Sunday, October 30, 2016

Case o' The Week: Government Misses "Target" Yet Still Hits Ninth's Mark - Zhou, Restitution, and Standards of Review

   Q: What could be worse than a forfeiture order that snags assets from dismissed or acquitted counts? See Lo blog entry here.
   A: A restitution order that scoops in victims from conduct that is beyond the scope of the conviction. United States v. Zhou, 2016 WL 5390345 (9th Cir. Sept. 27, 2016), decision available here.

Players: Judge Graber writing and concurring, Judge Silverman concurring, dissent by Judge Tashima. Hard-fought appeal by CD Cal AFPD Jonathan Libby.

Hon. Judge Susan Graber
Facts: Zhou used fraudulent credit cards at Target (Colorado) and Nordstrom (California). Id. at *1. The indictment charged he used the cards in the Central District of California “and elsewhere.” Id. at *2. 
  He plead open and admitted the CD Cal (Nordstrom) allegations (discussed by the government during the plea). He didn’t admit to the “Target” allegations (not mentioned by the government in the plea). Id. at *1-*2, *5. 
   The court’s Mandatory Victim Restitution Act (“MVRA”) order covered both the Nordstrom and the Target charges. Id. at *1. The (not-admitted) Target offenses generated about half of the restitution sum. Id. at *2. Zhou did not object at sentencing. Id.

Issue(s): “Defendant . . . [argues] for the first time on appeal that the district court improperly ordered restitution with respect to the Target charges.” Id. at *1. “He argues that the district court erred by awarding restitution to persons who were not victims of the offense of conviction, because the offense of conviction covered only the Nordstrom charges and the MVRA authorizes restitution only to the victims of the offense. Defendant acknowledges, as he must, that he did not raise that argument (or any argument concerning restitution) to the district court.” Id. at *2. 
  “[Applying the MVRA], the only issue is whether the Target victims were persons ‘directly and proximately harmed as a result of the commission of’ Defendant’s crimes of conviction.’” Id. at *4 (citing 18 U.S.C. § 366A(a)(2). 
  “The parties dispute whether it was plain error to order restitution to the victims of the Target charges.” Id.

Held: “We hold that the district court did not plainly err in imposing restitution and, therefore, affirm.” Id. at *1 (emphasis added). 
  “Defendant pleaded guilty to Count One of the indictment, and restitution is therefore appropriate for all victims of that count.” Id. at *5.

Of Note: This is a disappointing (albeit limited) restitution holding. An important sub-issue, however, is the standard of review. The government urged the Ninth to punt, because the case involved an “unresolved factual issue.” Id. at *3. Judge Graber rejects that pitch, and relegates this (pro-government) line of law into regular old “plain error” review. Id. 
  She also, however, rejects Zhou’s plea for de novo review as a “pure question of law.” Id. at *3. Indeed, Judge Graber rejects this argument so vehemently that she concurs with herself, to advocate for en banc elimination of the “pure question of law” line altogether. Id. at *6 (Graber, J., concurring). 
  As Judge Tashima observes, it’s a curious concurrence, since no one views this appeal as a “pure question of law.” Id. at *10 & n. 3 (Tashima, J., dissenting). 
  Appellate folks, read this concurrence carefully: Judge Graber’s push for en banc review of an established and valuable line of jurisprudence is of concern. (And note that two of Zhou’s panel – Judges Tashima and Silverman – were on another panel that dealt with this line of law.). See blog here

How to Use: Can the government scrape by with a limited factual recitation at the plea, and then blow up the universe of restitution victims by importing what is really relevant conduct? 
  Not if you object. 
  Judge Graber makes a point of limiting Zhou’s holding: “we need not and do not decide definitively whether the district court erred, because any error was not plain.” Id. at *6. It is an open question whether it is error for non-admitted conduct (or, put differently, conduct that is not squarely within the scope of a conviction) to be the basis of a MVRA restitution order. 
  Want a blueprint for your restitution objection? Read Judge Tashima’s compelling dissent. He pointedly asks why the Ninth is upholding a restitution order based on what is really relevant conduct, when the MVRA only authorizes restitution that flows directly “from the specific conduct that is the basis of conviction.” Id. at *8 (Tashima, J., dissenting).
For Further Reading: Two decades of experience have confirmed what we predicted: Olano was, well, a plain error.
  For an explanation of why Rule 52(b) doesn’t work, and a thoughtful suggestion on how to reform our broken system of reviewing unpreserved error, see Dustin Berger, Moving Toward Law: Refocusing the Federal Courts Plain Error Doctrine in Criminal Cases, 67 U. Miami L. Rev. 521 (2013), available here.

Image of the Honorable Judge Susan Graber from
Image of "Target" symbol from 

Steven Kalar, Federal Public Defender, N.D. Cal. Website at


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