News & Notes

 1. Judge Graham declares a mistrial because of a late disclosure of discovery.  Law360 covers it:

On day 13 of the trial against Jason Todd Faley, Joseph Anthony Cavallo and Benjamin Clark Heath, Senior U.S. District Judge Donald L. Graham declared a mistrial, but refrained from dismissing the indictment with prejudice as the defense had requested.

The mistrial came after the government revealed a terabyte of data, including more than 400,000 emails, that was seized via a search warrant on GoDaddy.com in 2017 for the emails of cooperating defendant Mark Vollaro and others affiliated with Complete Healthcare Concierge, one of the companies through which the defendants allegedly ran a scheme to submit fraudulent prescriptions for compounded medications.

Prosecutors lost track of the documents after the seizure and did not discover the search warrant until just before trial, according to court documents. The data was shared with the court and the defense just after the jury was sworn in, court documents state.

2.  Michael Avanetti was sentenced to 14 consecutive years, making his sentence nearly 20 total years.  Too much? From CNN:

Dean Steward, an attorney for Avenatti, said in a statement to CNN that the sentence “was overly harsh and uncalled for,” adding that his client described it in court as being “off the charts.”

“When compared with similar high-profile cases, the unfairness is glaring,” Steward said.

Monday’s sentence represents the latest episode in an extraordinary years-long legal drama surrounding Avenatti, whose representation of Stormy Daniels, the adult film star who alleged she had an affair with former President Donald Trump years before he ran for office, made the pugnacious attorney a household name.

“Avenatti’s fraud was egregious, and the court plainly meant to send a strong message. But a 14-year sentence is extraordinarily long given all the circumstances,” said CNN senior legal analyst and former federal prosecutor Elie Honig. 

3.  Former Congressman David Rivera has been charged.  His case is assigned to Judge Gayles. From Politico:

Former Florida Rep. David Rivera, who had successfully outflanked a series of investigations during his lengthy political and consulting career, was arrested Monday by federal authorities in connection with an ongoing probe into his work with Venezuela’s authoritarian regime.

Rivera, who represented a Miami-area district from 2011 to 2013, was detained in Georgia on Wednesday in connection with a Miami grand jury indictment issued last month. His arrest was first reported by The Associated Press. According to the indictment unsealed on Monday night, Rivera and his former political consultant, Esther Nuhfer, are facing charges of conspiring against the U.S., failing to register as foreign agents and engaging in illegal financial transactions including money laundering.

“It was the purpose of the conspiracy for the defendants to unlawfully enrich themselves by engaging in political activities in the United States on behalf of the government of Venezuela, and by representing the interests of the government of Venezuela before officials of the of the United States government and in an effort to influence United States foreign policy,” states the 34-page indictment.

“This is the single most important case on American democracy — and for American democracy — in the nation’s history.”

 That's former judge Michael Luttig on Moore v. Harper, which will be heard by the Supreme Court this Wednesday.  The question presented is:

Whether a state’s judicial branch may nullify the regulations governing the “Manner of holding Elections for Senators and Representatives ... prescribed ... by the Legislature thereof,” and replace them with regulations of the state courts’ own devising, based on vague state constitutional provisions purportedly vesting the state judiciary with power to prescribe whatever rules it deems appropriate to ensure a “fair” or “free” election.

The AP covers the case here: 

The Supreme Court is about to confront a new elections case, a Republican-led challenge asking the justices for a novel ruling that could significantly increase the power of state lawmakers over elections for Congress and the presidency.

The court is set to hear arguments Wednesday in a case from North Carolina, where Republican efforts to draw congressional districts heavily in their favor were blocked by a Democratic majority on the state Supreme Court because the GOP map violated the state constitution.

A court-drawn map produced seven seats for each party in last month’s midterm elections in highly competitive North Carolina.

The question for the justices is whether the U.S. Constitution’s provision giving state legislatures the power to make the rules about the “times, places and manner” of congressional elections cuts state courts out of the process.

***

Luttig, who advised former Vice President Mike Pence that he had no authority to reject electoral votes following the 2020 election, is among several prominent conservatives and Republicans who have lined up against the broad assertion that legislatures can’t be challenged in state courts when they make decisions about federal elections, including congressional redistricting.

That group includes former California Gov. Arnold Schwarzenegger, law professor Steven Calabresi, a founder of the conservative Federalist Society and Benjamin Ginsberg, a longtime lawyer for Republican candidates and the party.

