Accuracy v. Finality: The Implications of Habeas Rights Based on AEDPA Interpretations

BACKGROUND

With the release of the film Just Mercy, the debate over balancing the prevention of wrongful convictions against the assurance of finality in serious criminal matters has once again come into the spotlight. This dispute is not only receiving national attention in pop culture, but is also making headlines in the judicial field with the emergence of a new circuit split.

A habeas petition is a method invoked by prisoners seeking an early release by challenging the legitimacy of their detention. In 1996, the ability to file habeas petitions was limited with the passage of the Antiterrorism and Effective Death Penalty Act (“AEDPA”). Under AEDPA, a prisoner has just one opportunity to file a motion to vacate the earlier sentence. A second opportunity is permitted only when the Supreme Court adopts a new and favorable rule of constitutional law. Prisoners are also restricted to just one habeas petition, unless they can demonstrate that AEDPA’s remedy is “inadequate or ineffective.”

THE ISSUE

Can the AEDPA remedy be considered inadequate or ineffective, thereby circumventing the single habeas restriction, when a new rule of statutory construction is adopted by a circuit court?

THE SPLIT

In Hueso v. Barnhart (2020), the Sixth Circuit split from the Fourth Circuit, interpreting AEDPA to increase restrictions on habeas rights. Hueso was convicted of drug trafficking in Alaska. He was initially sentenced to 10 years in prison; however, the term was doubled under a federal sentencing law. The year after his conviction, the Supreme Court rejected the interpretation permitting doubling. At the time, Hueso’s counsel had already filed a Motion to Vacate challenging evidence, which was rejected. Counsel then filed a habeas petition based on the Supreme Court ruling. The court denied the petition based on Sixth Circuit precedent that barred habeas cases from entertaining challenges based on sentencing. However, in 2016, the Sixth Circuit overturned its previous holding, thereby permitting sentencing-based habeas petitions.

As a result, Hueso’s counsel filed another habeas petition, but this time it was rejected under AEDPA. Hueso appealed to the Sixth Circuit, arguing that he should be permitted to file a second habeas under AEDPA because the AEDPA remedy was inadequate and ineffective. The Sixth Circuit denied the appeal on two bases. First, the Sixth Circuit reasoned that the Supreme Court ruling rejecting double sentencing could not be introduced in a subsequent challenge as the decision was made while Hueso’s first Motion to Vacate was pending. The court reasoned that the decision was available at the time of the challenge and, therefore, the failure to mention it barred a second attempt. Second, the Sixth Circuit held that the second habeas petition was correctly denied because the basis of the petition centered on a circuit court decision to permit sentencing-based habeas petitions. The Sixth Circuit rationalized that this decision was not constitutional law, as required under AEDPA, and thus could not be a basis for seeking to file subsequent petitions.

The Sixth Circuit’s reasoning diverged from the Fourth Circuit’s prior interpretation in United States v. Wheeler (2018). Wheeler was charged with conspiracy to possess with intent to distribute cocaine and possession of a firearm. Wheeler entered into a plea deal, agreeing to an enhanced sentence with a mandatory minimum of 120 months. The next year, Wheeler’s counsel filed a Motion to Vacate, citing both inefficient counsel and the fact that the conviction did not qualify for an enhanced sentence. The Motion was denied based on Fourth Circuit precedent allowing a maximum aggravated sentence to be imposed. Wheeler’s counsel sought to appeal by filing a certificate of appealability. While the appeal was pending, the previous precedent relied upon was overturned by the Fourth Circuit with a finding that a district court could only consider the maximum sentence that the particular defendant could receive in enhanced sentence matters. However, Wheeler’s appeal was still denied based on the reasoning that the new decision could not be applied retroactively.

Wheeler’s counsel subsequently filed a habeas petition, arguing that the AEDPA remedy was inadequate and ineffective. In this case, the Fourth Circuit upheld the inadequacy on appeal. The court reasoned:

“[W]e conclude that [AEDPA] is inadequate and ineffective to test the legality of a sentence when: (1) at the time of sentencing, settled law of this circuit or the Supreme Court established the legality of the sentence; subsequent to the prisoner’s direct appeal and first … motion, the aforementioned settled substantive law changed and was deemed to apply retroactively on collateral review; (3) the prisoner is unable to meet the gatekeeping requirements … for second or successive motions; and (4) due to this retroactive change, the sentence now presents an error sufficiently grave to be deemed a fundamental defect.”

LOOKING FORWARD

Following the Wheeler decision, the Solicitor General, on behalf of the United States, filed a writ of certiorari with the United States Supreme Court. The petition was denied in March 2019, before the split emerged. The developing split has the potential for unfortunate consequences for prisoners based solely on the region they are imprisoned in. The split will inevitably result in disparate results concerning a prisoner’s rights to seek relief and retrial in the case of wrongful convictions. In the Sixth Circuit, Judge Karen Nelson Moore acknowledged the disparity in her dissent, pointing out that Hueso would “almost certainly prevail” had he attacked his sentence the first time, and noting that, as a result of the majority interpretation, Hueso would be spending another decade incarcerated.

