Summary Summary

Three more quickies:

In United States v. Espinal, No. 07-3128-cr (2d Cir. January 21, 2009), there was an inconsistency between the district court's oral statement of the guideline range and the range contained in the written judgment. The court remanded the case for the "ministerial purpose" of amending the judgment to reflect the actual Guideline range that the court used.

In Watson v. United States, No. 07-0354-pr (2d Cir. January 21, 2009), the district court summarily dismissed a 2255 motion that claimed ineffectiveness of counsel. The circuit found both that there was an insufficient fatual record for summary dismissal and that the defendant had sufficiently alleged prejudice. It remanded the case for further proceedings.

United States v. Sergentakis, No. 07-0809-cr (2d Cir. Januayr 21, 2009), has an interesting discussion of loss calculation methodology in commercial bribery cases.

Crack a Smile

United States v. McGee, No. 08-1619-cr (2d Cir. January 23, 2009) (Pooler, Raggi, Livingson, CJJ) (per curiam)

Darius McGee, convicted of a crack cocaine offense, was a career offender. At his sentencing, however, the district court downwardly departed. It disregarded the career offender guideline range, and sentenced him under the offense level that would otherwise have applied. Subsequently, he moved for a sentence reduction under 18 U.S.C. § 3582(c), seeking the benefit of the retroactive two-point offense level reduction for crack cocaine offenses. Because he had originally been a career offender, however, the district court denied the motion.

Calling the issue a “very close one,” the appellate court disagreed, and remanded the case for reconsideration of the 3582(c) motion. The court noted that McGee’s sentence was indeed “based on” a range that was subsequently lowered by the Sentencing Commission “because the district court premised McGee’s ultimate sentence on the crack cocaine guidelines.” Here, the district court expressly indicated that it was using the offense level that McGee would have been in absent the career offender designation, which suggests strongly that it would have used the lower offense level if the sentencing had taken place after the amended crack guidelines went into effect.

The court also rejected the government’s argument that the policy statement implementing the amendment refers specifically to the pre-departure guideline range. Although this argument was “not without force,” the court concluded that the policy statement “does not preclude the possibility that a defendant who was, even if by virtue of a departure, sentenced ‘based on’ the crack guidelines would be eligible for a reduction.”

Hart's Desire

United States v. Draper, No. 07-2301-cr (2d Cir. January 20, 2009)(Newman, Calabresi, Sotomayor, CJJ)

Defendants Hart and Draper were members of LRP, a drug gang that operated in Brooklyn. In July of 2001, LRP members robbed and murdered a rival. One of the LRP members involved in the killing, Clinton Davy, was picked up and questioned by New York City police officers. Over the next several months, Davy implicated another LRP member, Cory Marcano, ultimately giving information that led to Marcano’s arrest. After Marcano’s arrest, Davy was assaulted on three separate occasions for being a “snitch.”

Relevant to this appeal is the third such beating, which occurred on August 8, 2003. Hart, Draper and other LRP members entered Davy’s apartment and beat him with “a clothing iron, electrical cords, and bleach.” They discussed shooting him too, but the police arrived before they had the chance. Two days later, on April 10, Davy, who had been meeting only with local police and prosecutors, met with federal agents and prosecutors for the first time.

After a jury trial, Hart and Draper were convicted, inter alia, of retaliating against a witness, in violation of 18 U.S.C. § 1513(b)(2) and (f). On appeal, the court held both that the district court improperly charged the jury and that the evidence was insufficient on those counts.

The statute makes it an offense to harm someone, or threaten to do so, “with intent to retaliate” against him for giving information about the commission of a federal offense to a “law enforcement officer.” A “law enforcement officer” is defined specifically as one employed by the federal government. Thus, where the witness initially had contact with state authorities, “the government must provide sufficient evidence that the witness’s contact with law enforcement officials extended beyond her initial contact with the local police, and involved federal officers.”

Here, the jury charge did not require the government to prove that “at least one of the law enforcement officials” that Davy contacted before being beaten was an “officer or employee of the Federal Government.” This was error. In addition, the undisputed facts were that Davy did not have contacts with federal agents prior to his attack. He testified that his first contact with the feds was two days after the attack.

The court accordingly reversed the convictions on the retaliation counts and ordered their dismissal.

Comment

This case is noteworthy for a surprising reason: the defendants did not raise this issue themselves, either in the district court or on appeal. They did not object to the incorrect jury instruction, and their sufficiency argument on appeal was that there was insufficient evidence that they had retaliatory intent. Here, the circuit itself flagged the issue and ordered post-argument briefing on it. Thus, this reversal overcame both the plain error rule and the rule that “ordinarily” arguments not raised on appeal are “deemed abandoned.” The court invoked its “discretion to overlook such failure if a manifest injustice would otherwise result.”

Another tidbit: There is some dispute as to whether the sufficiency of the evidence is to be measured against the charge as given. Under this opinion, it is not.

Ship of Fuels

United States v. Ionia Management S.A., No. 07-5801-cr (2d Cir. January 20, 2009) (McLaughlin, Calabresi, Livingston, CJJ)(per curiam)

In the 1970's, the United States entered into two international treaties, collectively known as MARPOL, intended to eliminate marine pollution by oil. To give effect to MARPOL, Congress enacted the Act to Prevent Pollution on Ships, 33 U.S.C. § 1908(a) (“APPS”), which authorizes the Coast Guard to issue any regulations necessary to carry out the treaty’s provisions. Under APPS, ships are prohibited from discharging oily waste at sea unless the discharged material is properly filtered. In addition, under C.F.R. § 151.25(a), oil tankers of 150 gross tons and above “shall maintain” an oil record book (“ORB”) to record all transfers and disposals of oily waste generated on the vessel.

