their argument that three legal doctrines
independently bar this criminal forfeiture action: the statute of
limitations, res judicata, and the act of state doctrine. Before
reaching those arguments, we must address the government’s
contention that Liquidators cannot raise those arguments in
the ancillary proceeding.
A. Ancillary Proceedings under § 853(n) and Judicial
Estoppel
Title 21 U.S.C. § 853 and Federal Rule of Criminal Proce-
dure 32.2 govern Defendant’s criminal forfeiture proceedings.
Defendant was convicted of money laundering and conspiracy
to commit money laundering, in violation of 18 U.S.C.
§ 1956. Title 18 U.S.C. § 982(a)(1) requires that “[t]he court,
in imposing sentence on a person convicted of an offense in
2
Liquidators filed three separate appeals, which we consolidated. We
agree with the parties that we have jurisdiction over the appeals.
240 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
violation of section 1956 . . . of this title, shall order that the
person forfeit to the United States any property, real or per-
sonal, involved in such offense, or any property traceable to
such property.” Section 982(b)(1) states that the forfeiture
proceedings “shall be governed by the provisions of [21
U.S.C. § 853].” Rule 32.2 specifies the procedure governing
criminal forfeiture proceedings under § 853.
Here, briefly, is how the system works. See generally Liq-
uidators, 476 F.3d at 647-48. The government must provide
notice to the defendant that it intends to seek forfeiture. Rule
32.2(a). The notice must be included in the indictment or
information, but the notice “need not identify the property
subject to forfeiture.” Id. If the defendant is convicted on a
count supporting forfeiture (by statute), then the government
may move for entry of a preliminary order of forfeiture. Rule
32.2(b). “As soon as practical after a verdict or finding of
guilty . . . on any count in an indictment or information
regarding which criminal forfeiture is sought, the court must
determine what property is subject to forfeiture under the
applicable statute.” Rule 32.2(b)(1)(A). “If the government
seeks forfeiture of specific property, the court must determine
whether the government has established the requisite nexus
between the property and the offense.” Id.
At no point may any third party intervene in the criminal
trial or appeal. 21 U.S.C. § 853(k)(1). Additionally, once the
government has filed the criminal indictment or information
against the defendant, no third party may “commence an
action at law or equity against the United States concerning
the validity of his alleged interest in the property.” Id.
§ 853(k)(2). Instead, Congress protected the interests of third
parties through the operation of an ancillary proceeding. Id.
§ 853(n); Rule 32.2(b)(2). As stated by Rule 32.2(b)(2): “The
court must enter the [preliminary order of forfeiture] without
regard to any third party’s interest in the property. Determin-
ing whether a third party has such an interest must be deferred
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 241
until any third party files a claim in an ancillary proceeding
under Rule 32.2(c).”
The entry of a preliminary order of forfeiture permits the
government to commence an ancillary proceeding to deter-
mine the rights of third parties. Rule 32.2(b)(3). The prelimi-
nary order of forfeiture becomes final with respect to the
defendant at sentencing (or earlier, if the defendant agrees).
Rule 32.2(b)(4)(A). But the order is not final with respect to
interested third parties until the conclusion of the ancillary
proceeding. 21 U.S.C. § 853(n)(6).
The government must provide notice of its intended forfei-
ture of specific property, both generally and specifically to
known third parties who may have an interest in the property.
Id. § 853(n)(1); Rule 32.2(b)(6). “If, as prescribed by statute,
a third party files a petition asserting an interest in the prop-
erty to be forfeited, the court must conduct an ancillary pro-
ceeding . . . .” Rule 32.2(c)(1). “An ancillary proceeding is
not part of sentencing.” Rule 32.2(c)(4). The Rule and statute
specify details concerning the timing and procedure of the
ancillary proceeding, including a hearing to resolve factual
disputes. 21 U.S.C. § 853(n)(4), (5); Rule 32.2(c)(1). On the
substance of the ancillary proceeding, § 853(n)(6) states:
If, after the hearing, the court determines that the
petitioner has established by a preponderance of the
evidence that—
(A) the petitioner has a legal right, title, or interest
in the property, and such right, title, or interest ren-
ders the order of forfeiture invalid in whole or in part
because the right, title, or interest was vested in the
petitioner rather than the defendant or was superior
to any right, title, or interest of the defendant at the
time of the commission of the acts which gave rise
to the forfeiture of the property under this section; or
242 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
(B) the petitioner is a bona fide purchaser for
value of the right, title, or interest in the property and
was at the time of purchase reasonably without cause
to believe that the property was subject to forfeiture
under this section;
the court shall amend the order of forfeiture in accor-
dance with its determination.
