Opinion ID: 2589
Heading Depth: 2
Heading Rank: 3

Heading: Defendants' Arguments Against Including Attorney Fees and Accounting Costs in Restitution Order

Text: Defendants invoke the principle of ejusdem generis in urging us to exclude attorney fees and accounting costs from the definition of other expenses under § 3663A(b)(4). They maintain the term other expenses should be read to include only those expenses similar in nature to the ones specifically listed in this provision: lost income, child care expenses, and travel expenses. Ejusdem generis is a canon of statutory construction that dates back in Anglo-American law at least as far as the Archbishop of Canterbury's Case, 76 Eng. Rep. 519, 520-21 (K.B.1596). It literally means of the same kind or class. Black's Law Dictionary 535 (7th ed.1999). Under this canon, general terms that follow specific ones are interpreted to embrace only objects of the same kind or class as the specific ones. See, e.g., Hall St. Assocs. v. Mattel, Inc., ___ U.S. ___, 128 S.Ct. 1396, 1404, 170 L.Ed.2d 254 (2008); Wash. State Dep't of Soc. and Health Servs. v. Guardianship Estate of Keffeler, 537 U.S. 371, 384-85, 123 S.Ct. 1017, 154 L.Ed.2d 972 (2003). Ejusdem generis has its limits. Like other canons of statutory construction, it is simply a helpful guide to legislative intent, not a dispositive one, and it does not require a court to give it unthinking reliance. See Ali v. Fed. Bureau of Prisons, ___ U.S. ___, 128 S.Ct. 831, 839-40, 169 L.Ed.2d 680 (2008). Moreover, it has long been recognized that ejusdem generis cannot be called into play when the specific terms preceding the general one do not themselves have a common attribute from which a kind or class may be defined. See Darius v. Apostolos, 68 Colo. 323, 190 P. 510, 511 (1920); State v. Eckhardt, 232 Mo. 49, 133 S.W. 321, 322 (1910). In Ali v. Federal Bureau of Prisons, the Supreme Court relied on this reasoning, in part, to reject ejusdem generis as a guide for interpreting the meaning of any other law enforcement officer in 28 U.S.C. § 2680. See 128 S.Ct. at 839. While that general term is preceded in § 2680 by the phrase officer of customs or excise, the Supreme Court found no relevant common attribute linking customs officers to excise officers. Id. In other words, the specific terms did not define any generis within which the meaning of the general term could be circumscribed. Similarly, we find no relevant common attribute linking lost income, child care expenses, and transportation expenses in 18 U.S.C. § 3663A(b)(4). Certainly, these are all expenses that one might conceivably incur while participating in an investigation or prosecution or attending proceedings. But we do not need ejusdem generis to limit other expenses to such activities since § 3663A(b)(4) already does so expressly. It is true that our interpretation of the statute renders Congress' reference to child care and transportation expenses somewhat superfluous. But the Supreme Court confronted the same dilemma in Ali and did not find it to be a sufficient reason, standing alone, to invoke ejusdem generis. See 128 S.Ct. at 840. The Court reasoned that Congress might sometimes use specific terms not to limit the succeeding general ones, but instead simply to remove any doubt that the specific terms are included under the statute. Id. This reasoning is especially appropriate to § 3663A(b)(4), the drafters of which may have feared that courts would overlook child care and transportation expenses unless these items were specifically named. Such fears would not likely have extended to attorney fees and accounting costs because these expenses are so obviously associated with investigation and prosecution, particularly in the case of fraud offenses.
Defendants maintain in addition that other expenses cannot encompass attorney fees and accounting costs because such expenses amount only to indirect or consequential damages, whereas restitution is limited to direct harm. To support this assertion, defendants point to a number of cases in other circuits in which courts have rejected the inclusion of attorney fees in restitution orders on this basis: United States v. Radziszewski, 474 F.3d 480, 487 n. 3 (7th Cir.2007) (as amended), Government of Virgin Islands v. Davis, 43 F.3d 41, 46 (3d Cir.1994), United States v. Mullins, 971 F.2d 1138, 1146-47 (4th Cir.1992), and United States v. Arvanitis, 902 F.2d 489, 497 (7th Cir.1990). But none of these cases clearly address the language of § 3663A(b)(4). Davis, Mullins, and Arvanitis were all decided pre-MVRA when the courts were interpreting the language of the VWPA codified at 18 U.S.C. § 3663(b)(1). That language deals with the restitution of lost or damaged property, not investigation or prosecution expenses. Whether or not attorney fees or auditing costs may be included in the calculation of lost or damaged property says nothing about whether they may be included in the calculation of expenses incurred during investigation or prosecution of an offense. It is not entirely clear whether the Seventh Circuit in Radziszewski was addressing restitution of property or of investigation and prosecution expenses. The cases cited in that opinion suggest the former. In any event, to the extent the Seventh Circuit held that attorney fees and auditing costs may not be included in a restitution order under § 3663A(b)(4), we respectfully disagree. We also observe the Seventh Circuit has allowed the inclusion of auditing costs in a restitution order under 18 U.S.C. § 3663A(b)(1) on the theory that such expenses constituted damage to the victim's property. See United States v. Scott, 405 F.3d 615, 620 (7th Cir.2005). This is not to say defendants' concern over the link between an offense and the resulting restitution award may be ignored. As we have said, attorney fees and accounting costs may be included under § 3663A(b)(4) only if they were necessary and incurred during participation in the investigation or prosecution of the offense or attendance at proceedings related to the offense. Further, a restitution award under the MVRA may be based only on victims who were directly and proximately harmed as a result of the commission of the offense, 18 U.S.C. § 3663A(a)(2), and restitution may not be imposed if the determination of complex issues of fact relating to causation would unduly complicate or prolong the sentencing process, 18 U.S.C. § 3663A(c)(3)(B). In allowing the inclusion of attorney fees and accounting costs under § 3663A(b)(4), the Ninth Circuit has specified that such expenses must be the direct and foreseeable result of the defendant's wrongful conduct. Gordon, 393 F.3d at 1057. We have noted similar causation requirements in our analysis of victims' losses generally under the MVRA but have not yet fully addressed these requirements. See United States v. Reifler, 446 F.3d 65, 135-39 (2d Cir.2006); see also Boccagna, 450 F.3d at 120-21. We question whether the Ninth Circuit's formulation is appropriate when analyzing investigation and prosecution expenses under § 3663A(b)(4). Subsection (b)(4) seems to focus more on the link between these expenses and the victim's participation in the investigation and prosecution than on the offense itself. Recently we upheld the inclusion of lost income under § 3663A(b)(4) without considering whether this loss was a direct and foreseeable result of the defendant's offense. See United States v. Douglas, 525 F.3d 225, 254 (2d Cir.2008). And the Fifth Circuit has upheld investigation expenses based, in part, on its conclusion that the preclusion of consequential damages from other types of restitution does not apply to § 3663A(b)(4). See Phillips, 477 F.3d at 224-25. We need not formulate a precise test in the present case because  even assuming attorney fees and auditing costs must be a direct and foreseeable result of the offense  such a requirement was clearly met here. Defendants perpetrated a complicated fraud against a large corporation and a number of its clients, as well as the states to which those clients were required to turn over escheated funds. That this fraud would force the corporation to expend large sums of money on its own internal investigation as well as its participation in the government's investigation and prosecution of defendants' offenses is not surprising. There is no doubt that EDS's attorney fees and auditing costs were a direct and foreseeable result of defendants' offenses.