This case concerns the M/T Kriton, a 600-foot oil tanker managed by the defendant corporation, which delivered petroleum products along the east cost of the United States. The ship’s crew, directed by two of its officers, routinely discharged oily waste into the ocean using a special hose that was designed to bypass the ship’s filtration equipment. The crew also made false entries in the ship’s ORB to conceal the discharges.

After a trial, the corporation was convicted of, among other things, thirteen APPS violations. It challenged them on appeal, arguing that the duty to “maintain” an ORB required it only to have possession of the book, but not to keep it accurately. The circuit disagreed. Without a requirement that the book be accurate, the regulation would be at odds with MARPOL and Congress’ intent to prevent pollution at sea. The court also noted that the plain meaning of the word “maintain” included “to keep in a state of repair, efficiency or validity,” thus in the context of a regulation imposing record-keeping requirements, the duty to “maintain” plainly includes a duty to maintain a reasonably complete and accurate record.

Habeas Corpulent

Dolphy v Mantello, No. 03-2738-pr (2d Cir. January 9, 2009) (Jacobs, Hall, CJJ, Arcara, DJ)

At Seth Dolphy’s state-court criminal trial, the prosecutor exercised a peremptory challenge against the only African-American member of the jury panel, and Dolphy raised a Batson challenge. The prosecutor’s supposedly race-neutral explanation for striking the juror was that she was overweight: “[B]ased on my reading and past experience, ... heavy-set people tend to be very sympathetic toward any defendant.” When the judge asked him if he was “saying that race had nothing to do with it,” the prosecutor agreed. The defense again objected, noting that the same prosecutor had allowed overweight people on juries in other cases. The judge sustained the strike, holding that “I’m satisfied that is a race neutral explanation, so the strike stands.”

Once his conviction was affirmed in the New York State courts, Dolphy filed a pro se § 2254 petition in federal court. A magistrate judge recommended that the petition be granted because the trial court “misapplied Batson when it accepted the prosecution’s proffered race-neutral explanation without assessing credibility or pretext.” The district court, however, disagreed, finding that the necessary credibility finding was implicit in the trial court’s rejection of the Batson challenge.

On appeal, the circuit reversed. This case involves the third step of the traditional Batson inquiry, which “requires a trial judge to make an ultimate determination on the issue of discriminatory intent based on all the facts and circumstances.” The court must somehow “make clear” whether it credits the race-neutral explanation. Here, that standard was not satisfied. While the prosecution proffered a facially race-neutral explanation, it “rested precariously on an intuited correlation between body fat and sympathy for persons accused of crimes (seemingly without regard to the weight of the defendant).”

The trial court’s ruling on the Batson objection made no “inquiry or finding” and simply gave a “conclusory statement” that a race-neutral reason had been offered. This did not “necessarily indicate ... that the trial court credited the prosecution’s explanation.” Rather, it seemed only to indicate that the proffer of a race-neutral explanation “was itself enough.”

Accordingly, the court remanded the case to the district court for a hearing on the prosecutor’s sate of mind at the time. However, if the passage of time has made this “impossible or unsatisfactory” - the trial was in 1997 - the court should grant the petition.

The Rare Necessity

United States v. White, No. 07-1180-cr (2d Cir. January 9, 2009)(Kearse, Sack, Livingston, CJJ)

Police officers entered Anthony White’s home in response to a domestic violence call. According to the officers, they found him in the bedroom. He was sitting on the bed loading a sawed-off shotgun that was pointed at the doorway where the officers stood.

White’s version was that, before the police arrived, his girlfriend had threatened him with the shotgun and he had disarmed her. White claimed that he was protecting both himself and his son, who was also in the house. Finally, he testified that he was unloading the gun, not loading it, when the police arrived, and denied pointing it at them. He said that he had possessed the gun for a total of “three and a half minutes.”

Charged with being a felon in possession, White requested jury instructions both on necessity and “fleeting-possession.” The court refused, instead telling the jury that a defendant’s motive or reason for possessing a firearm was not an element, thus the government need not prove or disprove any “particular reason or motivation.” During jury deliberations, when the jury asked whether there were any exceptions for the law for “self-defense purposes,” the court responded that there “may be” exceptions “in the universe” depending on “the facts of the case,” but that none applied in White’s case. He was convicted and sentenced to eighty-four months’ imprisonment.

The circuit affirmed. It continued its long practice of refusing to decide whether there is a necessity defense to a felon-in-possession charge. The court noted that the statute does not provide for such a defense, but also that some courts have recognized it. Here, however, the court held that even if the defense existed, the facts of White’s case did not support it.

White’s testimony “was clearly sufficient” to establish that he was in imminent danger when his girlfriend pointed the gun at him. But once he disarmed her, any immediate danger to him was dispelled. Nor was the threat to his son sufficiently imminent to trigger a necessary defense charge. The threat that White described was “attenuated and speculative in nature.” Moreover, even if White was fully justified in taking possession of the weapon to safeguard his son, he did not show that he maintained possession of it “only for as long as necessary to dispel any threat.”

The court was even more dismissive of White’s asserted entitlement to a charge on “fleeting” or “innocent” possession. He did not possess the gun for “mere seconds, but picked it up, carried it to another room, began handling ammunition, and all told, had the gun in hand” for several minutes.

On Hold

United States v. Owen, No. 07-4966-cr (2d Cir. January 9, 2009)(Feinberg, Cabranes, Hall, CJJ)

This decision addresses one of the procedural complexities that can arise when a defendant changes counsel on appeal while post-verdict motions are pending in the trial court.

Lance Owen was convicted of a drug offense in the district court. He made a Rule 33 motion that raised ineffective assistance of counsel and newly discovered evidence claims. The court granted the motion based on the newly discovered evidence claim - without addressing Owen's other claims - but the circuit reversed. United States v. Owen, 500 F.3d 83 (2d Cir. 2007). In a footnote, however, that opinion suggested that Owen’s trial counsel might have been ineffective. After the opinion was filed, but before the mandate issued, the district court began proceedings to rule on the ineffectiveness claim.

