Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-09-03120/USCOURTS-caDC-09-03120-0/pdf.json

Parties Involved:
Gregory William Fair
Appellant
United States of America
Appellee

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 19, 2012 Decided November 9, 2012

No. 09-3120

UNITED STATES OF AMERICA,

APPELLEE

v.

GREGORY WILLIAM FAIR,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(No. 1:09-cr-00089-1)

Beverly G. Dyer, Assistant Federal Public Defender, argued

the cause for appellant. With her on the briefs was A.J. Kramer,

Federal Public Defender. Neil H. Jaffee, Assistant Federal

Public Defender, entered an appearance.

Christopher S. Merriam, Assistant Deputy Chief, U.S.

Department of Justice, argued the cause for appellee. With him

on the brief was Lanny A. Breuer, Assistant Attorney General. 

Elizabeth Trosman, Assistant U.S. Attorney, entered an

appearance.

Before: ROGERS and KAVANAUGH, Circuit Judges, and

SILBERMAN, Senior Circuit Judge.

USCA Case #09-3120 Document #1404111 Filed: 11/09/2012 Page 1 of 17
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Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge: Gregory Fair pled guilty to

copyright infringement, in violation of 17 U.S.C. § 506(a) and

18 U.S.C. § 2319, and mail fraud, in violation of 18 U.S.C.

§ 1341. Pursuant to the Mandatory Victim Restitution Act

(“MVRA”), 18 U.S.C. § 3663A, the district court ordered him

to pay restitution to Adobe Systems, Inc. in an amount

equivalent to the revenue he received from his sales of the

pirated products. On appeal he contends that the district court

abused its discretion because the government failed to offer

evidence of Adobe Systems’ actual loss, instead offering

evidence only of his gain. Because the government did not meet

its burden to present evidence from which the district court

could determine Adobe Systems’ actual loss as a result of the

pirated sales, we vacate the restitution order. 

I.

 According to the stipulated facts in the plea agreement,

Fair’s criminal scheme involved high-volume sales of pirated

Adobe Systems’ software on eBay. He sold copies of outdated

versions of popular Adobe products, such as Adobe Photoshop

and PageMaker. Along with the pirated software, he included

numerical codes that allowed buyers to update their software to

the most recent version at a reduced cost from Adobe Systems. 

Fair’s scheme thus represented a much cheaper route to an upto-date version of the software. For example, a customer could

first buy a pirated copy of outdated PageMaker software and an

upgrade code from Fair for around $125 and then pay around

$200 to Adobe Systems to upgrade to the most current version. 

The total price paid, around $325, would be less than half of the

retail price of the authentic up-to-date Adobe program

(approximately $700).

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Fair’s infringement scheme lasted from February 2001 to

September 2007, after which time an undercover investigation

by the United States Postal Inspection Service, based on

information from Adobe Systems about unauthorized sales,

identified his sales activity. According to records from PayPal,

the program used for completing eBay transactions, Fair had

received, and he admitted receiving, approximately $1.4 million

from his sales of pirated software on eBay. The plea agreement

also stated, for purposes of calculating the offense levels under

the U.S. Sentencing Guidelines, that “the infringement amount”

was greater than $400,000 but less than $1 million. Plea

Agreement at 2, 3 (Apr. 16, 2009). It also acknowledged that

the MVRA mandated restitution, citing 18 U.S.C. § 3663A, but

did not specify an agreed-to amount.

Prior to sentencing, the government provided the probation

office with “a spreadsheet summarizing records in the

government’s possession relating to [Fair’]s specific sales.” 

Gov’t’s Mem. in Aid of Sent. at 6 & Attach. A (Jun. 29, 2009). 

The spreadsheet showed over 7,000 sales with total sales

revenue of $767,465.99, which the government advanced as “a

reasonable calculation of the restitution.” Id. at 6. Fair objected

and initially suggested restitution of $455,000, the amount of

currency he withdrew from PayPal accounts associated with the

fraudulent transactions. See Def.’s Mem. in Aid of Sent. at 3 &

n.1 (June 26, 2009). He subsequently submitted that (1)

restitution under the MVRA must take the form of “actual loss”

to the victim; (2) “actual loss cannot be equated to ‘intended

loss’ or to gain by the defendant”; and (3) the government had

offered “no proof . . . of any actual loss by [the victim,] Adobe

Systems.” Def.’s Supp. Sent. Mem. at 1–4 (Sept. 22, 2009). He

further suggested that his piracy might in fact have benefitted

Adobe Systems by increasing consumers’ awareness and use of

its products. See id. at 3. 