At the conclusion of the ancillary proceeding, the court enters
a final order of forfeiture, which is final with respect to all
third parties. Rule 32.2(c)(2). Third parties may appeal from
a final order of forfeiture. Rule 32.2(c)(3).
In most situations, this system adequately protects every-
one’s interests. If the defendant believes that the property is
his or hers, the defendant has an adequate incentive to chal-
lenge the forfeitability of the property. Nothing prevents the
defendant from raising legal challenges to the forfeitability of
the property during the criminal proceeding itself. Addition-
ally, the statutory scheme usually provides adequate protec-
tion for the interests of third parties, because the statute
permits bona fide purchasers and those with superior title to
present their claims. If they have a superior interest in the
property as to the defendant, § 853(n)(6)(A), or if they are
bona fide purchasers for value, § 853(n)(6)(B), then they
would prevail in the ancillary proceeding on the merits,
regardless of any possible legal challenges to the forfeitability
of the property generally. And, if the third parties do not have
a superior interest and are not bona fide purchasers, then any
ruling that the forfeitability of the property was legally defi-
cient would not accrue value to the third parties, because they
have no interest in the property.
Liquidators assert, however, that this case might be an
exception to the usual situation. The Antiguan government
has ordered the liquidation of Eurofed. As a practical matter,
Defendant has no hope of ever obtaining the disputed assets
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 243
because, even if forfeiture is defeated here, Defendant almost
certainly will not recover the funds from the liquidation pro-
ceedings that are underway in Antigua. Accordingly, Defen-
dant had no incentive to challenge—and did not challenge—
the criminal forfeiture action brought by the United States
government.
[1] Additionally, unlike most scenarios, in which the inter-
ests of the third parties are protected by § 853(n)(6), here Liq-
uidators may not have a valid claim under either subsection
of § 853(n)(6). Liquidators may lack a valid superior-title
claim under subsection (A) because their interest in the prop-
erty arose after Defendant’s criminal conduct—necessarily,
because their interest in the property, like the government’s
interest in prosecuting Defendant, arose because of Defen-
dant’s criminal conduct.3 And Liquidators may lack a valid
claim under subsection (B) because they cannot claim to be
a bona fide purchaser for value: They did not purchase the
property—they acquired it through other legal means, namely,
by order of the High Court of Antigua. In short, Liquidators
may lack a valid claim under either subsection of § 853(n)(6).
But, as Liquidators point out, a ruling that the criminal forfei-
ture action is invalid would, in fact, accrue value to Liquida-
tors, because Liquidators had present-day possession of the
assets at the time of seizure, and a return of the assets there-
fore would benefit Liquidators (and, ultimately, the innocent
depositors of Eurofed).
[2] Liquidators view this case as the convergence of those
unusual circumstances: Defendant had no incentive to chal-
lenge the forfeitability of the property, Liquidators likely have
no valid claim on the grounds described in § 853(n)(6), and
a successful challenge to forfeitability would benefit Liquida-
tors. In this odd scenario, Liquidators argue, the government
3
Liquidators argue that, in fact, they do satisfy § 853(n)(6)(A). We do
not reach that argument because we hold that res judicata bars the criminal
forfeiture action in its entirety.
244 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
might have absolutely no right to forfeiture because of a
patent and fatal flaw (such as untimeliness or res judicata), yet
the government nevertheless might prevail because Defendant
has no reason to challenge the forfeitability and, if Liquidators
are prohibited from raising legal challenges, the government
nevertheless will retain possession and title to the assets.