Competing Branches: Judicial Scrutiny and Presidential Commutation of Prison Sentences

Background

Presidential commutation, or reduction, of prison sentences is a well-established power of the executive branch. Article II of the United States Constitution gives the President the “power to grant Reprieves and Pardons” for criminal offenses against the United States. U.S. Const. art. II, §2. However, the implications of such an action on the judiciary’s subsequent ability to grant a writ of habeas corpus are yet to be determined.

A writ of habeas corpus permits an inmate to have his or her case reviewed by a court to determine whether the imprisonment is lawful. If there have been changes in law relevant to the case, or if for any number of reasons, the inmate believes the original sentence may no longer hold, he or she may ask that a court hear the claim. Relatedly, Article III of the Constitution provides an important constraint on the authority of the judiciary, declaring that courts cannot hear a moot issue. In other words, the conflict before the court has to be one that is “live,” or where the parties still have a “cognizable interest in the outcome.”

The Issue

The question, then, is what happens once a prisoner’s sentence has been reduced by presidential commutation?

1.         Does any appeal by the affected inmate for review become moot, divesting the judiciary of its power to grant writs of habeas corpus?

2.         Does the judiciary still have the authority to review that case, or has it been transformed from a judicial sentence to an executive one?

The Split

In recent years, cases before the Fourth and Sixth Circuits have raised these exact questions. The circuit courts are split, with the Fourth Circuit taking a seemingly narrow view of its jurisdictional scope, while the Sixth Circuit applies its authority more broadly.

In United States v. Surratt (2017), the Fourth Circuit held that presidential commutation — in this case, shortening a sentence for crack cocaine possession from life to 20 years — divested the court entirely of its power to review the case. Though the ruling features only a two-sentence opinion, the concurring opinion explains the logical merits. It states, “absent some constitutional infirmity in the commutation order, which is not present here, we may not readjust or rescind what the President, in the exercise of his pardon power, has done.” It asserts that the nature of the sentence has been transformed by the action, and that the prisoner is no longer serving a judicially imposed sentence, but a presidentially commuted one — to interfere with that would be to act outside of the court’s jurisdictional purview. In the court’s view, the inmate had accepted the offer made by the President, which created finality in the decision, thus precluding the court from further intervention.

Deviating from this opinion, in Dennis v. Terris (2019), the Sixth Circuit found that such an exercise of presidential power does not take away from the judiciary’s authority to grant a writ of habeas corpus. The court acknowledged the executive’s power, but refused to accept the position that the “altered sentence becomes an executive sentence in full, free from judicial scrutiny with respect to mistakes the courts may have made.” In this view, there is no overlap between the power exercised by the executive and the authority the court is asked to assert. Here, the question is not whether the commutation should be amended, but rather whether the original sentence itself would hold up under scrutiny and application of modern law. The argument made by this court is that a commutation or pardon by the President does not change the nature of or eliminate the original sentence. Say, for example, an inmate’s sentence is commuted with the added condition that the inmate maintain good behavior. If that condition is not met, the commutation is revoked and the original sentence takes effect once again. The original sentence remains in place all along, “ready to kick into full effect if the recipient violates the conditional cap.” Likewise, the sentence is, all along, subject to be amended by the court system that imposed it. Moreover, the court argues that a commuted sentence is, on principle, not rendered moot. Commutation does not take away any interest the inmate has in seeking relief for the remainder of his or her sentence. If a court were to find the inmate’s sentence unlawful, then the original sentence would simply go away. In other words, the conflict is still “live,” giving the court jurisdiction to revise and reevaluate the legality of its own past decisions.

Looking Forward

The power of a President to shorten or forgive the sentences of prisoners is an exercise in fairness that dates back to the creation of the U.S. Constitution, and has played a role in the criminal justice system ever since. This current split reveals a fundamental difference in how the courts view their roles as part of the judiciary. Whether or not an overlap between branches of government is formed by an executive action is a question of constitutional interpretation that carries serious consequences for how justice will be carried out across the United States in the future.

The Tapia Tap Dance: When Does Considering Rehabilitation in Imposing a Sentence Violate Tapia?

BACKGROUND

In 1984, Congress passed the Sentencing Reform Act, as part of the Comprehensive Crime Control Act. The Act, among other things, abolished federal parole in all but a few instances and created the United States Sentencing Commission. It also required courts to consider the factors outlined in 18 U.S.C. § 3553(a)—which include the nature of the crime, the characteristics of the defendant, the justification for the sentence, the kinds of available sentences, any relevant policies promulgated by the Sentencing Commission, the need for consistency, and the value of any potential restitution to victims.

However, §3582 of the Act went one step further. In a nod to concerns about excessive prison sentences imposed during the height of the War on Drugs, it provided that the above factors should be considered while also “recognizing that imprisonment is not an appropriate means of promoting correction and rehabilitation.” In Tapia v. United States (2011), the Supreme Court interpreted that provision of the Act to mean that “the Sentencing Reform Act precludes federal courts from imposing or lengthening a prison term in order to promote a criminal defendant’s rehabilitation.”

THE ISSUE

What is the standard for determining when a sentencing court violates Tapia? When a court considers rehabilitation in imposing a sentence at all, does it violate Tapia? Or is Tapia only violated when a sentencing court uses rehabilitation as the determining factor?