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The government rejected Fair’s suggestion that Adobe

Systems benefitted from his sales or had any policy of

acquiescing to piracy, and argued that “[Fair]’s pirated works

cheat[ed] Adobe [Systems] out ofsales of full[-cost] versions of

its product at the much higher price point.” Gov’t’s Supp. Mem.

in Aid of Sent. at 5 (Oct. 13, 2009). Although objecting to

Fair’s suggestion that his sales revenues should be offset by his

costs, the government did not squarely address Fair’s argument

that the victim’s actual loss, not the defendant’s gain, should

provide the basis for the restitution amount under the MVRA. 

Rather, the government merely noted that it was “not relying

upon a restitution figure tied to the much higher retail price of

the legitimate Adobe software, but instead is using the actual

sales records and dollar amount sold by [Fair].” Id. at 8–9. In

its view, “[t]hough admittedly more difficult to quantify” than

lost sales, Fair additionally “inflicted other considerable harm to

Adobe,” such as damage to Adobe’s “good name.” Id. at 9.

At the sentencing hearing on October 22, 2009, defense

counsel emphasized that the government had failed to prove the

amount of Adobe Systems’ actual loss and had not raised

sufficient reasons why Adobe Systems could not prove the

amount of its loss, but instead relied on how much money Fair 

earned from the infringing sales. Counsel pointed out that

although “several hundred thousand dollars worth of cash and

cars were seized from [Fair], all of which were . . . undoubtedly

proceeds of this [scheme],” and “Adobe [Systems] applied to get

them,” the Postal Inspection Service only released

approximately $24,000, “decid[ing] that Adobe [Systems] hasn’t

shown that they deserve [the rest of] that money.” Tr. Oct. 22,

2009 at 21. Counsel argued that “[i]f Adobe Systems does not

come . . . with some data to indicate . . . that they had sales

interrupted that amounted to more than the sales that they clearly

got, based upon [Fair’s] activity, then . . . they should not be

awarded restitution.” Id. at 21–22. Government counsel 

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responded that Adobe Systems had provided the spreadsheet but

did not have the information Fair sought and “never did a study

that showed piracy benefitted them.” Id. at 24. Otherwise,

government counsel referred to screen shots of Fair’s eBay

listings showing he was advertising his products as genuine, as

well as the $455,000 tied to PayPal withdrawals. Defense

counsel, in reply, described how Adobe Systems distinguished

between persons buying from Fair and those who bought

legitimate software and chose as “a corporate strategy” to permit

Fair’s customers to purchase upgrades but to give no tech

support to Fair’s software. Id. at 26. 

The district court sentenced Fair to 41 months’

imprisonment and three years’ supervised release, and ordered

him to pay to Adobe Systems restitution of $743,098.99, an

amount representing the total sales listed on the spreadsheet

($767,465.99) less the forfeited funds turned over to Adobe

Systems by the Postal Inspection Service ($24,367.00). Looking

for “hard proof from the government,” the district court

reasoned that “[i]t’s undisputed that [Fair]’s revenue from the

sales of pirated Adobe products was at least $767,000,” and that

“if anyone held the right to collect revenue from the sale of these

products, it was Adobe [Systems],” and so it followed that

“since the sales did occur and revenue was generated, and the

right to the revenue was held by Adobe [Systems] and not by

[Fair], that Adobe [Systems] has the right to be restored to the

revenue that it lost [in] its right to collect on actual sales that

were made.” Tr. Oct. 22, 2009 at 27–28. Fair appeals the

restitution order, and our review of a restitution order is for

abuse of discretion. United States v. Bryson, 485 F.3d 1205,

1208 (D.C. Cir. 2007); cf. United States v. Leonzo, 50 F.3d

1086, 1088 (D.C. Cir. 1995). 

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II.