“Unfortunately, because of ongoing and widespread efforts to sow distrust and spread disinformation, confidence in our elections is at a low ebb,” Ginsberg wrote in a Supreme Court filing. “The version of the independent state legislature theory advanced by Petitioners in this case threatens to make a bad situation much worse, exacerbating the current moment of political polarization and further undermining confidence in our elections.” 

That's just one blockbuster being heard this week.  Up Monday is the web-designer case, a follow up to the cake designer case.  From SCOTUSblog:

The Supreme Court on Monday will revisit a long-simmering tension between legal protections for LGBTQ people and the rights of business owners who oppose same-sex marriage. The case, 303 Creative v. Elenis, is a challenge by a Colorado website designer to a state law that bars businesses that are open to the public from discriminating against gay people or announcing their intent to do so. The designer, Lorie Smith, argues that subjecting her to the law would violate her right to free speech. Colorado counters that exempting Smith from the law would open a Pandora’s box that would “upend antidiscrimination law – and other laws too.”

The justices have already grappled with this question once. In 2018, the court handed a narrow victory to Jack Phillips, a Colorado baker who refused to make a custom cake for a same-sex couple because he believed that doing so would violate his religious beliefs. Justice Anthony Kennedy’s opinion rested largely on the majority’s conclusion that the Colorado administrative agency that ruled against Phillips treated him unfairly by being too hostile to his sincere religious beliefs. The opinion seemed to leave open the possibility that, in a future case, a service provider’s sincere religious beliefs might have to yield to the state’s interest in protecting the rights of same-sex couples, and the majority did not rule on one of the central arguments in the case – whether compelling Phillips to bake a cake for a same-sex couple would violate his right to freedom of speech.

Enter Lorie Smith, the owner of 303 Creative LLC, a designer of websites and graphics based in Littleton, Colorado. Smith is a devout Christian who believes that marriage “is only between one man and one woman.” So although Smith wants to expand her business to include wedding websites, she does not want to design websites for same-sex weddings, and she wants to post a message on her own website to make that clear.

In 2016, Smith went to federal court in Colorado, seeking a ruling that Colorado could not enforce its public-accommodations law, known as the Colorado Anti-Discrimination Act, against her because it would violate her First Amendment rights to free speech and free exercise of religion. When the U.S. Court of Appeals for the 10th Circuit rejected her arguments, Smith came to the Supreme Court. The justices agreed in February to take up her case – but only on the free speech question, not on the free exercise issue.

 

 

CA11 says no to Cannon's Special Master in Mar-a-Lago case

 That was fast... and furious.  The 11th Circuit quickly vacated Judge Cannon's order appointing a Special Master in the Trump/Mar-a-Lago search case.  The per curiam opinion (CJ Pryor, Grant, Brasher) didn't hold back: 

The law is clear. We cannot write a rule that allows any subject of a search warrant to block government investigations after the execution of the warrant. Nor can we write a rule that allows only former presidents to do so. Either approach would be a radical reordering of our caselaw limiting the federal courts’ involvement in criminal investigations. And both would violate bedrock separation-of-powers limitations. Accordingly, we agree with the government that the district court improperly exercised equitable jurisdiction, and that dismissal of the entire proceeding is required.

The district court improperly exercised equitable jurisdiction in this case. For that reason, we VACATE the September 5 order on appeal and REMAND with instructions for the district court to DISMISS the underlying civil action.

Judge Branch speaks about cancel culture at Yale

 She joined Judge Ho and spoke at Yale.  Per Reuters:

Branch, a member of the Atlanta-based 11th U.S. Circuit Court of Appeals who is the only judge to publicly join Ho's boycott, said that while universities have been hesitant to punish disruptive students, "fatigue is growing for disruptive protests."

Asked by attendees what it would take for them to end their planned boycott of Yale students, both judges held out the possibility they could abandon it before it takes effect beginning with the class of 2023.

Ho said he understood that Yale appeared to recognize that they "clearly need a massive course correction."

Yale Law School dean Heather Gerken in a letter to alumni on Oct. 12 outlined moves the school has made to "reaffirm our enduring commitment to the free and unfettered exchange of ideas." And she has invited Ho and Branch to speak at another event next year.

"We're watching," Branch said. "We have not only seen some positive developments on campus and campuses, but we've gotten a lot of feedback since we have been here. And I know I'm encouraged by some of the changes that I see that are occurring."

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.