Okay, exporters, raise your hands if this has happened to you. You are exporting goods and some over excited and under informed U.S. Customs and Border Patrol Agent wrongfully seizes the item. For example, he decides that the EAR99 spark plugs that you are exporting are ECCN 3A228 triggered spark gaps. You file the necessary paperwork in response to the notice of seizure. In the meantime, your customer sues you for non-delivery. CBP finally admits after consulting with BIS that these are spark plugs and not triggered spark gaps and, six months later, agrees to return them. But here’s the catch:  they will return them only if you sign a standard release form absolving CBP from any liability for having wrongfully seized your spark plugs. Reluctantly you sign the papers, wait for your spark plugs and settle the lawsuit with your customer for unreimbursable damages caused by CBP.

Of course, the bitter taste here comes from the fact that these spark plugs are yours. You have the right to them unconditionally. You don’t have to waive your rights or promise to run naked through a public square as a prerequisite to the return of what is yours and which CBP should never have seized in the first place.

Now consider the case of Anthonia Nwaorie, a nurse who was traveling to Nigeria to establish a medical clinic for women and children in Nigeria. She had with her $41,377.  This was money which she had saved from her nurse’s salary.  It was intended to seed money for the clinic.   All of the money was seized by CBP at the airport because she did not file a declaration of the cash at the CBP Office six miles from the airport just before her departure.

When she received the Notice of Seizure under the Civil Asset Forfeiture Reform Act (“CAFRA”), she elected the option of having the matter referred to the U.S. Attorney for judicial resolution and filed that election along with the required CAFRA form. When the U.S. government did not file a judicial forfeiture action within 90 days of receiving the claim form, CAFRA required the government to “promptly release” the seized property and forbade the government from taking “any further action to effect the civil forfeiture of such property.” 18 U.S.C. § 983(a)(3)(B)(ii).

Thereafter CBP mailed her the all-too-familiar letter saying it would give her cash back to her but only if she signed a hold harmless agreement which would prevent her from filing suit against the government and would require her to indemnify the government against any future claims made against the released property. The letter also said that if she did not sign the hold harmless agreement within 30 days, administrative procedures to forfeit the cash would be instituted. Ms. Nwaorie refused to sign and instead called a lawyer. The Institute for Justice then took on her case, and, on May 2, filed a class action lawsuit against CBP alleging that CBP had no right to condition the return of forfeited funds on a hold harmless agreement. The suit requests return of Ms. Nwaorie’s seized property as well as that of the class members who also refused to sign the hold harmless agreement. It also seeks a judgment enjoining CBP in the future from conditioning release of seized funds on the hold harmless agreement.

The theory behind the suit is simple. Nothing in CAFRA authorizes conditioning the release of funds on a hold harmless agreement. Moreover, doing so violates the specific requirement to “promptly release” the funds if no forfeiture action has been filed within the statutorily mandated time period. And, of course, CAFRA’s prohibition on further forfeiture proceedings directly prohibits CBP from threatening administrative forfeiture if the hold harmless agreement is not signed.

Although this seizure, because it involved a currency reporting violation, was under CAFRA, the same logic would apply to seizures under the Tariff Act of 1930. If an exporter files a claim under 19 U.S.C. § 1608 and prevails in the subsequent federal court litigation or the government decides under 19 U.S.C. § 1604 not to prosecute the forfeiture action, nothing in the statute permits CBP to condition return upon a hold harmless or waiver of rights.

One thing to consider while waiting for the outcome of this lawsuit is this:  when signing and returning the hold harmless agreement, send it back with a cover letter indicating that the hold harmless was not signed voluntarily but was signed because of CBP’s unlawful demand that it be signed as a condition to return property that is lawfully yours.  Be aware, of course, that this is not something that should be done where Customs has lawfully seized the property and has decided to mitigate the forfeiture.