Wednesday, February 01, 2017

Vacating October Decision, Court Holds Return of Indictment Not Necessarily Fatal to Appellate Jurisdiction over Grand Jury Matters

On rehearing, a unanimous panel changes course in In re Grand Jury Matter #3, No. 15-2475 (Jan. 27, 2017), holding in this “out-of-lane” case that appellate jurisdiction survived the return of an indictment against a target-turned-defendant challenging a document's presentation to the grand jury. Reaching a question that had escaped review under its original decision, the Court now concludes that the district court erred in holding the crime-fraud exception to have vitiated work product protection for the document, an email the target had received from his attorney and forwarded to his accountant.

Identifying the target as John Doe, the opinion’s discussion of the underlying investigation is relatively spare, framing the email’s relevance in relation to the government’s theory that Doe executed a sham transfer of his company to a third party in order to mitigate liability in a class action suit challenging the company’s practices. The accountant produced the email in response to a subpoena, but the next day the accountant’s attorney sought to recall the email on the ground that its disclosure had been inadvertent. The government, however, retained the email and asked the district court for authorization to present it to the grand jury. The court granted permission, reasoning that while the email constituted attorney work product, it was subject to disclosure under the crime-fraud exception. Doe then filed an interlocutory appeal.

While Doe’s appeal was pending, the government presented the email to the grand jury and secured an indictment on RICO and other charges. Following oral argument but before decision, the government presented the email again to a second grand jury weighing a superseding indictment. Writing for a split panel, Judge McKee reasoned in an October 28 decision that the email’s presentation, along with the return of the indictment, had mooted the controversy, requiring dismissal of the appeal. Judge Ambro dissented on the view that the decision was contrary to precedent and counterproductive from the standpoint of judicial efficiency.

Doe petitioned for rehearing in November, and in December the second grand jury returned a superseding indictment. Last week, a unanimous panel granted the rehearing petition and adopted Judge Ambro’s analysis in a per curiam opinion. “[B]ecause in limited circumstances we take pre-indictment appeals and begin to decide them,” the Court reasons, “we should not reflexively dismiss those appeals — wasting the parties’ effort as well as ours — simply because an indictment is filed.”  Instead, the Court holds, appellate jurisdiction survives so long as “grand jury proceedings continue.” In Doe's case, the Court relates, they do: the second "grand jury is still investigating other charges relating to ownership of [the putatively transferred company], though the Government represents that it currently has no plans to seek additional charges based on the email."

Having confirmed jurisdiction, the unanimous panel proceeds to hold that presentation of the email to the grand jury was error. The crime-fraud exception did not apply because “an actual act to further the fraud is required before attorney work product loses its confidentiality.” This act-in-furtherance requirement, the Court stresses, “provides a key safeguard against intrusion into the attorney-client relationship, and we are concerned that contrary reasoning erodes that protection.” As Doe had done no more than forward the email to his accountant proposing “to discuss” the matter further, the record showed only that he "at most thought about using his lawyer’s work product in furtherance of a fraud, but he never actually did so."

In closing, the Court offers several cautionary remarks. "[M]any appeals involving grand jury proceedings" will still "become moot after the return of an indictment" because grand jury proceedings will have concluded. And in the event Doe is convicted and appeals, the error will not automatically guarantee him a new trial, but be subject to review for harmlessness.

