presence is to amplify the briefing as to why the vicarious convictions of the two organizational defendants was in error and why judge howard of the district court it was in  for denying the organizational defendants rule twenty nine motion for acquittal judgment by acqu to understand the story we have to visit just a moment about the players and the parties oceanic else is the company that owned the ship called the ocean hope oceanic they had one income earning asset the was the employer of the crew the crew members were contractual employees who served for a few months then they would leave and then if they would like to come back they would go through their own manning agency in this case based in manila in the philippines when they were a valuable to go to work and wanted to go to work they would seek employment through their manning agency and see who was hiring ocean fleet was a manager of the ship and frankly what is a manager a manager in this case is akin to a schoolteacher they were the ones who set the rules they were the ones who helped train the crew and they were the ones who helped source the crew but a no on certain terms they were not the employer of any of the crew members and so what happens on the ship the  the boiler suits had ocean fleet paint in on it but remember they're a vendor to the ship owner now the government in their brief say well it said ocean fleet so therefore they must be the employee of ocean fleet now the question of employer and employee contractual arrangement not subject to someone's subjective belief the fact that a vendor gives someone a suit as a present is part of the contractual arrangement between the ship owner and its contractual manager doesn't transform the employees of the owner to agents or employees of the manager now if we went to the raceway on the weekend no one would say the guy driving the number eleven car they had fed ex painted on the outside and he and his crew pit crew where fed ex uniforms fed ex employees so that really isn't evidence of the relationship this is black letter law contractual construction who's the employer who's the employee but what's interesting in this case is some crew members engineering department crew members are running a corrupt a corrupt black market enterprise we learned at trial for the first time that one of the tanks that was supposed to be used to store engine room wastes was in fact being used to store diesel fuel that they had sold that they had stolen for sale on the black market now what's important this was totally unknown to the master of the ship you are the captain person in charge of the vessel it was certainly unknown to the employer oceanic and certainly unknown to ocean fleet and all the people who had been on board the ship that included other coast guard port state control authorities flag inspectors varying inspectors classification society inspectors and a superintendent engineer and a port captain both of whom rode the ship from panama for eight days into wilmington north carolina what we know is that the misconduct was performed it's under spew did for the cruise convenience it was in furtherance of their black market corrupt  stealing of fuel and south we know that the whistleblower the third engineer mr menendez wanted to come forward and he did come forward he told his wife hey i'm going to report this but i'm not going to report this to the company either the ship owner or the ship manager anytos his wife in the text messages don't tell the captain if anyone calls you don't own and what's most egregious here minetti and his wife make contact with the u s government they speak to a coast guard investigator service agent mr sheeler based out in guam and she tells them don't tell your employer now why is that important because the underlying conduct the failure to maintain an accurate record book because of unrecorded discharges and movements of this waste had the company the employer or the manager or anyone else involved in this case known about it they would have been able to take corrective measures what a corrective measures if those entries for those discharges had been placed in the book there's no u s crime the ship would not have sailed into the us waters where they knowingly falsified our record book and that's agreed with the government the crime isn't the discharging the crime isn't anything that occurs outside of us waters it's limited by the third circuit's decision in us we have  that it must be when the ship sells into the us waters with a knowingly false oil record book now there's plenty of sites in the record that show that the crew members  not ocean fleet but remember there's no allegations of any misconduct by either company what they're saying is the people on the ship were the bad actors and companies can only act through the people on the ship but were judged our went wrong as he lumped the companies together he didn't analyze the employer employee relationship on a one by one basis separately in fact they are separate and distinct companies and fact there was never any allegation of a single enterprise because if there would have been such an allegation then imposing punishment in each of the companies would be an  permissible double dip now what we're saying here is there's absolutely no evidence of a employment agreement between ocean fleet and the crew members and there's no evidence of agency we also say when you look to oceanic as employer that deficiency falls in the government's ferry to offer any evidence of intent the court i'm sure is clear that in order for a company be vicariously responsible for criminal responsible for acts of agents or employees it's a three prong test that first the individual is an agent or an employee that the conduct is done in the course and scope of their authorised employment or agency put the third and here is where i focus my attention