Third Circuit: Loss means actual loss, not intended loss

This is a biggie from the Third Circuit.

In U.S. v. Banks, the court held loss, for sentencing guidelines purposes, means actual, and not intended, loss:

The Guideline does not mention “actual” versus “intended”
loss; that distinction appears only in the commentary. That
absence alone indicates that the Guideline does not include
intended loss.49
The government concedes that “the presumption is that
a word carries its ordinary meaning (and thus may resolve its
ambiguity).”50 We agree. The ordinary meaning of “loss” in
the context of § 2B1.1 is “actual loss.” This result is confirmed
by dictionary definitions of “loss.”51 

***

Our review of common dictionary definitions of “loss” point
to an ordinary meaning of “actual loss.” None of these
definitions suggest an ordinary understanding that “loss”

means “intended loss.” To be sure, in context, “loss” could
mean pecuniary or non-pecuniary loss and could mean actual
or intended loss.55 We need not decide, however, whether one
clear meaning of the word “loss” emerges broadly, covering
every application of the word. Rather, we must decide
whether, in the context of a sentence enhancement for basic
economic offenses, the ordinary meaning of the word “loss” is
the loss the victim actually suffered.56 We conclude it is.
Because the commentary expands the definition of
“loss” by explaining that generally “loss is the greater of actual
loss or intended loss,”57 we accord the commentary no weight.
Banks is thus entitled to be resentenced without the 12-point
intended-loss enhancement in § 2B1.1.58

Timing Is Everything

By Michael Caruso 

I rarely write about pending cases, but this case caught my attention as a former line cook and current lawyer.

Recently, Amanda Ramirez filed a $5 million class action lawsuit against Kraft Heinz Foods Company in Miami—the Hon. Beth Bloom is presiding. The lawsuit doesn't need any embellishment. Here are the allegations (slightly paraphrased but CAPS in original):

1. Kraft sells microwavable single-serve cups of mac and cheese represented as "READY IN 3½ MINUTES" under the Velveeta brand.

2. The statement "ready in 3½ minutes" is false and misleading because the mac and cheese takes longer than 3-and-a-half minutes to prepare for consumption. 

3. There are four steps in preparing the mac and cheese:

      a. Consumers must "REMOVE lid and Cheese Sauce Pouch;

      b. Next, they must "ADD water to fill the line in the cup. STIR."; 

      c. Third, "MICROWAVE, uncovered, on HIGH 3-1/2 min. DO NOT DRAIN."; 

          and

      d. Finally, they should "STIR IN contents of cheese sauce pouch." 

4. Kraft notes that the "CHEESE SAUCE WILL THICKEN UPON STANDING." 

Here's the crux of the suit: "Consumers seeing 'ready in 3½ minutes' will believe it represents the total amount of time it takes to prepare the [mac and cheese], meaning from the moment it is unopened to the moment it is ready for consumption. 

However, the directions outlined above show that 3-and-a-half minutes is just the length of time to complete one of several steps. The label does not state the mac and cheese takes '3½ minutes to cook in the microwave,' which would have been true."

Ms. Ramirez then states the obvious: "To provide consumers with mac and cheese that is actually 'ready in 3½ minutes,' it would need to be cooked in the microwave for less than 3-and-a-half minutes so that all the preparation steps could be completed in the 3-and-a-half minute timeframe. Consumers are misled to expect the mac and cheese will be ready for consumption in a shorter amount of time than it really takes to prepare."

Exactly. 

I understand that Tarantino has acquired the film rights.

 

Ramirez v. Kraft Heinz, 22-cv-23782-BB

"Whether the U.S. Court of Appeals for the 2nd Circuit’s “right to control” theory of fraud — which treats the deprivation of complete and accurate information bearing on a person’s economic decision as a species of property fraud — states a valid basis for liability under the federal wire fraud statute."