While those proceedings were pending, the mandate issued, and Owen filed a “protective” notice of appeal of his underlying conviction, which had the effect of putting a halt to the district court proceedings. He then moved for a remand in the circuit so that the district court proceedings could resume, but did not specifically note that the proceedings arose from the Rule 33 motion. A motions panel denied the motion, and the parties submitted merits briefs on the appeal.

This panel, however, concluded that the “protective” notice of appeal had “not yet become effective” because the issuance of the mandate restored the district court’s jurisdiction over the remaining claims in the Rule 33 motion. “Where, as here, the ... order that granted a Rule 33 motion on one of the grounds presented has been vacated solely on that ground - and the other grounds have not been addressed - a notice of appeal is not ‘effective.’”

Thus, a “protective” notice of appeal is to be held in abeyance pending the district court’s resolution of a Rule 33 motion, and will be come effective when the lower court disposes of the last remaining motion.

Crosswalk Puzzle

United States v. Stewart, No. 07-3003-cr (2d Cir. January 8, 2009) (Winter, Miner, Cabranes, CJJ)

Brett Stewart was a passenger in a livery cab that stopped at a red light. Two police officers claimed that the cab’s front wheels ended up in the crosswalk, a traffic violation. They pulled over the cab and recovered a gun from Stewart.

At Stewart’s suppression hearing, the officers gave their account, while the cab driver testified that he stopped before entering the crosswalk, which the district court credited. The court found that the officers had been subject to an optical illusion or distraction; it took judicial notice “of the fact that a stationary object may shift in one’s visual perception as one moves past it [and thus] that an object abutting a straight line may appear to be over that line as an observer moves past and away from that line.” The district court granted the motion, concluding that the police lacked probable cause for the stop and that there was no reasonable suspicion of criminal activity because “a traffic violation for infringing on an intersection does not quality as ‘criminal activity.’”

On the government’s appeal, the circuit reversed, holding that the district court applied the wrong legal standard. A traffic stop “based on reasonable suspicion of a traffic violation comports with the Fourth Amendment.” Neither reasonable suspicion of a crime more serious than a traffic violation nor probable cause is necessary.

On remand, the district court is to determine whether the officers had reasonable suspicion that the cab committed a traffic violation, bearing in mind that “a mistake of fact does not undermine the existence of reasonable suspicion.”

Summary Summary

Here are two summary orders of interest:

In United States v. Mammedov, No. 06-2971-cr (2d Cir. December 30, 2008), the court vacated a restitution order where the district court failed to set a payment schedule and, at least implicitly, ordered that the full amount be paid immediately. Ordering immediate payment when nothing in the record suggests that the defendant can comply is an abuse of discretion.

In United States v. Jibade, No. 08-1746-cr (2d Cir. January 7, 2009), the district court told the defendant that he faced possible deportation for his tax fraud conspiracy conviction when, in fact, deportation was mandatory. The court held that this warning was adequate because it put the defendant "on notice" that his guilty plea had immigration consequences so that he could pursue the matter later. Even assuming, however, that the warning was misleading or inacurate, in violation of Rule 11, the court did not vacate the plea because the defendant did not show a reasonable probability that he would not have pled guilty if not for the statements.

Crack Under Pressure

United States v. Williams, No. 08-1065-cr (2d Cir. January 7, 2009) (Hall, Livingston, Gibson, CJJ)

Here, the defendant, Saquan Lewis, unsuccessfully appealed the district court's denial of his motion for a sentence reduction under 18 U.S.C. § 3582(c) based on the retroactive amendment to the Guideline for offenses involving crack cocaine.

The District Court Proceedings

Lewis had originally pled guilty to trafficking in crack cocaine and a 924(c) charge under a cooperation agreement. At sentencing, he agreed that he was responsible for between 50 and 150 grams of crack which, under the applicable version of the Guidelines, resulted in an offense level of 32, with 3 levels deducted for acceptance of responsibility. His sentencing range on the crack count was 97 to 121 months, but due to his prior felony, he faced a 20-year mandatory minimum on that charge and a 5-year consecutive sentence on the 924(c). After granting the government’s motion under U.S.S.G. § 5K1.1 and 18 U.S.C. § 3553(e), the court sentenced him to a total of 100 months’ imprisonment. There was “no evidence” that the range recommended by drug Guideline “played any role in the district court’s determination” of the sentence.

Under the November 1, 2007, crack amendment Lewis’ offense level on the drug charge would have dropped by two levels, to 27. But the district court denied his § 3582(c)(2) motion because the original sentence was based on a § 3553(e) departure and the original sentencing range “had no bearing” on the sentence.

The Appeal

The circuit affirmed. Section 3582(c)(2) authorizes district courts to modify the sentence of a defendant “who has been sentenced to a term of imprisonment based on a sentencing range that has subsequently been lowered by the Sentencing Commission ... if such a reduction is consistent with the applicable policy statements issued by the Sentencing Commission.” Lewis, although nominally exposed to a sentencing range of 97 to 121 months, in fact, was subject to a 240-month mandatory minimum and, under U.S.S.G. § 5G1.1(b), that sentence became “the guideline sentence.”

Lewis argued that, as a matter of statutory interpretation, the term “Guideline sentence” was not the same as the term “Guideline range,” but the circuit disagreed. For him, the original range of 97 to 121 months “had no bearing on what became Lewis’ Guideline sentence because the 240-month mandatory minimum” subsumed and displaced “the otherwise applicable guideline range.” Once the mandatory minimum applied, his sentence was no longer “based on a sentencing range that has subsequently been lowered by the Sentencing Commission.”

