In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 03-4004

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

KENNETH SHEARER,

Defendant-Appellant.

____________

Appeal from the United States District Court for the

Northern District of Indiana, Fort Wayne Division.

No. 01 CR 49—William C. Lee, Judge.

____________

ARGUED JUNE 4, 2004—DECIDED AUGUST 12, 2004

____________

Before FLAUM, Chief Judge, and DIANE P. WOOD and

EVANS, Circuit Judges.

FLAUM, Chief Judge. On June 20, 2002, Kenneth Shearer

was convicted of dealing in display fireworks without a

license issued by the Bureau of Alcohol, Tobacco & Firearms

(“ATF”), placing false labels on cases of display fireworks,

and knowingly receiving display fireworks in interstate

commerce. He now appeals his conviction and sentence. For

the reasons stated herein, we affirm the judgment of conviction and remand the case for resentencing.
2 No. 03-4004

I. BACKGROUND

In 1999, Kenneth Shearer was the owner and operator of

All American Professional Fireworks (“All American”) which

was in the business of selling display fireworks. Due to the

dangerous nature of such devices, the ATF strictly regulates

their distribution and requires that every dealer be licensed

and inspected by the ATF. Shearer did not have a such a

license, at least not in July 1999 when an undercover agent

from the U.S. Consumer Product Safety Commission

arrived at All American and purchased two boxes of display

fireworks.

As was already noted, display fireworks are inherently

dangerous items. Classified as “1.3G” devices, display fireworks are those that contain more than 130 milligrams of

flash powder per tube. They are thus distinguishable from

consumer fireworks, which are classified as “1.4G” devices

and have 130 milligrams or less of flash powder per tube.

Unlike consumer fireworks, display fireworks pose a risk of

mass detonation. This risk is a serious one, and if there is

an accident involving display fireworks, emergency personnel must evacuate all persons within a half-mile radius of

the site. To prevent such accidents, display fireworks

dealers must store the fireworks in an explosives magazine

inspected by the ATF and located away from inhabited

buildings and highways. To avoid more purposeful mischief

with display fireworks, those transporting the devices must

swear under penalty of perjury that they are acting on

behalf of one licensed by the ATF, each display firework

must be shipped with a specific label designating it as

“1.3G”, and dealers must keep clear records indicating the

amount and type of display fireworks on the premises. In

contrast, the ATF has no regulations for the storage, transportation, or distribution of consumer fireworks.

Although Shearer at one time possessed a license to sell

display fireworks, this license expired in January 1998.
No. 03-4004 3

Thus, when an undercover agent purchased two boxes of

single shot Thunder Kings from All American in July 1999,

and each Thunder King contained an average of 3,716 milligrams of flash powder per tube, Shearer became the subject of an ATF investigation. The investigation culminated

in a search of All American’s premises which uncovered

twenty-five cases of display fireworks, invoices showing

purchases of display fireworks, and an ATF permit issued

to a “Robert Bombka.” Additionally, ATF agents discovered

that many of the cases of display fireworks had false “1.4G”

labels placed directly over the correct “1.3G” labels. 

Shearer was subsequently indicted and charged with engaging in the business of dealing in display fireworks without

an ATF license, placing false labels on cases of display fireworks in violation of the Hazardous Materials Transportation

Act, and knowingly receiving display fireworks in interstate

commerce. After a jury trial, Shearer was convicted on all

counts against him and sentenced to concurrent sentences

of 80 months’ imprisonment and 60 months’ imprisonment.

Shearer now appeals his conviction and sentence.