[3] The government disputes the extent to which the cir-
cumstances of this case are unusual. In any event, it argues,
third parties cannot raise legal challenges to the forfeitability
of the property in an ancillary proceeding. The government
argues that, by design, § 853(n)(6) provides the only theories
by which a third party may challenge the forfeiture: superior
title and bona fide purchaser. According to the government,
it follows that third parties may not assert any other chal-
lenges, such as res judicata, to the forfeitability of the prop-
erty. Many legal sources, including the Advisory Committee’s
Notes to Rule 32.2, our previous statements on the scope of
ancillary proceedings, and our sister circuits’ holdings, sup-
port the government’s view. See, e.g., United States v. Nava,
404 F.3d 1119, 1125 (9th Cir. 2005) (“The petitioner may
prevail only upon showing, by a preponderance of the evi-
dence, that he possessed a vested or superior legal right, title,
or interest in the property at the time the criminal acts took
place, or that he was a bona fide purchaser for value.”);
United States v. Huntington Nat’l Bank, 574 F.3d 329, 334
(6th Cir. 2009) (“Because § 853(n)(6) offers just two grounds
for relief, only two (closely related) substantive questions
may arise when a third party asserts an interest in forfeitable
property—even for the first time at a hearing.”).
[4] Liquidators’ response is, in short: “We saw this coming.”4
4
Liquidators also argue that, even if the government’s position is correct
as a general matter, we should recognize an exception for the unusual cir-
cumstances of this case, discussed above. Buttressed by the constitutional
avoidance doctrine, Liquidators argue that Congress could not have
intended the allegedly absurd result that the government is permitted to
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 245
In the original appeal, Liquidators strenuously asserted that
the procedural scheme created by Congress violated their due
process rights. See Liquidators, 476 F.3d at 647 (“Liquidators
essentially challenge the entire process Congress prescribed
for third parties to adjudicate their interest in property subject
to forfeiture.”). Liquidators foresaw the arguments now
advanced by the government. They argued that, if we did not
permit them to intervene in the criminal proceeding in order
to make their legal challenges, the government would prevent
them from raising those legal challenges in the ancillary pro-
ceeding, for the very reasons that the government now
advances. In sum, Liquidators argued that the procedural
scheme violated due process because they would never be
permitted to raise their legal challenges to forfeitability.
In that appeal, the government responded by pulling the rug
out from under Liquidators’ argument. In its briefing to us,
the government affirmatively rebutted the premise of Liquida-
tors’ due process challenge. The government assured us that,
in the eventual ancillary proceeding, Liquidators could raise
its legal challenges to forfeitability and that the courts could
and would resolve those challenges on their merits. The gov-
ernment thus recharacterized Liquidators’ due process argu-
ment as a demand for a hearing on their claims prematurely,
before the ancillary proceeding took place. For instance, in its
seize and keep property to which it has no legal right and as to which the
property’s rightful owners cannot mount a challenge. See United States v.
Crozier, 777 F.2d 1376, 1383 (9th Cir. 1985) (holding that persons assert-
ing a property right have a due process right “to be heard ‘at a meaningful
time and in a meaningful manner’ ” (quoting Armstrong v. Manzo, 380
U.S. 545, 552 (1965))); see also United States v. Reckmeyer, 836 F.2d
200, 206-08 (4th Cir. 1987) (interpreting § 853(n)(6) broadly to permit
legal challenges to the forfeitability of property in order to avoid due pro-
cess concerns). We do not reach those arguments because, as explained in
text, the doctrine of judicial estoppel prevents the government from mak-
ing its argument. We do not decide whether, and to what extent, third par-
ties may challenge forfeitability in an ancillary proceeding where judicial
estoppel plays no role.
246 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
response to an emergency motion filed by Liquidators, the
government stated:
When the dust settles, the Liquidators’ ‘emer-
gency motion’ is not about the merits of any of the
Liquidators’ arguments, all of which can be
advanced and resolved in the ancillary proceeding
and then appealed, if the resolution is adverse.
Rather, the emergency motion is about whether the
Liquidators have standing to demand a particular
type of process . . . .
