[00:00:00] Speaker 03: Our next case is number 22-21-54, the Portland Mint versus United States. [00:00:06] Speaker 03: Okay, Mr. Bartan. [00:00:09] Speaker 01: Good morning, Your Honors. [00:00:10] Speaker 01: May it please the Court. [00:00:12] Speaker 01: The Court of Federal Claims exists to adjudicate claims for money damages against the United States. [00:00:19] Speaker 01: That's what this case is all about. [00:00:22] Speaker 03: OK, let's support, for the moment, your claim that this is an implied, in fact, contract under radium mines and that the regulation defines what the contract is. [00:00:38] Speaker 03: I'm trying to understand what you think is supposed to happen in a situation in which the submitted coins are, let's say, half genuine and half counterfeit. [00:00:52] Speaker 03: What is supposed to happen under those circumstances? [00:00:55] Speaker 03: Obviously, the coins can't be returned. [00:01:01] Speaker 03: That is, the counterfeit coins can't be returned because that would be in violation of the forfeiture statute, right? [00:01:09] Speaker 03: What's supposed to happen under those circumstances? [00:01:12] Speaker 01: Well, what's supposed to happen, as we stated very clearly in the briefs, is that the well-planned facts in the second amended complaint are supposed to be given credence by the court. [00:01:22] Speaker 01: You're not addressing my question. [00:01:25] Speaker 03: My question is, let's assume they're half genuine and half counterfeit. [00:01:30] Speaker 03: What's supposed to happen? [00:01:33] Speaker 03: Well, if they were... They can't return the coins unless they separate them into counterfeit and genuine, right? [00:01:40] Speaker 01: That's correct. [00:01:42] Speaker 01: So under the regulation, under that hypothetical, because those are not the facts here, but under that hypothetical, if half of the coins were counterfeit and half were genuine, then the mint would have the ability to reject the entirety of the shipment. [00:01:57] Speaker 01: That's what the regulations make clear, but those are not... Well, they can't return the counterfeit coins, right? [00:02:03] Speaker 01: No, they wouldn't be able to return the counterfeit coins, but the problem here... What are they supposed to do? [00:02:08] Speaker 01: Well, they're supposed to give, in this case... Unload the truck. [00:02:13] Speaker 03: It's half counterfeit, half genuine. [00:02:17] Speaker 03: Test them. [00:02:18] Speaker 03: and finds out half of them are counterfeit, half are genuine. [00:02:21] Speaker 03: What are they supposed to do? [00:02:22] Speaker 03: What's supposed to happen? [00:02:23] Speaker 01: Your Honor, they're supposed to give the participant in the program, in this case, the Portland Mint, the opportunity to challenge that discrimination. [00:02:32] Speaker 03: OK, so what happens, and the Portland Mint, and everybody agrees, it's half counterfeit and half genuine. [00:02:37] Speaker 03: What happens? [00:02:38] Speaker 01: at that point under the regulations certainly they would not return the counterfeit portion because that that's illegal property sizable property forfeitable property i think if they were to use and i just following your hypothetical if they were to use a genuine portion of the points to mince new coin roll then they would be obligated to pay the poor it could be very difficult separate counterfeit from the genuine right [00:03:07] Speaker 01: I would agree with that. [00:03:09] Speaker 01: But again, I think it's important for the court to remember, which I know your honors do, that we're not at summary judgment. [00:03:18] Speaker 01: There has been no discovery allowed in this case. [00:03:22] Speaker 01: We are at the motion to dismiss stage. [00:03:24] Speaker 03: But in terms of construing the regulation, it's important to know how hypotheticals come out. [00:03:30] Speaker 03: And because there's a real possibility here that [00:03:34] Speaker 03: This was an admixture of counterfeit and genuine coins. [00:03:38] Speaker 03: But even the government's assay of the coins, it seems to me, appears to agree that some of them are genuine, where they say the vast majority are counterfeit. [00:03:50] Speaker 03: But they say that some of them are genuine. [00:03:53] Speaker 03: In the forfeiture context, you have district court decisions which say, [00:03:58] Speaker 03: under those circumstances, the government has to give back the genuine coins. [00:04:03] Speaker 01: Well, Your Honor, the vast majority of these coins were indisputably genuine. [00:04:08] Speaker 01: 99.9918. [00:04:10] Speaker 02: That's a factual issue. [00:04:13] Speaker 