Wednesday, January 11, 2017

Definition of Crime of Violence Under 18 U.S.C. §16(b) is Unconstitutional

      The Third Circuit ruled that the definition of crime of violence under 18 U.S.C. § 16(b) is unconstitutionally vague, and therefore the Petitioner’s prior conviction did not constitute a crime of violence.
      In Baptiste v. Attorney General, 841 F.3d 601(3d Cir. 2016), the Third Circuit first analyzed the New Jersey aggravated assault statue noting that it covered a “wide array of conduct.”  The appellate court further noted that a defendant could be convicted under this law based on: (1) intentional use of force, (2) conduct that presented a substantial risk he or she would use force or (3) conduct that presented no risk of intentional use of force.  The result was a defendant could be convicted under the same statute “for conduct as dissimilar as an intentional act of physical violence (first category of conduct) and drunk driving causing accidental injury (third category of conduct).”  Ultimately, the Third Circuit concluded that reckless second-degree aggravated assault, in “the ordinary case,” creates a substantial risk of intentional use of force and is therefore categorically a crime of violence under § 16(b).
      However, due to the holding in Johnson v. United States, 135 S.Ct. 2551 (2015), the Third Circuit then went on to find § 16(b) was void for vagueness under the Due Process Clause, joining the Sixth, Seventh, Ninth and Tenth Circuits, all of which have previously found §16(b) unconstitutionally vague and invalid.  Therefore, the aggravated assault conviction was not a crime of violence. 

      Nevertheless, Petitioner was still found to be removable because the crime of reckless second-degree aggravated assault is a crime involving moral turpitude. 

Monday, January 09, 2017

Divisible Statutes and the Means/Elements Test Under Mathias

In United States v. Henderson, 841 F.3d 623 (3d Cir. 2016), the Third Circuit ruled that Pennsylvania’s Controlled Substances Act was a divisible statue, and thus the district court was correct in applying the modified categorical approach to determine if a conviction under that statue was a “serious drug offense” under the Armed Career Criminal Act (“ACCA”).  The statute was divisible because the controlled substance schedules set forth different elements of the offense, not different means of committing the same offense.

In reaching its decision, the Third Circuit applied the means/elements test established by the Supreme Court in Mathias v. United States, 136 S.Ct. 2243 (2016).  Mathias set forth three methods of determining if a factor is a distinct element of the offense, or simply a separate means of committing the offense.  Courts should consider (1) whether a state court has decided the matter; (2) the language of the statute; and (3) the record itself.  For the statute in dispute in this case, a state court had already found that the type of drug involved in a case was a distinct element of the offense, not a means of committing the offense.  Second, the language of the statute did not simply set forth a “list of illustrative examples” of drugs that lead to a violation of the statute, but rather the statute contains “a disjunctive and exhaustive list” for drug types that are “alternative elements[,] not separate means of commission” of the offense.  Finally, the record in the underlying case, particularly the charging documents, showed the type of drug was an element of the offense, as it was the involvement of heroin that made this a serious drug offense. 

The appellate court noted that in performing a means/element review under the third method – examination of the record – courts are not limited to “actual conviction documents,” but rather courts may look to charging instruments, plea forms, sentencing orders, conviction documents and “other reliable judicial records.”

Finally, the Third Circuit ruled that the defendant’s conviction under the Pennsylvania law, involving heroin, qualified as a predicate offense under ACCA. 

Wednesday, December 28, 2016


In two cases decided on December 19, 2016, United States v. Robinson, No. 15-1402, 2016 WL 7336609 and United States v.Galati, No. 15-1609, 2016 WL 7336610, the Circuit adopted a novel approach to addressing whether an offense qualifies as a crime of violence under 18 U.S.C. § 924(c).  The Circuit held that the categorical approach, which directs a court to look only at the elements of the particular offense of conviction to determine whether it qualifies as a crime of violence (See Taylor v. United States, 495 U.S. 575 (1990)), does not apply when a 924(c) conviction is contemporaneous with the conviction for a crime of violence.  The Court said that this is because the record of all necessary facts are before the district court.  The facts of the charged offenses, either determined by a jury (as in Robinson) or admitted by the defendant during a guilty plea, unmistakably shed light on whether the purported crime of violence was committed with “the use, attempted use, or threatened use of physical force against the person or property of another.”

The defendant in Robinson was convicted of Hobbs Act robbery and of brandishing a firearm during a crime of violence (the Hobbs Act robbery).  The Circuit considered the language of the Hobbs Act robbery statute in conjunction with the brandishing conviction under Section 924(c).  The Court said that looking at a contemporaneous conviction allows a court to determine the basis for a defendant’s predicate conviction and the defendant suffers no prejudice because the court is not finding any new facts which are not already of record.  The Circuit framed the question as whether a Hobbs Act robbery committed while brandishing a firearm is a crime of violence and concluded that the answer must be yes.