THE SPLIT

As it turns out, every Circuit in the country—save for the D.C. Circuit—has taken a position on this issue. They’re divided into two camps.

The Seventh, Ninth, Tenth, and Eleventh Circuits apply an easy-to-satisfy standard: they hold that Tapia is violated when the sentencing judge even considers rehabilitation or bases his sentence even in part on rehabilitation. As articulated by the Tenth Circuit in United States v. Thornton (2017), for example, “A rule requiring reversal only when rehabilitation is the sole motivation would not make sense. The federal sentencing statute mandates that judges consider other factors. . . . Therefore, there will almost always be some valid reasons advanced by the district court for imposing the sentence issued.” The Eleventh Circuit in United States v. Vandergrift (2014) arrived at the same conclusion, and based its analysis on an interpretation “faithful to Tapia’s reasoning.” It noted that the Supreme Court held that sentencing courts “‘should consider the specified rationales of punishment except for rehabilitation’” when “determining whether to impose or lengthen a sentence of imprisonment.” Accordingly, any consideration of rehabilitation is improper.

The First, Second, Third, Fourth, Fifth, Sixth, and Eighth Circuits come out differently. For a sentencing court to run afoul of Tapia, they require a demonstration that rehabilitation was the determining factor in the sentencing court’s decision to impose or enhance a sentence in order to find a Tapia violation. They, too, base their rationale in the Supreme Court’s language in Tapia. For example, in United States v. Garza (2018), the Fifth Circuit noted:

in Tapia the Court made clear that “[a] court commits no error by discussing the opportunities for rehabilitation within prison or the benefits of specific treatment or training programs.” A district court also may legitimately “urge the [Bureau of Prisons] to place an offender in a prison treatment program.” However, when the district court’s concern for rehabilitative needs goes further—when the sentencing record discloses “that the court may have calculated the length of [the defendant’s] sentence to ensure that she receive certain rehabilitative services”—§ 3582(a) has been violated.

Similarly, in United States v. Bennett (2012), the Fourth Circuit focused on looking at the specific error that the Supreme Court was attempting to remedy in Tapia. To glean the Supreme Court’s meaning, it looked at the sentencing court’s proceedings in Tapia and observed that the district court judge said that the “‘number one’ consideration ‘[was] the need to provide treatment.’” It observed that the Tapia decision was a “close question . . . whether the rehabilitation rationale drove the sentencing decision,” despite the sentencing court’s brazen discussion of rehabilitation. Accordingly, the Court couldn’t possibly mean that a district court judge’s mere discussion of rehabilitation ran afoul of Tapia.

The Third Circuit, which arrived at a conclusion on the proper interpretation of Tapia only ten days ago, articulated a related—but distinct—rationale. It noted in United States v. Schonewolf (2018) that that the first approach, taken by the Seventh, Ninth, Tenth, and Eleventh Circuits, would “risk a chilling effect on district courts ‘discussing the opportunities for rehabilitation within prison,’ a subject that ‘a court properly may address.’”

LOOKING FORWARD

Given that virtually every Circuit in the country has arrived at a conclusion on the meaning of Tapia—and that those meanings differ and are supported by different rationales—the Supreme Court has a strong incentive to take an appeal from one of these cases to resolve the split. Even more persuasively, the Sentencing Reform Act was intended to promote consistency in sentencing across the country. It’s a cruel twist of irony for the drafters of the Act that it, in turned, spurred even more inconsistency.

Reading the Fifth: Supreme Court Exercises its Right to Remain Silent on What Comprises a “Criminal Case”

BACKGROUND

The Self-Incrimination Clause of the Fifth Amendment protects individuals from being compelled to bear witness against themselves in a criminal case. Courts have struggled with the scope of this protection, particularly regarding what comprises a “criminal case.” Does the term extend to pre-trial proceedings, such as a bail hearing? Has a person’s Fifth Amendment right against self-incrimination been violated if the compelled statement in question is never used in a court of law?

Over the past thirty years, the Supreme Court has never directly resolved the question of what constitutes a “criminal case.” In dicta from United States v. Verdugo-Urquidez (1990), the Supreme Court indicated that the Fifth Amendment right was merely a trial right. But later, in Mitchell v. United States (1999) the Supreme Court indicated that the right extended to sentencing hearings.

The question of what comprises a criminal case was more recently addressed in Chavez v. Martinez (2003). In his plurality opinion, Justice Clarence Thomas declared that a statement was not a violation of the Fifth Amendment right against self-incrimination where the individual first hadn’t been charged with a crime and where the individual’s statements had not been used in a criminal case. Thomas further wrote:

“Mere coercion doesn’t violate the self-incrimination clause minus use of compelled statements in a criminal case against the witness…a ‘criminal case’ at the very least requires the initiation of legal proceedings.”

Three other justices disagreed, arguing that self-incrimination is complete the moment a confession is compelled, regardless of whether the statement is used at trial.

After the opinions in Chavez were released, a circuit split developed over the definition of a criminal case under the Fifth Amendment.

THE ISSUE

Does the Fifth Amendment right against self-incrimination include statements compelled in pre-trial proceedings?

