Smoke Shop, LLC v. United States

In the

United States Court of Appeals

For the Seventh Circuit

____________________

No. 13-3921

THE SMOKE SHOP, LLC,

Plaintiff-Appellant,

v.

UNITED STATES OF AMERICA,

Defendant-Appellee.

____________________

Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 2:12-cv-01186 — Rudolph T. Randa, Judge.

____________________

ARGUED JUNE 2, 2014 — DECIDED AUGUST 4, 2014

____________________

Before FLAUM and WILLIAMS, Circuit Judges, and DOW,

District Judge. ∗

FLAUM, Circuit Judge. In 2012, the Drug Enforcement

Administration seized over $110,000 worth of smokable “in-

cense products” from a Delavan, Wisconsin retailer called

The Smoke Shop. At the time of seizure, the DEA believed

∗ Of the Northern District of Illinois, sitting by designation.

2 No. 13-3921

that the incense products, which contained synthetic canna-

binoids, were controlled substance analogues and therefore

illegal under federal drug laws. Smoke Shop contested this

assertion and moved for the return of its inventory in federal

district court. Later, the substances in the incense products

were scheduled by the Attorney General, rendering them

contraband. This eliminated Smoke Shop’s hopes of recover-

ing its goods, so it brought a conversion action against the

federal government for damages under the Federal Tort

Claims Act.

The district court dismissed Smoke Shop’s FTCA suit on

two alternative grounds. It found, first, that the government

enjoyed sovereign immunity from Smoke Shop’s suit under

the detained-goods exception to the FTCA. Second, the court

found that Smoke Shop failed to exhaust its administrative

remedies because it did not submit a claim for damages to

either the DEA or the Department of Justice before filing

suit. We affirm on both grounds.

I. Background

This case is before us on a motion to dismiss, so we rely

on the allegations in the plaintiff’s complaint, without

vouching for their truth. Golden v. State Farm Mut. Auto. Ins.

Co., 745 F.3d 252, 255 (7th Cir. 2014).

The Smoke Shop is a small retail store in downtown

Delavan that sells assorted novelties, tobacco products,

smoking accessories, and what Smoke Shop describes as “in-

cense products.” As the government’s testing later revealed,

the incense products in question contained two marijuana-

mimicking synthetic cannabinoids, XLR-11 and UR-144. See

generally Eliza Gray, The Rise of Fake Pot, TIME, Apr. 21, 2014,

No. 13-3921 3

at 26. Despite these intoxicating properties, Smoke Shop’s

complaint avows that the incense products are marked

“NOT FOR HUMAN CONSUMPTION,” and have “numer-

ous legitimate and legal uses … ranging from religious cer-

emonies to the removal of pet odors.”

On September 13, 2012, two DEA agents and three local

police officers came into the store and seized 8,000 packages

containing several different brands of the incense products.

The agents told Smoke Shop’s owner, David Yarmo, that

they were taking the seized inventory to the local police sta-

tion for testing, and that Smoke Shop would get back what-

ever was not found to be illegal. Believing that the products

contained no controlled substances, Yarmo consented to

their seizure.

Several days later, Yarmo went to the local police station

to inquire about his inventory. He was told that the DEA

had shipped the products to a federal testing facility, so

Yarmo next turned to the DEA. Those agents told Yarmo

there was “no way” that the DEA would ever return the in-

cense products and that if Yarmo wanted to get the products

back he would have to “sue them.”

Smoke Shop then filed a motion for the return of proper-

ty in federal district court. See Fed. R. Crim. P. 41(g) (“A per-

son aggrieved by an unlawful search and seizure of property

or by the deprivation of property may move for the proper-

ty’s return … in the district where the property was

seized.”). In response, the government filed a letter inform-

ing the district court that half of the seized products had

tested positive for XLR-11 and UR-144, which the DEA con-

sidered to be controlled substances under the Controlled

Substances Analogue Act, see 21 U.S.C. §§ 802(32), 813,

4 No. 13-3921

841(a)(1). Because the tested incense products were consid-

ered contraband, the government explained, the DEA could

not return them. The letter also indicated that the remaining

products were due to be tested.

The district court held a hearing on the Rule 41(g) motion

in which Smoke Shop’s and the government’s experts debat-

ed whether XLR-11 and UR-144 constituted controlled sub-

stance analogues, and the parties continued to brief the is-

sue. While this dispute was ongoing, however, the Attorney

General exercised his power under the Controlled Substanc-

es Act to schedule XLR-11 and UR-144 as schedule I con-

trolled substances on a temporary basis “to avoid an immi-

nent hazard to the public safety.” 21 U.S.C. § 811(h).

