Opinion ID: 173168
Heading Depth: 3
Heading Rank: 3

Heading: Proximate cause standard

Text: While we have not articulated a precise standard of proximate cause in the MVRA context, we have recognized that the main inquiry for causation in restitution cases [is] whether there was an intervening cause and, if so, whether this intervening cause was directly related to the offense conduct. United States v. Wilfong, 551 F.3d 1182, 1187 (10th Cir.2008) (quoting United States v. De La Fuente, 353 F.3d 766, 772 (9th Cir.2003)); see also United States v. Gamma Tech Indus., Inc., 265 F.3d 917, 928 (9th Cir.2001) (Defendant's conduct need not be the sole cause of the loss, but any subsequent action that contributes to the loss, such as an intervening cause, must be directly related to the defendant's conduct.). Other courts have also focused on the need for the harm suffered by the alleged victim to be not too attenuated from the defendant's wrongful act. See Robertson, 493 F.3d at 1334 ([T]he government must show not only that a particular loss would not have occurred but for the conduct underlying the offense of conviction, but also that the causal connection between the conduct and the loss is not too attenuated (either factually or temporally). (quoting Cutter, 313 F.3d at 7)). We thus hold that, for the purposes of determining if an individual is a victim under the MVRA, an individual will be proximately harmed as a result of the defendant's crime if either there are no intervening causes, or, if there are any such causes, if those causes are directly related to the defendant's offense. There are potentially two intervening causes between Mr. Speakman's wire fraud and the loss Merrill Lynch suffered. First, Mrs. Speakman's initiation of arbitration against Merrill Lynch is an intervening cause of Merrill Lynch's harm, because Merrill Lynch presumably would not have had to pay $1,225,000 if Mrs. Speakman had not brought the arbitration. We have little difficulty in concluding that the arbitration was directly related to the offense conduct, because Mrs. Speakman initiated the arbitration directly in response to Mr. Speakman's fraud in an attempt to recover the money he stole from her. This is a direct relationship that is not too attenuated from Mr. Speakman's fraud so that it would be unjust to hold him responsible. The second intervening cause between Mr. Speakman's fraud and Merrill Lynch's harm is whatever caused the arbitrator to rule that Merrill Lynch was liable to Mrs. Speakman in the NASD arbitration. However, the record does not reflect the basis for Merrill Lynch's liability in the arbitration, so we cannot be sure if Merrill Lynch's liability was based on respondeat superior principles, negligence in supervising Mr. Speakman, or some other basis entirely. [4] And because, as explained below, whether Merrill Lynch was proximately harmed by Mr. Speakman's fraud depends on the basis of Merrill Lynch's liability to Mrs. Speakman in the NASD arbitration, the government has not met its burden of establishing that Merrill Lynch was a victim of Mr. Speakman's fraud. [5] Because the district court did not require a showing of proximate cause in its determination of whether Merrill Lynch was a victim, the government never attempted to establish that element. Mindful of the MVRA's interest in providing compensation to victims of crime, we conclude that a remand is appropriate to allow the government to present evidence of the proximate cause of Merrill Lynch's loss to the district court in the first instance. In order to provide the district court with guidance as to what constitutes proximate cause in this instance, we next consider whether proximate cause would be established if the government is able to establish that Merrill Lynch's liability in the arbitration arose from either respondeat superior or negligence.
If Merrill Lynch's liability was premised on a respondeat superior theory, then there really is no second intervening cause, as employers are generally held liable on that theory not because of any act or omission on their part, but rather because the employee was acting within the scope of his duty. See generally Restatement (Third) Agency § 7.07 (2006). If the government could establish that Merrill Lynch was liable to Mrs. Speakman under a respondeat superior theory, we would thus have little trouble concluding that Merrill Lynch was directly and proximately harmed by Mr. Speakman's fraud.
Although a closer question, we also think that Merrill Lynch's harm would still be directly related to Mr. Speakman's fraud even if Merril Lynch was held liable in the arbitration because of its own negligence in supervising Mr. Speakman. Mr. Speakman must have anticipated that Merrill Lynch would not diligently supervise his actions, or else he would not have been able to commit the fraud in the first place. In addition, the negligent supervision only gave rise to Merrill Lynch's liability because of the fraud that Mr. Speakman was committing. Thus, unlike a volitional act, negligent supervision would not be a cause by itself. It thus cannot be an intervening cause. This satisfies us that Merrill Lynch's harm would be directly related to Mr. Speakman's fraud if Merrill Lynch's liability arose from its own negligence in supervising Mr. Speakman.
Unfortunately, based on the record before us, we cannot even determine whether either respondeat superior or negligent supervision provided the basis for Merrill Lynch's liability to Mrs. Speakman. It is possible that the NASD arbitration found Merrill Lynch liable for other reasons, possibly for an intentional harm that Merrill Lynch itself committed. The only reference to Merrill Lynch's liability contained in the record is a statement by the probation officer in the PSR, based on a statement from Merrill Lynch itself, that Merrill Lynch and the defendant were found jointly and severally liable for losses to Mrs. Speakman in the amount of $1,225,000. (PSR at A-3.) With no further information concerning Merrill Lynch's liability in the arbitration, it remains possible that Merrill Lynch was liable to Mrs. Speakman because of its own volitional acts. In such a case, Merrill Lynch would not have been proximately harmed by Mr. Speakman because it was its own actions that gave rise to its liability, and thus Merrill Lynch's harm would not be directly related to Mr. Speakman's fraud. Just as a third party's intentional tort will generally be held as a superseding cause of a harm, thereby relieving another party of liability for negligence, we are satisfied that any intentional act that Merrill Lynch may have taken would be a superseding cause of its liability that would break the causal chain between Mr. Speakman's actions and Merrill Lynch's loss sustained in the arbitration. See Gaines-Tabb v. ICI Explosives, USA, Inc., 160 F.3d 613, 620 (10th Cir.1998) (When the intervening act is intentionally tortious or criminal, it is more likely to be considered independent. (quotation omitted)); see also Restatement (Second) of Torts § 448 (The act of a third person in committing an intentional tort or crime is a superseding cause of harm to another resulting therefrom....). Indeed, it would be odd to consider Merrill Lynch a victim of Mr. Speakman's fraud if the reason it suffered harm was because of its own intentional conduct. [6] We therefore vacate this portion of defendant's sentence and remand for the district court to perform further fact-finding as to whether Mr. Speakman proximately caused Merrill Lynch's harm.