Judge Fuentes filed a concurring opinion.  He explained that the categorical approach should be used even when the convictions are simultaneous.  However, he concludes that Hobbs Act robbery is categorically a crime of violence under 924(c)(3)(A), finding persuasive a Second Circuit decision, United States v. Hill, 832 F.3d 135 (2d Cir. 2016), that all the alternative means of committing a Hobbs Act robbery satisfy the force clause.

In Galati, the defendant was convicted of using interstate commerce facilities in the commission of a murder-for-hire, in violation of 18 U.S.C. § 1958, and discharging a firearm during a crime of violence (the murder-for-hire).  The Circuit framed the question as whether a violation of Section 1958 which results in personal injury and during which a firearm is discharged is a crime of violence and concluded that it is a crime of violence.  The Court noted that the discharge of the firearm coupled with resulting personal injury qualifies as the use of physical force.

The Circuit declined to address the defendants’ challenge to the residual clause in 18 U.S.C. § 924(c)(3)(B).

It appears that under the Circuit’s logic a contemporaneous conviction of any crime along with a 924(c) conviction of either brandishing or discharging a firearm will qualify as a crime of violence under the force clause of 924(c)(3)(A).

Tuesday, November 01, 2016

Elonis STILL guilty for Facebook threats

In US v. Elonis, 12-3798 (10/28/2016), the Third Circuit affirms Elonis’s conviction for Facebook threats -- again.  SCOTUS vacated the Circuit’s original denial of Elonsis’s appeal.  As a matter of statutory interpretation, a conviction under 18 U.S.C. § 875(c), transmitting a threat to injure another person in interstate commerce, could not be based solely on an objective standard (whether a reasonable person would perceived the words as a true threat).  There must be a mens rea requirement greater than negligence.  SCOTUS refused to state whether a mens rea of recklessness would be sufficient.  However, SCOTUS wrote that the jury should have been instructed that Elonis could be convicted if it found he “transmitted a communication for the purpose of issuing a threat or with knowledge that the communication would be viewed as a threat.”  SCOTUS did NOT reach the First Amendment issues.

On remand, the Third Circuit found that the trial court’s instruction containing the objective standard was harmless error.  Elonis testified at trial that his posts were just rap lyrics or satire; that he never intended for anyone to feel like he was threatening them; and that he didn’t care what other people thought or said about him.  Some of his posts contained statements saying that they were fictional, were not meant to depict real persons, and that he was simply exercising his First Amendment rights.  The government argued at closing that even if the jury believed everything that Elonis said, that they could still convict him because “it doesn’t matter what he thinks.”  However, despite Elonis’s testimony and the government’s closing, the Third Circuit found harmless error because the Government had produced evidence beyond a reasonable doubt that the defendant personally knew his communications would be viewed as a threat AND an objective person would view the communications as a threat.

For the conviction based on posts discussing his ex-wife, the Third Circuit pointed out that after a PFA hearing in which the ex-wife cited to Facebook posts as threatening, Elonis continued to post similar lyrics.  For the convictions based on posts discussing state police, elementary schools, and FBI agents, the Third Circuit reasoned that because Elonis knew that posts containing very similar lyrics discussing his former co-workers had made them feel threatened, that he knew these particular posts would make people feel threatened as well.

I cannot imagine that this is the end of this case.  First, while I can understand the affirmance of the conviction involving the threats to his ex-wife, I am puzzled by the affirmance of the other convictions.  There was evidence that the ex-wife felt threatened by the lyrics and Elonis continued to post them even after knowing that his felt threatened (and the lyrics are objectively threatening).  However, there was no such similar evidence that (1) state police, elementary schools in the area, or the FBI felt threatened, (2) that Elonis knew or found out they felt threatened, and (3) that he continued posting threatening lyrics anyway.  Isn't there some need to show that Elonis knew that the particular person or people that are the "victims" would feel threatened?  Indeed, it is hard to imagine how the criminalization of these generalized threats, not directed towards particular individuals, can pass constitutional muster.