That's the question presented in Ciminelli v. United States, which SCOTUS will hear tomorrow morning. The government's use fraud statutes is out of control; it has criminalized basic breach of contract cases.  As an example, in a recent case in this district, a group of defendants were sentenced to 18 years (!!) under a right to control theory where the alleged fraud was based on a lie on how the defendants would use the product they purchased.  So Ciminelli is a big one, not just for the Second Circuit.

From SCOTUSblog:

This case has similarities with prior corruption disputes selected by the Supreme Court. It involves millions in New York state funds and thus raises federalism concerns: How much flexibility should states have in governance decisions without federal interference? The bidding process may have been unfair to Ciminelli’s competitors, but did the unfairness merit federal intervention? The harm calculation in this case is also unclear: Did Ciminelli intend to cause any loss to Fort Schuyler? There may have been a stronger case that Ciminelli wanted to cause business losses to his competitors by denying them a chance at the Buffalo Billion. Finally, because this is a criminal case, there is the specter of overcriminalization. Was Ciminelli on notice that he was committing a federal crime as opposed to utilizing sharp business practices to edge out competitors?

Deception in the government contracting process is a legitimate threat, and courts face a challenge in determining which forms of deception are serious enough to merit criminal sanctions. Some level of insincerity is expected — when a contractor makes its “best” offer, there is likely some puffery or gamesmanship involved in the negotiations. On the other hand, collusive price-fixing behavior among the contractors bidding for business is both improper and illegal. When are financial penalties sufficient to deter sketchy contractors, and when does federal prison become important in limiting bad behavior?

In Ciminelli’s case, the main wrongdoing appears to be his “sneaking to the front of the line” in the negotiation process. If the Supreme Court continues its trend of narrowing the scope of federal fraud criminalization, it can do so by eliminating the “right to control” theory of fraud. A decision that narrows or nixes that theory could reduce uncertainty among government contractors. Potential contractors would face a reduced risk of prison time when engaging in pre-negotiation talks with government insiders. Less clear is how much such a narrowing decision would benefit Ciminelli. Because the jury instructions and facts give room for having proven tangible economic harm, it is uncertain how much influence the “right to control” language had upon the jury’s decision to convict.

Hope everyone had a great Thanksgiving.

Sorry for the slow blogging

 Gonna take this week off.

I hope all of you have the best Thanksgiving.

I'm thankful for all of you and the great comments, tips, and readers.  And also thankful for the great posts by John Byrne and Michael Caruso.  Such wonderful stuff.

If you are looking for a good read during this Thanksgiving week, check out Rumpole's great posts on Elizabeth Holmes' sentencing here and here.  

Great stuff on why a first-time non-violent offender should not have gotten 11 years.  

Catch up soon.

Crypto Lawsuit Names High Profile Defendants

 

By John R. Byrne

If you've been following the news, you know about the cryptocurrency collapse. Here comes the litigation. A plaintiff has sued Sam Bankman-Fried (the founder and former CEO of FTX, a crypto trading platform) and a host of celebrities, alleging they misled them about the functionality of the FTX platform and/or failed to disclose their compensation for promoting FTX. FTX has filed for bankruptcy. 

You'll recognize the names of some of the defendants: Tom Brady, Gisele Bundchen, Shaq, Larry David, Udonis Haslem, and the Golden State Warriors (yes, the team), among others. The complaint asserts a claim under the Florida Securities and Investor Protection Act, FDUTPA, and civil conspiracy.

The case was assigned to Judge Moore. You can read the complaint here. 

In the meantime, the arena where the Heat play--now FTX Arena--is getting a new name. With the way the Dolphins are playing, maybe Joe Robbie would be nice callback.

Mar-a-lago special master/search case set for oral argument in 11th Circuit on November 22

JUST IN: Appeals court scheules oral arguments in DOJ appeal of Judge Cannon's special master order from Nov. 22 -- in case anyone was naively hoping for a quiet Thanksgiving week. pic.twitter.com/hKrHD5oTY6

— Kyle Cheney (@kyledcheney) November 15, 2022

"DEA’s most corrupt agent: Parties, sex amid ‘unwinnable war’"

 That's the title of the AP's explosive report on DEA agents and federal prosecutors.  The article, by Jim Mustian and Joshua Goodman, is a must-read.