01: I agree. [00:04:14] Speaker 02: One of the things that's, we don't know the answer to that. [00:04:19] Speaker 02: The initial letter and maybe the appeal decision refers to the coins as being counterfeit. [00:04:26] Speaker 02: Maybe that's a [00:04:28] Speaker 02: a misstatement. [00:04:30] Speaker 02: I understood that one of the things you want in this case is to get to the place in this case where you can test the assertion that any of the coins were counterfeit, and if so, how much? [00:04:42] Speaker 02: Correct. [00:04:42] Speaker 02: And you want that under a contract theory? [00:04:45] Speaker 02: Two contract theories, just as Kell call it, one. [00:04:47] Speaker 02: Nobody thinks there's a difference here between accounts two and accounts three for current purposes. [00:04:53] Speaker 02: And a regulation theory and a takings theory. [00:04:55] Speaker 02: Correct. [00:04:56] Speaker 02: So, and you say, in fact, I think in your second amended complaint, maybe generously read, but nevertheless, let's assume it says that the mint was wrong in finding counterfeit. [00:05:09] Speaker 01: Correct. [00:05:09] Speaker 02: Right. [00:05:10] Speaker 02: And that because the only relief you want indeed can get is monetary relief. [00:05:15] Speaker 02: You can't get these coins back. [00:05:16] Speaker 01: Absolutely. [00:05:17] Speaker 02: It's not an APA claim because it's no equitable relief. [00:05:21] Speaker 02: It's only monetary relief. [00:05:22] Speaker 02: and you want an opportunity to test the factual assertion that you made that the MIP was wrong about finding any of them counterfeit and if so, how many? [00:05:34] Speaker 02: Now let's assume you get to that place. [00:05:38] Speaker 02: What do you think the regulations say about, obviously they don't say they're going to return the counterfeit. [00:05:46] Speaker 02: Do you think that the regulations, impliedly or expressly say, you do get back coins that are not counterfeit and if they are no longer returnable because they've been melted and put to other government use, you get some amount of money, like the designated rates? [00:06:08] Speaker 01: Under the hypothetical, if some portion of the Portland Mint's coins were used to manufacture a new coin roll, [00:06:15] Speaker 01: And therefore, we would argue there was some determination by the mint that they were authentic, because certainly they're not going to use counterfeit coins to manufacture genuine new US coinage. [00:06:27] Speaker 02: Under that, I'm sorry. [00:06:29] Speaker 02: This may be a detour, but why is that, of course? [00:06:32] Speaker 02: I mean, the metal may be perfectly usable. [00:06:35] Speaker 01: Well, then again, it goes to the threshold determination. [00:06:39] Speaker 03: There's no prohibition on using counterfeit coins to manufacture new coins, right? [00:06:44] Speaker 01: I would think there would be. [00:06:45] Speaker 01: You would think there would be? [00:06:47] Speaker 01: Where is it? [00:06:48] Speaker 01: Because counterfeit coins would be evidence of a crime. [00:06:53] Speaker 01: To your honor's point, they're forfeitable, they're seizable. [00:06:56] Speaker 01: So certainly I don't think the mint would take the position that they would take counterfeit coins. [00:07:01] Speaker 03: If the counterfeit coins are forfeited to the mint, why can't the mint use them however it wants to? [00:07:06] Speaker 03: To manufacture new coins, for example. [00:07:08] Speaker 01: Again, from just a strictly common sense perspective, if the coins were counterfeit, and we don't know how under this hypothetical the coins are counterfeit, whether they were out of tolerance in terms of the metal allocation, if they were counterfeit for some other reason, it certainly strikes me as odd or defying common sense that you would take counterfeit coins and use them to manufacture genuine new US coins. [00:07:34] Speaker 02: Do I understand on the contract claim that while you say that much of the content of the contract would be determined by the regulations, you don't say that there is a perfect coincidence. [00:07:49] Speaker 02: So that, for example, part of your contract claim is that Mr. Holmes, in accepting these at the furnace door, [00:08:03] Speaker 02: made a binding promise that since he's about to destroy them, that he must be, that the Mint will in fact be paying for at least a portion that is not forfeited. [00:08:18] Speaker 02: Whether or not the regulation says that. [00:08:22] Speaker 01: Well, I guess. [00:08:23] Speaker 02: This is meant to be a helpful question. [00:08:25] Speaker 01: I understand, Your