As a result of the Attorney General’s action, the district

court dismissed Smoke Shop’s Rule 41(g) motion. The court

opined that the Attorney General’s “decision to schedule

UR-144 and XLR-11 suggests that they were not analogues in

the first instance, and now, Mr. Yarmo must recoup his loss-

es through further litigation against the government.” The

Smoke Shop, LLC v. United States, 949 F. Supp. 2d 877, 879

(E.D. Wis. 2013). Accordingly, the court suggested that

Smoke Shop amend its pleadings to effect this “further liti-

gation.”

Smoke Shop took the court up on its suggestion and filed

an amended complaint against the United States for unlaw-

ful conversion under the Federal Tort Claims Act, seeking

compensatory damages. Smoke Shop alleged that the gov-

ernment took its incense products—collectively worth about

$110,000—with no legal grounds to do so, and that the gov-

ernment only later declared the substances in the products

illegal.

No. 13-3921 5

The district court dismissed Smoke Shop’s complaint un-

der Federal Rule of Civil Procedure 12(b)(6) on two inde-

pendent grounds. First, the court found that Smoke Shop’s

action was barred by sovereign immunity. Though the FTCA

waives the federal government’s immunity for the torts of its

employees, 28 U.S.C. § 1346(b)(1), claims arising from the

detention of goods by law enforcement officers are excepted

from that waiver, id. § 2680(c). To make matters more com-

plicated, the Civil Asset Forfeiture Reform Act amended

§ 2680(c) to “re-waive” the government’s immunity in deten-

tion-of-goods cases where the goods were “seized for the

purpose of forfeiture” and certain other requirements are

met. See id. § 2680(c)(1)–(4). However, the district court

found that CAFRA’s re-waiver did not apply to Smoke

Shop’s claim because the DEA did not, in fact, seize the in-

cense products for the purpose of forfeiture—it seized them

in connection with a criminal investigation.

The district court also concluded that Smoke Shop failed

to exhaust its administrative remedies. Before a plaintiff can

bring an FTCA action in court, she must present an FTCA

“claim” to the appropriate federal agency within two years

after the claim accrues. See id. §§ 2401(b), 2675(a). The district

court found that Smoke Shop’s Rule 41(g) motion did not

qualify as a claim for money damages under § 2675(a), and

that its FTCA action was therefore barred.1

1 The government moved to dismiss the complaint under both Rule

12(b)(1) (lack of subject-matter jurisdiction) and Rule 12(b)(6) (failure to

state a claim). The district court correctly dismissed the complaint pur-

suant to Rule 12(b)(6). We have held that “the statutory exceptions enu-

merated in [28 U.S.C.] § 2680(a)–(n) … limit the breadth of the Govern-

ment’s waiver of sovereign immunity [under the FTCA], but they do not

6 No. 13-3921

II. Discussion

We review the district court’s grant of a motion to dis-

miss de novo. Augutis v. United States, 732 F.3d 749, 752 (7th

Cir. 2013).

A. The FTCA’s detained-goods exception and CAFRA’s re-

waiver provision

The detained-goods exception to the FTCA preserves the

federal government’s immunity from suits arising from “the

detention of any goods, merchandise, or other property by

any officer of customs or excise or any other law enforce-

ment officer.” 28 U.S.C. § 2680(c); see also Ali v. Fed. Bureau of

Prisons, 552 U.S. 214 (2008) (holding that § 2680(c) covers law

enforcement officers of any kind). But in 2000, Congress,

“reacting to public outcry over the government’s too-zealous

pursuit of civil and criminal forfeiture,” passed the Civil As-

set Forfeiture Reform Act. United States v. Khan, 497 F.3d 204,

208 (2d Cir. 2007). Among other reforms, CAFRA “re-

waived” the government’s immunity—that is, once more

opened the government up to suit under the FTCA—for tort

actions stemming from law-enforcement detentions of prop-

erty. But CAFRA’s exception-to-the-exception only applies if

four conditions are met:

accomplish this task by withdrawing subject-matter jurisdiction from the

federal courts.” Parrott v. United States, 536 F.3d 629, 634 (7th Cir. 2008).