(Emphasis added.) The government’s response brief was
worded even more strongly. In the introductory paragraph to
a section entitled “The Liquidators[’] Claims, Which are
Without Merit, All Can Be Raised and Resolved in the Ancil-
lary Proceeding,” the government stated: “The ancillary pro-
ceeding provides a mechanism for resolving factual and legal
disputes relating to third party ownership of forfeited prop-
erty. All of the Liquidators[’] claims can be raised and
resolved, with an appeal if necessary, at the conclusion of that
proceeding. See, e.g., [United States v. Real Property in
Waterboro, 64 F.3d 752, 756 (9th Cir. 1995)] (cannot assert
res judicata prior to ancillary proceeding).”
In view of the government’s representations, we held:
Liquidators present no reason why the ancillary
proceeding would inadequately protect their interest
in adjudicating their competing claim to the prop-
erty. In the proceedings that we understand the dis-
trict court will promptly commence below,
Liquidators may present all arguments and defenses
to defeat the government’s forfeiture, including
those raised in their seizure motion and on
appeal.[FN2] We express no opinion on the merits of
those arguments, and the district court may freely
apply the law to the facts as it finds them during the
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 247
ancillary proceedings.
FN2. To clarify, these include whether: (1) the gov-
ernment seized the funds outside the limitation
period, (2) res judicata bars the criminal seizure, (3)
the criminal seizure violates the act of state doctrine,
[and other arguments irrelevant here].
Liquidators, 476 F.3d at 650-51 & n.2; see also id. at 653
(“Because Liquidators may present all legal arguments that
might bar the government’s forfeiture in the proceedings
below, and because the district court is prepared to undertake
the ancillary proceedings promptly, we further hold that Liq-
uidators fail to satisfy the constitutional and prudential com-
ponents of standing and ripeness.”).
[5] At oral argument in the original appeal, counsel for
Liquidators expressed his fear that the government was play-
ing a “shell game” whereby the government asserts that Liq-
uidators can raise their arguments later, but subsequently
states that Liquidators cannot raise the arguments at all. His
concern turned out to be justified, as that is exactly what the
government did at the ancillary proceeding following our
remand. Under the circumstances, judicial estoppel bars the
government from effecting its sleight of hand.
Judicial estoppel “is an equitable doctrine invoked
by a court at its discretion.” In determining whether
to apply the doctrine, we typically consider (1)
whether a party’s later position is “clearly inconsis-
tent” with its original position; (2) whether the party
has successfully persuaded the court of the earlier
position; and (3) whether allowing the inconsistent
position would allow the party to “derive an unfair
advantage or impose an unfair detriment on the
opposing party.”
248 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
United States v. Ibrahim, 522 F.3d 1003, 1009 (9th Cir. 2008)
(quoting New Hampshire v. Maine, 532 U.S. 742, 750-51
(2001)) (some internal quotation marks omitted). All three
elements are met here.
The government’s “original position” was that Liquidators
could raise its legal challenges in the ancillary proceeding. Its
“later position” is that Liquidators cannot raise its legal chal-
lenges in the ancillary proceeding. Those are directly contra-
dictory positions; necessarily, they are “clearly inconsistent.”
The government disputes our characterization of its original
position. According to the government, whatever it may have
stated in the portions of its papers quoted above, it also made
some statements in the original appeal that are consistent with
its current position that Liquidators cannot raise their legal
challenges at all. As a factual matter, the government is cor-
rect that, in the original appeal, it occasionally took the posi-
tion, consistent with its current position, that Liquidators’
legal arguments would be barred. But we cannot overlook
what the government now wishes it had not stated. It is ines-
capable that the government affirmatively and forcefully
advanced a position clearly inconsistent with its current posi-
tion.
The second prong of judicial estoppel is helpful here:
“whether the party has successfully persuaded the court of the
earlier position.” Ibrahim, 522 F.3d at 1009. As noted above,
we plainly understood the government’s position in the origi-
nal appeal as allowing Liquidators to raise their arguments
during the ancillary proceeding, and we were persuaded by
that position. Liquidators, 476 F.3d at 650-51 & n.2. In other
words, even though the government took seemingly inconsis-
tent positions at times, the panel was convinced by the posi-
tion, squarely stated in the government’s brief, that “[a]ll of
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 249
the Liquidators[’] claims can be raised and resolved” in the
ancillary proceeding.5
[6] In conclusion, even though the government occasion-
ally contradicted itself in the original appeal, it took a position
(1) clearly inconsistent with its current position and (2) con-
vinced the court of that position, (3) to Liquidators’ unfair
detriment. We exercise our discretion and hold that judicial
estoppel bars the government from arguing that Liquidators
cannot raise its legal claims challenging forfeitability.