THE SPLIT

The Third, Fourth and Fifth Circuits resolved this question in favor of Justice Thomas’s view, holding that the right against self-incrimination is only a trial right. In Renda v. King (2003), the Third Circuit determined that questioning while in police custody without providing Miranda warnings is not a Fifth Amendment violation if the individual is never charged with a crime and their responses are never used in a trial.

But on the other hand, in Vogt v. City of Hays (2017) the Tenth Circuit resolved this question in favor of a broader reading of the term “criminal case,” allowing the term to include certain pre-trial proceedings. The Second, Seventh, and Ninth Circuits take a similar view of the right against self-incrimination.

The facts of Vogt are unusual. In Vogt, a police officer for the City of Hays admitted during an interview with a neighboring police department that he had illegally retained a knife obtained during his employment as a police officer. The neighboring police department agreed to hire Vogt on the condition that he report the illegal retention of the knife to the Hays police department. Upon Vogt’s admission, Hays initiated a criminal investigation against him. The charges were dropped, but Vogt sued, claiming that the state violated his Fifth Amendment right against self-incrimination by inducing him to confess.

The Tenth Circuit in Vogt concluded—after examining the text of the Fifth Amendment and the Founders’ intent—that the right against self-incrimination includes pre-trial proceedings. The court noted that the Fifth Amendment makes no mention of “trial” or “criminal prosecution,” instead using the term “criminal case.” The court pointed to Counselman v. Hitchcock (1892) wherein the government argued that a witness could not invoke the Fifth Amendment in a grand jury proceeding because it was not a “criminal case.” The Supreme Court rejected the government’s argument there, holding that the “criminal case” of the Fifth Amendment is a broader term than the Sixth Amendment’s “criminal prosecution.”

Additionally, to determine the meaning of “criminal case,” the Tenth Circuit consulted the most prominent dictionary of the Framers’ era: purportedly Noah Webster’s An American Dictionary of the English Language. In this dictionary, “case” was defined as “a cause or suit in court.” This definition, where “suit” is understood to be nearly synonymous with “cause,” indicates that the Framers understood the criminal case to encompass more than merely the trial. From these facts, Tenth Circuit concluded that the right against self-incrimination is more than just a trial right.

LOOKING FORWARD

The City of Hays appealed the Tenth Circuit’s decision in Vogt, and the Supreme Court granted certiorari on September 28, 2017. The case was argued before the Court on February 20, 2018; however, whether this split will be resolved by the Vogt appeal is yet to be seen. Justices Samuel Alito and Sonia Sotomayor both noted the case was “odd,” and Justice Breyer even questioned whether the strange and distinguishing facts of Vogt made it an appropriate one for the Court to take. The Supreme Court has the option to dismiss the case as improvidently granted, but it is likely that the Court will publish an opinion resolving this constitutional issue soon.

On a constitutional question of this magnitude, let’s hope the Supreme Court doesn’t choose to plead the Fifth.

Does Pre-Trial Detention Toll a Term of Supervised Release?

Supervised Release

For some people who are convicted of a criminal offense, a sentence can include a term of supervised release (also known as special or mandatory parole). Under 18 U.S.C. § 3624, the federal supervised release statute, a term of supervised release begins on the day that a person is released into the custody of a parole officer. The federal supervised release statute also provides that the term of supervised release is tolled during any period where the person is imprisoned in connection with a conviction for a different federal, state, or local crime.

The Issue

Jason Mont began a five-year period of supervised release on March 6, 2012. On June 1, 2016, Mr. Mont was arrested on state charges and held in pre-trial detention until he pleaded guilty in October 2016. In June 2017, Mr. Mont’s supervised release was revoked, and he was ordered to serve an additional 42 months for violating his supervised release. In United States v. Mont (2018), Mr. Mont claimed that the court did not have jurisdiction to revoke his supervised release, arguing that his supervised release ended on March 6, 2017 (five years after he was initially released). Following circuit precedent established by United States v. Goins (2008), the Sixth Circuit held that pretrial detention that leads to a conviction counts as time “in connection with a conviction,” as described in the federal statute.

The Split

Several circuits have spoken to whether time served in pretrial detention counts as time “in connection with a conviction” for the purposes of the federal supervised release statute, in addition to the Sixth Circuit’s previous ruling in Goins. The Fourth Circuit in United States v. Ide (2010), the Fifth Circuit in United States v. Molina-Gazca (2009), and the Eleventh Circuit in United States v. Johnson (2009) have all held that pretrial detention counts for the purposes of the federal supervised release statute. In contrast, the D.C. Circuit in United States v. Marsh (2016) and the Ninth Circuit in United States v. Morales-Alejo (1999) held that time served in pretrial detention does not qualify.

The Ninth Circuit is the only circuit that has directly addressed the statutory language in the federal supervised release statute:

“A plain reading of this language…suggests that there must be an imprisonment resulting from or otherwise triggered by a criminal conviction. Pretrial detention does not fit this definition, because a person in pretrial detention has not yet been convicted and might never be convicted.”

In Mont, the Sixth Circuit explicitly rejected this interpretation.