Federal courts do not have inherent authority to order

restitution. See United States v. Papagno, 639 F.3d 1093, 1096

(D.C. Cir. 2011). A product of the victims’ rights movement,

see id., the MVRA, 18 U.S.C. § 3663A, is unlike other

restitution statutes under which the award of restitution is

discretionary, see Papagno, 639 F.3d at 1096–97. The MVRA

applies only to certain types of crimes, including Title 18

property offenses “in which an identifiable victim . . . has

suffered a physical injury or pecuniary loss.” 18 U.S.C.

§ 3663A(c)(1). It provides that the restitution order “shall

require” that the defendant either return the property or

reimburse the victim for his or her “loss” — i.e., the value of the

property offset by the value of any part of the property that was

returned. Id. § 3663A(b)(1). The MVRA is to be enforced

pursuant to section 3664, id. at § 3663A(d), which requires

courts to order the defendant to pay “restitution to each victim

in the full amount of each victim’s losses,” id. § 3664(f)(1)(A). 

The purpose of the MVRA, then, is “essentially

compensatory: to restore a victim, to the extent money can do

so, to the position [the victim] occupied before sustaining

injury.” United States v. Boccagna, 450 F.3d 107, 115 (2d Cir.

2006) (citations omitted). Its authorization is accordingly

limited to the actual, provable loss suffered by the victim and

caused by the offense conduct. See United States v. Zangari,

677 F.3d 86, 91–92 (2d Cir. 2012); United States v. Arledge, 553

F.3d 881, 898–99 (5th Cir. 2008); United States v. Chalupnik,

514 F.3d 748, 754–55 (8th Cir. 2008) (citing United States v.

Petruk, 484 F.3d 1035, 1038 (8th Cir. 2007)); United States v.

Hudson, 483 F.3d 707, 710–11 (10th Cir. 2007); Boccagna, 450

F.3d 107, 115–17. Awarding restitution in excess of the

victim’s actual loss would be punitive in nature and thus fall

outside the scope of the MVRA. See Chalupnik, 514 F.3d at

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754; Hudson, 483 F.3d at 710. Because the MVRA does not

authorize restitution in excess of the amount of the victim’s

losses, see, e.g., Boccagna, 450 F.3d at 117, United States v.

Beydoun, 469 F.3d 102, 107 (5th Cir. 2006), it is distinguishable

from restitution in the civil law context, where restitution

denotes “the law of nonconsensual and nonbargained benefits.” 

RESTATEMENT (THIRD) OF RESTITUTION &UNJUST ENRICHMENT

§ 1(d) (2011).1

The MVRA places the burden on the government to prove

the victim’s loss by a preponderance of the evidence. 18 U.S.C.

§ 3664(e). Our sister circuits have required that the district

court, in determining “the full amount of each victim’s losses,”

id. § 3664(f)(1)(A), articulate the specific factual findings

underlying its restitution order in order to enable appellate

review. United States v. Singletary, 649 F.3d 1212, 1222 (11th

Cir. 2011); United States v. George, 403 F.3d 470, 473 (7th Cir.

2005).

1

 The RESTATEMENT (THIRD) OF RESTITUTION & UNJUST

ENRICHMENT explains:

Another context in which the word ‘restitution’ means

something closer to ‘damages’ is a product of statutes

authorizing compensation to victims as a part of criminal

sentencing. It is a natural use of the language to speak of

requiring a criminal to ‘make restitution’; the problem is that

the liability imposed in such cases is not based on unjust

enrichment but on compensation for harm. To the extent that

this aspect of criminal sanctions has a basis in civil

obligations, it is found in tort rather than restitution.

Id. at § 1(e)(2).

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A.

The circuit courts of appeals are in general agreement that

the defendant’s gain is not an appropriate measure of the

victim’s actual loss in MVRA calculations. See Zangari, 677

F.3d at 92–93 (2d Cir.); Arledge, 553 F.3d at 899 (5th Cir.);

United States v. Gallant, 537 F.3d 1202, 1247 (10th Cir. 2008);

Chalupnik, 514 F.3d at 754 (8th Cir.); United States v.