II. DISCUSSION

Shearer’s first issue on appeal is whether the district

court erred by allowing testimony at trial that Shearer sold

display fireworks in 1998 and 2000. Shearer argues that

because he was charged only with dealing in display

fireworks from May 1999 through July 1999, any evidence

regarding 1998 and 2000 is improper character evidence

under Federal Rule of Evidence 404(b). The government

responds that the evidence was proper under Rule 404(b)

because it was used to rebut Shearer’s assertion that he

was keeping the fireworks for his own personal use and to

establish instead that Shearer intended to deal in display

fireworks in 1999.
4 No. 03-4004

As Shearer failed to object to the use of this evidence at

trial, we review the district court’s admission of the testimony for plain error. See United States v. Carroll, 871 F.2d

689, 691 (7th Cir. 1989). Under this standard of review, we

must find that: (1) an error occurred; (2) the error was

“plain,” that is, it was clear or obvious; and (3) the error

affected the outcome of the district court proceedings. See

United States v. Olano, 507 U.S. 725, 731-35 (1993). Unfortunately for Shearer, he cannot show any error, let alone an

error that is plain.

The challenged testimony is that of two fireworks vendors

who purchased display fireworks from All American

annually. One of these vendors, Pauline St. Marie, testified

that she spent approximately $10,000 at All American each

season, beginning in 1996 and continuing until 2000. The

other vendor, Johnathan Hetzer, testified that he began

purchasing cases of display fireworks from All American in

1998 and returned in 1999 with yet a third seasonal fireworks seller, Michael Crosby. The testimony of these vendors

established that All American generated large profits by

dealing in display fireworks, and that it had ongoing relationships with customers who transacted business with All

American regularly. This, in turn, helped show that Shearer’s

possession of twenty-five cases of display fireworks was for

the purpose of dealing in display fireworks rather than for

Shearer’s personal use.

Rule 404(b) does not ban all evidence of a defendant’s prior bad acts. It prohibits only evidence used “to prove the

character of a person in order to show action in conformity

therewith,” while allowing evidence that is for the purpose

of proving such things as “motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or

accident.” Fed. R. Evid. 404(b). In this case, the government

had the burden of showing that Shearer was engaged in the

business of dealing in display fireworks. Shearer disputed

this and, in fact, argued that he was simply keeping display
No. 03-4004 5

fireworks for his own personal use. St. Marie’s and Hetzer’s

testimony was properly directed towards proving Shearer’s

intent to deal by demonstrating that Shearer engaged in

regular and repeated transactions involving display fireworks with a consistent group of buyers. The admission of

this evidence therefore did not violate Rule 404(b).

Shearer next contends that his sentence was improper.

Specifically, Shearer challenges several enhancements to

his sentence based upon the district judge’s factual findings

that: (1) Shearer’s offense involved more than 1,000 pounds

of explosive materials; (2) Shearer was the organizer or leader

of a criminal organization that involved five or more

participants or was otherwise extensive; (3) Shearer used a

minor to commit the offense; and (4) Shearer committed

perjury by denying virtually every fact material to his guilt

at trial. Additionally, Shearer believes that he merited a

sentence reduction for acceptance of responsibility. 

Although such challenges to the application of the

Sentencing Guidelines would have presented us with little

difficulty a few weeks ago, the Supreme Court’s decision in

Blakely v. Washington, 2004 WL 1402697 (U.S. June 24,

2004) and our reading of Blakely in United States v. Booker,

2004 WL 1535858 (7th Cir. July 9, 2004), demonstrate that

the constitutional validity of the Guidelines is in doubt. See

also United States v. Pineiro, 2004 WL 1543170 (5th Cir.

July 12, 2004) (addressing this issue but holding that

Blakely should not be read to invalidate the U.S. Sentencing

Guidelines). Under Blakely as interpreted in Booker, a

defendant has the right to have a jury decide factual issues

that will increase the defendant’s sentence. As Booker

holds, the Guidelines’s contrary assertion that a district

judge may make such factual determinations based upon

the preponderance of the evidence runs afoul of the Sixth

Amendment. Thus, in light of Booker, we must remand this

case to the district court for resentencing. 
6 No. 03-4004

III. CONCLUSION

For the foregoing reasons, the judgment of conviction is

AFFIRMED. The sentence imposed is VACATED and the case

is REMANDED for resentencing.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—8-12-04