Similarly, the FTCA’s administrative exhaustion requirement is better

thought of as a “condition precedent to the plaintiff’s ability to prevail,”

not a jurisdictional rule (as we will discuss in part II.B). Kanar v. United

States, 118 F.3d 527, 530 (7th Cir. 1997); accord Glade ex rel. Lundskow v.

United States, 692 F.3d 718, 723 (7th Cir. 2012).

No. 13-3921 7

(1) the property was seized for the purpose of

forfeiture under any provision of Federal law

providing for the forfeiture of property other

than as a sentence imposed upon conviction of

a criminal offense;

(2) the interest of the claimant was not forfeit-

ed;

(3) the interest of the claimant was not remitted

or mitigated (if the property was subject to for-

feiture); and

(4) the claimant was not convicted of a crime

for which the interest of the claimant in the

property was subject to forfeiture under a Fed-

eral criminal forfeiture law.

28 U.S.C. § 2680(c).

We must decide whether the DEA’s seizure and deten-

tion of Smoke Shop’s incense products qualifies for

CAFRA’s re-waiver. The first condition is the one the parties

contest: whether the products were “seized for the purpose

of forfeiture,” a phrase to which our court has yet to give a

definitive construction.

Adopting the reasoning of Foster v. United States, 522 F.3d

1071 (9th Cir. 2008), the district court found that CAFRA’s

re-waiver did not apply to these facts. Foster interpreted the

requirement that the property have been “seized for the

purpose of forfeiture” to mean that the property must have

been seized solely for the purpose of forfeiture. Id. at 1075.

The Ninth Circuit thus held that “the fact that the govern-

ment may have had the possibility of a forfeiture in mind

when it seized Plaintiff’s property” was insufficient to bring

8 No. 13-3921

the detention within the scope of CAFRA’s re-waiver “when

criminal investigation was [also] a legitimate purpose of the

initial seizure.” Id. In other words, the Ninth Circuit inter-

preted § 2680(c)(1) to preserve the government’s immunity

whenever a federal officer seized the plaintiff’s property

pursuant to a criminal investigation at least in part—even if

the officer may have envisioned that the goods would be for-

feited down the line.

The Ninth Circuit reasoned that its interpretation gave

effect to the congressional purposes behind the FTCA’s de-

tained-goods exception, including “ensuring that certain

governmental activities not be disrupted by the threat of

damage suits.” Kosak v. United States, 465 U.S. 848, 858 (1984)

(internal quotation marks omitted); see also Foster, 522 F.3d at

1078. Reading CAFRA’s re-waiver as extending to any law

enforcement investigation in which the officers might con-

template forfeiture would undermine that objective. For in-

stance, “[a]ny waiver of sovereign immunity for damage to

[property seized during an investigation] could hamper law

enforcement officers’ effectiveness in carrying out the im-

portant purposes underlying the seizure and redirect their

attention from the possibility of danger in executing the

search warrant to the possibility of civil damages.” Foster,

522 F.3d at 1078.

The Ninth Circuit also grounded its reading in

§ 2680(c)(1)’s text. The court explained that “the statute’s use

of the definite phrase ‘the purpose of forfeiture,’ as opposed

to an indefinite phrase ‘a purpose of forfeiture,’ suggests that

the property be seized only for the purpose of forfeiture. Had

Congress drafted the text to provide for re-waiver ‘if the

property was seized and forfeited,’ then it would apply when

No. 13-3921 9

both purposes underlie a single seizure. Congress, however,

did not do so.” Id. at 1077–78.

Our court has not adopted Foster’s “sole-purpose test” in

applying CAFRA’s re-waiver provision. However, we em-

ployed Foster in an unpublished decision (as have two other

circuits). Pearson v. United States, 373 F. App’x 622, 624 (7th

Cir. 2010); Shigemura v. United States, 504 F. App’x 678, 680

(10th Cir. 2012); Bowens v. U.S. Dep’t of Justice, 415 F. App’x

340, 343 (3d Cir. 2011). And in another case, we more or less

applied Foster’s logic: we found that because the government

demonstrated that a detention occurred “for a criminal in-

vestigation and not for purposes of forfeiture,” CAFRA’s re-

waiver did not apply. On-Site Screening, Inc. v. United States,

687 F.3d 896, 898 (7th Cir. 2012).

We now formally adopt Foster’s sole-purpose test. We

agree that an alternative reading of § 2680(c)(1)—one that

would waive the government’s immunity whenever an of-

ficer envisioned the possibility of the seized goods’ forfei-

ture—would eviscerate the FTCA’s detained-goods excep-

tion in the context of criminal investigations. When the gov-

ernment seizes property for law enforcement purposes, “in

practice, forfeiture often follows eventually. Thus, in every

criminal seizure the government necessarily must anticipate

at least the possibility of a future forfeiture, a dual motiva-

tion that would be nearly impossible to disprove in any par-

ticular case.” Foster, 522 F.3d at 1079.