Looking Forward

This case has not attracted much attention within the legal community since the Sixth Circuit’s ruling was handed down this past February, but it does have important ramifications for persons whose sentences include a period of supervised release. With six circuits having weighed in on opposite sides of a matter of federal statutory interpretation, the time is ripe for an aggrieved party to petition the Supreme Court for a definite ruling on this issue. Mr. Mont has ninety days from the date of the Sixth Circuit’s judgment to file a writ of certiorari to the Supreme Court – while this deadline has not passed, it is not yet clear whether he will file a petition. In the alternative, given that this issue arises out of different interpretations of a federal statute, Congress could pass a bill to amend the current statute and clarify whether pretrial detention that leads to a conviction counts as time served in connection with a conviction.

Agree to Disagree: Defining Submission to Police Authority

Issue

The Fourth Amendment of the Constitution protects against unwarranted searches and seizures, which begs the question—what exactly constitutes a seizure? In California v. Hodari D. (1991), the Supreme Court held that a “seizure” requires either physical force or submission to police authority. In the wake of this decision, circuit courts have struggled to define the phrase, “submission to police authority,” resulting in a split of authority. The emergent view in the Courts of Appeals, although admittedly uneven within the circuits, is that when a suspect does nearly anything more than pausing briefly, including any significant verbal engagement with the officer, that action is strong evidence of submission.” United States v. Camacho (1st Cir. 2011). Some courts have adopted this rather broad interpretation of the term, imparting a low standard for submission. Other courts have adopted a narrow view, requiring additional conduct to meet the standard.

The issue of defining submission is incredibly significant because of its impact on other aspects of a case. For example, whether or not a defendant is deemed to have submitted to police authority can determine what evidence may be presented at trial, which can significantly influence the outcome of a case. The Fourth Amendment serves to protect against unwarranted invasions of privacy by requiring probable cause. The Fourth Amendment “prohibition on unreasonable searches and seizures is enforced through the exclusionary rule, which excludes evidence seized in violation of the Fourth Amendment.” United States v. Camacho (1st Cir. 2011).

The Split

The following circuits have adopted the view that brief compliance followed by flight does not constitute submission.

  • Second Circuit: In United States v. Huertas (2d Cir. 2017), the court held that, in dealing with the police, conduct that amounts to evasion cannot be considered submission.
  • Third Circuit: In direct contradiction with the Tenth Circuit’s ruling, the court in United States v. Valentine (3d Cir. 2000) held that a brief pause does not make for a submission, and therefore the defendant in this case was not seized within the Fourth Amendment meaning.
  • Ninth Circuit: In United States v. Hernandez (9th Cir. 1994), the court rejected the defendant’s argument that he was “seized” because he briefly submitted to the police officer’s show of authority before fleeing. The court here requires a discernible showing of compliance to constitute submission:

“We decline to adopt a rule whereby momentary hesitation and direct eye contact prior to flight constitute submission to a show of authority. Such a rule would encourage suspects to flee after the slightest contact with an officer in order to discard evidence, and yet still maintain Fourth Amendment protections.”

The following circuits have adopted the view that brief compliance followed by flight does constitute submission.

  • First Circuit: In United States v. Camacho (1st Cir. 2011), the court held that once a defendant responds to questions posed by the police, he or she has submitted to police authority.
  • Tenth Circuit: In United States v. Morgan (10th Cir. 1991), the court held that even the slightest form of compliance, in this case, a momentary hesitation, is enough to constitute submission. The court explains its reasoning as follows:

“Here, the intrusion on Mr. Morgan in regard to the initial attempted questioning by Officer Eubanks and the subsequent exchange between the two was minimal. However, since Officer Eubanks had followed the car in which Defendant was a passenger for several blocks with his red lights flashing; since Officer Eubanks exited from a marked police car, in uniform, and asked the Defendant to hold up; and since Defendant, at least momentarily, yielded to the Officer’s apparent show of authority, we find Mr. Morgan was seized for purposes of the Fourth Amendment during the initial portion of the encounter.”

  • D.C. Circuit: In United States v. Brodie (D.C. Cir. 2014), the court ruled that when a defendant complies with an officer’s orders by engaging in overt acts, such as putting one’s hands on the car, the defendant has submitted to police authority.

Looking Forward

Although the Supreme Court expressly outlined the requirements for a “seizure” in California v. Hodari D. (1991), it still left some questions unanswered—circuit courts were tasked with the responsibility of defining “submission to police authority,” and conflicting rulings resulted. Branden Huertas submitted a petition for writ of certiorari to the Supreme Court in December 2017, in hopes of appealing the Second Circuit’s decision in United States v. Huertas (2017). In the petition, Huertas discusses the split among the lower courts and urges the Supreme Court to review the issue. In his petition for a writ of certiorari to the U.S. Court of Appeals for the Second Circuit, Huertas notes: “The conflict is widely recognized by courts and commentators. It also is deeply entrenched; the courts on either side of the split have acknowledged the contrary reasoning of their peers and have had multiple opportunities to reconsider their positions, but the conflict has persisted. Thus, only this Court can restore uniformity on this important question of Fourth Amendment law.” For further reading, see the petition for writ of certiorari: Huertas v. United States.