Which brings me to the second reason I think we haven’t seen the end of this case.  No opinion directly addresses the First Amendment concerns.  Does SCOTUS's interpretion of the mens rea requirement automatically mean that the statute satisfies the First Amendment?  Some of Elonis's lyrics aren’t that different (although, really of much poorer quality) than the lyrics of some successful rap artists.  One of his posts was almost word for word taken from a stand-up comedy routine, which he referenced in his post.  It is hard to imagine that art (even bad art) and comedy routines are not protected by the First Amendment.  Does it matter that his lyrics were posted on his own Facebook page rather than transmitted to a "victim"?  Does it matter that two of the "victims," the state police and the FBI, can be viewed as public officials?

Is there a rehearing petition coming?  Another cert petition?  I, for one, would really like some First Amendment clarity please!

Interlocutory appeal of disclosure order in grand jury proceedings dismissed for lack of jurisdiction

            The Third Circuit dismissed the appeal in In Re Grand Jury Matter #3, 15-2475 (10/28/2016), for lack of jurisdiction.  In response to a grand jury subpoena, John Doe’s accountant gave the government an email that was written by John Doe’s lawyer and forwarded to the accountant by John Doe. The government wanted to show the email to the grand jury.  John Doe claimed that it was attorney work product and privileged.  District Court ruled that the crime-fraud exception applied and that the government could disclose the email to the grand jury.

            Normally, to file an interlocutory appeal of such a disclosure order, the subpoenaed party would have to refuse the subpoena, get held in contempt, and then file an appeal of the contempt finding.  However, in circumstances, such as here, where the document is not in the possession of the person opposing disclosure, the person opposing disclosure is unable to choose to stand in contempt so that he/she could immediately appeal the disclosure order.  Under these circumstances, sometimes the Perlman doctrine allows the privilege-holder to file an interlocutory appeal.

            In this case, the Third Circuit allowed the appeal to continue and had full briefing and oral argument.  However, sometime after the filing of the appeal, the grand jury was shown the email and they returned an indictment.  Given the indictment, the Third Circuit found that an interlocutory appeal was premature because the issue could be raised after final judgment if there was a conviction in this case.  They dismissed the case for lack of jurisdiction.  A dissent was filed.

Pro se appeal of non-decision dismissed for lack of jurisdiction

            In Marshall v. Commissioner of PA DOC, et al. 16-9000 (10/25/2016), the Third Circuit dismissed this pro se appeal for lack of jurisdiction.  Marshall is a capital inmate with a pending federal habeas petition who moved to proceed pro se.  After additional motions and a psychiatric evaluation, the District Court held a hearing in which parties addressed whether Marshall was competent and whether he could proceed pro se.  At this hearing the District Court specifically stated that it had not yet decided these issues but that it would do so shortly.

            After the hearing, but prior to the announcement of any decision, Marshall filed a pro se appeal of the District Court’s (then non-existent) denial of his motion to proceed pro se.  After that, the District Court issued an order finding Marshall not competent and denying his motion to proceed pro se.  No parties (not Marshall nor his counsel) filed anything further with the Third Circuit after the District Court’s opinion, even though the Third Circuit invited them to do so.

            The Third Circuit dismissed Marshall’s appeal for lack of jurisdiction.  Even though there are circumstances under F.R.A.P. 4(a)(2) and the Cape May Greene doctrine where the Third Circuit may have jurisdiction over an appeal that was filed before it was ripe, those circumstances did not apply to Marshall’s case.  At the very least, FRAP 4(a)(2) and the Cape May Greene doctrine require that the District Court have at least announced an appealable decision, even if the decision may not have been officially entered or there may be other pending issues preventing the entry of a final appealable order.  Neither of those circumstances applied here as the notice of appeal was filed before any decision was made or announced.  Thus, even though Marshall’s motion to proceed pro se has now been denied, his appeal of the denial of his motion was premature and dismissed for lack of jurisdiction.

PS -- Props to all attorneys who continue to act in their client's best interests even when the client is trying to fire you.

