4/1/22: Important fraud sentencing decision & a great case on lesser included instructions

In United States v. Kirilyuk, --- F.4th ---, No. 19-10447 (9th Cir. 2022), the Court vacated the sentence in a complex fraud conspiracy involving over 120,000 stolen American Express cards.

There is a lot to this important case, so my summary is longer than usual. 

First, "Kirilyuk contends that Application Note 3(F)(i)’s mandatory $500-per-card minimum conflicts with the plain meaning of 'loss' under § 2B1.1, and he asks us to find it non-binding under Stinson v. United States, 508 U.S. 36, 38 (1993). We agree and do not consider the Application Note authoritative."

At the outset, the Court "look[ed] to see whether our prior precedent forecloses Kirilyuk’s challenge to Application Note 3(F)(i)."

"To be sure, in two published cases, we interpreted and applied Application Note 3(F)(i) or its predecessor. See United States v. Yellowe, 24 F.3d 1110 (9th Cir. 1994); United States v. Gainza, 982 F.3d 762 (9th Cir. 2020). But neither case analyzed the Note’s validity under Stinson, so neither case binds us on this question. Prior precedent that does not “squarely address” a particular issue does not bind later panels on the question. Brecht v. Abrahamson, 507 U.S. 619, 631 (1993). As we have repeatedly stated, '[q]uestions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.' United States v. Ped, 943 F.3d 427, 434 (9th Cir. 2019) (simplified). Thus, cases are 'not precedential for propositions not considered,' United States v. Pepe, 895 F.3d 679, 688 (9th Cir. 2018), or for matters that are 'simply assumed,' Sonner v. Premier Nutrition Corp., 971 F.3d 834, 842 n.5 (9th Cir. 2020). Indeed, if a prior case does not 'raise or consider the implications' of a legal argument, it does 'not constrain our analysis.' United States v. Cassel, 408 F.3d 622, 633 n.9 (9th Cir. 2005)."

"Even if precedent doesn’t foreclose reaching the merits, the government still contends that Kirilyuk forfeited his Stinson challenge by not raising it in the district court. This is inaccurate. '[I]t is claims that are deemed waived or forfeited, not arguments.' United States v. Lloyd, 807 F.3d 1128, 1174–75 (9th Cir. 2015) (simplified). Before the district court, Kirilyuk specifically objected to the applicability of Application Note 3(F)(1) as 'arbitrary,' 'artificially high,' and 'contrary to relevant case law and concepts of justice.' 'Once a federal claim is properly presented, a party can make any argument in support of that claim; parties are not limited to the precise arguments they made below.' Id. at 1175 (simplified). Thus, Kirilyuk’s sentencing objection was enough to preserve our de novo review of his Stinson challenge."

"Finally, the government argues we should not reach the Stinson issue because Kirilyuk didn’t raise it until his reply brief. It is true that an appellant generally waives any argument not raised in the opening brief. See Friends of Yosemite Valley v. Kempthorne, 520 F.3d 1024, 1033 (9th Cir. 2008). But we’ve recognized two exceptions to that rule: (1) when failure to consider the argument would lead to “manifest injustice,” and (2) when the 'opposing party will not suffer prejudice.' Hall v. City of Los Angeles, 697 F.3d 1059, 1071 (9th Cir. 2012). Both exceptions apply here. First, Application Note 3(F)(1) boosted Kirilyuk’s base offense level—from +16 to +22, see U.S.S.G. § 2B1.1(b)(1)(I), (L), significantly increasing his sentencing range and raising a concern for a manifest injustice. Second, both parties had ample opportunity to address this question in supplemental briefing and so we see no prejudice to the government. We thus exercise our discretion to consider Kirilyuk’s Stinson argument and turn to the merits."

On the merits, "the Supreme Court has told us that there is a limit to the binding nature of the Application Notes. Stinson says that an Application Note “that interprets or explains a guideline is authoritative unless it . . . is inconsistent with, or a plainly erroneous reading of, that guideline."

"The question here is simple: Is Note 3(F)(i)’s 'special rule' for calculating loss by using a minimum $500-per-card multiplier consistent with the plain meaning of 'loss'? We hold that it is not.