Card Declined: The Credit Card Fraud – Crime Sentencing Transaction

The Issue

Wire fraud, an intentional act to defraud another individual or entity of property (usually money) through electronic means, is becoming an increasingly common and widespread crime in the United States. According to a study by Javelin Strategy & Research in partnership with LifeLock, Inc., approximately 15.4 million consumers were victims of identity theft or fraud in 2016, up 16 percent from 2015, and more than ever recorded by the firm. Obtaining credit card numbers, encoding them on blank cards, and making purchases or withdrawals from automated teller machines (ATMs) has become a favorite medium of crime among fraudsters. When determining how a perpetrator of wire fraud should be sentenced for possessing credit cards that are canceled, expired or attached to an account from which all funds have been successfully siphoned, a key issue is whether the “access device” is in fact usable by the perpetrator.

The Split

Credit cards that have been encoded with stolen numbers and used fraudulently are governed by 18 U.S.C. § 1029(e)(1) and (e)(3). Of particular importance, Application Note 3(F)(i) of § 2B1.1 of the sentencing guidelines says in cases involving “unauthorized access devices,” in this case credit cards, “loss includes any unauthorized charges made with the counterfeit access device.”

The Ninth Circuit ruled on this issue in 2012, when it considered United States v. Onyesoh, which explored access device fraud under 18 U.S.C. § 1029 and whether the government must prove the usability of an expired credit card number in order for a district court to increase the severity of a sentence. In Onyesoh, the Ninth Circuit held that unauthorized access devices must be usable:

An “unauthorized access device” must be an “access device,” which itself must be capable of obtaining “money, goods, services, or any other thing of value.” 18 U.S.C. § 1029(e)(1) and (e)(3). The statute’s language is clear and we give it full effect—unauthorized access devices are a subset of access devices, and therefore must be capable of obtaining something of value…The statute is intended to target major fraud operations instead of individual [fraud]…But the kind of devices potentially covered by the statute says nothing about the quantum of proof necessary to establish usability. The legislative history simply does not address that issue. No court, in this or any other circuit, has read usability out of the statute.

But in deciding United States v. Popovski at the end of 2017, the Seventh Circuit changed the score. Judge Easterbrook adopted the Sixth Circuit’s 2015 decision in United States v. Moon, arguing that the statute and note must be read together:

[T]he definition of “unauthorized access device” in § 1029(e)(3) includes “any access device that is lost, stolen, expired, revoked, canceled, or obtained with intent to defraud”. This necessarily implies that a card, number, or other identifier with a potential to obtain goods or initiate a transfer of funds remains an “access device” even if it is “expired, revoked, [or] canceled.” These two statutory paragraphs can work together only if paragraph (1) defines an “access device” according to its nature—the sort of thing that could in principle be used to get goods or funds, whether or not it would work in practice…. If a calculation under Application Note 3(F)(i) overstates the seriousness of the offense, a district judge must adjust accordingly. That process, rather than warping the language of § 1029(e), is the way to avoid the Ninth Circuit’s parade of horribles.

While the Ninth Circuit’s decision was likely predicated on a desire to prevent obtuse sentences for criminals who possessed but did not use expired credit card numbers, Judge Easterbrook’s scathing critique of the Ninth Circuit made clear that the Seventh Circuit, like the Sixth Circuit, will not cut financial criminals any sentencing slack:

Like the panel in Onyesoh, we too think that a district judge should not increase a sentence just because the defendant possessed ancient pieces of plastic or lists of numbers useful only during the reign of Xerxes. But we disagree with Onyesoh’s view that this result should be achieved by treating the language in § 1029(e)(3) as irrelevant to the meaning of “access device”. Courts must read the statute to reconcile these paragraphs.

Looking Forward 

After a new sentencing hearing, the Ninth Court of Appeals and the Supreme Court denied Onyesoh’s petition for a writ of certiorari.  Certiorari is currently pending for Popovski, but the Supreme Court has not expressed interest in ruling on the case in the current session.

Judge Easterbrook, in deciding United States v. Popovski, came down hard on the Ninth Circuit’s interpretation of the sentencing law regarding this sort of wire fraud. He argued, in part, that district judges can come to a workable resolution under the current law without disregarding any specific portion of the statute. Following Judge Easterbrook’s logic, it seems unlikely that this issue will pique the Supreme Court’s interest. Nevertheless, if credit card fraud continues to rise at record levels and continues to emerge as the cause celebre of the consumer crime world, constituent pressure may push Congress to act.

 

On Whose Authority? Authorized Access and Criminalized Computer Use under CFAA

It’s a close thing, when watching a crime drama, to see whether the makers of a show thoroughly misunderstand the law or the use of computers. The fantasy of the hacker furiously typing as code streams down a computer screen, and the fantasy of the lawyer defying the judge to give a rousing speech and sway the jury, are equally illusory mainstays of network TV. Occasionally, however, law and computer technology do produce real drama. On January 13th, 2013, a young man named Aaron Swartz faced a lawsuit from the United States. Swartz, a student from MIT, had been accused of downloading over 4,000,000 articles from the online database JSTOR. Swartz had, according to the United States, broken into a network closet at MIT and downloaded the majority of the JSTOR archives, which MIT had licensed, before sharing the millions of scholarly articles on various file-sharing websites. After his breach of the network was discovered, the United States filed suit. During the course of the litigation, after learning that he could face up to seven years in prison, Mr. Swartz committed suicide.