Honor. [00:08:26] Speaker 01: And so the answer to that question is yes. [00:08:30] Speaker 01: We're alleging an implied in fact contract that is formed against the backdrop of the regulations, 31 CFR 100.11. [00:08:39] Speaker 01: But we're also alleging, and we have alleged specifically in paragraphs 50 to 57 of the second amended complaint, [00:08:46] Speaker 01: that there is something more here under, for example, DNN Bank. [00:08:51] Speaker 01: And what we're specifically alleging is that Anthony Holmes, Jr., who had the title material handler supervisor, and I'm stressing the word supervisor for the court, engaged in actually a number of months of back and forth and communications and to some degree negotiations. [00:09:09] Speaker 03: Does he have authority to make a contract outside of the regulatory context? [00:09:15] Speaker 01: Again, at this preliminary stage of the proceedings, and I'm stressing the word preliminary stage because it comes directly from this court's decision in Summers Oil, we've alleged more than enough. [00:09:29] Speaker 03: We've alleged... No, no, no, but what's the answer to my question? [00:09:32] Speaker 03: I understand the theory that responding to the regulation under radium mines creates a contract. [00:09:39] Speaker 03: Are you suggesting that [00:09:41] Speaker 03: Mr. Holmes had the authority quite apart from the regulation to enter into a contract with your client? [00:09:47] Speaker 01: No, I would suggest that he had the ability to enter into a contract pursuant to the redemption program and the regulations that implement the redemption program. [00:09:58] Speaker 02: Let me just tell you why that Well, I'm not quite sure what to make of that. [00:10:06] Speaker 02: One way of viewing the regulations is that they are simply silent about what happens to unreturnable non counterfeit coins in a mix. [00:10:23] Speaker 02: In which case you wouldn't have a violation of the regulation. [00:10:27] Speaker 02: You would have something that just wasn't addressed by the regulation. [00:10:31] Speaker 02: Um, and this is what, um, uh, C six one through three, because four through six say we're going to return it. [00:10:40] Speaker 02: We're going to do what we need to do before we destroy them and put them to, to our own use. [00:10:46] Speaker 02: In that case, you would have this set of events that happened here. [00:10:54] Speaker 02: not covered by the regulation, but nevertheless, something that I had taken your complaint to be suggesting Mr. Holmes agreed to, basically. [00:11:04] Speaker 02: He was willing to take your property, destroy it, without yet knowing how much of it was forfeitable and how much of it was not forfeitable and therefore ought generally to be returned to you if it wasn't being taken by the government. [00:11:23] Speaker 02: And that's a contract over and above the regulation. [00:11:28] Speaker 02: Have I misunderstood that? [00:11:29] Speaker 01: No. [00:11:30] Speaker 01: You haven't misunderstood it. [00:11:34] Speaker 01: We've tried to make clear in the second amended complaint that the regulations provide the starting point, but not the end point, for this implied in fact contract. [00:11:43] Speaker 02: And then you would have to establish, as Judge Dyck was pointing to, that he actually had authority to do that. [00:11:49] Speaker 01: But absolutely. [00:11:51] Speaker 01: There is an element that's very clear we need to establish implied, in fact, authority. [00:11:55] Speaker 01: But what we are saying is, at this preliminary stage of the proceeding, we've alleged more than enough to withstand the motion to dismiss. [00:12:03] Speaker 01: And we cited Somers Oil, which is exactly on point here in many ways, in saying that generalized allegations of authorization liberally construe [00:12:13] Speaker 01: That's how this court interpreted this stage of proceedings, are more than sufficient to survive a motion to dismiss. [00:12:21] Speaker 01: We have put forward more than generalized allegations in this case. [00:12:27] Speaker 01: We provided specific facts, specific communications in paragraphs 50 to 57. [00:12:33] Speaker 03: Well, your allegations about his authority seem to track the cases. [00:12:38] Speaker 03: But I want to come back to the hypothetical that I was asking about earlier. [00:12:42] Speaker 03: I'm still not understanding. [00:12:44] Speaker 03: What's supposed to happen where you've got this ad mixture, the coins are submitted, it's not a situation in which the coins are accepted and used to manufacture new coins, and the mint is sitting there and scratching its collective head. [00:12:59] Speaker 