We would be wary of the Foster interpretation if it mar-

ginalized CAFRA’s re-waiver. After all, Congress meant to

carve out some category of detained-goods suits and render

the government liable on those claims. But the legislative

history of CAFRA suggests that the seizure of property pur-

10 No. 13-3921

suant to a criminal investigation was not the problem Con-

gress was seeking to address. Instead, CAFRA’s reforms tar-

geted the abuse of forfeiture actions, which—like criminal in-

vestigations—are often carried out by law enforcement pur-

suant to seizure warrants. See 18 U.S.C. § 981(b)(2) (“Seizures

pursuant to this section shall be made pursuant to a warrant

obtained in the same manner as provided for a search war-

rant under the Federal Rules of Criminal Procedure … .”). A

House Judiciary Committee report shows that Congress was

predominantly concerned with making property owners

whole where the government unsuccessfully brings a forfei-

ture action and damages or loses the seized property while

the action is pending. See H.R. Rep. No. 106–192, at 18 (1999)

(“Seized property awaiting forfeiture can be quickly dam-

aged … . It cannot be categorized as victory when a boat

owner gets back, for instance, a rusted and stripped hulk of a

vessel.”). In an earlier report, the House Judiciary Commit-

tee described CAFRA’s proposed changes to the FTCA as

allowing “property owners who prevail in forfeiture actions

[to] sue the government for any negligent destruction or

damage to the property.” H.R. Rep. No. 105-358, at 49 (1997).

Our adoption of Foster thus leaves CAFRA’s exception intact

in the areas where it was intended to be employed.

Indeed, Smoke Shop frames its argument in Foster’s

terms. That is, Smoke Shop argues that the incense products

were seized for the sole purpose of forfeiture—which, if

plausibly alleged in the complaint, would permit Smoke

Shop to take advantage of CAFRA’s re-waiver. In support of

its claim that the DEA was not pursuing a criminal investi-

gation when it seized the products, Smoke Shop points out

that the DEA did not have a search warrant to search the

store, and that no federal criminal charges were ever filed

No. 13-3921 11

against the business or Yarmo. Smoke Shop also stresses that

a DEA agent told Yarmo that he would never get his prod-

ucts back and that he would have to file suit. Smoke Shop

acknowledges that the government never initiated a forfei-

ture action with respect to the seized goods. But it argues

that a formal action was unnecessary, because under 21

U.S.C. § 881(f), controlled substances are summarily forfeit-

ed. See id. § 881(f)(1) (“All controlled substances in schedule I

or II that are possessed, transferred, sold, or offered for sale

… shall be deemed contraband and seized and summarily

forfeited to the United States.”). Because the government

viewed these incense products as contraband all along,

Smoke Shop argues, it must have envisioned the products’

forfeiture under 21 U.S.C. § 881 from the moment it seized

them.

But Smoke Shop’s theory is unpersuasive. First, though it

invokes 21 U.S.C. § 881 to support its argument that the sei-

zure was “for the purpose of forfeiture” under 28 U.S.C.

§ 2680(c)(1), Smoke Shop does not realize that § 881 would

seem to wholly undermine its case that it meets the condi-

tion set out in § 2680(c)(2): that “the interest of the claimant

was not forfeited.” Putting aside the parties’ disagreement

over whether the incense products constituted controlled

substance analogues at the time of their initial seizure, there

is now no dispute that these products are schedule I con-

trolled substances as a result of the Attorney General’s

scheduling them. As such, by operation of § 881(f)(1), Smoke

Shop’s interest in the products was forfeited. And this result

makes sense: we imagine that Congress did not intend for

plaintiffs to obtain damages for lost items that were eventu-

ally deemed contraband (even if the plaintiff tried to fight

that designation initially, as Smoke Shop did here). That

12 No. 13-3921

said, the government never raised this argument about the

interaction between 21 U.S.C. § 881(f)(1) and 28 U.S.C.

