STATE OF INDIANA DEPARTMENT OF REVENUE v. Adams

BOEHM, Justice,

dissenting.

I respectfully dissent. The issue is whether the Fourth Amendment requires that evidence that was admittedly seized in violation of the Fourth Amendment and is inadmissible in a eriminal prosecution must also be excluded in proceedings to assess Indiana's Controlled Substance Excise Tax (CSET)1 Because the purpose of the exclusionary rule is to remove the incentive for unreasonable governmental invasions of citizens' privacy, the closer the responsibilities of the seizing authority are to the subject matter of the civil proceeding, the more persuasive the case for exclusion of unconstitutionally seized evidence. Here the seizing ageney was the county sheriff's department and the civil proceeding was an assessment of a tax that is essentially punitive and whose collection augments local law enforcement funding. Under these circumstances, I believe both precedent *734and principle dictate that the Fourth Amendment precludes admission of the evidence in this case.

The Fourth Amendment to the United States Constitution preserves the "right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." U.S. Const. amend. IV. In Weeks v. United States, 232 U.S. 383, 398, 34 S.Ct. 341, 58 L.Ed. 652 (1914), the United States Supreme Court held that evidence seized in violation of the Fourth Amendment is not admissible in a federal criminal proceeding. In Mapp v. Ohio, 367 U.S. 643, 655, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961), the Supreme Court made clear the same is true in state criminal proceedings. The Court has repeatedly explained that the rule protects all citizens by removing the incentive to conduct an unreasonable search. Id. at 656, 81 S.Ct. 1684. It does so at the cost of excluding otherwise highly relevant evidence if the search, though unlawful, nonetheless bears fruit. That cost is the price our Constitution willingly accepts in the interest of preserving the rights of all to be free from unreasonable governmental intrusions.

In United States v. Janis, 428 U.S. 433, 96 S.Ct. 3021, 49 L.Ed.2d 1046 (1976), the Supreme Court considered the extent to which the exelusionary rule applies in civil proceedings. Janis dealt with evidence unlawfully seized by state officers. In a 5-3 decision, with Justice Stevens not participating, the Supreme Court allowed the admission of that evidence in a federal gambling excise tax proceeding. Id. at 459-60, 96 S.Ct. 3021. The Court once again balanced the likely social benefits of applying the rule against the costs of excluding the evidence. Id. at 458-54, 96 S.Ct. 3021. Although Wilkins v. United States, 364 U.S. 206, 223, 80 S.Ct. 1437, 4 L.Ed.2d 1669 (1960) had made clear that evidence unlawfully seized by state officials cannot be admitted in federal criminal prosecutions, the majority concluded that state criminal law enforcement officers would not be significantly deterred by a rule that excluded the evidence from federal tax proceedings. Janis, 428 U.S. at 459, 96 S.Ct. 3021. The decision pointed out that earlier cases applying the exclusionary rule in civil proceedings had involved "intrasovereign" violations. Id. at 456, 96 S.Ct. 3021.2

Lower federal courts have since elaborated on the Janis balancing test. In Tirado v. C.I.R., 689 F.2d 307, 310 (2nd Cir.1982), the Second Cireuit concluded that "[dletermining when the likelihood of substantial deterrence justifies excluding evidence requires some assessment of the motives of the officials who seized the challenged evidence." The court also observed that "[tlhe key issue, implicit in Janis as in other exclusionary rule decisions, is still what concerns the seizing officers had in mind." Id. at 318. Elaborating on this theme, the Sixth Circuit, in Wolf v. C.I.R., 13 F.3d 189, 194-95 (6th Cir.1998), set forth five factors relevant to the application of the exelusionary rule in a civil proceeding: (1) the nature of the proceed*735ing; (2) whether the proposed use of unconstitutionally seized material is inters-overeign or intrasovereign; (8) whether the search and secondary proceeding were initiated by the same agency; (4) whether there is an explicit and demonstrable understanding between the two governmental agencies; and (5) whether the secondary proceeding fell within the "zone of primary interest" of the officers that conducted the search.