is that the conduct was done with the intention at least in part to benefit the company that there was a total failure in the government to present any evidence of the subject he of the crew members in fact the evidence that was presented was to the contrary that they knew and acknowledged their training to follow the rules they knew and acknowledged their training to report misconduct immediately they knew and acknowledged that under their own philippine overseas employment agency union contract the p o v a arrangement that they were only to follow legal orders and to refuse illegal orders there was also evidence from the captain captain tab or argues that no one reported any misconduct and despite his open door policy had he known of any misconduct he would have passed it on to the employer and would have expected  remedial measures and possibly terminations of the miss poorly acting crew members but what's important here is the actual evidence that came from the people that were doing the bad stuff the fourth engineer mr starr duma testified it was secret there was purposely hidden from the captain remember that's the man in charge of the vessel it was hidden from the superintendent engineer sorry in the port captain the two gentlemen that rode the ship for eight days prior to a rival in wilmington it was kept from the panamanian authorities now remember the ship had come through the panama canal with dozens of people coming on board the vessel and again the misconduct was being hidden and it was being hidden from their own maning agency captain spencer yarra came away from the philippines and testified to that but the whistleblower himself mr meant that he was the third engine near his testimony was well we did it because it was easier now that intent means it's recruit convenience not for a benefit of either their employer oceanic or the vessels manager and of course you can't forget to look at the specific intent of of the whistleblower telling his wife to keep the secret don't tell the captain don't tell of the company there was certainly looking at the charges specifically there was no evidence of subjective intent for this conspiracy charge count one or lying to the agents or tampering with the witnesses that covers counts for through nine and when you look at the record book violations count two that's the apps count which is an aiding and abetting theory or the the thousand and one violation again no evidence of subjective intent now i'd like to bring to the court's attention a novel argument this area of laws evolving that relates to count two aiding and abetting if there's only two cases to circuit court cases the talk about aiding and abetting under the act to prevent pollution from ships they both come from the fifth circuit that's the joke case j h o and the fellows case and the values makes clear that an engineer can't be convicted of an a theory of offense and you have the master who's the company the employer's man on the scene totally in the dark you can't have an aiding and abetting of yourself but you can have an eating and abetting where the representative on board the ship is in the dark completely about the misconduct and this is a knowing violation so we say that is improper as a matter of common sense and legal construction for a vicarious conviction of the companies on the theory of eating and betting when the person who has the liability captain doesn't know about the misconduct now a few more final thoughts that we believe that if there is a conviction that should stand that the court failed to count the group counts two and three and counts six through nine that that would effectively turn what in one thousand count case if you look at both defendants together into a ten count case and substantially reduce the fine if  hundred thousand is the right amount based on the district court's determination of the find against oceanic the employer that turns a two point seven million dollar fine into a one million dollars fine pretty quickly but we say that that's not right this court should send the case back should overturn the penalties imposed fines imposed if it gets that far for at least four reasons anyone want to which is enough to set aside the punishment send the case back first off it's unreasonable it was well more than necessary in kimbrough tells us that the fine should be no more sufficient but no more than necessary judge howard failed to consider the thirty five seventy two factors eighteen us code thirty five seventy two factors and he failed to make any findings of the defendant's economic circumstances inability to pay again just lump them together and relied on two p said well they could probably pay over time but there was no analysis of any of the factors specifically thirty five seventy two one two three and eight we know that oceanic had only one income earning asset that was the vessel that was twenty years old and had come to the end of its useful life and it had been scrapped sold and scrapped before the end of this case and us v hill this court told us that a sentence should be vacated if a court fails to adequately assess the defendant's ability to pay and that case the court vacated a mere four thousand dollars fine there's also disparity and i like to take a moment on this there's another case in this circuit eastern just division or us diana that was a case with a similar sort of charge the similarly situated defendant and what's interesting about that is it was more egregious behavior it was a longer period of discharging at sea and three port calls in united states and in that case the judge imposed a fine of one hundred thousand per count only one hundred thousand per count and here we have an unwarranted disparity as per u s few armstrong we also have the disparity between the two defendants remember there's no distinction between the underlying conduct