§ 2680(c)(2).

In any event, Smoke Shop’s complaint fails to make out a

plausible case that its situation qualifies for § 2680(c)(1).

Though we accept the facts alleged in the complaint as true,

Smoke Shop’s assertion that “[t]he defendants seized the

property for the purpose of forfeiture” is the type of legal

conclusion not entitled to this presumption of truth. Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009). Putting statements like these

aside, we must determine whether the remaining factual al-

legations “plausibly suggest an entitlement to relief.” Id. at

681. “If the allegations give rise to an obvious alternative ex-

planation, then the complaint may stop short of the line be-

tween possibility and plausibility of entitlement to relief.”

McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011)

(alterations, citations, and quotation marks omitted).

When examined in context, the facts alleged in Smoke

Shop’s complaint give rise to an obvious alternative explana-

tion: that the DEA seized Smoke Shop’s inventory in connec-

tion with its investigation of a possible drug crime. DEA

agents raided the store with local law enforcement officers in

tow. The agents did not have a search warrant, but they

didn’t need one, as Yarmo consented to the search and sei-

zure of his inventory. All along, the DEA maintained that it

was testing the products to see if they contained an illegal

substance under federal drug laws. And sure enough, tests

revealed that the products did contain substances that the

government considered illegal under the Controlled Sub-

stances Analogue Act.

No. 13-3921 13

True, the government never charged Smoke Shop with a

crime. But just because the government had not yet indicted

does not mean that we must assume—contrary to the cir-

cumstances of the seizure and testing—that one was not con-

templated. And in fact, Smoke Shop tells us in its brief on

appeal that six months after the seizure, Yarmo was served

with a grand jury subpoena seeking financial documents

and other information from Smoke Shop. We may “consider

new factual allegations raised for the first time on appeal

provided they are consistent with the complaint,” Chavez v.

Ill. State Police, 251 F.3d 612, 650 (7th Cir. 2001), and this alle-

gation further confirms our commonsense intuition that the

DEA was conducting a criminal investigation. Cf. McCauley,

671 F.3d at 616 (“Making the plausibility determination is ‘a

context-specific task that requires the reviewing court to

draw on its judicial experience and common sense.’” (quot-

ing Iqbal, 556 U.S. at 679)). Thus, Smoke Shop has not plausi-

bly alleged that the DEA seized the incense products solely

for the purpose of forfeiture. This situation therefore falls

outside the scope of CAFRA’s re-waiver provision—and

within the scope of the detained-goods exception—and the

district court was right to dismiss Smoke Shop’s FTCA suit

on this ground.

B. Presentation of a claim under 28 U.S.C. § 2675(a)

We also affirm the district court on its alternative hold-

ing: Smoke Shop’s failure to exhaust its administrative rem-

edies before filing its FTCA action.

28 U.S.C. § 2675(a) states that “[a]n action shall not be in-

stituted upon a claim against the United States for money

damages for … loss of property … unless the claimant shall

have first presented the claim to the appropriate Federal

14 No. 13-3921

agency and his claim shall have been finally denied by the

agency in writing.” In other words, the FTCA bars would-be

tort plaintiffs from bringing suit against the government un-

less the claimant has previously submitted a claim for dam-

ages to the offending agency, because Congress wants agen-

cies to have an opportunity to settle disputes before defend-

ing against litigation in court. See McNeil v. United States, 508

U.S. 106, 112 & n.7 (1993).

The term “claim” is undefined in the statute. But a corre-

sponding regulation instructs that a proper administrative

claim under the FTCA contains four elements: (1) notifica-

tion of the incident; (2) a demand for money damages in a

sum certain; (3) the title or legal capacity of the person sign-

ing; and (4) evidence of the person’s authority to represent

the claimant. 28 C.F.R. § 14.2(a); see also Kanar v. United

States, 118 F.3d 527, 528 (7th Cir. 1997).

Several courts consider 28 U.S.C. § 2675(a)’s exhaustion

requirement to go to the court’s subject-matter jurisdiction

over the FTCA action, see, e.g., Valadez-Lopez v. Chertoff, 656

F.3d 851, 855 (9th Cir. 2011); Estate of Trentadue ex rel. Aguilar

v. United States, 397 F.3d 840, 852 (10th Cir. 2005), and one of

our early decisions confronting the meaning of the FTCA’s

administrative claim requirement, Best Bearings Co. v. United

States, 463 F.2d 1177, 1179 (7th Cir. 1972), operated under

this same assumption. For many of those courts (though not

Best Bearings), it followed that the definition in 28 C.F.R.