Galloway, 509 F.3d 1246, 1253 (10th Cir. 2007); cf. United

States v. Kuo, 620 F.3d 1158, 1164–65 (9th Cir. 2010); United

States v. Harvey, 532 F.3d 326, 341 (4th Cir. 2008); United

States v. Badaracco, 954 F.2d 928, 942–43 (3d Cir. 1992). That

said, the Second Circuit has acknowledged that “there may be

cases where there is a direct correlation between gain and loss,

such that the defendant’s gain can act as a measure of — as

opposed to a substitute for — the victim’s loss.” Zangari, 677

F.3d at 93 (emphasis in original) (citation omitted). That court

was careful to emphasize, however, that some approximation of

actual loss is needed in order to assess whether the defendant’s

gain serves as a reasonable estimate of the loss. See id. at

93–94. Otherwise, resort to the complexity exception, 18

U.S.C. § 3663A(c)(3)(B), or additional evidentiary proceedings,

id. at § 3664(d),2

 is the appropriate course. See Zangari, 677

2

 The MVRA provides that a district court may decline to

order restitution for a qualifying property offense if it finds, “from

facts on the record,” that:

(A) the number of identifiable victims is so large as to

make restitution impracticable; or

(B) determining complex issues of fact related to the

cause or amount of the victim’s losses would

complicate or prolong the sentencing process to a

degree that the need to provide restitution to any

victim is outweighed by the burden on the sentencing

process.

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F.3d at 93. 

The government correctly notes that the Seventh Circuit in

United States v. Chay, 281 F.3d 682 (7th Cir. 2002), affirmed a

restitution award based on the gross proceeds of the defendant’s

fraudulent sales, i.e., the defendant’s gain, id. at 687. In Chay,

however, the defendant raised a different challenge to the

restitution award, namely that the restitution amount should be

reduced by the costs of his piracy, id. at 686, and thus the

Seventh Circuit had no occasion to address the gain-versus-loss

issue now before this court. See id. at 686–87 & n.2. It

subsequently did in George, 403 F.3d 470, and held, in line with

the other circuits, that “[r]estitution must be based on the

victim’s loss rather than the offender’s gain.” Id. at 474

(citations omitted). Somewhat similarly the Second Circuit in

United States v. Milstein, 481 F.3d 132, 137 & n.3 (2d Cir.

2007), affirmed a restitution order based on a victim’s lost sales

where the defendant did not challenge the sales-profit distinction

on appeal.

Because the plain text of the MVRA’s authorization, 18

U.S.C. § 3663A(a)(1), reflects Congress’ intent to compensate

victims for the loss caused by the defendant’s criminal conduct,

see id. § 3664(f)(1)(A), we join the circuit courts of appeals and

hold that in ordering restitution pursuant to the MVRA the

district court may not substitute a defendant’s ill-gotten gains for

the victim’s actual, provable loss. Victims of crime may achieve

disgorgement of profits and ill-gotten gains through other

statutory and civil-recovery mechanisms. See, e.g., Kuo, 620

F.3d at 1164, 1166; Chalupnik, 514 F.3d at 754. For instance,

Id. § 3663A(c)(3). Or the district court may follow a less drastic path

and attempt to alleviate the complexity by requiring additional

documentation, hearing testimony, or referring the issue to a

magistrate judge or special master. Id. § 3664(d).

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the actual-damages provision for copyright infringement under

Title 17 provides that “[t]he copyright owner is entitled to

recover the actual damages suffered by him or her as a result of

the infringement, and any profits of the infringer that are

attributable to the infringement and are not taken into account in

computing the actual damages.” 17 U.S.C. § 504(b) (emphasis

added). 

B.

In cases involving copyright infringement and fraudulent

sales, the victim’s actual loss typically equates to the profit the

victim lost on the sales that were diverted from the victim as a

result of the defendant’s infringing sales. See, e.g., Chalupnik,

514 F.3d at 755; Hudson, 483 F.3d at 710 & n.1; Beydoun, 469

F.3d at 107–08. Under this lost-profits on diverted-sales theory,

the government must offer sufficient evidence to establish both

the profit margin per sale and the number of sales lost. If the

record does not demonstrate that the counterfeit goods ever

reached the market, see, e.g., Beydoun, 469 F.3d at 107–08;

United States v. Johnson, 790 F. Supp. 2d 945, 946 (E.D. Wis.

2011); United States v. Dove, 585 F. Supp. 2d 865, 872 (W.D.