The story centers around testimony provided to federal prosecutors by former Miami and Colombia-based agent José Irizarry, who has been portrayed as the DEA’s most corrupt agent. Irizarry spent his final hours of freedom with the AP in his native Puerto Rico confessing his crimes before reporting to federal prison to begin a 12-year sentence for money laundering.

The article takes a wider look at other federal agents and prosecutors who he says turned a blind eye — and sometimes joined in — his flagrant abuses.

Among the AP investigation’s key findings:

1. Irizarry has described to federal investigators — and the AP — how other federal agents, prosecutors, informants and in some cases cartel smugglers all joined on a three-continent joyride known as “Team America” that chose cities for bulk cash pick-ups mostly for partying or to coincide with Real Madrid soccer or Rafael Nadal tennis matches. That included stops along the way in VIP rooms of Caribbean strip joints, Amsterdam’s red-light district and aboard a yacht in Cartagena, Colombia, that launched with plenty of booze, booming music and more than a dozen prostitutes.
2. An ongoing federal investigation has focused on one of Irizarry’s partners who was briefly detained on allegations of sexual assault during a trip to Madrid, Spain, in 2018. The agent’s brother, a Florida wedding photographer, has been jailed since March for civil contempt after he refused to provide testimony to a Grand Jury in Tampa even after being granted immunity.
3. Three current and former federal prosecutors have faced questioning about Irizarry's raucous parties, including one still in a senior role in Miami, another who appeared on TV’s “The Bachelorette” and a former Ohio prosecutor who was confirmed to serve as the U.S. attorney in Cleveland this year before abruptly backing out for unspecified family reasons.
4. Central to the Irizarry investigation are overly cozy relationships developed between agents and informants — strictly forbidden under federal guidelines — and loose controls on the DEA’s undercover drug money laundering operations that few Americans know exist but which generate a huge windfall every year for U.S. law enforcement. Spurred by Irizarry’s crimes, the new DEA Administrator Anne Milgram has ordered an outside review of the agency’s foreign operations.

Chief Judge William Pryor addresses the Federalist Society

He starts at the 24 minute mark here.

Judge Pryor’s speech is getting a lot of press.  Here’s an example from Reuters:

A prominent federal judge on Thursday called the growth of the conservative Federalist Society an "example of the American dream" and mocked criticism by a U.S. senator and others who say the influential legal group has captured the judiciary.

***

Federalist Society leaders advised on the selection of former President Donald Trump's judicial nominees, and many of Trump's appointees were members of the group. But Pryor mocked the notion that the 60,000-member professional organization was working "in the shadows" to reshape the courts.

"Little did I know that millions of American voters, that the past president of the United States and the United States senators only provided camouflage for the real operation," Pryor said.

Pryor singled out claims by Democratic Senator Sheldon Whitehouse of Rhode Island, who sits on the Senate Judiciary Committee, that a network of conservative causes and "dark money" groups are working together to seat judges and justices. Whitehouse could not immediately be reached for comment.

He also took aim at liberal commentators who frequently criticize the Federalist Society. Pryor displayed images that referenced some of those remarks, including one showing the group's logo on the Death Star from "Star Wars."

***

Leonard Leo, a long-time conservative legal activist, while serving as a Federalist Society executive helped compile a list of potential U.S. Supreme Court nominees that Trump drew from during his tenure.

"Are there members of the Federalist Society who are involved in that process? Of course. But with that, so what? That's politics," said Pryor, who was on Trump's Supreme Court lists.

"The idea that this is some kind of monolithic organization is just a myth," he said.

Meantime, Professor Steven Calabresi founded the organization many years ago, but apparently the Federalist Society is telling the good professor not to call himself the founder anymore because of his views.