§ 14.2(a) was not authoritative, because the Attorney General

lacked the delegated power from Congress to determine the

extent of Article III jurisdiction. See, e.g., GAF Corp. v. United

States, 818 F.2d 901, 920 & n.110 (D.C. Cir. 1987).

No. 13-3921 15

However, our court no longer treats § 2675(a) as a juris-

dictional prerequisite. See Glade ex rel. Lundskow v. United

States, 692 F.3d 718, 723 (7th Cir. 2012). And for good reason:

For the federal courts to adjudicate a case, there must be a

case or controversy within the meaning of Article III (a re-

quirement not at issue here), and a statutory grant of author-

ity (here, the provision of the FTCA, 28 U.S.C. § 1346(b)(1),

granting federal courts the authority to adjudicate actions for

the torts of government employees). Section 2675(a)’s ex-

haustion requirement is neither of these; it is better charac-

terized as a “condition precedent to the plaintiff’s ability to

prevail.” Kanar, 118 F.3d at 530. Read this way, the word

“claim” in § 2675(a) is simply a term in need of definition—

i.e., a statutory gap for the Attorney General to fill pursuant

to congressional delegation. Id. And our reading of § 2675(a)

better aligns with the Supreme Court’s guidance that the la-

bel “jurisdictional” should be used “not for claim-processing

rules, but only for prescriptions delineating the classes of

cases … falling within a court’s adjudicatory authority.”

Kontrick v. Ryan, 540 U.S. 443, 455 (2004); accord Gonzalez v.

Thaler, 132 S. Ct. 641, 648–49 (2012).

In any event, as a result of our decision in Kanar, there is

not much of a practical difference between our circuit’s posi-

tion—which considers 28 C.F.R. § 14.2(a) to be definitional—

and the circuits that consider § 2675(a) as limiting the federal

courts’ power to adjudicate FTCA actions. The courts in the

latter category require a claimant to file “(1) a written state-

ment sufficiently describing the injury to enable the agency

to begin its own investigation, and (2) a sum certain damag-

es claim.” Blair v. IRS, 304 F.3d 861, 864 (9th Cir. 2002); accord

GAF Corp., 818 F.2d at 919 n.106 (collecting cases). By its

terms, the regulation demands slightly more. See 28 C.F.R. §

16 No. 13-3921

14.2(a) (including the additional requirement that the person

signing establish her title and authority to pursue the claim).

But in Kanar, we reasoned that § 2675(a) does not require

would-be FTCA plaintiffs to comply with “every jot and tit-

tle” of the regulation. 118 F.3d at 530. So long as the proper

agency had the opportunity to settle the claim for money

damages before the point of suit, we said, technical deficien-

cies in the administrative claim could well be a case of “[n]o

harm, no foul.” Id. at 531. Thus, the underlying purpose of

our approach to § 2675(a)’s requirement—like the courts that

eschew the regulation—is to ensure that the claimant “does

not hinder the settlement process that a claim is supposed to

initiate.” Id.

Smoke Shop admits that it did not file a formal adminis-

trative claim with the DEA or the U.S. Attorney’s office be-

fore filing its FTCA action. But Smoke Shop maintains that

its motion to the district court under Federal Rule of Crimi-

nal Procedure 41(g) gave the government constructive notice

of its claim—so, no harm, no foul. The district court disa-

greed, concluding that asking for the return of seized prop-

erty is not the equivalent of presenting a proper administra-

tive claim under the FTCA.

Smoke Shop’s Rule 41(g) motion certainly satisfied the

first, third, and fourth requirements of 28 C.F.R. § 14.2(a).

But the government maintains that the Rule 41(g) motion

lacked the second requirement: a demand for money dam-

ages in a sum certain. Smoke Shop merely asked for the in-

cense products back—it made no claim to money damages

should the property not be returned.