Va. 2008), or that their introduction to the market in fact

“thwarted” actual sales of the victim’s product, see, e.g.,

Chalupnik, 514 F.3d at 755; Hudson, 483 F.3d at 710; Dove, 585

F. Supp. 2d at 872, courts have held that no actual loss can be

shown and restitution therefore is inappropriate. In this regard,

the actual lossto the displaced (authentic) seller is the profit lost

from the displaced sales — not the retail value of the goods that

would have been sold. Hudson, 483 F.3d at 710 n.1; Dove, 585

F. Supp. 2d at 872; cf. Chalupnik, 514 F.3d at 755. The gross

proceeds that the defendant collects from infringing sales are

similarly an inappropriate gauge of the victim’s lost profits. 

In ordering Fair to pay restitution to Adobe Systems

equivalent to his sales revenue, the district court abused its

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discretion because the government failed to present evidence

from which the district court could either determine Adobe

Systems’ actual loss or find that Fair’s gain was a reasonable

measure of that loss. The MVRA demands that restitution be

awarded only for the victim’s actual, provable loss, see 18

U.S.C. § 3663A(a)(2), (b)(1); id. § 3664(e), (f)(1)(a). Yet the

government offered no evidence of either the number of sales

that Adobe Systems likely lost as a result of Fair’s scheme or the

profit that Adobe Systems would have made on any such

diverted sales. The record contains only a spreadsheet tallying

Fair’s eBay sales and unsubstantiated, generalized assertions of

government counsel regarding Adobe Systems’ lost sales. See,

e.g., Gov’t’s Mem. in Aid of Sent. at 6–9 & Attach. A (June 29,

2009); Gov’t’s Supp. Mem. in Aid of Sent. at 5, 8–9 (Oct. 13,

2009). There thus was no evidentiary basis on which the district

court could find that had Fair’s customers not purchased pirated

Adobe software from him at a greatly reduced price, all or any

portion of them would have purchased full-priced versionsfrom

Adobe Systems. Much as the Tenth Circuit observed in Hudson,

483 F.3d at 710, “we are very skeptical of the implicit

suggestion that” customers’ purchase of a certain number of

copies of low-priced counterfeit software “proves that [those

customers] would have agreed to purchase the same number of

copies from [the legitimate seller]” for many times more. 

Nor was there an evidentiary basis on which the district

court could find that Fair’s revenues represented profits that

Adobe Systems would have otherwise gained. Adobe Systems’

victimimpactstatement cited lossesstemming fromallsoftware

piracy in support of requesting the maximum sentence, whereas

restitution under the MVRA is limited to the victim’s losses

from the defendant’s offense conduct. Consequently, the district

court’s order that Fair pay Adobe Systems restitution in the

amount of his unlawful sales revenue (minus the $24,367 it had

already received from Fair’s seized property) failed to conform

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to the MVRA. As Fair states: “The restitution here was purely

speculative. Thus, even if the government was correct that

[Fair’s] conduct ‘deprivesthe rights[’] owner of potentialsales,’

. . . it did not introduce evidence specifically identifying, or even

estimating, sales lost to Adobe [Systems].” Appellant’s Br. at

17. 

The government maintains that because Fair “created any

potential uncertainty in calculating pecuniary harm” by selling

outdated counterfeit software, “[he] — not his victims — bears

the risk of any uncertainty that his misconduct causes at the time

of quantifying harm.” Appellee’s Br. at 26. It also maintains

that the lost-profits rationale “makes no sense in the present

context” because Adobe Systems no longer sells the versions of

the software that Fair sold. These arguments are unpersuasive. 

As an initial matter, under the MVRA the government, not the

defendant, carries the burden of proving the amount of the

victim’s loss. 18 U.S.C. § 3664(e). The cases on which the

government relies are inapposite civil law cases, such as

Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 265 (1946)

and Story Parchment Co. v. Paterson Parchment Paper Co., 282

U.S. 555, 562 (1931), which did not involve restitution awards

and in which the amount of damages was not statutorily limited

to the victim’s actual, provable loss. Nor is this a case where a

partial shift in the burden would be appropriate, where the

defendant “deliberately destroyed” evidence relevant to the

restitution calculation, see Kuo, 620 F.3d at 1167, or where the

defendant is in a much better position than the government to

ascertain the particular facts at issue, see United States v.

Archer, 671 F.3d 149, 173 (2d Cir. 2011). 