"Though dictionary definitions for 'loss' may vary, they make one thing clear: 'No reasonable person would define the ‘loss’ from a stolen [credit] card as an automatic $500' rather than a fact-specific amount. Id. Instead, § 2B1.1 is driven by 'the amount of loss caused by the crime.' Gainza, 982 F.3d at 764 (emphasis added). So 'loss' cannot mean a pre-determined, contrived amount with no connection to the crime committed, even if it is based on the Commission’s 'research and data.' See U.S.S.G. amend. 596 (Nov. 2000). Application Note (3)(F)(i) thus doesn’t illuminate the meaning of 'loss,' but modifies it. Yet 'Stinson requires that commentary interpret the guidelines, not contradict or add to them.'"

"This case illustrates the egregious problem with the Application Note’s expansion of the meaning of “loss.” As determined by the Probation Office, Kirilyuk’s conspiracy involved $1.4 million in actual losses or $3.4 million in intended losses. Applying the $500-per-card multiplier balloons the “loss” to $60 million—17 times greater than the intended loss. While the conspiracy was designed to charge only $15 to $30 per credit card, the Application Note asks us to deem each loss to be $500. Application Note 3(F)(i) thus operates as an enhanced punishment, rather than an assessment of “loss” tied to the facts of the case. But Stinson makes clear that the role of the Application Notes is to explain the Guidelines, not enact policy changes to them. We thus hold that Application Note 3(F)(i)’s expansion of the meaning of “loss” is 'clearly inconsistent with the language of the Guideline' and is not binding under Stinson."

"Because Application Note 3(F)(i) contorts the meaning of “loss” to equal “$500” in credit card cases, we hold that it is not binding and that Kirilyuk’s 22-level enhancement cannot stand."

"We next turn to the enhancement for use of an “authentication feature” under § 2B1.1(b)(11)(A)(ii). We hold that the district court erred in imposing that enhancement because the purported authentication features used here were issued by American Express or a bank, not an “issuing authority” as defined by the Guidelines."

Finally, "[a]lthough not raised by Kirilyuk, the government commendably concedes that the district court imposed an illegal sentence by imposing a 264-month sentence on each of Kirilyuk’s wire and mail fraud counts. Both wire and mail fraud carry a maximum penalty of 240 months’ imprisonment for each count. See 18 U.S.C. § 1343 (wire fraud); 18 U.S.C. § 1341 (mail fraud). So the government is right that the district court’s sentence of 264 months per count was illegal.

"[T]the district court would have been free to hand down a shorter sentence had it realized the error in the imposed sentence. Thus, it would be 'a miscarriage of justice to give [Kirilyuk] an illegal sentence' in this case."

Next, in United States v. Medina-Suarez, --- F.4th ---, No. 20-50290 (9th Cir. 2022), the Court vacated a conviction for felony attempted illegal entry in violation of 8 U.S.C. § 1325(a), in a case in which the defendant contended that the trial court erred in denying his request for a jury instruction on the lesser-included offense of misdemeanor attempted illegal entry.

“A defendant is entitled to an instruction on a lesser-included offense if the law and evidence satisfy a two-part test: 1) ‘the elements of the lesser offense are a subset of the elements of the charged offense’; and 2) ‘the evidence would permit a jury rationally to find [the defendant] guilty of the lesser offense and acquit [him] of the greater.’” 

"There is no dispute in this case about the first step of the two-part test for lesser-included instructions. As the government concedes, it is well-established that misdemeanor attempted illegal entry is a lesser-included offense of felony attempted illegal entry. Indeed, the elements of the two offenses are the same except that felony attempted illegal entry includes the added element of a prior § 1325(a) conviction; that is, a first offense is a misdemeanor, and a subsequent offense is a felony."

"As for the second step of the two-part test, we conclude that the district court abused its discretion in finding that the jury could not rationally find Medina-Suarez guilty of the lesser offense (misdemeanor attempted illegal entry) and acquit him of the greater offense (felony attempted illegal entry). Given that the only distinct element required for a felony conviction in this case is a prior conviction for the same crime, the jury could have rationally chosen the lesser offense simply by finding that the government failed to prove that Medina-Suarez was previously convicted under 8 U.S.C. § 1325(a)."

