Kaley v. United States
2014 U.S. LEXIS 1634, 188 L. Ed. 2d 46, 571 U.S. 320 (2014)
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Rule of Law:
A grand jury's indictment, which establishes probable cause to believe a defendant committed a crime, is conclusive and cannot be challenged by the defendant in a pre-trial hearing seeking to unfreeze assets needed to pay for legal counsel.
Facts:
- Kerri Kaley was a sales representative for a subsidiary of Johnson & Johnson, selling prescription medical devices.
- Kaley and other sales representatives obtained what they described as unwanted, excess, or outmoded medical devices from hospital staff.
- Kerri Kaley and her husband, Brian Kaley, then sold these devices to a company in Florida and distributed the proceeds.
- The Kaleys maintained that their conduct was lawful because the devices were unwanted hospital inventory they were permitted to take.
- In anticipation of a federal indictment, the Kaleys secured a $500,000 line of credit on their home.
- They used these funds to purchase a $500,000 certificate of deposit specifically to pay for their legal defense.
Procedural Posture:
- A federal grand jury indicted Kerri and Brian Kaley on charges including transporting stolen medical devices.
- The Government obtained an ex parte pre-trial restraining order in the U.S. District Court, freezing the Kaleys' assets, including a $500,000 certificate of deposit.
- The Kaleys moved to vacate the restraining order, requesting a post-restraint, pre-trial hearing to challenge the factual basis of the indictment.
- The District Court denied the Kaleys' request for a hearing on the merits of the criminal charges.
- The U.S. Court of Appeals for the Eleventh Circuit, acting as an intermediate appellate court, initially remanded the case for the district court to consider if a hearing was warranted.
- On remand, the District Court agreed to a hearing but limited its scope to the traceability of the assets, not the probable cause of the underlying crime.
- The Kaleys conceded traceability and again sought to challenge the indictment's probable cause, which the District Court denied, and the restraining order was affirmed.
- The Kaleys appealed again to the Eleventh Circuit, which affirmed the District Court's ruling, holding that defendants are not entitled to challenge the grand jury's probable cause determination.
- The United States Supreme Court granted certiorari.
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Issue:
Does an indicted defendant have a Fifth or Sixth Amendment right to a pre-trial hearing to challenge a grand jury's finding of probable cause that they committed a crime, when seeking to unfreeze assets needed for counsel of choice?
Opinions:
Majority - Justice Kagan
No. An indicted defendant does not have a constitutional right to a pre-trial evidentiary hearing to challenge the probable cause finding of the grand jury that underlies the criminal charges. The Court's precedents, particularly United States v. Monsanto, establish that a pre-trial asset restraint is constitutionally permissible based on a finding of probable cause that the property is forfeitable. Historically, a grand jury indictment is treated as a conclusive determination of probable cause for the purpose of initiating a criminal prosecution. If a grand jury's finding is sufficient to justify pre-trial detention—a restraint on liberty—it is also sufficient to justify a pre-trial restraint on property. Allowing a judge to second-guess the grand jury on the foundational issue of a case's merits would create 'legal dissonance' and undermine the grand jury's constitutionally prescribed role. Even under the Mathews v. Eldridge balancing test, the minimal probable value of such a hearing in correcting error does not outweigh the significant governmental interests in preserving forfeitable assets and protecting its trial strategy from premature disclosure.
Dissenting - Chief Justice Roberts
Yes. A defendant whose assets needed for counsel of choice are frozen should have a constitutional right to a pre-trial hearing to challenge the probable cause supporting the indictment. The Sixth Amendment right to counsel of choice is a fundamental, structural component of a fair trial. Allowing a prosecutor to disable a defendant by freezing assets without any opportunity for an adversarial hearing raises profound due process concerns. A hearing would not be a 'relitigation' of the grand jury's finding because a judge would hear the defendant's side for the first time and consider different evidence. The majority's concern about 'dissonance' is unfounded, as judges already conduct similar inquiries in bail hearings without undermining the grand jury. The risk of an erroneous deprivation of the irreplaceable right to chosen counsel is substantial in an ex parte proceeding, and an adversarial hearing provides a crucial safeguard against potential prosecutorial overreach.
Analysis:
This decision solidifies the power of a grand jury's indictment, making its probable cause finding virtually unchallengeable in pre-trial proceedings related to asset forfeiture. It significantly strengthens the government's position in criminal prosecutions by allowing it to freeze a defendant's assets, including those earmarked for legal fees, based solely on an indictment. The ruling narrows the scope of due process hearings available to defendants post-indictment, effectively limiting their ability to contest the merits of the government's case to unfreeze assets and thereby potentially restricting their choice of legal counsel. This precedent reinforces the principle that the Sixth Amendment right to counsel of choice does not grant a defendant the right to use funds that a grand jury has determined are probably the proceeds of a crime.