This conclusion was further supported by a policy statement that provides that a reduction is not authorized under § 3582(c)(2) if the Guideline amendment “does not have the effect of lowering the defendant’s applicable guideline range because of the operation of another guideline or statutory provision” such as a statutory mandatory minimum term of imprisonment. Lewis was, in fact, subject to a 240-month mandatory minimum, and the court rejected his argument that, in departing below that minimum, the district court “must have” relied upon the original crack cocaine Guideline range. The district court expressly held that this range had “no bearing” on his sentence. The circuit approved of this reasoning, noting that it was consistent with its own rule that § 3553(e) departures may be “based only on substantial assistance to the government and on no other mitigating considerations.”

Nothing In Store

United States v. Uddin, No. 07-3121-cr (2d Cir. January 6, 2009) (Kearse, Sack, Katzmann, CJJ)

Mohammed Uddin owned a small grocery store in Manhattan, and used it to commit food stamp fraud between 2003 and 2006 by dispensing cash in exchange for food stamps. He pled guilty but admitted in his allocution only that the amount of fraud exceeded $5,000 - the jurisdictional amount. After a Fatico hearing, the district court concluded that the loss amount was $377,799, and sentenced Uddin accordingly. On appeal, Uddin challenged the loss calculation.

The District Court Proceedings

The government had been seeking a loss in excess of $1.2 million, arguing that all of Uddin’s food stamp redemptions exceeding $50 during the relevant time period were fraudulent. Uddin argued instead that the loss should be limited to $5,000, the amount he admitted in his plea.

The evidence at the Fatico hearing showed that his store redeemed several times more in food stamp benefits than did two comparably sized stores nearby, and that he exchanged food stamps for cash with a CI on fourteen occasions in 2006 alone.

An agent also testified that, based on his experience, any food stamp redemptions of more than $50 at Uddin’s store were fraudulent. He characterized this as a “conservative” estimate based on the fact that the store had a very limited supply of eligible food items for sale, and those that it did stock were “dusty” and “outdated.” In addition, the store was small, lacked baskets or carts, and did not offer delivery service. Video surveillance in 2006 showed no customers leaving the store carrying groceries worth $50 or more; some appeared to be counting cash as they exited.

A second agent testified that, while the store had been well stocked in 2002 - when it first obtained its license to redeem food stamps - by 2006 the store sold very little eligible food. Moreover, the average food stamp transaction in New York City was about $12, thus the activity in Uddin’s store was quite unusual.

After hearing this testimony, the district court concluded that the government’s estimate of loss was too high, while Uddin’s was too low. The court first assumed that the store’s stock declined steadily and gradually between 2002 and 2006. This led it to discount the government’s proposed loss amount by half, which led to a loss of $629,665. The court also disagreed with the government that every transaction of $50 or more was completely fraudulent, and discounted that assumption by forty per cent. Sixty per cent of $629,665 is $377,799, and that was the amount the court settled on.

The Circuit’s Decision

The court of appeal affirmed, noting that the Sentencing Guidelines require only a “reasonable estimate” of loss in financial crimes. A court can make such an estimate by “extrapolating the average amount of loss from known data.” Here, the district court’s estimate was reasonable and was supported by a preponderance of the evidence, given the evidence of the decline in the store’s stock during the relevant time period. The use of the $50 transaction figure as a “general point of reference for likely fraudulent transactions” was likewise reasonable. Even if “not based on precise data,” it was based on “known” data such as the average dollar amount of food stamp redemptions at similar stores in New York City and the witnesses’ observations of Uddin’s own store.

The court then added - not particularly helpfully - that while “there will undoubtedly be situations in which a district court’s estimate of a loss amount falls outside the boundaries of reasonableness, we need not define precisely what those boundaries are. It is enough that the district court here did not exceed them.”

Lies My Broker Told Me

United States v. Kelley, No. 06-5536-cr (2d Cir. January 5, 2009) (per curiam)

Kevin Kelley, a stock broker, was convicted of securities and wire fraud based on his fraudulent activities with respect to four separate securities. For each of them he would either (1) purchase stocks for his clients without their authorization (2) do so without disclosing his own interest in the company or (3) misappropriate client funds for his own use. Kelley subsequently deceived his clients about the value of their investments by sending them false account statements.

Over his objection, those account statements were admitted into evidence on the securities fraud counts. On appeal, he pursued that claim, again without success. Kelley’s specific argument was that under 15 U.S.C. § 78j - section 10(b) of the Securities Exchange Act of 1934 - it is a crime to “employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance.” His point was that since the deception must be made “in connection with” the purchase or sale of the stock, statements like those at issue here, which he created and disseminated up to four years later, did not fall under the statute.

The court agreed with Kelley in principle, but not in application. The 10(b) violations here arose from Kelley’s broader scheme to induce his clients to buy the stocks, or his use of client funds to buy them without authorization, and not from the statements themselves. Rather, the statements were properly introduced at trial as evidence of Kelley’s intent to defraud and of the scope of his scheme. They also showed that his actions were not “simple mistakes but were instead part of a large, intentional scheme to defraud.”

The court disposed of Kelley’s other arguments in a summary order bearing the same docket number, in which there is one holding of note. The trial court permitted the government to introduce into evidence tax returns of one of the companies involved in the scheme as a “statement by the party’s agent or servant” under Fed.R.Evid. 801(d)(2)(D). On appeal, while the court rejected a Crawford argument with respect to those returns, it agreed that it was error - albeit harmless - to admit an unsigned tax form under this rule.

Dogged Determination

United States v. Hayes, No. 07-0063-cr (2d Cir. December 24, 2008) (Miner, McLaughlin, Pooler, CJJ)

On the morning of September 3, 2002, Derrick Hayes overdosed on cocaine. After he was put in an ambulance, his girlfriend gave local police officers permission to search the house. They found evidence suggesting that Hayes was a large-scale drug trafficker, so they suspended the search and made arrangements to obtain a search warrant. One of the officers, while waiting for the warrant, released a drug-sniffing dog, “Kilo,” from the car, where it had been confined for several hours. During a Frisbee came with the officer in Hayes’ front yard, the dog alerted. The officer encouraged the dog to continue investigating, and it ran around Hayes’ house, toward the back of a detached garage. From an area of thick brush, about sixty-five feet from the house, and near the border with a neighbor’s property, the dog retrieved a black bag. Without waiting for the warrant, the officer opened the bag and found about fourteen ounces of cocaine.