Though this is a dramatic example of information redistribution, many who are currently law students or young lawyers grew up committing, and continue to commit, routine criminal offenses on their computers. Anyone who ever downloaded a song over Napster or Limewire, who got a free version of Microsoft Office or Adobe Photoshop from a friend on a USB drive, or fought through hundreds of pop-up ads to watch a low-res version of a not-on-Netflix movie with a date has committed a crime. Commentators have often worried about statutes that criminalize large swaths of everyday behavior, creating a situation where most people receive no penalty while an arbitrary few face crushing consequences. One such statute under scrutiny is the Computer Fraud and Abuse Act, the statute under which Mr. Swartz was prosecuted.

The Split

The Computer Fraud and Abuse Act, ‘CFAA,’ is codified at 18 U.S.C. § 1030. The CFAA criminalizes certain acts by those who have “knowingly accessed a computer without authorization or exceeding authorized access.” The question is, what constitutes authorized access? Courts have split over the proper definition. The narrow view, held by the Ninth and Fourth Circuits, interprets “exceeding authorized access” as referring to only access restrictions on restricted data itself. The broader view, held by the First, Fifth, Seventh and Eleventh Circuits, interprets “exceeding authorized access” as referring to any use of the computer that was not authorized.

Typical of the narrow interpretation is the case U.S. v. Nosal (9th Cir. 2012). The defendant, David Nosal, was planning on leaving his contracting firm and starting a competing business. Along with associates, he obtained login credentials and downloaded source lists and other data from his employer, to use in founding his own company. Nosal summarises the split well:

This language can be read either of two ways: First, as Nosal suggests and the district court held, it could refer to someone who’s authorized to access only certain data or files but accesses unauthorized data or files—what is colloquially known as “hacking.” For example, assume an employee is permitted to access only product information on the company’s computer but accesses customer data: He would “exceed authorized access” if he looks at the customer lists. Second, as the government proposes, the language could refer to someone who has unrestricted physical access to a computer, but is limited in the use to which he can put the information. For example, an employee may be authorized to access customer lists in order to do his job but not to send them to a competitor.

After review, the Ninth Circuit upheld the reasoning of the district court, arguing both that the broad interpretation made redundant prior “without authorization,” clause of the statute, and that the federal statute too broadly criminalized computer use:

Minds have wandered since the beginning of time and the computer gives employees new ways to procrastinate, by g-chatting with friends, playing games, shopping or watching sports highlights. Such activities are routinely prohibited by many computer-use policies, although employees are seldom disciplined for occasional use of work computers for personal purposes. Nevertheless, under the broad interpretation of the CFAA, such minor dalliances would become federal crimes. While it’s unlikely that you’ll be prosecuted for watching TV on your work computer, you could be. Employers wanting to rid themselves of troublesome employees without following proper procedures could threaten to report them to the FBI unless they quit. Ubiquitous, seldom-prosecuted crimes invite arbitrary and discriminatory enforcement.

The broader view can be found in cases like U.S. v. Rodriguez (11th Cir. 2010), argued in the Eleventh Circuit. Rodriguez found that an employee in the Social Security Administration who authorized personal information in the database without a business reason had violated the CFAA, as “the policy of the Administration is that use of databases to obtain personal information is authorized only when done for business reasons… In the light of this record, the plain language of the Act forecloses any argument that Rodriguez did not exceed his authorized access.”

Looking Forward

Many tech commentators continue to worry that the CFAA as interpreted as broadly as it is in the Rodriguez case will, as the Ninth Circuit notes, criminalize even basic work slacking. Despite his win, the defendant Nosal found himself in court again for U.S. v. Nosal (9th Cir. 2016), or “Nosal II.” In this case, Mr. Nosal was found in violation of the CFAA, though the Ninth Circuit retained their narrow interpretation. Mr. Nosal appealed to the Supreme Court, and the case was denied certiorari. Until the Supreme Court clarifies the CFAA, courts will continue to disagree on how broadly the statute should be interpreted, and on whether the use of a work computer “without a business reason,” like sneaking some Netflix in during company time, should be a federal crime.

Negotiate and Chill: How (and Whether) The Time for Plea Negotiations Can Be Excluded Under the Speedy Trial Act

Background

The Speedy Trial Act requires that any information or indictment charging a defendant with an offense must be filed within thirty days from an individual’s arrest or summons in connection with the crime. 18 U.S.§ 3161 (b).

This means that the government has thirty days from the time someone is arrested or summoned to charge that person with a crime.

However, certain periods of time—or delays—can be excluded from the Speedy Trial thirty days. For example, under 18 U.S. § 3161(h)(1), delays “resulting from other proceedings concerning the defendant” can be excluded. The statute gives a non-exhaustive list of eight delays that would count as “resulting from other proceedings”:

(A) determining “mental competency or physical capacity”

(B) trial related “to other charges against the defendant”

(C) interlocutory appeals

(D) pretrial motions

(E) the transfer of the case or removal of a defendant

(F) transportation of a defendant if not unreasonable

(G) a court consideration of a proposed plea agreement

(H) proceedings “under advisement by the court”

Delays “resulting from other proceedings concerning the defendant” are automatically excludable from the Speedy Trial thirty days.