"The fact that the jury did ultimately return a felony conviction below does not undermine this point. As the Supreme Court has acknowledged, one of the very purposes of a lesser-included offense instruction is to protect a defendant from the possibility that 'where the jury suspects that the defendant is plainly guilty of some offense, but one of the elements of the charged offense remains in doubt, . . . the jury will likely fail to give full effect to the reasonable-doubt standard, resolving its doubts in favor of conviction.'"

In a footnote, the Court also provides this helpful suggestion:  "In cases like this one where the element that distinguishes the lesser offense from the greater is a prior conviction—the proof of which is completely divorced from the proof of the other elements—it could be argued that a lesser-included offense instruction should be given on request any time the defendant does not concede the distinguishing element, even when that element is not actively contested."

3/28/22: Case on the Fourth Amendment's nexus requirement and aggravated identity theft

In United States v. Kvashuk, --- F.4th ---, No. 20-30251 (9th Cir. 2022), the Court affirmed convictions on  fraud-related counts in a case in which Kvashuk stole $10 million in digital gift cards from his employer, Microsoft, using login credentials he took from his coworkers.

"Kvashuk challenge[d] the denial of his motion to suppress evidence seized from his house on the ground that the search warrant lacked probable cause."  He argued that the warrant affidavit failed to “establish a nexus between the unlawful activities and the places to be searched.”

The Court explained: "It is true that '[p]robable cause to believe that a suspect has committed a crime is not by itself adequate to secure a search warrant for the suspect’s home.' But 'the nexus between the items to be seized and the place to be searched' can rest on 'normal inferences as to where a criminal would be likely to hide” evidence of his crimes.'"

And "the nature of cybercrime— specifically, its reliance on computers and personal electronic devices—is relevant to probable cause for searching the suspect’s residence."  Ultimately, the Court concluded, "the search warrant affidavit shows a fair probability that evidence of Kvashuk’s crimes would be found on a computer at his residence. Therefore, there was an adequate nexus between the unlawful activities and the place to be searched."

The Court also rejected a staleness claim, among other arguments. 

As to the aggravated identity theft counts, the Court concluded that the individual Microsoft email accounts at issue satisfied the definition of "a means of identification" for purposes 18 U.S.C. § 1028A(a)(1).

3/24/22: Case about the Juvenile Delinquency Act

 In United States v. Mendez, --- F.4th ---, No. 21-50086 (9th Cir. 2022), the Court considered "whether the JDA precludes the government from prosecuting a person as an adult for a continuing conspiracy that includes both pre- and post-majority conduct after the court dismisses a JDA information charging that person with conspiracy based solely on pre-majority conduct."

The Court held it does not and affirmed. 

First, the Court found it had interlocutory jurisdiction to hear the appeal.

As to the merits, "[w]e hold that a defendant who continues to participate in a conspiracy after reaching majority ratifies his prior conduct in the conspiracy, such that the conspiracy carries over into his majority. In this situation, the JDA is inapplicable."

"We also hold that, because Mendez allegedly continued to participate in the racketeering conspiracy on his eighteenth birthday and beyond, his racketeering conspiracy offense was not an act of juvenile delinquency under the JDA."

"Consequently, the district court has adult criminal jurisdiction over the majority-spanning RICO conspiracy offense charged in the SSI."

"Because Mendez’s participation in the conspiracy allegedly continued beyond his eighteenth birthday, it was no longer an act of juvenile delinquency under the JDA. Rather, the conduct became a continuing adult RICO conspiracy offense which began when he was a juvenile but continued when he allegedly engaged in additional acts in furtherance of the ongoing conspiracy after reaching the age of majority. The JDA does not shield Mendez from having to answer for this continuing criminal behavior as an adult."

"When a minor ratifies his pre-majority conduct by continuing to participate in an ongoing criminal conspiracy after his eighteenth birthday, the offense is not insulated by the JDA’s procedural enclave."

3/22/22: Finally a criminal decision

More than a month has passed since the last published criminal decision.  Today brings a case about appellate waivers and supervised release conditions.  