and fact oceanic is the employer in ocean fleet is just a vendor of oceanic you know if i can take just five more seconds the sentence is also wrong this is too broad it now touches upon the property of third parties not before the court what am i talking about any ship manager that operates four or five different ships for four or five different shipowners now that sentence goes too far it's now comparing the ability of other third parties to s problem that marple and the act from ships to rectify there's no dispute in this case that the defendant ship the ocean hope illegally discharge oily substances into the water the only issue here is whether the jury's verdict finding that the corporate defendants were vicariously liable for these acts is supported by sufficient evidence i'm going to address first the issue of vicarious liability and then if the court has questions about sentencing address those  manager of the of the ship had an agreement with oceanic and if you look at the joint appendix page four zero six that agreement says that ocean fleet agreed to employ on behalf of the owner o onboard crew as the manager deems necessary for the proper operation and maintenance of the vessel and to dismiss any or all of them therefore it was ocean fleet that was employing the crew that kept the ability to retain or dismiss the employees  ocean fleets discretion that would indicate that these crew members ignacio and samson were employees of ocean fleet but even if they weren't employees they were of the very least agents and the case law recognizes that corporate lie or that vicarious liability attaches to either employees or agents and it's clear in this case there was plenty of evidence submitted for the jury to find that ignacio and sampson were working as agents of ocean fleet aboard the ship as judge the master and directing that the e mail given to the chief engineer instructions as to what was to take take place aboard the ship so the chief engineer was acting as ocean fleet agent in that engine room additionally  fleet yes yes there was a great deal of evidence submitted i mean almost all the crew members testified at the engine room crew members testified they also said that they believe that they were employed by ocean fleet and again looking at the agreement between ocean fleet and oceanic itself it seems that ocean fleets you know voluntarily took on that role of managing the crew they i mean they were telling them what to do aboard the ship and chief engineer not ignacio and second engineer samps were carrying out those instructions aboard the ship that's the definition of agency turning then to whether or not this was within the scope of ignacio and sampson's employment the violations here stem from discharging directly into the ocean bypassing the pollution control equipment failing to accurately record those discharges and other necessary events and measurements of that needed to be recorded under apps and lying to investigators and directing their subordinate to do the same and if we look at ocean fleets manual and the responsibilities that were delegated to each chief engineers responsibilities at the government's appendix three thirty nine to forty second engineers were at three forty two and those included ensuring complete compliance with the various environmental requirements policies and procedures properly maintaining the oil record book monitoring managing and resolving issues associated with proper handling of oily waste and any equipment having oil to see interfaces these are things that these these responsibilities the acts that happened fall directly under the response of those responsibilities which ocean fleet been vested with the authority to work as a compliance team for their parent company were acting within the scope of their employment when they directed subordinate employees to falsify and conceal documents that had to be submitted to the f a the analogy between the two cases is directly on point also if the court were to look at the second circuit decision and ionia management in that case the second circuit how that the engine crew members who were using a magic  hose to bypass pollution control equipment were acting within their authority to maintain the engine room discharge waste and record relevant information turning then to whether or not this act was for the benefit of the defendants  defendants benefited in two main ways they save time and they saved money it's undisputed that build water and sludge had to be discharged in some way over the ships to continue to reach all the ports along its route failure to do so would have cost the defendants time and money and we the jury heard significant evidence that the reason that ignacio and sampson chose to discharge directly into the ocean were aimed at least in part satisf defense desire to avoid any kind of complications when the ship came in to do a port state control examine we'll need to remember correctly that there were some problems with the functioning of some of the key yes so not using it and the coast guard ran the test there would have been any malfunction that might have happened by operating the machine during the normal course of business so that by not using it was in pristine condition so they were assured that once they got into port it would operate as it was supposed to sludge into the ocean and there was evidence submitted to the jury that the the defendants the ocean hope was running its incinerator on a daily basis which the evidence that was presented to the jury said was unusual and would put a lot of stress on the machinery and then in fact when they came into the port state control the coast guard found that that there was a cracked refractory in insulation and the coast guard testified to the jury  is not intact it would cause hot spots which would cause a safety hazard and you would lose some