03: What do we do here? [00:13:00] Speaker 03: We can't return the counterfeit coins. [00:13:03] Speaker 03: And let's assume it's extremely difficult to separate the counterfeit from the real coins. [00:13:09] Speaker 03: In fact, so difficult that it's economically impractical to separate them. [00:13:14] Speaker 03: What's supposed to happen? [00:13:17] Speaker 01: Under that hypothetical, I think the regulations as they presently exist [00:13:22] Speaker 01: read that the entire shipment would be forfeitable, if you will, to the mint, meaning that under the regulations 31 CFR 100.11, under your hypothetical, which again, I want to stress, are not the facts of this case. [00:13:38] Speaker 01: I think the entire shipment, if it was impractical to separate genuine from counterfeit, would be forfeited to the mint. [00:13:45] Speaker 01: Here though, and I just want to stress this, [00:13:47] Speaker 02: Well, that's one possibility. [00:13:51] Speaker 02: Another is that you would read the regulations as implicitly requiring the testing to be done before the destruction. [00:13:59] Speaker 01: Well, in fact, Your Honor, I don't mean to cut your honor off. [00:14:03] Speaker 02: I guess on the further hypothetical that it's impractical to separate them, then everything either stays or goes. [00:14:11] Speaker 01: But I think it's an important point, and maybe one that was lost in some of the briefing. [00:14:15] Speaker 01: If you read the Second Amendment complaint, we've alleged in a number of places two things that bear upon this inquiry. [00:14:22] Speaker 01: Number one, there was a change in the redemption program in 2010 that required the mint to assay shipments prior to any melt. [00:14:33] Speaker 01: That was referenced a number of times in the second amended complaint. [00:14:37] Speaker 01: The other point that I would make factually and again... That change occurred before? [00:14:41] Speaker 01: In 2010, correct. [00:14:42] Speaker 01: 2010 so you knew about that when you dropped them off correct We understood and this is based upon public reporting because again We don't have any discovery on public reporting the mint assays a shipment prior to any melt meaning they Determine to your honors point whether the coins are genuine or counterfeit before melting them the other point that I would make I just got confused [00:15:04] Speaker 02: What was the status of that temporal point at the time you dropped this off? [00:15:10] Speaker 01: So we dropped the coins off in August of 2018, eight years later. [00:15:13] Speaker 01: Meaning, again, we don't have any discovery. [00:15:16] Speaker 02: And the regulations said that they were supposed to assay first, pre-melt testing. [00:15:21] Speaker 01: The regulations do not, but based upon public reporting, irrespective of the regulation, said that they assay the shipment prior to melt. [00:15:32] Speaker 01: And we allege that in the second amended complaint. [00:15:36] Speaker 01: The other thing that we allege in the complaint, which is very important here, is that a significant portion of the shipment that was delivered to Olin Brass in 2018 [00:15:47] Speaker 01: had already been determined to be genuine by the government, by the Department of Homeland Security in 2016, pursuant to a litigation that the Portland Mint had brought against the Department of Homeland Security and the Mint for failing to allow its shipment out of the port. [00:16:06] Speaker 01: So at the end of the day, to Your Honor's point, [00:16:10] Speaker 01: This is a case where all that the Mint has alleged at this time, and it's a complete counter narrative. [00:16:20] Speaker 01: It came 28 months after the coins had been delivered to Olin Brass that the entire shipment was counterfeit, but only based upon the testing. [00:16:31] Speaker 01: And this is right in the record. [00:16:33] Speaker 03: Did they say the entire shipment was counterfeit or just the vast majority of it? [00:16:37] Speaker 01: They claim, based upon the testing of 203 coins, just 203 coins out of a shipment of 425,000 pounds. [00:16:44] Speaker 01: So 425,000 pounds delivered to Olin Brass. [00:16:50] Speaker 01: They melted 425,060 pounds. [00:16:52] Speaker 01: They withheld 35 pounds. [00:16:59] Speaker 01: So the total was 425,090 pounds. [00:17:03] Speaker 02: So I'm looking at page 288 of the appendix. [00:17:08] Speaker 02: was received on December 30 of 2020 and the first sentence of the second paragraph on that page says, I have reviewed the test results and find that the testing sufficiently supports a conclusion that the coins you submitted in August 2018 were