Tuesday, October 11, 2016

Pennsylvania Drug Priors Not Necessarily Qualifying Predicates for Recidivist Enhancements

In Singh v. Attorney General, No. 15-2274, the Court reverses the Board of Immigration Appeals’ determination that an alien's prior Pennsylvania drug offense was an “aggravated felony” making him subject to removal and ineligible for discretionary relief.  In both this immigration context and those presented by recidivist enhancements such as the Sentencing Guidelines’ career offender provision, the court must determine whether the prior conviction was for an offense matching the “generic” federal definition of the pertinent crime.  If the state offense sweeps more broadly, it is not a predicate.

With regard to Pennsylvania's principal controlled substance law at 35 Pa. C. S. § 780-113(a)(30), that requirement can present an issue inasmuch as the state’s controlled substance schedules at § 780-104 include drugs not embodied in the federal schedule at 21 U.S.C. § 802.  A prior conviction therefore cannot be deemed a predicate unless the sentencing court (or immigration judge) is permitted to inquire into underlying judicial records to determine what substance formed the basis for the defendant’s prior Pennsylvania conviction.  For such inquiry to be permissible, § 780-113(a)(30) must be “divisible,” meaning that drug type must be an element of the offense.

Here, the Court quotes its recent decision in Bedolla Avila v. Attorney General, No. 15-1860 (June 23, 2016), to confirm that § 780-113(a)(30) is “divisible ‘with regard to both the conduct and the controlled substances to which it applies,’” i.e., that the type of substance is one element of the offense, and the mode of trafficking — for example, “manufacturing” vs. “delivering” — is another.  Accordingly, courts may make inquiry into the limited class of judicial documents cognizable on the “modified categorical approach” under Shepard v. United States, 544 U.S. 13 (2005).

In Singh’s case, the cognizable portions of the underlying judicial record featured language one would imagine was formulated to keep the conviction from triggering immigration consequences: his offenses were said to involve a “PA Counterfeit Substance – Non Fed.”  Rejecting the government’s view that state courts and prosecutors lack authority to determine what substances are or are not within the scope of the federal Controlled Substances Act, the Court reads the “Non Fed” language to permit a conclusion that "whichever drug identity Singh’s previous conviction involved, it was not a drug identity listed as a federal controlled substance.”

The Court also rejects an end-run ventured by the Board of Immigration Appeals, which had held that Pennsylvania drug priors constitute aggravated felonies as a categorical matter.  According to the BIA, “no ‘reported decision of a Pennsylvania court’” indicates any defendant has been convicted for “conduct involving a substance that was not included in the Federal controlled substance schedules.”  The Board thus concluded that Pennsylvania drug offenses qualify as predicates because there is no “realistic probability” that “Pennsylvania actually prosecutes people under § 780-113(a)(30) for misconduct involving substances that are not federally controlled.”  In rejecting that conclusion, the Court explains that no such “realistic probability” inquiry is appropriate where the elements of the state and federal offenses do not match.  In the case of  35 Pa. C. S. § 780-113(a)(30), the different penalties provided by state law for different substances, as well as discussion in a Superior Court decision, supply the correct points of reference to hold that drug type is an element, such that no match appears.

Unusual Bankruptcy Fraud Case Yields Guidance on Sentencing and Proof Issues

In the rare bankruptcy fraud case to reach it, United Statesv. Free, No. 15-2939, the Court confronts an instance of a defendant who filed for voluntary reorganization under Chapter 13 despite having adequate assets to repay his creditors in full.  The proceeding was later converted into a Chapter 7 action and the creditors made whole.  Defendant Michael Free was meanwhile found guilty by a jury of making false statements in filings and testimony in the bankruptcy proceedings.  At sentencing, the government sought a 16-level enhancement under the 2014 Sentencing Guidelines for a loss amount of between $1 and $2.5 million.  The sum represented an accounting of the value of certain assets concealed by Free from the bankruptcy court.  (Note that by amendment effective November 1, 2015, Section 2B1.1 now requires a loss $1.5 to $3.5 million to trigger a 16-level bump.)