of your heat through that and so it's not going to get hot enough to burn the sludge properly and we saw that there was testimony that the sludge tank was two thirds full before they came into port a well maintained so they had to get rid of that sludge before they got into wilmington because captain hill testified that having too much sludge aboard can recall a ship to be detained at port until it offloaded because they don't like sending the ship out with too much sludge aboard and it's you know if they're two thirds full and they're burning every day clearly something is going wrong they're not it's not operating death it's supposed to so there only other option that would vicarious liability is appropriate here because ignacio and sampson were employees or at the very least agents of both companies they were acting within the scope of the duties that had been delegated to them by the these companies and they acted for the yes the defendants did not object to paragraph sixty seven and both of the p s ours is the one that concludes that the defendants are able to pay a fine and they did not object to that paragraph in the p three thirty five fifty three and thirty five seventy two just sentence i mean disparity didn't really come up in the p s r so i'm not sure that if they had an opportunity to jack's prior to them actually being sentenced so i think that falls with under the presented it as abuse of discretion lord we presented it as abuse of discretion with respect to the the probation conditions but i point out that mr chows is talking about these third parties that can come into port those parties and he he does not have standing to challenge that probation condition as the third party he could challenge the condition as to ocean fleet and oceanic but not these other ships that are coming in port those ships can of we can certainly come into u s port by simply hiring a different management company and the court concluded that by you know excluding ocean fleet from coming into port after it has you know how to violation like this is certainly within you know it's related to the offense and would serve to sentencing hearing that if conditions change recognizing that you know the market was unstable at the time of sentencing if their conditions were to change they were welcome to bring that information in the probation office for a reassessment of their ability to pay so the grimes the courts asked about the challenge to the ability to pay the p s r has made no mention of any quantum and in fact your honour's will know that the discussion with the probation officer in the court was that there was a five hundred thousand dollars bond posted jointly and severally on hand to pay a fine so we without having a crystal ball it would be how do you challenge the ability to pay there was five hundred thousand dollars a pin point posted by a joint and several bond so there was no other challenge to present at that point in time until the number came up the number only came out at sentencing was wait there's no way they can pay that now the government comes up here and offers evidence of what some coastguard  agent says about saving time and money but that's not the perspective of what the law requires the law requires a look at the subjective intent of the actor and there's not one single crewmember who said that he nothing from much a jury could infer that's correct it's complete insufficiency of evidence the actual evidence was to the opposite it was affirmative evidence from the crew members recognizing their training recognizing their reporting requirements recognizing their promise to to refuse an illegal order and more important recognizing that if they got caught by the captain or some other third party that would come on board the ship that they would lose their job it was no benefit it was a detriment everyone knew was a detriment to the company because it prevented oceanic or anyone else similarly situated like ocean fleet to coming in and taking corrective measures before arrival in us waters i like to point the court manila this divide that into orient as a manning agency sources crew for the shipowner oceanic and all the contracts that are in the record also make that clear the government said that ocean fleet hired the crew but when they said it went very quickly was on behalf of oceanic they were serving in a role as as an intermediary but we're in a principle in the employer employee relationship day pointed to emails but that seam e mail that we're talking about daily new reports went to the shipowner went to the ship manager went to the ship charter went to the cargo owner and went to the cargo receiver that's not evidence of an employment or an agency relationship judge king asked about what was the benefit to the business there is no benefit to the business let's remember this ship had not one not two but a dozen mechanics working on board at all times to use that pollution prevention equipment like twelve people why do you pay for twelve mechanics you have a mechanic on call at your house for your car course not but this business has twelve on the handle one engine and associated machinery to to do the job properly but the jury was probably destructive on that question they were properly instructed on that question your honor but they weren't properly instructed on what is any agent what is an employer what is an employee the you don't bring any issues up here about the structure i don't see any i was properly instructed on the on the point i agree with that general verdict yes i agree with that statement is guilty so the question is whether the evidence is sufficient to support the guilty verdict as to each of the work for doesn't trump the actual employment contract relationship final point government sites to us be automated laboratories and that was a case where the employer of the employees was