B. Res Judicata6
Liquidators argue that res judicata bars the criminal forfei-
ture here. Before addressing that issue, some discussion of
civil and criminal forfeiture is in order. Civil forfeiture is an
in rem proceeding against the res, on the legal fiction that the
property itself is “guilty.” Nava, 404 F.3d at 1123. To achieve
civil forfeiture, the government generally must prove, by a
preponderance of the evidence, the culpability of the owner
and a nexus between the property and the illegal activity. Id.
at 1124.
By contrast, criminal forfeiture is an in personam proceed-
ing against the defendant personally and is part of the defen-
dant’s punishment. Id. Accordingly, to achieve criminal
forfeiture, the government first must prove, beyond a reason-
able doubt, that the defendant is guilty of the crime. Id. The
government then must prove, by a preponderance of the evi-
dence, a nexus between the property and the crime. Id.
5
For good reason, the government does not argue that the quoted text
meant only that Liquidators could raise their arguments and get a “resolu-
tion” that the arguments could not be raised. We have rejected such
semantic gamesmanship. Russell v. Rolfs, 893 F.2d 1033, 1037-39 (9th
Cir. 1990).
6
Because we conclude that res judicata bars this criminal forfeiture
action, we do not reach Liquidators’ alternative arguments concerning the
statute of limitations and the act of state doctrine.
250 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
The two types of forfeiture actions have much in common.
Both seek the same result: forfeiture of the property. Both
arise from exactly the same facts: the owner’s illegal activi-
ties. Both involve the same plaintiff: the government. Both
require that the government establish the same general deter-
mination: proof by preponderance of the evidence of a nexus
between the property and the illegal activity.
But the two types of forfeiture actions differ in one very
important way: To achieve criminal forfeiture, the govern-
ment must prove culpability beyond a reasonable doubt; to
achieve civil forfeiture, however, the government must prove
culpability only by a preponderance of the evidence. For that
reason, if the government’s criminal prosecution of the prop-
erty owner fails, that failure does not prevent the government
from pursuing civil forfeiture. United States v. One Assort-
ment of 89 Firearms, 465 U.S. 354, 361-62 (1984). The gov-
ernment may pursue civil forfeiture even after a failed
criminal prosecution. Id.
[7] Here, however, we face the reverse situation. The gov-
ernment sought civil forfeiture but filed its action too late.
After Liquidators pointed out the untimeliness of the action,
the government conceded that its action was time-barred, and
the district court entered a final judgment against the govern-
ment. After the criminal conviction of Defendant, the district
court entered a final order of criminal forfeiture in favor of
the government over the same property. Liquidators argue
that the dismissal of the civil forfeiture action is res judicata,
barring the government from obtaining criminal forfeiture.
[8] “Three elements constitute a successful res judicata
defense. Res judicata is applicable whenever there is (1) an
identity of claims, (2) a final judgment on the merits, and (3)
privity between parties.” Tahoe-Sierra Pres. Council, Inc. v.
Tahoe Reg’l Planning Agency, 322 F.3d 1064, 1077 (9th Cir.
2003) (footnote and internal quotation marks omitted). The
second and third elements are clearly met. “The Supreme
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 251
Court has unambiguously stated that a dismissal on statute of
limitations grounds is a judgment on the merits.” Id. at 1081.
Additionally, although the nominal defendant in a criminal
forfeiture action (the criminal defendant) is different from the
nominal defendant in a civil forfeiture action (the property
itself), the interested party in both actions is identical: the
owner of the property. And, of course, the government is the
plaintiff in both actions. There is therefore privity between
parties. See id. at 1081-82 (holding that “privity is a flexible
concept dependent on the particular relationship between the
parties in each individual set of cases”).