In the district court, Hayes unsuccessfully alleged that his Fourth Amendment rights had been violated. The circuit affirmed.

The Dog Sniff

Hayes first argued that Kilo’s sniff was a warrantless search of his property. The Second Circuit has held that a canine sniff outside the door of a private residence - unlike one at an airport or other public area - is a “search,” and thus subject to the constraints of the Fourth Amendment. Hayes argued that this rule should apply here, but the court disagreed. The contents of the black bag that Kilo detected were not inside his residence; they were outside, in the brush some sixty-five feet away. Hayes had no legitimate expectation of privacy in “the air in [his] front yard.”

Curtilage

In addition, the area where the bag was found was not part of the curtilage of Hayes’ home. The court held that Hayes did not have a reasonable expectation of privacy in the area, even assuming that Kilo passed through the curtilage en route to the black bag. “Such a transient trespass does not implicate the Fourth Amendment where the incriminating evidence is discovered outside the curtilage.”

The court then gave a detailed analysis of the curtilage question itself. This issue is governed by Fourth Amendment principles, not common law property factors, and there is a four-factor test: the proximity of the area to the main residence; any enclosure of the area; the use of the area; and steps taken to protect it from view. See United States v. Dunn, 480 U.S. 294, 300 (1987).

As to proximity, the sixty-five-foot distance between Hayes’ house and the brush area weighed against a proximity finding. While in some cases such a distance could satisfy the proximity factor, here the brush was a border and served as the fringe of Hayes’ property in relation to his home.

Hayes conceded that there was no enclosure, but argued that the nature of his property should exempt him from this requirement. The court disagreed because the purpose of the enclosure factor is to determine those areas the homeowner intended to keep private.

As for use, the only use Hayes made of the area was to hide the black bag. It was of no moment that Hayes expected that the area would be immune from police scrutiny. “A finding of curtilage cannot be supported absent evidence in the record that the area was designated and used for other intimate purposes that one might ordinarily conduct inside of one’s home.”

Finally, the court found that Hayes took no meaningful steps to shield the area in question from observation. There was no fence or other structure, and the general area was visible from the street.

The Opening of the Bag

The court also rejected the claim that the officer should have waited for the warrant before he opened the bag. Since there was no expectation of privacy in the “non-curtilage area” where the bag was recovered, there was likewise no expectation of privacy in the bag itself.

Summary Summary

There were some interesting summary orders this week.

In United States v. Romero, No. 06-1199-cr (2d Cir. December 18, 2008), the district court imposed a $10,000 fine, observing that the debt would make the defendant eligible for work in prison. That observation was incorrect, since a fine is not a prerequisite for obtaining prison employment. The circuit remanded so that the lower court can reconsider whether to impose a fine.

In United States v. McFadden, No. 07-3614-cr (2d Cir. December 17, 2008), the court did not enforce an appeal waiver in a plea agreement because, during the plea allocution, the court did not specifically flag the waiver, and even implied that McFadden had a limited right to appeal his sentence. As a result, the appellate court ordered a Crosby/Regalado remand.

In United States v. Sykes, No. 07-0505-cr (2d Cir. December 17, 2008), the court strongly suggested that a search of the defendant’s vehicle was outside the scope of a search warrant that authorized a search of his residence “including all storage areas and curtilage,” although it concluded that the admission of evidence recovered from the vehicle was harmless error. The court noted that deeming an area “curtilage” does not by itself authorize the search of a vehicle and would, in this case, have required further fact finding by the district court.

In United States v. Vargas, No. 08-0295-cr (2d Cir. December 17, 2008), the district court erroneously instructed the jury that it could presume an effect on interstate commerce if either illegal drugs or the proceeds of their sale was the object of a robbery, although the error was harmless.

Taking Stock

United States v. Elgindy, No. 06-4081-cr (2d Cir. December 17, 2008) (Sack, Katzmann, CJJ, Rakoff, DJ)

Defendants Elgindy and Royer were convicted of securities fraud-based racketeering counts, as well as related extortion charges relating to a complex stock manipulation scheme. On appeal they challenged, inter alia, venue and the district court’s jury instructions on the securities fraud counts. The circuit affirmed.

The Scheme

In 1998, Elgindy started Pacific Equity, a company that provided information for stock investors. It had a publicly available website that published negative information about publicly traded stocks, while a subscriber-only site profited from this information by advising its subscribers to short-sell those same stocks. In 2000, Elgindy began receiving misappropriated negative law enforcement information about certain stocks from Royer, who was then an FBI agent. Elgindy would pass on this information to his subscribers and instruct them to short the stock before he made the information public. Then he would release the information to the public through his other website, and instruct his subscribers to release it through other public means, so that they could profit from the resulting drop in the stock’s price. In addition, Elgindy himself traded on and profited from the misappropriated information. Eventually, Royer left the FBI and began working directly for Elgindy. He continued to provide misappropriated information, however, using other law enforcement officers as his sources.

The defendants also used this set-up to commit extortion. At one point, they learned that a company’s CEO had been convicted of a drug felony that had been expunged. Elgindy described the CEO as a “three time felon” on the subscriber web site, and told him that he would not leave him alone unless the CEO gave him a discounted block of stock.

Venue

The defendants challenged the sufficiency of the evidence of Eastern District venue. Since they were charged with multiple counts, venue had to be in a district where all of the counts could be tried. Here, that standard was satisfied.