Section 2B1.1 of the Guidelines, pertaining to fraud and other economic crimes, defines “loss” as the greater of the “reasonably foreseeable pecuniary harm that resulted from the offense” or, to abbreviate slightly, “the pecuniary harm that was intended to result from the offense.”  If “there is a loss but it reasonably cannot be determined,” the sentencing court is to use “the gain that resulted from the offense as an alternative measure.”  In Free’s case, the district court made no explicit finding of any intent to cause pecuniary harm to the creditors; rather, the Circuit suggests, Free’s aim had been to protect his extensive store of valuable World War II-era firearms from liquidation.  The district court nonetheless applied the 16-level enhancement, reading the Guidelines to “reflect the commonsense proposition ‘that there would be a higher loss calculation when there is a significantly higher amount of assets that are concealed from the Bankruptcy Court[.]’”  Given “the tens of thousands of bankruptcy cases just filed here in Pittsburgh, let alone around the country,” the judicial system must “absolutely rely on people telling the truth because we can’t ferret it out any other way.”

The Circuit reverses.  Loss cannot simply be the amount of assets the debtor hides from the trustee and creditors.  Instead, the sentencing court must determine the “pecuniary harm, actual or intended, to [the defendant’s] creditors, or what he sought to gain from committing the crime.”  Despite disagreeing with the district court’s “view that the concept of ‘loss’ under the Guidelines is broad enough to cover injuries like abstract harm to the judiciary,” the Court emphasizes the relevance of this concern.  Indeed, the decision even goes so far as to contemplate an upward departure for conduct resulting in “a significant disruption of a governmental function” under Section 5K2.7 of the Sentencing Guidelines.  Separately, the Court states in a footnote that loss amount may include “administrative expenses” incurred by the bankrupt estate.

The Court otherwise rejects the defendant’s challenge to the sufficiency of the evidence.  Quoting a Sixth Circuit decision for the proposition that under the bankruptcy statute at 18 U.S.C. § 157, “filing itself is the forbidden act,” the Court concludes that the evidence Free filed fraudulent documents was “overwhelming.”  It would thus appear that in bankruptcy fraud cases there need be no proof that the defendant intended to deprive creditors of money or property.

Wednesday, September 21, 2016

No Requirement of Actual Harm for Vulnerable Victim Enhancement

     In United States v. Adeolu, No. 14-3610, 2016 WL 4728003, the Circuit affirmed Adeolu’s sentence, holding that the vulnerable victim enhancement at U.S.S.G. § 3A1.1(b)(1), does not require actual harm to the victim, only a nexus between the victim’s vulnerabilty and the crime’s success.

     Adeolu, a tax preparer, prepared fraudulent tax returns by having his clients claim false dependents.  Adeolu was ultimately convicted of conspiracy to defraud and aiding and abetting the preparation of materially false tax returns (18 U.S.C. § 371 and 26 U.S.C. § 7206(2)).  At sentencing, the court applied the vulnerable victim sentencing enhancement set forth in § 3A1.1(b)(1) based on Adeolu's use of young children's personal information. On appeal, Adeolu argued that the children were not vulnerable victims because they did not experience “actual” harm.

     In rejecting the actual harm requirement, the Circuit states that any issue regarding harm is encompassed within the analysis of the nexus between a victim's vulnerability and the crime's success.  This allows the court to assess whether a victim has been “taken advantage of” in a manner that facilitates the defendant's scheme.  Actual harm is inconsequential to this analysis.  
The Court noted that the purpose of § 3A1.1 is to “acknowledge that, . . . defendants know or should know of their victim's particular vulnerability and are therefore more blameworthy for knowingly or even negligently harming them.” (citation omitted).  “But a defendant is not more or less blameworthy for the purposes of this enhancement based on the amount of harm that a victim experiences. Applying the enhancement in such a manner would create a disparity in the punishments for defendants who are more successful (and cause more harm) and those who are less successful.”
In light of those points the Court held that there is no requirement of “actual” harm.

     In this case, the victim’s youth gave rise to their vulnerability:  “Given a child's inability to guard against theft of personal information, we find that the first element of this test is satisfied.”  Second, Adeolu knew the victims' vulnerability and that their ages were integral to qualifying as dependents on the fraudulent returns.  Accordingly, there was a “nexus” between the victims' vulnerability and the success of the scheme.