counterfeit. [00:17:28] Speaker 02: And I thought there was something similar in the appeal [00:17:39] Speaker 02: the official determination, there's only one conclusion to be drawn. [00:17:43] Speaker 02: All but an exceedingly small sample of Portland mint shipment was melted. [00:17:50] Speaker 02: And I guess this is the appeal. [00:17:53] Speaker 02: A very high percentage of the sample was made by a manufacturer other than the United States mint. [00:18:01] Speaker 02: Is that the equivalent of saying all but a very, sorry, [00:18:06] Speaker 02: Is that equal to saying a very high percentage was counterfeit, or is that counterfeit? [00:18:14] Speaker 01: Yeah. [00:18:14] Speaker 01: Certainly, my understanding of what was proffered by the government before the Court of Federal Claims [00:18:20] Speaker 01: is that if you look at appendix page 287, so one page before, it talks about the Portland Mint submitting 425,095 pounds. [00:18:28] Speaker 01: 425,060 pounds were melted and used by the Mint to manufacture new genuine U.S. [00:18:37] Speaker 01: coins. [00:18:38] Speaker 01: 35 pounds were retained. [00:18:40] Speaker 02: Of those 35 pounds... Well, I understand the testing was on the sample. [00:18:44] Speaker 02: The question is what conclusion was drawn, and it may not matter. [00:18:50] Speaker 02: Right? [00:18:51] Speaker 02: I mean, we don't take this as established truth. [00:18:54] Speaker 02: You're challenging this in a monetary action. [00:18:58] Speaker 02: But the question, do we take it that the Mint has found, or is the government asserting that the Mint has found that all 400 and something thousand pounds were counterfeit? [00:19:10] Speaker 02: Correct. [00:19:11] Speaker 01: What? [00:19:11] Speaker 01: The entirety of the shipment the government claims to be counterfeit. [00:19:14] Speaker 03: Well, that's not how I read it, but I'm not sure that makes a difference. [00:19:18] Speaker 03: I mean, your position is that whatever part of it was genuine, we ought to be paid for it, right? [00:19:24] Speaker 01: That is correct. [00:19:26] Speaker 03: OK. [00:19:26] Speaker 03: Let's move to questions. [00:19:29] Speaker 03: Thank you. [00:19:30] Speaker 03: Let's hear from the government. [00:19:31] Speaker 03: We have two minutes for a model. [00:19:33] Speaker 03: Thank you, Judge. [00:19:35] Speaker 03: Ms. [00:19:35] Speaker 03: Vicks? [00:19:51] Speaker 00: Good morning. [00:19:52] Speaker 00: May it please the court? [00:19:55] Speaker 00: The Court of Federal Claims dismissal decision in this case. [00:19:57] Speaker 03: So in the light of Radium Mines, I'm thoughtful as to the government's position that this can't be an implied, in fact, contract reading the regulation as defining the terms of the contract to the extent that the regulation has terms in it. [00:20:13] Speaker 03: How do you distinguish Radium Mines? [00:20:16] Speaker 00: In Radium Mines, the regulation said that the United States will [00:20:21] Speaker 00: perform a contract when it receives a sample of recoverable ore. [00:20:27] Speaker 00: It actually says, purchase contract. [00:20:29] Speaker 00: The United States will issue a contract if it receives ore that is recoverable. [00:20:33] Speaker 00: These regulations have no such language in them that the United States intends to form any contract. [00:20:39] Speaker 03: Is that the only difference? [00:20:46] Speaker 00: Well, RadioMinds, I believe, included written [00:20:51] Speaker 00: documents as well and the plaintiff had to send a sample of the ore and the United States would test that and see if it was in fact recoverable and the full [00:21:05] Speaker 03: Case of radium mines the court sustained that there was no contract because the plaintiff had not submitted a recoverable sample Okay, well let's assume that we think that radium mines is similar to this case and that if the coins are redeemed or submitted There's a there's a contract defined by the regulation and perhaps by something else so if that's the case [00:21:32] Speaker 03: Why shouldn't they be paid for the portion of the submission that was genuine? [00:21:40] Speaker 00: Because, Your Honor, the contract says that if a portion of a submission or any portion of a submission appears to be involved in criminal activity or is evidence of intent [00:21:55] Speaker 00: defraud the United States, then they don't redeem at all. [00:21:58] Speaker 00: So any portion of the regulation both indicates, I think, that no contract would be formed. [00:22:04] Speaker 03: OK, what's supposed to happen in those circumstances where they submit something which is 50% genuine, 