The first factor, the nature of the civil proceeding, is clearly significant and points strongly toward requiring exclusion in this case. This Court recently examined the CSET assessment process in Bryant v. State, 660 N.E.2d 290, 297 (Ind.1995), and concluded "the CSET is so far removed from a normal excise tax that it must be classified as a punishment." The Court noted the CSET"'s focus on deterrence, not revenue raising, as evidenced by the receipt to a CSET taxpayer that admonishes that the unauthorized delivery, sale, possession or manufacture of a controlled substance is a crime. Id. at 296. A possessor of contraband is required to show this receipt to prove the tax has been paid. Id. At the time Bryant was decided, the receipt was valid for only forty-eight hours, and a taxpayer who possessed the same drug for a longer period was required to repay the tax every forty-eight hours to avoid the CSET's additional sanctions. Id. In 1996, after the ruling in Bryant, the General Assembly extended the validity of the receipt from forty-eight hours to thirty days. Ind.Code § 6-7-3-10(b) (1998). Despite this change, I think it obvious that the tax remains, at heart, punitive in nature. I acknowledge that the federal wagering tax involved in Janis has some of these characteristics, but it is nowhere near the CSET in overall draconian impact.

Bryant also pointed out that the fact the CSET applied only if a crime had been committed suggested the CSET's punitive nature. 660 N.E.2d at 296. The 1996 CSET amendments did nothing to alter this, and now, as then, the tax is imposed only on individuals who deliver, possess or manufacture controlled substances in violation of Indiana or federal drug laws. Id. at 296-97. In contrast, in both Tirado, 689 F.2d at 309, and in Wolf. 13 F.3d at 191, two of the principal cases upon which the majority relies, the civil proceedings were for assessment and collection of federal income taxes which apply to all human activity and are plainly revenue measures, not surrogate punishments.

Finally, Bryant noted that an excise tax is imposed upon the performance of an act or the enjoyment of a privilege, but the CSET is imposed only after a taxpayer's drugs have been confiscated, and the taxpayer neither enjoys a privilege nor performs an act at the time of taxation. 660 N.E.2d at 297. That observation remains true after the 1996 amendments. The State contends that the United States Supreme Court's subsequent ruling in Hudson v. United States, 522 U.S. 93, 118 S.Ct. 488, 139 L.Ed.2d 450 (1997), has called into question this Court's holding in Bryant that double jeopardy precluded imposition of the tax and eriminal prosecution for the same drug possession. Even if this is the case, I nevertheless believe Bryant was plainly correct in its view that the civil sanctions imposed pursuant to the CSET are punitive in nature.

The second Wolf factor is the one Janis emphasized in finding evidence seized by state officers to be admissible in a federal tax proceeding: whether the evidence is to be used in a proceeding under the same government whose agents seized it. Here, of course, both the taxing authorities and *736the law enforcement officers operated as agents of the State of Indiana.

The third, fourth, and fifth Wolf factors are closely related. The third factor is whether the search and the civil proceeding were initiated by the same agency. If so, the potential incentive to ignore the Fourth Amendment is greater. As Wolf put it, quoting Tirado: " '[Algents are likely to have all the responsibilities of their agency in mind as they go about their investigations.'" 18 F.3d at 195. Although the sheriff and the initiator of the CSET proceeding are not literally the same ageney, they plainly operated in concert. Detective Michael Turner of the Marion County Sheriff's Department conducted the initial illegal search, notified the Department of Revenue that the erimi-nal case was being dismissed, informed the Department that the prosecuting attorney would be asking the Department to begin collection proceedings, and attended the execution of the tax warrant and the search of Adams' home. Indeed, the link between law enforcement and tax collection is embedded in the statute. The 1996 amendments to the CSET mandate the Department may not commence collection proceedings unless the Department either is ordered to do so in a court's sentencing order, or is notified in writing by the prosecuting attorney of the jurisdiction where the offense occurred that the prosecuting attorney does not intend to pursue erimi-nal charges related to the controlled substance. TC. § 6-7-3-19. -

This brings us to the fourth Wolf factor: whether, if two agencies are involved, there is an explicit and demonstrable understanding between the two. It seems obvious that if the Department must rely upon notification from law enforcement agencies before it may commence collection proceedings, an explicit and demonstrable understanding between the agencies must exist. In any event, the Wolf court explained that in determining whether there is such an understanding between the two governmental agencies, a court may consider the existence of a statutory regime "in which both agencies share resources-particularly resources derived from one of the proceedings." 183 F.3d at 195. The CSET provides for a sharing of resources in the most direct form: it offers a direct economic incentive to law enforcement officers who pursue CSET assessments. The act provides that thirty percent of each assessment is to go to the law enforcement agency that is responsible for the information leading to the assessment, to be used "to conduct criminal investigations." I.C. § 6-7-8-16(b). Similarly, ten percent of CSET money collected each month is awarded to the law enforcement training board to train law enforcement personnel. Id. § 6-7-3-16(c). As Tirado observed, the exclusionary rule is most needed where the concerns of the securing officers are furthered by a successful seizure. In this case the officers not only further their agency's mission; they gain a bounty from a CSET collection.