[9] The question, then, is whether there is “an identity of
claims.” We have long recognized the flexibility inherent in
the res judicata determination with respect to identity of
claims. See Costantini v. Trans World Airlines, 681 F.2d
1199, 1202 n.7 (9th Cir. 1982) (“[I]dentity of causes of action
‘cannot be determined precisely by mechanistic application of
a simple test.’ ” (quoting Abramson v. Univ. of Haw., 594
F.2d 202, 206 (9th Cir. 1979))). To decide the identity of
claims, we have applied four criteria:
(1) whether rights or interests established in the prior
judgment would be destroyed or impaired by prose-
cution of the second action; (2) whether substantially
the same evidence is presented in the two actions;
(3) whether the two suits involve infringement of the
same right; and (4) whether the two suits arise out of
the same transactional nucleus of facts.
Id. at 1201-02 (quoting Harris v. Jacobs, 621 F.2d 341, 343
(9th Cir. 1980) (per curiam)); see, e.g., Cent. Delta Water
Agency v. United States, 306 F.3d 938, 952-53 & n.11 (9th
Cir. 2002) (applying the criteria). The fourth criterion—the
same transactional nucleus of facts—is the most important.
Cent. Delta Water Agency, 306 F.3d at 952.
252 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
[10] There can be little doubt that the civil forfeiture action
and the criminal forfeiture action arose from the “same trans-
actional nucleus of facts”: Defendant’s criminal conduct.
There are no real differences (if there are any differences at
all) between the factual predicates for the two forfeiture
actions. Through a straight-forward application of our criteria,
then, res judicata applies.7
The issue is complicated to some extent by our description
of the fourth criterion in other cases. In applying that crite-
rion, we have held that “[r]es judicata bars relitigation of all
grounds of recovery that were asserted, or could have been
asserted, in a previous action between the parties, where the
previous action was resolved on the merits.” Tahoe-Sierra,
322 F.3d at 1078 (internal quotation marks omitted); see also
Dionne v. Mayor of Baltimore, 40 F.3d 677, 683 (4th Cir.
1994) (holding, in a different context, that “a critical predicate
for applying claim preclusion is that the claimant shall have
had a fair opportunity to advance all its ‘same transaction’
claims in a single unitary proceeding”). In this case, the gov-
ernment could not have brought the criminal forfeiture
“claim” as a separate claim in the civil forfeiture action (or
vice versa). The statutes governing the two types of actions
are entirely separate and do not permit such mingling.
Accordingly, our description of the fourth criterion, in Tahoe
Sierra and other cases, suggests that res judicata would not
apply here.
7
In our view, the other three Costantini factors do not help the analysis
much here. The second factor supports a finding of res judicata, because
“substantially the same evidence is presented in the two actions.” Costan-
tini, 681 F.3d at 1202. The third factor also supports a finding of res judi-
cata, because “the two suits involve infringement of the same right.” Id.
The first factor, “whether rights or interests established in the prior judg-
ment would be destroyed or impaired by prosecution of the second
action,” id. at 1201-02, is unhelpful here because it begs the question. Res-
olution of that factor depends only on our conclusion about res judicata.
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 253
Nonetheless, we find no true conflict between our holding
today and our previous discussions. Importantly, in most res
judicata cases, the inquiry about the “same transactional
nucleus of facts” is the same inquiry as whether the claim
could have been brought in the previous action. If the harm
arose at the same time, then there was no reason why the
plaintiff could not have brought the claim in the first action.
The plaintiff simply could have added a claim to the com-
plaint. If the harm arose from different facts at a different
time, however, then the plaintiff could not have brought the
claim in the first action. Either way, the inquiry into the
“same transactional nucleus of facts” is essentially the same
as whether the claim could have been brought in the first
action. In that context, it makes sense, when asking whether
the claims involve the “same transactional nucleus of facts,”
to ask as a proxy whether the claims could have been brought
in the original action.
[11] But this case is different. Because the statutes govern-
ing the two types of forfeiture actions are distinct and do not
permit consolidation, the fact that the two “claims” could not
have been brought in the same action does not advance the
true inquiry: whether the claims arose from the same transac-
tional nucleus of facts. As discussed above, that criterion
plainly is met here. We hold that a final judgment against the
government in a civil forfeiture proceeding acts as res judicata
against a criminal forfeiture proceeding with respect to the
same property when the claims in the latter proceeding arise
from the same transactional nucleus of facts.