The there was Eastern District venue on the securities fraud counts because seven of the subscribers to Elgindy’s private website were located in that district, Elgindy sent hundreds of email messages to those subscribers containing Royer’s misappropriated information, and trades in the affected stocks were made by other investors residing in the Eastern District. While there was no “direct evidence” that Elgindy’s Eastern District subscribers themselves traded on the information, that was “of no moment.” Venue need only be proved by a preponderance, and “the jury could reasonably infer that it was more likely than not that one or more of these subscribers traded in the applicable securities.” Moreover, it was reasonable for the jury to find that Elgindy’s subscribers followed his instructions to disseminate information, which impacted the purchase of those stocks by non-subscribers who lived in the Eastern District.

These activities satisfied the “substantial contacts” test, which looks at the “site of the defendant’s acts, the elements and nature of the crime, the locus of the effect of the criminal conduct, and the suitability of the [venue] for accurate factfinding.”

These same Eastern District contacts also satisfied the racketeering and conspiracy counts.

As for the extortion counts, venue lay in the Eastern District for the similar reasons. Disseminating the fact that the CEO was a “three time felon” put downward pressure on the company’s stock, which in turn provided Elgindy with the ammunition to extort the CEO into giving stock Elgindy. Moreover, at least one of Elgindy’s Eastern District subscribers played an active role in those events.

The Securities Fraud Instructions

The defendants were convicted of securities fraud on two theories: that they unlawfully traded on material confidential information, and that they engaged in market manipulation.

For the first theory, they argued that the law enforcement information that Royer obtained was not “nonpublic,” since much of it was also publicly available. They claimed that it was error for the court to instruct the jury that “the fact that information may be found publicly if one knows where to look does not make the information ‘public’ for securities trading purposes unless it is readily available, broadly disseminated, or the like.”

The court found no error in this instruction. Borrowing from a Supreme Court case interpreting the Freedom of Information Act, it held that “[t]he law enforcement reports that Royer misappropriated were not themselves public in any practical sense, even if some of the sources from which they were compiled could be accessed by the public. Moreover, the manner in which law enforcement information was combined in the reports was itself nonpublic and helped inform its relevance for trading purposes.” The court did note, somewhat cryptically, however, that, “While the trial court’s instruction here given might not be universally appropriate, in the factual context of this case it correctly stated the relevant principles the jury needed to apply.”

As for market manipulation, the district court instructed the jury that the essence of the manipulation was “the deception of investors into believing that prices at which they purchase and sell securities are determined by the natural interplay of supply and demand,” and thus that “any conduct” that is “designed to deceive or defraud investors” by affecting the price of securities is prohibited. The defendants claimed that this was error because it permitted a conviction without a finding that the defendants “disseminated false information to the marketplace.”

But the relevant statute prohibits the use of “any manipulative or deceptive device or contrivance,” which the court held “extends to manipulation of all kinds, whether by making false statements or otherwise.” Here, the defendant “sought to artificially affect the prices of various securities by directing ... subscribers to trade and disclose the negative information at times and in manners orchestrated by the defendants that were dictated not by market forces, but by defendants’ desire to manipulate the market for their own benefit.” This conduct “squarely meets the ordinary meaning of ‘manipulation.’”

Restoration Drama

United States v. Bullock, No. 07-3059-cr (2d Cir. December 17, 2008) (Jacobs, Minor, Sotomayor, CJJ)

Bullock, a previously convicted felon, was convicted, after a jury trial, of possessing ammunition. He was subject to a fifteen-year mandatory minimum under the Armed Career Criminal Act (“ACCA”), and actually received a sentence of 188 months. On appeal, he argued principally that his prior convictions - three robberies - were not ACCA predicates because his civil rights had been restored. See 18 U.S.C. § 921(a)(20). Specifically, he noted that he had “been off parole for 11 years,” was “entitled to vote,” and that New York law did not restrict his right to possess ammunition.

The circuit disagreed. Restoration of civil rights has three components - the right to vote, the right to serve on a jury, and the right to hold elective office. The court agreed that Bullock’s rights to vote and hold office were “arguably” restored by operation of law under N.Y. Elect. Law § 5-106 and N.Y. Civ. Rights Law § 79. But, since Bullock was not pardoned and his prior convictions had not been “expunged,” he still did not have the right to serve on a jury in New York. Accordingly, the district court properly counted Bullock’s as ACCA predicates.

Summary Summary

Here is the latest crop of summary orders of interest:

In United States v. Adelson, No. 06-2738-cr (2d Cir. December 9, 2008), a government appeal, the court affirmed a 42-month sentence, which was a substantial downward variance from the guidelines, which recommended life. Citing Cavera, the court noted that for "financial offenses" sentences "if adequately explained, should be reviewed especially deferentially."

In United States v. Cardenas, No, 06-5601-cr (2d Cir. December 9, 2008), the court remanded for an evidentiary hearing as to whether an “oral cooperation agreement” existed. The defendant alleged that there was, and there was not “overwhelming evidence to the contrary.” Moreover, the defendant’s allegations were not contradicted by any of his prior statements. Since the defendant made “sufficiently specific allegations under oath to raise issues of material fact as to the existence of the alleged oral agreement . . . the record was insufficient to deny the motion without inquiry.”

In United States v. Ballares, No. 07-5845-cr (2d Cir. December 8, 2008), the court held that the defendant waived his objections to a magistrate judge’s report and recommendation because he filed the objections out of time.

And, in United States v. Bennett, No. 06-2443-pr (2d Cir. December 3, 2008), on the appeal of the denial of a 2255 motion, the court remanded for further factfinding on whether defense counsel was ineffective by “overriding [the defendant’s] right to testify on his own behalf.”

Run-On Sentence

United States v. Chavez, No. 05-4679-cr (2d Cir. December 8, 2008) (Kearse, Calabresi, Sack, CJJ)

Jaime Chavez was convicted after a jury trial of a drug conspiracy and a § 924(c) offense, and faced a 50-year mandatory minimum: due to a prior conviction there was a 20-year minimum on the drug charge; and, because the gun had a silencer, he faced a 30-year mandatory consecutive sentence for the gun. The guidelines recommended a minimum sentence of 60 years; 30 for the drugs plus 30 for the gun, and the district court sentenced him to 55 years.