Smoke Shop’s omission of the money-damages element

is only fatal if it can be said to have “hinder[ed]” or “thwart-

No. 13-3921 17

ed” the settlement process “that Congress created as a prel-

ude to litigation.” Kanar, 118 F.3d at 531. Unfortunately for

Smoke Shop, we have never held that a request for the re-

turn of property—unaccompanied by a statement that the

claimant would seek money damages if the property was

not returned—satisfies § 2675(a). In fact, in Best Bearings, we

said just the opposite. 463 F.2d at 1179 (“The request for re-

turn of the [seized] bearings was not presentation of plain-

tiff’s claim to the government agency as required by

§ 2675(a) … .”). True, Best Bearings assumed that § 2675(a)

was a jurisdictional requirement, a position we have now

abandoned. See Glade, 692 F.3d at 723. Yet this conceptual

shift does not undermine the logical underpinnings of Best

Bearings’ holding that a request for the return of seized

property is not the equivalent of a demand for money dam-

ages. Yarmo did submit a declaration that itemized the

seized inventory, including each product’s respective value.

But it was by no means clear that Smoke Shop was asking

the government for money damages in those amounts in lieu

of the property’s return—it seems that Yarmo merely want-

ed to convey to the court the importance of the loss to his

business. Thus, Smoke Shop simply did not tell the govern-

ment that it intended to bring a tort suit against it.

Smoke Shop argues that it put the government on con-

structive notice that it intended to fight this matter. It was

foreseeable to the government, Smoke Shop argues, that if

the attempt to get the products back using Rule 41(g) didn’t

work, Smoke Shop would likely seek money damages next.

But Smoke Shop loses sight of the fact that the FTCA is an

exception to the immunity the federal government ordinari-

ly enjoys from tort actions. As such, Congress can make

“[m]en … turn square corners” before haling the govern-

18 No. 13-3921

ment into court—“[i]f [the government] attaches even purely

formal conditions to its consent to be sued those conditions

must be complied with.” Rock Island, A. & L. R. Co. v. United

States, 254 U.S. 141, 143 (1920) (Holmes, J.); cf. McNeil, 508

U.S. at 111–13 (submitting a claim after initiating FTCA liti-

gation does not fulfill § 2675(a), even if the litigation has not

advanced substantially). Congress decided that it wanted

agencies to have a chance to settle damages claims before

facing litigation. And without being presented with an actu-

al claim for money damages, the DEA and the U.S. Attor-

ney’s office were ill-equipped to make a fully informed as-

sessment of Smoke Shop’s claim.

As in our past cases, Smoke Shop’s oversight hindered or

thwarted the settlement process envisioned by the FTCA. See

Kanar, 118 F.3d at 531 (attorney’s failure to comply with the

agency’s request that he provide proof of his capacity to rep-

resent the claimant hindered the settlement process and

barred the claimant’s FTCA suit); Best Bearings, 463 F.2d at

1179 (business’s request to the FBI and the U.S. Attorney’s

office for the return of seized property did not satisfy

§ 2675(a)); Antonelli v. Sherrow, 246 F. App’x 381, 385 (7th Cir.

2007) (prisoner’s letters to ATF agents demanding the return

of a seized computer did not qualify as FTCA claims because

the letters did not request money damages). In all of those

cases, the agency had the same “constructive notice” of the

claimant’s position that Smoke Shop alleges the DEA had

here. But constructive notice that an individual has a griev-

ance with the agency does not facilitate settlement negotia-

tion of the individual’s claim for money damages—or at

least, not as directly as the FTCA demands.

No. 13-3921 19

Nothing prevented Smoke Shop from submitting an ad-

ministrative claim to the government at the time of the sei-

zure. In fact, Smoke Shop’s failure to do so—and its decision

to file a criminal procedure motion with the district court

instead—may have led the government to believe that

Smoke Shop was forgoing the civil-litigation route, or at

least that Smoke Shop was not contemplating it at that time.

Thus, Smoke Shop’s failure to exhaust is a second ground for

us to affirm the district court. 2

III. Conclusion

Smoke Shop’s action is barred by the detained-goods ex-

ception to the FTCA. Smoke Shop also failed to exhaust its

administrative remedies by submitting a proper claim for

money damages before filing its FTCA suit. We thus AFFIRM

the district court’s dismissal of Smoke Shop’s suit.

2 In its brief on appeal, Smoke Shop also argues that “[c]onstruing the

statutes as the district court did ignores the promise of the due process

clause of the Fifth Amendment that property will not be taken absent

due process.” Smoke Shop’s argument on this front is waived, as it did

not pursue a due process theory in the district court, and we find that its

constitutional argument—comprised of ipse dixit and little else—is un-

developed on appeal. Puffer v. Allstate Ins. Co., 675 F.3d 709, 718 (7th Cir.

2012).