Baltimore Test Case: Fourth Circuit Rejects Ancient Coin Collectors’ Claims

Fourth Circuit Court of Appeals

The United States Court of Appeals for the Fourth Circuit has issued a unanimous decision rejecting the Ancient Coin Collectors Guild’s (ACCG) effort to strike down U.S. import controls that protect ancient coins from transnational looting and trafficking.

“Having already received two hearty bites at the proverbial apple, …. we are satisfied to reject each of the Guild’s contentions on appeal,” wrote the appellate court in the case of U.S. v. Three Knife-Shaped Coins; 7 Cypriot Coins; 5 Other Chinese Coins.

Memoranda of Understanding (MoU) between the United States and Cyprus and China—adopted respectively in 2007 and 2009 and authorized by the terms of the Convention on Cultural Property Implementation Act (CPIA)—approved American import restrictions on at-risk archaeological and ethnological material from each of these countries. Both bilateral agreements included protections for ancient coins. The ACCG objected, prompting the trade group “to manufacture litigation by deliberately importing restricted ancient Cypriot and Chinese coins into the United States,” said the appeals court.

In its August 7, 2018 ruling, the appellate court wrote that “the Guild has never made a good faith effort to comply with the applicable regulations. In fact, the Guild admits that it ‘deliberately’ and ‘purposefully’ imported … ancient coins, knowing that they were subject to import restrictions, in seeking to engineer this forfeiture action. … The Guild simply implemented a scheme designed to knowingly contravene, and subsequently challenge, a federal law that it opposed.”

The appeals court explained that “[t]he Guild opposed the Cypriot and Chinese MOUs, believing that State Department officials had acted in bad faith …. That belief was bolstered by what the Guild perceived as failures of government officials to comply with the CPIA.”

While noting that the ACCG was “founded … in 2004 in an effort to preempt the imposition of CPIA restrictions on ancient coins,” the circuit judges highlighted that, in 1974, the U.S. became a signatory to the 1970 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership and Cultural Property (the 1970 UNESCO Convention), which was “designed to eradicate the clandestine excavation and illicit trade of ‘cultural property,'” including “‘antiquities more than one hundred years old, such as . . . coins.'”

President Ronald Reagan gave effect to the 1970 UNESCO Convention when he signed the CPIA into law in 1983.

The ACCG sued to contest the CPIA’s import control regimen in 2010, filing its claim in the District Court of Maryland in the case of Ancient Coin Collectors Guild v. U.S. Customs and Border Protection; U.S. Department of State; Assistant Secretary of State, Educational and Cultural Affairs. The test case challenged U.S. Customs’ detention of ancient Cypriot and Chinese coins that the ACCG imported into Baltimore in 2009 from an overseas London dealer.

The district court rejected the ACCG’s legal arguments in 2011, 2014, and again in 2015. The district judge again rejected similar arguments in 2017 in the subsequent forfeiture case of U.S. v. Three Knife-Shaped Coins. Appeals court judges also said no to the trade group’s arguments in 2012 when the case went to the Fourth Circuit Court for the first time. Also in 2012, the circuit court judges denied the group a rehearing. The U.S. Supreme Court, meanwhile, refused to take up an appeal by the ACCG in 2013.

But the Fourth Circuit left the door open to the ACCG to dispute the seizure and forfeiture of the specific coins it imported into Baltimore, while closing the door to contesting the CPIA’s import controls in general. Nevertheless, the ACCG took advantage of the opportunity and renewed its opposition to the CPIA in the case of U.S. v. Three Knife-Shaped Coins, filed by lawyers in the U.S. Attorney’s Office for the District of Maryland in April 2013 in order to forfeit the ancient Cypriot and Chinese coins.

In that case, the Maryland District Court ruled on summary judgment that the CPIA’s import regulations covering ancient coins would remain intact and that the government was entitled to forfeit fifteen ancient coins that Customs detained. The court, meanwhile, handed the ACCG a victory by ordering the government to return seven ancient coins to the group.