50% counterfeit? [00:22:13] Speaker 00: If a person submits coins to this program, this entirely discretionary United States Mint program, which is [00:22:20] Speaker 00: titled Request for Examination of Bent or Partial Coins for Possible Rejection. [00:22:24] Speaker 00: Well, what's supposed to happen? [00:22:25] Speaker 00: What do they do? [00:22:25] Speaker 00: Yeah. [00:22:25] Speaker 00: So what's supposed to happen is that when they submit under this regulation, they understand they might not get their coins back, and they might not be redeemed. [00:22:33] Speaker 00: And so what's supposed to happen is the mint, if it determines that a portion of the submission is not redeemable under C6.1 through 3, it doesn't redeem, and it doesn't return. [00:22:45] Speaker 03: Well, what happens to the coins? [00:22:47] Speaker 00: The coins are melted. [00:22:50] Speaker 00: They were delivered to a foundry. [00:22:51] Speaker 00: I think it's not a mystery that they would be melted when they're delivered to a foundry. [00:22:55] Speaker 03: So the government can use the genuine coins to make new coins without paying for them? [00:23:02] Speaker 00: The government accepts the goal. [00:23:05] Speaker 03: Yes, no. [00:23:06] Speaker 00: The government can use the metal. [00:23:09] Speaker 03: Without paying for it? [00:23:10] Speaker 00: Under the terms of the regulation, yes, but the regulations don't say anything about use of the metal indicating whether coins are redeemed or not. [00:23:17] Speaker 03: That doesn't seem very fair, does it? [00:23:19] Speaker 00: Well, it does seem fair because it's the program that the United States has set up in the regulations and if someone wanted to challenge the reasonableness of these regulations, they could certainly bring that case. [00:23:36] Speaker 03: So why shouldn't we interpret the regulations to say if they're genuine coins there, half of them are genuine, you use them to create new coins, you should pay for it? [00:23:48] Speaker 03: Why shouldn't we construe the regulation that way? [00:23:51] Speaker 00: Because the plain language of the regulation says otherwise. [00:23:54] Speaker 03: What plain language? [00:23:56] Speaker 00: The plain language right here that says no redemption will be made when a submission or any portion of a submission. [00:24:03] Speaker 03: You mean that taking the coins and melting them down is not a redemption? [00:24:07] Speaker 00: Exactly, Your Honor. [00:24:08] Speaker 00: A redemption is a conclusion reached by the Mint after it submits a submission to this process, which includes taking [00:24:17] Speaker 00: a sample of the submission, testing that sample, and determining whether the coins are legally redeemable under the regulations. [00:24:24] Speaker 02: Do you take the position, which would be a dictionary position, that redemption is payment, as opposed to anything else like just keeping something? [00:24:38] Speaker 02: I place something in your trust for a while, and you just decide to keep it. [00:24:46] Speaker 00: Redemption under these regulations is exchange. [00:24:49] Speaker 00: So to Your Honor's point, the regulations are I give you a bent quarter that doesn't work anymore, and you give me a quarter back, one for one, if it meets the conditions of the regulation. [00:25:05] Speaker 00: Now, for instance, it could be an authentic quarter. [00:25:08] Speaker 00: And if you intentionally mutilated it, it's not suitable for redemption. [00:25:12] Speaker 03: So what would you call it? [00:25:13] Speaker 03: You keep the coins, you melt them down, and you use them. [00:25:16] Speaker 03: You say that's not a redemption. [00:25:17] Speaker 03: What is it, a forfeiture? [00:25:19] Speaker 00: It would be a forfeiture under the forfeiture statute and under the case law. [00:25:24] Speaker 00: OK. [00:25:24] Speaker 03: And the cases under the forfeiture statute, as I read them, say you can't do that. [00:25:28] Speaker 03: You've got to give back the genuine coins. [00:25:33] Speaker 03: And you didn't do that. [00:25:34] Speaker 00: Well, there's no obligation under the regulations to separate out genuine from counterfeit coins. [00:25:40] Speaker 00: The regulations clearly state if a portion of the submission demonstrates an attempt to defraud the United States or a submission appears to be part of any criminal activity. [00:25:51] Speaker 03: If a submission contains any counterfeit coins... But it doesn't say you can keep the coins and melt them down and make new coins out of them. [00:25:55] Speaker 03: It doesn't say that. [00:25:57] Speaker 00: It doesn't say that those are prerequisites to finding