Furthermore, to the extent uncertainty exists as to Adobe

Systems’ profit margins on outdated products, the government

fails to address why using profit margins from the company’s

current products would not represent a more accurate estimate

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of actual loss than Fair’s gross sales proceeds. At sentencing,

the government counsel acknowledged that a market exists of

“people who are likely to buy older but genuine product[s].” Tr.

Oct. 22, 2009 at 22–23. Government counsel’s statement that

Adobe Systems had not conducted a study to determine the

impact of infringement suggests a method that might have been

used to provide the district court with relevant evidence to

determine the amount of Adobe Systems’ actual loss. 

Conceivably, as discussed during oral argument, Adobe Systems

might have been able to survey Fair’s customers to determine

how many would likely have purchased full-cost updated

versions of those Adobe products. See Oral Argument Tape

14:27–15:09. Additionally, the government offers no

explanation of why Fair’s customers’ purchases of upgrades

from Adobe Systems would not represent gains to the company

or, for that matter, how the ability of Fair’s customers to

purchase upgrades would assist the district court in evaluating

how many customers would have purchased new Adobe

products at full price absent Fair’s piracy.

To the extent the government defends the use of gross

proceeds as “consistent with the calculation of loss under the

Sentencing Guidelines,” Appellee’s Br. at 15, it ignores the

different approaches in the Guidelines and the MVRA. 

Essentially, the government blurs the line between the

“infringement amount” calculated under Sentencing Guidelines

§ 2B5.3 in criminal copyright cases, which is derived by

multiplying the retail value of the infringed or infringing items

by the quantity of infringing items, and the restitution amount

calculated under the MVRA, which must reflect the actual,

provable loss suffered by the victim. See Tr. Oct. 22, 2009 at

32–33; Appellee’s Br. 15–17. The two calculations are distinct

“given the different methods of calculation and different

purposes of the calculation[s]” even if they may equate in some

instances. United States v. Yeung, 672 F.3d 594, 604 (9th Cir.

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2012) (citations omitted); see also United States v. Huff, 609

F.3d 1240, 1247–48 (11th Cir. 2010); Singletary, 649 F.3d at

1220; Dove, 585 F. Supp. 2d at 869. And “[u]nlike loss under

the Guidelines, the MVRA requires proof of actual loss and does

not allow alternative metrics, such as gain,” Gallant, 537 F.3d

at 1247 (citation omitted). Even under the Guidelines provision

that permits a defendant’s gain to be used as an alternative

measure of loss for certain property offenses (not including

criminal copyright infringement), the gain that resulted from the

offense may be used “only if there is a loss but it reasonably

cannot be determined.” U.S.SENTENCING GUIDELINES MANUAL

§ 2B1.1 cmt. 3(B) (2011). The MVRA offers a different

alternative. See 18 U.S.C. § 3663A(c)(3), supra note 2. 

Finally, the government’s argument — that requiring proof

of lost profits “would reward defendants by imposing on victims

the difficult task of quantifying each lost sale resulting from

their criminal conduct,” Appellee’s Br. at 18 — collapses under

the plain text of the MVRA, which places the burden on the

government, not the victim, to prove actual loss by a

preponderance of the evidence. 18 U.S.C. § 3664(e). Moreover,

the MVRA permits victims to recoup any necessary

expenditures made during participation in the prosecution and

investigation. Id. § 3663A(b)(4); see generally Papagno, 639

F.3d at 1097–1100. And in the event the actual-loss calculation

is in fact too complex to permit a timely calculation of

reasonable restitution, the MVRA envisions the appropriate path

for a district court is to hold additional proceedings or to decline

to order restitution at all, not to issue an order unsupported by

the evidence. See 18 U.S.C. §§ 3663A(c)(3), 3664(d), supra

note 2. 

The abuse-of-discretion standard may be generous, see

Kickapoo Tribe v. Babbitt, 43 F.3d 1491, 1497 (D.C. Cir. 1995)

(citing Maurice Rosenberg, Judicial Discretion of the Trial

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Court: Viewed from Above, 22 SYRACUSE L. REV. 635 (1971)),

but it is not one that will countenance the clear legal and factual

error present here.

C.

The remaining question is the scope of a remand, if any. 

The government seeks another opportunity to offer new evidence

of Adobe Systems’ actual loss while Fair seeks vacation of the

restitution order for lack of record evidence to determine or

estimate Adobe Systems’ actual loss. Any remand, Fair

alternatively suggests, should require resentencing based on the

existing record.