Chavez had asked the court to shorten the sentence on the drug charge in light of the long sentence he faced for the gun, but the district court concluded that it could not lawfully do this. Rather, the court independently selected 25 years as the appropriate sentence for the drug conspiracy, then imposed the mandatory 30-year § 924(c) sentence.

On appeal, Chavez argued that the district court misunderstood its sentencing authority, but the circuit affirmed. It read § 924(c) as “plainly designed to impose penalties that are cumulative to the penalties imposed for other crimes.” Moreover, there is nothing in § 3553(a) that would give a district court the authority to reduce a sentence on one count in light of the penalties prescribed for another: “consideration of only the factors set out in § 3553(a) could lead the court to conclude that a shorter total sentence than the total specified for a § 924(c) conviction and recommended for the underlying crime would be appropriate.” Thus, a sentencing court must first determine the appropriate prison term for the count to which the § 924(c) count is to be consecutive, then impose the gun sentence. If the court reduces the prison term on the underlying count on the ground that the total sentence is too severe, it “conflates the two punishments and thwarts the will of Congress that the punishment imposed for violating § 924(c) be” additional and consecutive.

Comment

This decision is unconvincing. Several of the § 3553(a) factors arguably permit a sentencing court to consider the § 924(c) sentence in selecting an appropriate sentence on the underlying count: the "nature and circumstances of the offense"; the need for the sentence to reflect the "seriousness of the offense"; the "respect for the law" and "just punishment" provisions and the deterrence provisions all seem to cover this. Moreover, in a similarly structured statue, 18 U.S.C. § 1028A, which mandates a 2-year consecutive sentence for aggravated identity theft, Congress specifically directs that the sentencing court “shall not in any way reduce the term to be imposed” on the underlying offense “so as to compensate for, or otherwise take into account,” the § 1028A sentence. The absence of a similar instruction in § 924(c) would seem to suggest that the circuit got this one wrong. Finally, and in any event, under Kimbrough, district courts are clearly permitted to “thwart the will of Congress” in exercising their sentencing discretion.

Take It To The Banc

United States v. Cavera, No. 05-4591-cr (2d Cir. December 4, 2008) (en banc)

Gerard Cavera pled guilty to participating in a scheme in which guns were purchased in the South then transported to New York City for sale. At sentencing, the district court imposed a sentence six months longer than the top of the Guideline range, and an above-Guideline fine, based on two “location specific” concerns. The court held that firearms offenses are more dangerous in densely populated urban environments and that the need for deterrence was greater because New York’s strict gun laws made it one of the few places where gun-running was profitable.

On Cavera’s appeal, a panel of the court vacated the sentence as procedurally unreasonable (the case was blogged here twice, most recently in October 2007 under the title Location, Location, Location). The circuit then took up the case en banc. Although the court divided deeply on some issues, the majority vacated the panel opinion and affirmed the sentence.

The Deterrence Theory

The en banc majority opinion, written by Judge Calabresi, agreed that the district court’s deterrence rationale was a valid basis for an upward variance.

There is “no special reason to think that reliance on a locality-based categorical factor is - without more - suspect.” And, the “existence and enforcement of strict local gun laws in a particular jurisdiction is likely to make the cost of getting a gun in that jurisdiction higher than in a jurisdiction with lax anti-gun laws.” This, in turn, increases “the profits to be had from trafficking guns into the strong-enforcement jurisdiction.” The penalty thus needs to be “correspondingly higher to achieve the same amount of deterrence.” The majority cited “considerable” empirical support for this position, although it noted that, “[l]ike any economic theory,” the point was not without controversy. Nevertheless it was not an abuse of discretion for the district court to rely on this type of reasoning.

Judge Straub dissented, and was joined by Judges Cardamone, Sotomayor and Pooler. Judge Straub argued that it was error for the district court to conclude that, “as a general matter,” greater deterrence was necessary because gun trafficking is more profitable in New York than elsewhere, although there would have been no error if the district court had found that Cavera himself had been motivated by such greater profits.

More importantly, the dissenters disagreed that, as a factual matter, gun trafficking was more profitable in New York. Their review of the information relied on by the district court pointed to no such conclusion.

Judge Sotomayor wrote a separate dissent, joined by the other dissenters, that made this same point, describing the district court’s deterrence reasoning as “unsubstantiated and unconvincing,” since it was based on a single law review article that “hypothesized - without the benefit of data - that gun trafficking might be more profitable in areas with strict gun laws.” This opinion also points out that the majority should not have relied on data and economic theories not referenced by the district court. This “shifts the appellate court’s role from reviewing the lower court’s sentencing rationale to crafting it.”

The Dangerousness Theory

The members of the court had an even wider range of views on the district court’s conclusion that firearms offenses are more dangerous in densely populated urban areas. The court did not rule on the issue.

As summarized in the majority opinion, “some of us would hold that the district court, in its wide discretion, permissibly relied on a determination that trafficking guns into an urban area is likely to create more harm than the national average offense envisaged by the Guidelines. Others would hold that the district court erred to the extent that it based the sentence on the notion that guns are more dangerous in metropolitan areas. Still others are unsure whether reference to such broad, nonspecific geographical and demographic factors is appropriate in the context of this case.”

Other Interesting Tidbits

The majority opinion has a lot of other interesting, if more general, material that is worth looking at.

1. En Banc procedure

This opinion gives nice explanation of the court’s view of the en banc procedure itself, a procedure that the court uses “sparingly.” It notes that when the members of the court are in “substantial agreement,” an en banc opinion “gives us the opportunity to speak somewhat more broadly, for the purpose of giving guidance to district courts in this Circuit and to future panels.” It also notes that when the members of the court “possess significantly differing views on a particular issue,” it is “often wise to avoid speaking as an en banc Court unless the point is one that is strictly necessary to decide the case.” This is interesting, as it might explain the infrequency of en banc rehearing in this circuit.

