E.D.N.Y.: What’s the burden under 18 U.S.C. § 1345 v. SW issuance? Preponderance or PC?

This is a patent action involving an AR-15 trigger mechanism that can convert the gun to a machine gun. The government got involved to enjoin it. The defendants seek a transfer to W.D.Tex. which is denied. The court addresses 18 U.S.C. § 1345 and the standard for injunctive relief (preponderance) v. search warrant issuance on probable cause in footnote 4. United States v. Rare Breed Triggers, LLC, 2023 U.S. Dist. LEXIS 67796 (E.D.N.Y. Apr. 18, 2023)*:

Because 18 U.S.C. § 1345 is not frequently invoked, there exists some ambiguity as to whether the Government must demonstrate that there is “probable cause” to believe that a defendant is committing fraud or must instead prove “by a preponderance of the evidence” that the defendant is committing fraud. See, e.g., United States v. Legro, 284 F. App’x 143, 145 (5th Cir. 2008) (describing this ambiguity in 18 U.S.C. § 1345). Because the Court concluded at the TRO hearing on January 24, 2023 that the Government had met its burden under either standard, ECF No. 14 at 8, it declined to reach the question of which standard applied, although it used the phrase “probable cause” in its temporary restraining order. ECF No. 11 ¶¶ 1-6.

In the future, a court facing a closer call may find it necessary to closely engage with this question on a TRO posture. Because 18 U.S.C. § 1345 is a “hybrid” statute, providing a civil cause of action to enjoin criminal activity, it is not entirely clear which standard should apply. On the one hand, an ex parte application for a temporary restraining order bears some procedural similarities to a search warrant application, and in that context the probable cause standard applies. On the other hand, preponderance of the evidence is the default standard of proof for most civil actions, and in light of the broad authority already given to the Government under 18 U.S.C. § 1345, there is certainly cause to question whether Congress intended for the Government to have the authority to, say, shut down a defendant’s entire business based on ex parte allegations of fraud proven under such a low standard. That is especially so in light of caselaw that holds that irreparable injury is presumed for purposes of Rule 65(b) of the Federal Rules of Civil Procedure if the statutory conditions of 18 U.S.C. § 1345 are met. See, e.g., United States v. Palumbo, 448 F. Supp. 3d 257, 261 (E.D.N.Y. 2020).