Our conclusion is driven by the unique context of forfei-
ture. Unlike in other contexts, the two types of forfeiture
actions always seek exactly the same result (forfeiture of the
property), arise from exactly the same facts (the owner’s ille-
gal activity), necessarily always involve the same potential
plaintiff (the government), and involve the same general
determination (proof of the owner’s culpability and a nexus
between the property and the illegal activity). The two forfei-
254 UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL
ture options—civil and criminal—provide the government
two different paths to reaching the same goal—forfeiture of
the property. As discussed above, the civil forfeiture path car-
ries a lower burden of proof. Once the government has fol-
lowed that path to final judgment, permitting the government
then to pursue criminal forfeiture effectively would permit the
government a second bite at the same apple.8
Nor does application of res judicata in these circumstances
hinder the government or thwart the dual-track system of for-
feiture created by Congress. The forfeiture statutes generally
allow the government to pursue both civil forfeiture and crim-
inal forfeiture at the same time. Importantly, those statutes
permit the government to seek a stay of the civil forfeiture
proceedings while the government conducts a criminal prose-
cution or investigation. See, e.g., 18 U.S.C. § 981(g) (permit-
ting a stay of civil forfeiture proceedings involving money
laundering). As discussed above, if the government’s criminal
forfeiture action fails, it may then pursue civil forfeiture. But,
as here, once the government has sought—but failed—to
achieve civil forfeiture, res judicata prohibits criminal forfei-
ture of the same property. This system provides the maximum
benefit to the government: a civil forfeiture action permits the
government to seize the property in question while it pursues
a criminal investigation and possible prosecution and, even if
the criminal prosecution fails (or is not begun), the govern-
ment still may pursue civil forfeiture (by asking the court to
dissolve the stay in the civil action). This system also pro-
motes the goals of res judicata: fairness, finality, and avoid-
8
As noted in text, the important point for purposes of res judicata is that
the district court issued a final judgment in the civil forfeiture action.
Although the government filed the criminal complaint before filing the
civil forfeiture action, the district court issued a final judgment in the civil
forfeiture action before the criminal proceeding had concluded. Once the
district court issued a final judgment in the civil forfeiture action, that
judgment became res judicata. See Adams v. Cal. Dep’t of Health Servs.,
487 F.3d 684, 692 n.2 (9th Cir. 2007) (recognizing that a judgment in a
later-filed action can act as res judicata to bar an earlier-filed action).
UNITED STATES v. LIQUIDATORS OF EUROPEAN FEDERAL 255
ance of duplicate judicial proceedings. Only when the
government bumbles its forfeiture proceedings, as happened
here, will res judicata pose any sort of obstacle to obtaining
a person’s crime-connected property.
In a detailed and lengthy opinion, the First Circuit reached
the same conclusion through much the same reasoning.
United States v. Cunan, 156 F.3d 110, 114-20 (1st Cir. 1998).
We agree with and adopt both its reasoning and its conclusion
that “res judicata bars a criminal forfeiture following dis-
missal with prejudice of a prior civil forfeiture proceeding
involving the same property.” Id. at 120. As the First Circuit
noted, the only other circuit courts to have mentioned the
issue have expressed support for the same view, albeit in dic-
tum. Id. at 119-20; see United States v. Maull, 855 F.2d 514,
517 n.3 (8th Cir. 1988) (declining to reach the issue); id. at
517-18 (Arnold, J., dissenting) (stating that he would reach
the issue and would hold that a civil forfeiture loss is res judi-
cata with respect to a criminal forfeiture action); United States
v. Lots 43 Through 46, 935 F.2d 1134, 1137 (10th Cir. 1991)
(“If we were writing on a clean slate we would, in fact, be
inclined to views about the case consistent with the persuasive
dissent of Judge Arnold from the Eighth Circuit’s opinion in
[Maull].”).
CONCLUSION
[12] We reverse and remand with instructions that the dis-
trict court amend the final order of forfeiture to exclude the
assets at issue here and to direct the government to return
those seized assets to Liquidators.
REVERSED and REMANDED with instructions.