Most importantly, however, Judge Calabresi’s majority opinion seems to have abandoned, sub silentio, the circuit’s annoying practice of using the phrase “in banc” instead “en banc.”

2. Substantive Reasonableness

The majority opinion changes the court’s standard for substantive sentencing review, even though the court did not review Cavera’s sentence substantively. From now on, the court will “set aside a district court’s substantive determination only in exceptional cases where the trial court’s decision cannot be located within the range of permissible decisions ... . To the extent that our prior cases may be read to imply a more searching form of substantive review, we today depart from that understanding.”

The opinion also describes the substantive review process in detail. First, the court takes into account “the totality of the circumstances, giving due deference to the sentencing judge’s exercise of discretion, and bearing in mind the institutional advantages of district courts.” The Guideline range is not presumptively reasonable, while a non-Guideline sentence is not presumptively unreasonable, and there need not be “extraordinary” circumstances to justify one.

Substantive review is also informed by 18 U.S.C. § 3661, which provides that there is “no limitation” on the information about the defendant that a court can consider “for the purpose of imposing an appropriate sentence.” Section 3661 is not a “blank check” for district courts, however. A appellate court will consider “whether a factor relied on by a sentencing court can bear the weight assigned to it” under the totality of the circumstances of the case.

The court recognizes that a district court may vary from the Guidelines based solely on a policy disagreement, even where that disagreement applies to a wide class of offenders or offenses. Variances from the Guidelines will “attract greatest respect” on appeal when the judge finds that the case is outside the “heartland,” while a finding that a Guideline sentence does not properly satisfy § 3553(a) in a “mine-run case” will be subject to “closer review.”

The question of when a sentence merits “closer review,” however, is still evolving. “More will have to be fleshed out as issues present themselves.”

3. Procedural Reasonableness

Procedural review entails, in very large part, considering the district court’s explanation for the sentence. An adequate explanation is a “precondition for meaningful appellate review.” The explanation must satisfy the reviewing court that the district court “has considered the parties’ arguments and that it has a reasoned basis for exercising its own legal decisionmaking authority.”

A district judge imposing a non-Guideline sentence “should say why she is doing so” and should “bear[] in mind that a major [variance]... should be supported by a more significant justification than a minor one.” However, once the appellate court is “sure” that the sentence “resulted from the reasoned exercise of discretion, we must defer heavily to the expertise of district judges.”

Such deference might well “result in substantial variation among district courts,” but this is a “necessary cost” of the Booker remedy. In its recent cases, “the Supreme Court has made clear its view that disparities in sentences imposed by different district judges are more likely to reflect justified differences than are those arising from difference of opinion among appellate panels.”

Who’s Your Daddy?

United States v. Connolly, No. 06-3139-cr (2d Cir. December 4, 2008) (Straub, Raggi, CJJ, Sessions, DJ)

Odell Connolly was born in Panama on April 21, 1968. His mother was a local, but his father was a United States citizen. They were not married. The father had been drafted into the United States Army in 1966 and was on active duty in the Panama Canal Zone until eighteen days before Connolly was born. After that, he was transferred to the Ready Reserves; he performed no further duty or services for the army, and received no pay or other form of government compensation. Although the army had the right to recall him to active duty, it never did so, and he was discharged in 1972.

Connolly legally entered the United States in 1993, but was deported in 1998 after a drug conviction, without asserting a claim to U.S. citizenship. He reentered illegally sometime after January 2002, and in 2005 was charged with illegal reentry. He defended the case both in the district court and on appeal by arguing that under 8 U.S.C. § 1403, he was a U.S. citizen.

The circuit disagreed. Section 1403 grants citizenship to anyone born in Panama on or after February 26, 1904, “whose father or mother or both at the time of the birth of such person” was a U.S. citizen “employed by the Government of the United States.”

Connolly’s case presented two questions. The first was whether his father was his “father” under the statute, since Connolly was born out of wedlock. In resolving this against Connolly, the district court had relied on an obscure interpretation letter ostensibly issued by the INS in sometime in 2001 that provided that the term “father” in this statute excluded the father of a child born out of wedlock unless the child had been legitimated. The district court gave this letter Chevron deference, and accordingly found that Connolly’s father was not, in fact, his “father.”

The circuit was not convinced. First, the letter was of dubious provenance, existing only as a Westlaw citation, with no “date or any other publication information that would help to identify how it came to exist.” Moreover, Chevron deference is only warranted where Congress has not spoken clearly on the issue. But here it has. The statute uses the term “father” without modification, restriction or exception, and the ordinary meaning of “father” is a “male parent.” Nor did the absence of statutory language distinguishing children on the basis of legitimacy create an ambiguity. When Congress has wanted to distinguish fathers of children born out of wedlock in title 8, it has done so. The court was also skeptical of INS letter itself: its lack of “thoroughness”; its poor “reasoning”; and the “limited relevance” of its sources. Finally, the court noted that a “more recent” pronouncement by the Department of Justice reached the contrary conclusion.”

The court stopped short of actually holding on the issue, however, because it held that Connolly could not establish that his father was “employed by the Government of the United States” when Connolly was born, in light of the fact that the father had been separated from active military duty eighteen days before Connolly’s birth. The plain meaning of “employ” is to “use or engage the services of” or “to provide with a job that pays wages or a salary.” In addition, when Congress does not provide a definition of the term “employee,” courts must assume that it had in mind “the conventional master-servant relationship” under common law. Under this test, the father was not “employed” after his separation from active duty. After leaving Panama, he returned to the job he had before being drafted; he did not participate in training, get paid a salary or receive another compensation. While army reservists serve a “necessary and valuable purpose,” this does not “constitute an employment relationship under the ordinary meaning of the statutory language.”