redemption. [00:26:00] Speaker 00: It doesn't say anything about melting or using the coins. [00:26:03] Speaker 03: Right, so that happened here. [00:26:05] Speaker 03: We've got to figure out what the consequence of doing that is. [00:26:09] Speaker 00: No, the consequence of submitting coins to this program, if they are counterfeit at all, is that they are forfeit. [00:26:16] Speaker 00: And the mint does not redeem under the terms of the court. [00:26:18] Speaker 03: That's not what the forfeiture statute says, at least as construed by some of these district court cases. [00:26:24] Speaker 00: But the regulations say that redemption is denied under the circular status. [00:26:28] Speaker 03: It doesn't say you can keep the coins and use them either. [00:26:31] Speaker 00: It doesn't say that the mint is going to return them. [00:26:34] Speaker 02: When it says redemption is denied, it's saying we won't pay you. [00:26:38] Speaker 02: The regulation doesn't say by virtue of your having given this stuff to us in order for us to decide whether to pay you, we will keep it. [00:26:50] Speaker 00: I think it's implicit in the regulation. [00:26:52] Speaker 00: In c6 1 through 3, there's no provision for returning any coins that are denied redemption. [00:26:58] Speaker 02: It just doesn't say. [00:26:59] Speaker 02: It doesn't say, dear world, if you drop this stuff off and we find any of these three conditions, right, material misrepresentation, that we will keep the material. [00:27:12] Speaker 02: It doesn't say that. [00:27:13] Speaker 00: It doesn't say we will keep that. [00:27:15] Speaker 02: It just says we won't pay for it. [00:27:16] Speaker 00: It says we won't pay for it. [00:27:17] Speaker 00: Right. [00:27:18] Speaker 00: But it also doesn't say that we will separate [00:27:21] Speaker 00: out every single coin. [00:27:23] Speaker 02: It might be, as was discussed earlier, it might be impractical or impossible to separate, but that seems like a remedy issue. [00:27:37] Speaker 00: No, I disagree, Your Honor, because if we go back to 31 CFR 100.11a, any submission under this subpart shall be deemed an acceptance of all provisions of this subpart [00:27:49] Speaker 00: If a person submits coins to this program, it is on notice that it may not get paid and it may not get its coins back. [00:28:01] Speaker 00: It accepts that. [00:28:02] Speaker 00: Those are the terms of the regulations. [00:28:06] Speaker 03: Where does it say it's not getting the coins back? [00:28:09] Speaker 03: The genuine part? [00:28:11] Speaker 00: There's no provision for returning coins if redemption is not made. [00:28:15] Speaker 03: Okay, so it doesn't say it. [00:28:16] Speaker 03: It doesn't say it. [00:28:17] Speaker 00: Well, since it does say that coins will be returned under provisions four, five, and six of C6, and it doesn't say under one, two, and three, it's a fair implication that they will not be returned if redemption is denied under those conditions. [00:28:39] Speaker 02: Mr. Barkan made some reference to, I think he said, a 2000 [00:28:48] Speaker 02: that, as I understood him, he indicated that there was some pronouncement or something issuing from the Mint saying, we will do the testing before we destroy them. [00:29:02] Speaker 02: By destroy, I mean melt and then use the metal. [00:29:08] Speaker 02: I think he said he makes that allegation in the second amended complaint. [00:29:13] Speaker 02: Sure. [00:29:15] Speaker 00: I can address that. [00:29:16] Speaker 00: Whatever the Mint said in 2010 about if it tests assays before melting them, the regulations here, which were issued in 2018, do not say that the Mint will test prior to destruction. [00:29:31] Speaker 00: And the regulations here are what govern. [00:29:34] Speaker 00: I know the Mint has... [00:29:36] Speaker 00: As we laid out in our brief and we did brief below, laid out in the brief below, the Mint suspended the program in 2018 because it was concerned that there was counterfeiting operations. [00:29:48] Speaker 00: And it opened the program in 2018 with part of the reason for the revision of the regulations was to try to enhance their ability to detect counterfeits. [00:30:05] Speaker 00: If the Mint previously had a policy of testing before melting, we're not sure what the exact publication was that Mr. Barton was referencing. [00:30:14] Speaker 00: But the regulations that issue here, or the regulations that govern here, simply say that the Mint may take samples, may test, and may deny redemption under six specific circumstances, and impliedly will not return the coins if it's denied under three circumstances. [00:30:33] Speaker 