The ACCG appealed, prompting the Fourth Circuit to hear the Guild’s case a second time, and leading to this month’s appellate decision.

In its opinion of August 7, 2018 (docket 17-1625), the court of appeals again rejected the ACCG’s “first discovery” argument, which the trade group consistently advanced throughout its eight years of litigation. It is the argument that the government must prove that coins seized by Customs were, in the appellate court’s words, “(1) first discovered within and hence subject to the export control of the State Party for which restrictions were granted (“first discovery”); and (2) illegally removed from the State Party’s control after those restrictions were granted (“illegal removal”).”

The Fourth Circuit noted, “The Guild correctly stresses that, under the CPIA, the executive branch can only impose restrictions on archaeological or ethnological material that was first discovered within the State Party that requested the restrictions, i.e., the State Party’s cultural patrimony.” But the appellate court concluded that the ACCG was wrong “in asserting that the government must prove the first discovery element at every stage of the CPIA process—initially in the promulgation of the designated lists [specifying the types of archaeological and ethnological material covered by CPIA import restrictions], then in the detention of the restricted items by Customs, and again as part of establishing a prima facie forfeiture case.” The court of appeals wrote, “Contrary to the Guild’s erroneous reading of the CPIA, the first discovery requirement only delimits what material the executive branch can place on a restricted list. Once the material is properly included on a list, or, in other words, ‘designated,’ the government no longer must establish the first discovery element with regard to particular imported material.”

The appeals court also rejected the ACCG’s claim that the government must prove the illegal removal of the seized coins from Cyprus and China. “Simply put,” the court wrote, “we reject the Guild’s interpretation of the CPIA on this point.”

The appeals court helpfully clarified the burden of proof in a CPIA cultural property forfeiture case, explaining that “the government must establish the following … : (1) that the material [seized] is covered by an MOU …; (2) that the [archaeological and ethnological] material is ‘listed by regulation under [CPIA] section 2604‘…; and (3) that the listing is ‘sufficiently specific and precise’ to ensure both that ‘the import restrictions . . . are only applied to the archeological or ethnological material covered by the [MOU],’ and that ‘fair notice is given to importers and other persons as to what material is subject to such restrictions’ ….” If the government satisfies these requirements in its prima facie case, then the burden shifts to the importer to prove that the cultural heritage material is not subject to forfeiture.

The ACCG also failed to convince the appeals court that an importer lacks adequate notice of exactly which imports are restricted and which are permitted by the CPIA. In the case at hand, Guild claimed that the CPIA’s companion regulations at 19 C.F.R. § 12.104, specifically describing the import restrictions on cultural heritage material, necessarily conflicted with the CPIA’s terms found in 19 U.S.C. § 2601(2). The court ruled that there was no violation of the ACCG’s due process rights to fair notice and that there was no drafting error within the rules. In so ruling, the court offered a pointed observation:

In any event, the Guild’s asserted conflict … fails to make the government’s import restriction scheme so vague and ambiguous that a reasonable person would not know which ancient coins are subject to the restrictions. Indeed, the Guild concedes that it used the Cypriot and Chinese Designated Lists as guideposts in deciding which ancient coins were likely to be seized by Customs. The fact that the Guild—with the assistance of [the London dealer]—correctly identified the coins subject to the import restrictions, shows beyond peradventure that importers of ordinary intelligence are able to ascertain the conduct that contravenes federal law.

Meanwhile, in a footnote, the court of appeals answered “no” to the question “Do CPIA Import Restrictions Constitute an Embargo?,” commenting that it is proper for a federal district court to hear a CPIA import control case as opposed to the Court of International Trade (CIT) in New York. The CIT is the court that has “embargo jurisdiction.”

Judge Robert Bruce King wrote the appeals court decision in U.S. v. Three Knife-Shaped Coins. Circuit Judges G. Steven Agee and Stephanie Dawn Thacker joined.