The fifth Wolf factor is whether the secondary proceeding fell within the "zone of primary interest" of the officers that conducted the search. As the court explained, "Where the relationship between the objectives of the law enforcement agency to which the officer belongs and the secondary proceedings is close, an inference may be drawn that the officers had the use of the evidence in the subsequent proceeding in mind when they made the seizure." Wolf, 13 F.3d at 195. The zone of primary interest of a law enforcement officer is "the apprehension, incapacitation, punishment, and ... rehabilitation of criminals, as well as the possible deterrence of future criminals through the imposition of criminal sanctions." Id. at 194. Because the CSET applies only to eriminal activity, *737its enforcement quite properly falls within the zone of primary interest of a law enforcement officer. Indeed, the funds collected will directly bolster the budget, and presumably the crime-fighting ability, of the officer's law enforcement agency. The Willie Sutton principle applies here-the collection of the tax is where the money is.

In sum, it seems to me that these general principles all cut in the direction of application of the exelusionary rule. In addition, other courts have found the Fourth Amendment to require exclusion in the specific context of controlled substance tax cases. In Vara v. Sharp, 880 S.W.2d 844 (Tex.App.1994), the Court of Appeals of Texas applied the Wolf factors to the Texas Controlled Substances Tax Act, which is very similar to Indiana's CSET. The court concluded the federal exelusion-ary rule applied, and the provision of the Texas statute that prohibited application of the exclusionary rule violated the United States Constitution. Id. at 852. The Vara court pointed out that the exclusionary rule has been applied in civil forfeiture proceedings because of their quasi-criminal nature. Id. at 851 (citing One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 85 S.Ct. 1246, 14 L.Ed.2d 170 (1965)). The court also noted the United States Supreme Court has held that certain constitutional protections normally reserved for criminal proceedings apply to civil proceedings of a quasi-criminal nature. Id. (citing Austin v. United States, 509 U.S. 602, 113 S.Ct. 2801, 125 L.Ed2d 488 (1993)). In Austin, the Supreme Court held that forfeiture proceedings "historically have been understood, at least in part, as punishment," and were therefore subject to the limitations of the Eighth Amendment's excessive fines clause. 509 U.S. at 618, 113 S.Ct. 2801. Under this line of cases, the more punitive the proceeding, the greater the constitutional protections afforded and the more persuasive the argument for application of the exclusionary rule.

For all of these reasons, I believe the Fourth Amendment interest in deterring illegal searches and seizures outweighs the costs of excluding illegally obtained evidence in a CSET proceeding. The cost of application of the exelusionary rule in tax collection proceedings is merely to impair the State's ability to collect this fine clothed as a tax. It may be something of an overstatement to say, as the Court of Appeals did in Adams' eriminal case, that if the exclusionary rule does not apply to CSET proceedings, there is "absolutely no downside risk to officers illegally seizing drug evidence." Adams v. State, 726 N.E.2d 390, 395 (Ind.Ct.App.2000). But it is not an overstatement to say that the incentive to search without a warrant is significant if very substantial financial penalties may be recovered for the seizing agency. That puts all citizens at risk of overzealous enforcement. The Fourth Amendment strikes that balance in favor of application of the exelusionary rule.

DICKSON, J., concurs.

. As the majority correctly notes, Adams does not argue that the search and seizure provision of the Indiana Constitution requires a different result. That issue is not before us.

. See, eg., Pizzarello v. United States, 408 F.2d 579, 586 (2nd Cir.1969) (evidence unlawfully seized by federal Treasury agents inadmissible in federal wagering excise tax assessment); United States v. Blank, 261 F.Supp. 180, 184 (N.D.Ohio 1966) (evidence unlawfully seized by IRS agents inadmissible in federal wagering excise tax assessment); Powell v. Zucker, 366 F.2d 634, 640 (D.C.Cir.1966) (evidence unlawfully seized by Air Force special agents inadmissible in civilian employee discharge proceeding); State of Iowa v. Union Asphalt & Roadoils, Inc., 281 F.Supp. 391, 407 (S.D.Iowa 1968) (evidence unlawfully seized by agents of the Iowa Attorney General cannot be offered into evidence by the State as plaintiff in a civil action under the antitrust laws).