In United States v. Wells, --- F.4th ---, No. 19-10451 (9th Cir. 2022), the Court dismissed in part an appeal from the district court’s judgment and order imposing sentence and conditions of supervised release, vacated the judgment in part, and remanded with instructions to the district court to clarify a special condition of supervised release to avoid a constitutional violation.

The bulk of the appeal deals with appellate waivers and the exception for an "illegal sentence."  The Court explained, "a waiver of the right to appeal a sentence does not apply if (1) the defendant raises a challenge that the sentence violates the Constitution; (2) the constitutional claim directly challenges the sentence itself; and (3) the constitutional challenge is not based on any underlying constitutional right that was expressly and specifically waived by the appeal waiver as part of a valid plea agreement."

Under this standard, the Court held, "Wells waived his general right to appeal 'any aspect' of his sentence but did not expressly waive any specific constitutional right, such as any First Amendment challenges. Following our precedent, we must address the constitutional challenges on the merits."

The Court then considered the merits of certain supervised release challenges, but otherwise dismissed the appeal. 

As relevant, it turned to a condition providing: 

You must not possess or use a computer without the prior approval of the probation officer. ‘Computer’ includes any electronic device capable of accessing the internet or processing or storing data as described at 18 U.S.C. § 1030(e)(1) (including cell phones), and all peripheral devices.” As part of the statute governing computer fraud crimes, section 1030(e)(1) defines “computer” as “an electronic, magnetic, optical, electrochemical, or other high speed data processing device performing logical, arithmetic, or storage functions, and includes any data storage facility or communications facility directly related to or operating in conjunction with such device, but such term does not include an automated typewriter or typesetter, a portable hand held calculator, or other similar device.” 18 U.S.C. § 1030(e)(1).

The Court held this condition was unconstitutionally vague. 

We conclude that Special Condition No. 3 requires clarification. The definition of “computer” under the condition potentially could be understood to encompass common household objects. An “electronic, magnetic, optical, electrochemical, or other high speed data processing device performing logical, arithmetic, or storage functions” can include devices such as smart kitchen appliances that contain microprocessors, even though such appliances are not capable of receiving, storing, or otherwise processing materials of child pornography. To be clear, we do not make any determination on whether the special condition is overbroad, as it is an issue that is barred by the waiver. Certainly, the district court could have simply imposed a condition that bars the use of any device that uses electricity, which perhaps would be problematic for other reasons but is not “unconstitutionally vague.” But the definition for “computer” without any clarification here can lead to a situation where “men of common intelligence must necessarily guess at its meaning and differ as to its application.”

Of note, this case might be heading en banc because there is a conflict between United States v. Bibler, 495 F.3d 621 (9th Cir. 2007) and United States v. Joyce, 357 F.3d 921 (9th Cir. 2004), as to when appellate waivers apply. 

2/10/22: Section is 1324(a)(1)(A)(iv) is unconstitutional as facially overbroad

In United States v. Hanson, --- F4th ---, No. 17-10548 (9th Cir. 2022), the Court vacated convictions on two counts of encouraging or inducing an alien to reside in the United States for private financial gain in violation of 8 U.S.C. § 1324(a)(1)(A)(iv), and remanding for resentencing.  

The Court held that subsection (iv) is overbroad under the First Amendment and unconstitutional.

We []"interpret subsection (iv) as prohibiting someone from (1) inspiring, helping, persuading, or influencing, (2) through speech or conduct, (3) one or more specified aliens (4) to come to or reside in the United States in violation of civil or criminal law."

"It is clear that subsection (iv) covers a substantial amount of protected speech. Many commonplace statements and actions could be construed as encouraging or inducing an undocumented immigrant to come to or reside in the United States. For example, the plain language of subsection (iv) covers knowingly telling an undocumented immigrant 'I encourage you to reside in the United States.' Such a statement is protected by the First Amendment."

"[T]the government’s interpretation of subsection (iv)’s reach is subject to change and is irrelevant: 'the First Amendment protects against the government; it does not leave us at the mercy of noblesse oblige. We would not uphold an unconstitutional statute merely because the government promised to use it responsibly.'" 

