United States District Court, D. Arizona
ORDER
Honorable Steven P. Logan United States District Judge
Before
the Court is Defendant Michael Lacey's
(“Lacey”) Motion for Release of Funds Unrelated
to Backpage and Request for Expedited Relief (Doc. 385) (the
“Motion for Release of Funds”) and Lacey's
Motion to Strike the Government's Untimely Opposition to
His Motion for Release of Funds Unrelated to Backpage and
Request for Expedited Relief (Doc. 415) (the “Motion to
Strike”). The Motion for Release of Funds was fully
briefed on December 11, 2018. (Docs. 412, 424) The Motion to
Strike was fully briefed on December 21, 2018. (Docs. 423,
426) The Court's ruling is as follows.
I.
Background
On
March 28, 2018, a federal grand jury returned a ninety-three
count indictment against several Defendants, including Lacey,
alleging that the Defendants engaged in various crimes
related to the operation of the website Backpage.com,
including conspiracy, facilitating prostitution, and money
laundering. (Doc. 3) The indictment also includes forfeiture
allegations.[1] On April 26, 2018, the U.S. District Court
for the Central District of California issued seizure
warrants for certain of Lacey's accounts with the
Republic Bank of Arizona ending in x2485, x1897, and x3126.
(Doc. 412 at 2; Doc. 385 at 1)
On
November 16, 2018, Lacey filed the Motion for Release of
Funds seeking an order from the Court providing equitable
relief from the seizure warrants issued by the Central
District of California. (Doc. 385) On December 3, 2018, Lacey
filed a Notice of Government's Non-Opposition to the
Motion for Release of Funds. (Doc. 403) On December 11, 2018,
the Government filed its response to the Motion for Release
of Funds (Doc. 412), and Lacey filed the Motion to Strike,
citing the response as untimely. (Doc. 415)
II.
Motion to Strike
Lacey
filed the Motion to Strike seeking to strike the
Government's response to his Motion for Release of Funds
because the response was filed more than fourteen days after
service of the Motion for Release of Funds, as required by
Local Rule of Civil Procedure 7.2(c). LRCrim 12.1; (Doc. 415
at 5). In response, the Government argues that its response
was timely because the Motion for Release of Funds is
essentially a motion pursuant to Federal Rule of Criminal
Procedure 41(g), which would allow the Government 60 days to
respond. (Doc. 423 at 2)
The
decision to grant or deny a motion to strike is within the
Court's discretion. Sunburst Minerals, LLC v. Emerald
Copper Corp., 300 F.Supp.3d 1056, 1059 (D. Ariz. 2018);
LRCiv 7.2(i) (stating that the C ourt may, bu t is not r e q
uired to, dispose of the motion summarily). A court may deny
a motion to strike for untimely filing upon a finding of
excusable neglect. Stewart v. Unknown Bezy, 473
Fed.Appx. 752, 753 (9th Cir. 2012). To determine whether a
party's failure to meet a deadline constitutes excusable
neglect, courts must apply a four-factor equitable test,
examining: (1) the danger of prejudice to the opposing party;
(2) the length of the delay and its potential impact on the
proceedings; (3) the reason for the delay; and (4) whether
the movant acted in good faith. Ahanchian v. Xenon
Pictures, Inc., 624 F.3d 1253, 1261 (9th Cir. 2010).
At this
time, the Court declines to exercise its discretion to strike
the Government's response. First, the Court does not find
that the Defendant suffered any prejudice from the untimely
filing, and the Defendant did not identify any prejudice in
his pleadings. Second, the delay had no impact on the
Court's timing in considering the Motion for Release of
Funds or any potential impact on the proceedings in this
case. The Court finds that the Government's reason for
the untimely filing was plausible, as the Motion for Release
of Funds could easily be identified as a motion pursuant to
FRCRP 41(g), despite the fact that the Court declines to
address that issue at this time. Finally, the Court does not
find any evidence that either party acted in bad faith.
Accordingly, the Court finds that the Government has
demonstrated excusable neglect for its untimely filing, and
the Motion to Strike is denied. The Court cautions the
parties that this exercise of discretion will not excuse
untimely filings in the future.
III.
Motion for Release of Funds
Lacey
also seeks an order from the Court releasing the funds held
in three bank accounts identified as “Republic Bank
accounts ending in 2485, 1897, and 3126.” (Doc. 385 at
1) The seizure warrants freezing these accounts were issued
by the Central District of California. (Doc. 424 at 6) At a
hearing held on November 16, 2018, the Court declined to
disrupt the seizure warrants issued by the Central District
of California when similar challenges were brought by other
Defendants (Docs. 360, 365, 376), and the Court found that
the Defendants had a sufficient legal remedy for any
challenges to the seizure warrants issued by the Central
District of California in that district. (Doc. 401 at 56,
57-58, 59)
Lacey
argues that the Court's prior Order is distinguishable
from the present Motion for Release of Funds because he is
not challenging the issuance, authorization or enforcement of
the seizure warrants. (Doc. 424 at 6) Instead, Lacey argues
that the Motion for Release of Funds is seeking equitable
relief from the seizure warrants in the form of releasing the
funds that are being restricted by the warrants. (Doc. 424 at
6) However, Lacey has not provided the Court with any
precedent or persuasive argument for why he cannot seek the
requested equitable relief in the Central District of
California. Quite strangely, Lacey admits that “an
Application and Motion” challenging the seizure
warrants at issue are presently being litigated before the
Central District of California. (Doc. 424 at 8-9, stating
“[w]hile the parties continue to litigate the
Application and Motion in the Central District of California,
the government's handling of that litigation demonstrates
that this Motion should not face the same fate . . .
.”) Therefore, as discussed in the Court's previous
Order, the Court finds that any legal or equitable relief
from the warrants issued by the Central District of
California is properly sought in that district.[2] The Court
declines to exercise its jurisdiction to provide equitable
relief from seizure warrants issued by another court where
the Defendant is able to seek relief from the rendering
court.[3]
Accordingly,
IT IS ORDERED that Defendant's Motion
for Release of Funds Unrelated to Backpage and Request for
Expedited Relief (Doc. 385) is denied; and
IT
IS FURTHER ORDERED that Defendant's Motion to
Strike the Government's Untimely Opposition to His Motion
for Release of Funds Unrelated to Backpage and ...