03: Does the 35 pound sample still exist? [00:30:36] Speaker 03: Do you know the answer to that question? [00:30:37] Speaker 00: Yes it does. [00:30:51] Speaker 03: Okay, anything further? [00:30:53] Speaker 00: Unless the court has additional questions. [00:30:58] Speaker 00: Then I ask that the court affirm the dismissal of this case. [00:31:01] Speaker 03: OK. [00:31:01] Speaker 03: Thank you. [00:31:03] Speaker 03: Mr. Barton? [00:31:16] Speaker 01: Thank you. [00:31:16] Speaker 01: So just briefly. [00:31:18] Speaker 01: Two points. [00:31:19] Speaker 01: So first, although much of this is focused on the regulation, and I understand the court's questions about the regulations, I don't want to lose sight, Judge, of I think something that was implicit in your questioning. [00:31:32] Speaker 01: The vast majority of these coins are gone. [00:31:36] Speaker 01: They were taken for a public purpose. [00:31:38] Speaker 01: So even putting the regulation aside, this is a paradigmatic physical taking, at least with respect [00:31:46] Speaker 01: to the £425,060 that the Mint indisputably has taken and used for public benefit. [00:31:54] Speaker 01: The coins are in our collective pockets at this point. [00:31:59] Speaker 01: The other point coming back to the regulation that I would leave the Court with is 31 CFR 100.11d. [00:32:10] Speaker 01: And D speaks about the U.S. [00:32:12] Speaker 01: Mint will redeem, will redeem, require to redeem. [00:32:18] Speaker 01: Now, there's much discussion about what does redemption mean under the regulation. [00:32:24] Speaker 01: My definition, the Portland Mint's definition of redeem is the same definition that's been proffered by Treasury OIG. [00:32:32] Speaker 01: because although we don't have discovery in this case, the government did append to its papers an OIG report that was authored by Treasury OIG in August of 2020 about the redemption program. [00:32:48] Speaker 01: And on appendix page 605, [00:32:52] Speaker 01: There is discussion about what OIG witnessed at Olin Brass in August of 2018. [00:32:58] Speaker 01: And the very first bullet, I'm just going to read into the record, very first black bullet on 605. [00:33:05] Speaker 01: Treasury OIG observed the redemption and recycling of coins redeemed [00:33:12] Speaker 01: through the Mintz Coin Exchange programs at Olin Brass from July 31, 2018 through August 2, 2018, which included obtaining coin samples from the redemption. [00:33:25] Speaker 01: So the 35 pounds of coin samples that we're talking about, according to Treasury OIG appendix page 605, that is from the redemption [00:33:35] Speaker 01: of the Portland Mint's coins on August 1st and 2nd of 2018. [00:33:41] Speaker 01: Under the will redeem language of 100.11D, the Portland Mint is clearly entitled to payment at the published rates for what the Mint took and used. [00:33:54] Speaker 03: One question. [00:33:55] Speaker 03: Does knowledge and intent play any role here? [00:34:01] Speaker 03: In other words, does it make a difference if the submitter of the coins knows that they're counterfeit or is ignorant of the fact that it's counterfeit? [00:34:11] Speaker 01: well i i think this sort of would get to an innocent owner defense that's applicable in the civil asset forfeiture context so i i think that knowledge would play in because your honor's point if you're talking about coins that are just are genuine points they're not forfeitable because civil asset forfeiture action is brought against property itself and under uh... i think it's [00:34:37] Speaker 01: 18 USC 982 or 983 if I'm remembering correctly there is an innocent owner defense in the law so if the participant in the program did not know that the coins were counterfeit. [00:34:49] Speaker 03: I was thinking more in terms of the regulations they're dealing with here which list fraud and criminal activity. [00:34:58] Speaker 01: So as a separate category, I think it certainly would play in. [00:35:04] Speaker 01: I have to think more about how precisely it would play in. [00:35:07] Speaker 01: But there's no question here, just given the fact that the Portland Mint has twice sued the government once in 2016, now again here, that there is no knowledge or belief or anything on the part of the Portland Mint that these coins are counterfeit. [00:35:24] Speaker 01: We wouldn't be here otherwise. [00:35:26] Speaker ?: OK. [00:35:27] Speaker 03: Anything further? [00:35:28] Speaker 03: OK. [00:35:28] Speaker 03: Thank you very much. [00:35:29] Speaker 01: Thank you. [00:35:30] Speaker 01: I thank the House Counsel. [00:35:31] Speaker 03: The case is submitted.