"We are mindful that invalidating subsection (iv) for overbreadth is 'strong medicine' that is not to be 'casually employed.'  However, for the reasons we have set forth above, subsection (iv) is overbroad and unconstitutional."

2/3/22: Federal kidnapping case

In United States v. Jackson, --- F.4th ---, No. 19-10070 (9th Cir. 2022), the Court reversed a conviction for kidnapping under 18 U.S.C. § 1201(a)(2), and remanded for resentencing.

The basic facts were that Jackson assaulted his ex-girlfriend.  During the assault, he restrained her.  The government charged him with assault and kidnapping.  The jury convicted him of both.

As to the kidnapping charge, the Court noted the Supreme Court's warning that the statute should be narrowly construed to cover only true kidnapping:  "Were we to sanction a careless concept of the crime of kidnaping or were we to disregard the background and setting of the Act the boundaries of potential liability would be lost in infinity. A loose construction of the statutory language conceivably could lead to the punishment of anyone who induced another to leave his surroundings and do some innocent or illegal act of benefit to the former . . . . The absurdity of such a result . . . is sufficient by itself to foreclose that construction."

The Court explained, "[t]he facts here, viewed in the light most favorable to the government, do not bear the hallmarks of a 'true kidnaping[].'"

"[T]o distinguish facts that constitute kidnapping from those that do not," the Court adopted the analysis in Government of the Virgin Islands v. Berry, 604 F.2d 221, 224 (3d Cir. 1979).  Specifically, there are "four factors to guide courts and juries in defining kidnapping . . . . (1) the duration of the detention or asportation; (2) whether the detention or asportation occurred during the commission of a separate offense; (3) whether the detention or asportation which occurred is inherent in the separate offense; and (4) whether the asportation or detention created a significant danger to the victim independent of that posed by the separate offense."

"[W]e hold that, in kidnapping prosecutions under 18 U.S.C. § 1201(a)(2), courts should consider the Berry factors to evaluate whether the charged conduct constitutes kidnapping. This is a factual inquiry, taken up during a Rule 29 motion and, if appropriate based on the circumstances of the case, incorporated into jury instructions."

"Applying these factors, we conclude that the government failed to prove beyond a reasonable doubt that a kidnapping occurred." 

2/1/22: Interesting decision related to collateral attacks

 In United States v. Schlenker, --- F.4th ---, No. 20-30141 (9th Cir. 2022), the Court affirmed the district court’s orders (1) granting the government’s motion to dismiss Jeremy Schlenker’s civil action seeking a declaration that filing a 28 U.S.C. § 2255 motion would not breach the plea agreement he entered in his criminal case in 2016, and (2) denying Schlenker’s motion to clarify the terms of the plea agreement.

Schlenker pleaded guilty to second-degree murder in violation of 18 U.S.C. §§ 1111 and 1153(a), and possession of a firearm in furtherance of a crime of violence in violation of 18 U.S.C. § 924(c)(1)(A).  As part of the plea agreement, Schlenker waived his right to collaterally attack his conviction and sentence, except for ineffective assistance of counsel claims.

A few years after his sentencing, the Supreme Court held that the residual clause of § 924(c)(3), the provision defining a “crime of violence,” was unconstitutionally vague.  The Ninth Circuit then held that second-degree murder is not a “crime of violence” under the elements clause of § 924(c)(3).

As a result of these developments, Schlenker sought to challenge the validity of his § 924(c) sentence in a habeas proceeding, and his counsel so informed the government. The prosecutors responded that the government would oppose such relief and consider the filing of such an action to be a breach of the plea agreement. Schlenker then filed a motion to clarify the terms of his plea agreement (“Motion to Clarify”) in his criminal case. He also filed a civil action seeking a declaration that filing a motion under 28 U.S.C. § 2255 would not breach the plea agreement. In both cases, the district court concluded that it lacked jurisdiction because there was no “case or controversy” as required under Article III. See U.S. Const. Art. III, § 2, cl. 1.

The Court affirmed "because Schlenker’s declaratory action and Motion to Clarify improperly seek to carve out a collateral legal issue from a potential habeas petition and to use the Declaratory Judgment Act, 28 U.S.C. § 2201, as a substitute to challenge his sentence."