But a delay can still be excluded under other provisions in § 3161, such as (hint) 18 U.S. § 3161(h)(7), under which a delay resulting from a continuance granted to serve “the ends of justice” can be excluded. To be excluded, the reasons the delay serves “the ends of justice” must be set in the record.

The Split

As you might imagine, the real fights happen in the “including, but not limited to” space created by 18 U.S. § 3161(h)(1). For example, circuits cannot come to an agreement on whether plea negotiations are automatically excludable as “resulting from other proceedings concerning the defendant.”

The Second, Fifth, Ninth, and Eleventh Circuits have held that delays resulting from plea negotiations are only excludable under § 3161(h)(7)—where the judge makes findings on the record that the delay serves “the ends of justice.”

These Circuits determined that automatic exclusion only works for delays related to official judicial proceedings because those enumerated examples in 18 U.S. § 3161(h)(1) all relate to official judicial proceedings. The Eleventh Circuit in United States v. Mathurin (2012) stated that:

“'[P]lea negotiations’ are informal discussions between the parties and are directly controlled by the parties, not the court.” (quoting United States v. Lucky (2d Cir. 2009)).

Thus, the court held, plea negotiations are only excludable if the judge makes findings on the record that the delay serves “the ends of justice.”

On the other hand, the Fourth, Seventh, Eighth, and Sixth Circuits have held that delays resulting from plea negotiations are automatically excluded as “resulting from other proceedings concerning the defendant.” The Sixth Circuit, in United States v. White (2017) held that:

“Although the plea-bargaining process is not expressly specified in § 3161(h)(1), the listed proceedings ‘are only examples of delay ‘resulting from other proceedings concerning the defendant’ and are not intended to be exclusive.”

Takeaways

This split is ripe for Supreme Court review and a cert petition is pending.

It is important for the split to be resolved because defendants should be treated the same across jurisdictions. Also, what good is the Speedy Trial Act if defendants are unsure when they will be charged or how the Speedy Trial Act applies to their situation?

Although a look into statutory construction could resolve this split, interesting policy perspectives are at play regarding plea bargaining incentives—how would automatic exclusion of plea negotiations influence the parties to come to an agreement, if at all?

Whether plea agreements are automatically excludable or not, though, it is certainly better that everyone know for sure.

Speak Now or Forever Hold Your Peace: A Split on a Fiduciary’s Duty to Speak

Imagine: a member of your trusted investment club approaches you encouraging you to purchase securities in a new company, which you do because your investment club always has the group’s best interests in mind. Later you learn that this member received a commission from your transaction. You feel betrayed, but did he have a duty to tell you about his stake in your investment?

Duty to Speak

In Chiarella v. United States, the Supreme Court held, “When an allegation of fraud is based upon nondisclosure, there can be no fraud absent a duty to speak.” Such a duty is found when a party has information “that the other is entitled to know because of a fiduciary or similar relation of trust and confidence between them.”

This rule, like virtually all legal rules, reflects a balancing of competing interests. On one hand, we want to believe that people are trustworthy, particularly when a person has a fiduciary duty to us. The investment adviser industry depends on people trusting that their investment advisers have their best interests at heart. If an individual recommending the purchase of securities is deriving a commission from the sale, a potential investor would want to be wary of a potential conflict of interest.

On the other hand, is it wise to impose a duty to speak on every individual who may share information about a company offering securities? With the growth of technology, communication and the sharing of information have become constant. If such a duty is imposed on every individual who recommends a security or supplies information about a company, the chain of liability would be unending.

The Split

On whom do we impose a duty to speak? Three circuits have taken different approaches.

The Third Circuit found that a general fiduciary duty does not implicate a duty to speak. In Schiff v. United States the Court held:

“The Government argues that Schiff’s duty to disclose in the SEC filings derives from a general fiduciary obligation of ‘high corporate executives’ to the company’s shareholders . . . This argument reaches too far.”

The Second Circuit held in Securities and Exchange Commission v. Dorozkho that a duty to speak should be found wherever there is a fiduciary duty.

“[These cases] all stand for the proposition that nondisclosure in breach of a fiduciary duty ‘satisfies § 10(b)’s requirement . . . [of] a deceptive device or contrivance’.”

Finally, the Ninth Circuit extends the duty to speak to a much broader class in Paracor Finance, Inc. v. General Electric Capital Corp.

“A number of factors are used to determine whether a party has a duty to disclose: (1) the relationship of the parties, (2) their relative access to information, (3) the benefit that the defendant derives from the relationship, (4) the defendant’s awareness that the plaintiff was relying upon the relationship in making his investment decision, and (5) the defendant’s activity in initiating the transaction.”

Looking Forward

While the Ninth Circuit approach allows a judge to balance factors and find whether a duty to speak exists as a matter of fairness, this approach does not seem practical in a world where people are constantly accruing and sharing information. Thus, it makes the most sense for the court to follow the Second Circuit’s approach of only finding a duty to speak where there is a fiduciary duty, which represents the middle ground of who has a duty to speak and promotes predictability.