Although decided under the Sentencing Guidelines as

opposed to the MVRA, our decision in Leonzo, 50 F.3d 1086, is

on point. There, after concluding that the district court lacked

sufficient evidence to support its Guidelines loss calculation, the

court reversed and remanded for resentencing. Leonzo, 50 F.3d

at 1087. The Guidelines’ calculation hinged on the size of the

loss taken on a fraudulently obtained loan on a particular

mortgaged property, and at sentencing the government offered

evidence only of the average loss to a portfolio including the

property in question, not evidence of the size of any loss the

victim suffered on that particular property. Id. at 1088. This

court restricted the remand proceedings to the existing record,

precluding the government from introducing new evidence in

support of its claim of loss. Id. The court explained that “[n]o

special circumstances justified, or even explained, the

government’s failure to sustain [its] burdens [of production and

persuasion].” Id.; see also Archer, 671 F.3d at 168–69, 174. 

Because the legal and factual positions regarding the

requirements of the MVRA were fully aired by the parties here

in the district court, we are unpersuaded that the government

should be permitted “a second bite at the apple” absent special

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circumstances. Leonzo, 50 F.3d at 1088; see also Singletary,

649 F.3d at 1222. 

In United States v. Whren, 111 F.3d 956 (D.C. Cir. 1997),

the court applied the same rationale to hold that on remand for

resentencing a defendant may not “raise for the first time a

challenge to his sentence that is unrelated to the reason for the

remand . . . unless his newly-raised objection to the sentence is

based upon an error so plain that the district court or the court of

appeals should have raised it for him.” Id. at 957. The court

elaborated that “upon a resentencing occasioned by a remand,

unless the court of appeals expressly directs otherwise, the

district court may consider only such new arguments or new

facts as are made newly relevant by the court of appeals’

decision — whether by the reasoning or by the result.” Id. at

960 (emphasis added). The court stated that it saw no reason to

distinguish the case before it — in which the party sought to

raise a new legal argument on resentencing — from Leonzo, in

which the government sought to introduce new evidence. Id. at

959. In adopting this so-called “waiver rule,” the court rejected

the “de novo rule,” under which some circuits permit district

courts to presume de novo resentencing on an open record unless

specifically directed otherwise by the appellate court. Id. at

959–60 (collecting cases); see also, e.g., United States v. West,

646 F.3d 745, 748–49 (10th Cir. 2011); Kuo, 620 F.3d at 1166

(9th Cir.). The court observed that the plain-error exception

would suffice to protect against any risk of a miscarriage of

justice. See Whren, 111 F.3d at 960 (citing FED. R. CRIM. P.

52(b)); see also United States v. Johnson, 378 F.3d 230, 243 (2d

Cir. 2004). In United States v. McCoy, 313 F.3d 561 (D.C. Cir.

2002), the en banc court stepped further back from a bright line

waiver rule, holding that Whren does not preclude a defendant

from raising on remand an issue that was only contingently

relevant in the original sentencing but became determinative

under the remand order if the defendant can “establish ‘good

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cause,’ within the meaning of Rule 32[(i)(1)(D)] of the Federal

Rules of Criminal Procedure, for not having raised it sooner.” 

Id. at 562.

No special circumstances are present that would warrant

reopening the record on restitution in Fair’s case. The

government’s burden to prove actual loss under the MVRA was

well-established before sentencing. See also Tr. Oct. 22, 2009

at 23 (government counsel stating, “[w]e welcome the burden to

prove restitution.”). The government was allowed to present

evidence, unlike in Gallant, 537 F.3d at 1222, 1254, and the

demonstration of actual loss cannot be said to have been

“contingent” at the original sentencing on the resolution of a

different issue, see McCoy, 313 F.3d at 561–63. Indeed,

whether the government had offered evidence demonstrating

actual loss was the central issue addressed during the parties’

restitution discussion at the sentencing hearing. See, e.g., Tr.

Oct. 22, 2009 at 20–28. Moreover, although this circuit had not

spoken directly to the issue, other circuits had addressed the

requirements of the MVRA’s plain text prior to Fair’s

sentencing. Accordingly, because the government presented no

evidence of Adobe System’s actual loss as a result of Fair’s

sales of pirated copies of its software, we vacate the order of

restitution.

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