Opinion ID: 3012046
Heading Depth: 2
Heading Rank: 5

Heading: 3-Level Upward Departure

Text: Lastly, Milan contends that the district court erred when it applied a 3-level upward departure to his combined offense level rather than to the public corruption counts only, which had the effect of increasing his sentence by 16 months.23 On this point, a majority of the panel affirms the district court; however, Judge Greenberg, the author of the rest of this opinion, would reverse. The following portion of this opinion, therefore, represents the views of Chief Judge Becker as joined in by Judge Barzilay, with Judge Greenberg offering the reasons for his disagreement in a separate dissenting opinion, infra. At sentencing, the court adopted, without objection, the grouping calculations of the Presentence Investigation Report (PSR) which, applying the methodology set forth in U.S.S.G. S 3D1.2,24 trisected Milan’s convictions into distinct groups according to the nature of the offenses: Group One, involving Milan’s unlawful financial transactions concerning the loan from Rivera (counts 15, 16, and 17); Group Two, involving Milan’s crimes as a public official (counts 1, 3, 4, 7, 8, 9, 12, 13, and 14); and Group Three, involving the staged burglary of Atlas Contracting Company and subsequent insurance fraud (counts 18 and 19). The government moved for an upward departure on the grounds that Milan was involved in systematic or pervasive corruption of a public office which caused a loss of _________________________________________________________________ 23. Our review of the district court’s construction of the Sentencing Guidelines is plenary. See United States v. Swan , 275 F.3d 272, 275 (3d Cir. 2002). 24. Section 3D1.1(a) of the guidelines establishes a three-step procedure for determining the proper offense level in a case that involves multiple counts of conviction. First, counts that are closely related must be grouped in accordance with the provisions of section 3D1.2. Each group then is assigned an offense level based on the count with the highest offense level within that group. See U.S.S.G. S 3D1.3. Finally, if there is more than one group, section 3D1.4 provides that the combined offense level is derived by determining units for each group and adding offense level increases for each group to the offense level for the group with the highest specified offense level. 27 confidence in government. Specifically, U.S.S.G.S 2C1.7, the guideline used to calculate the adjusted offense level for the Group Two crimes, which is entitled Fraud Involving Deprivation of the Intangible Right to the Honest Services of Public Officials; Conspiracy to Defraud by Interference with Governmental Functions, contains within its commentary Application Note 5, which states: Where the court finds that the defendant’s conduct was part of a systematic or pervasive corruption of a governmental function, process, or office that may cause loss of public confidence in government, an upward departure may be warranted. See Chapter Five, Part K (Departures). The court granted the government’s motion, adding a 3- level upward departure to Milan’s combined offense level for a total base of 27 as follows: Section 3D1.4 Units Adjusted Offense Level for Group One: 23 Adjusted Offense Level for Group Two: 18 Adjusted Offense Level for Group Three: 11 Total Units 1-1/2 Greater Adjusted Offense Level 23 Increase in Offense Level 1 Section 2C1.7 Departure Increase 3 Total Offense Level 27 See PSR at 21-27. With criminal history category I, the sentencing range was 70 to 87 months, and the court imposed the maximum term available within the range. Milan maintains that the district court should have applied the departure only to the Group Two adjusted offense level, the group encompassing Milan’s acts of public corruption to which the departure was applicable, before applying the multiple-grouping adjustments found in U.S.S.G. S 3D1.4. Applying the 3-level public corruption departure only to calculate the adjusted offense level of the public corruption charges would have yielded the following results: 28 Section 3D1.4 Units Adjusted Offense Level for Group One: 23 Adjusted Offense Level for Group Two (with three-level section 2C1.7 departure applied): 21 Adjusted Offense Level for Group Three: 11 Total Units 2 Greater Adjusted Offense Level 23 Increase in Offense Level 2 Total Offense Level 25 With a criminal history category I, the sentencing range under Milan’s proposed methodology would have been 57 to 71 months. Under U.S.S.G. S 1B1.1 the steps for calculating a sentence are as follows: (a) determine the applicable guideline section for each offense from Chapter Two; (b) determine the base offense level and apply any appropriate specific offense characteristics, cross references, and special instructions contained in the particular guideline in Chapter Two; (c) apply the adjustments as appropriate related to victim, role, and obstruction of justice from Parts A, B, and C of Chapter Three; (d) repeat steps (a) through (c) for each count and adjust the offense level accordingly if there are multiple counts of conviction; (e) apply the adjustment as appropriate for the defendant’s acceptance of responsibility from Part E of Chapter Three; (f) determine the defendant’s criminal history category as specified in Part A of Chapter Four; (g) determine the guideline range in Part A of Chapter Five that corresponds to the offense level and criminal history category previously determined; (h) determine from Parts B through G of Chapter Five the sentencing requirements and options related to probation, imprisonment, supervision conditions, fines, and restitution; and, (i) [r]efer to Parts H and K of Chapter Five, Specific Offender Characteristics and Departures, and to any other policy statements or commentary in the guidelines that might warrant consideration in imposing sentence. U.S.S.G. S 1B1.1(a)-(i). We have held that these steps are to be applied sequentially by the sentencing 29 court. See United States v. Johnson, 155 F.3d 682, 684 (3d Cir. 1998) (The court reads these instructions as providing a sequence of steps for the court to follow in the order in which they appear.); United States v. McDowell, 888 F.2d 285, 293 (3d Cir. 1989) (construing S1B1.1 as reflecting [t]he intent of the Sentencing Commission . . . that the Guidelines be applied like a formula; a court . . . should go down each guideline in order, making the necessary calculations). As we will explain infra, we think that structure applicable here. Milan contends that the district court erred in applying the S 2C1.7 Application Note 5 upward departure at step (i) (after the step (d) grouping) rather than at step (b) (before grouping). Milan asserts that Note 5 is a departure specific to S 2C1.7 and not the type of more general,unguided Chapter 5 departure to which step (i) refers. This conclusion is supported, according to Milan, by the language of Note 5, which is narrowly written and directed toward the offense level determination for a S 2C1.7 offense. For the same reason, Milan submits that applying the Note 5 departure to the adjusted base offense level before grouping is more consistent with the punishment fits the crime logic of the Guidelines in that the upward departure for governmental corruption ought to be specifically tied to that portion of his sentence that relates to his crimes as a public official. The government counters by arguing that Milan’s proposed methodology is inconsistent with the Guidelines’ text. Specifically, the government contends that the Note 5 departure is neither a specific offense characteristic, a cross reference, nor a special instruction, and therefore does not fall within the ambit of S 1B1.1 step (b). Rather, the government contends, Note 5 is simply a reference to the type of Chapter 5 departure that the sentencing court may properly consider at step (i), only after the multiplegroups adjustments have been performed. Furthermore, the government argues that the district court’s methodology is more consistent with general Guidelines principles in that it allows the judge to assess the factors listed in Note 5 only after the judge has considered all of the information relevant to determining whether a departure is appropriate, 30 such as the defendant’s criminal history and whether the defendant has accepted responsibility for his acts. We hold that the government’s position is correct, and that the district court did not err in applying Note 5 to Milan’s sentence after grouping. We reach this conclusion primarily because we find the text of the Sentencing Guidelines clear on this point. In particular, we think it plain that the departure warranted by Application Note 5 does not amount to a specific offense characteristic, cross reference, or special instruction, the only three types of sentencing adjustments to which step (b) explicitly refers. Milan has conceded that Note 5 is not a specific offense characteristic, see Milan’s Reply Br. at 18, and he has not raised any argument that Note 5 is a cross reference, nor could he reasonably do so in light of the fact thatS 2C1.7 does not include Note 5 within its four provisions-- U.S.S.G. S 2C1.7(c)(1)-(4) -- expressly designated as cross references, see United States v. Gay, 240 F.3d 1222, 1232 (10th Cir. 2001) (concluding that the Guidelines’ career offender provision, U.S.S.G. S 4B1.1, is not across reference in part because it is not labeled as such), nor does Note 5 instruct the sentencing court to apply any other guideline, which is a requirement under the Guidelines’ definition of a cross reference. See U.S.S.G. S 1B1.5 (defining a cross reference asan instruction to apply another offense guideline). We also think it clear that Note 5 does not qualify, as Milan argues, as a special instruction, a phrase which is used as a term of art in the Guidelines. The Guidelines take care to label special instructions expressly as such in many subsections of Chapter Two. See, e.g., U.S.S.G. SS 2A3.1(d), 2B1.1(d), 2B4.1(c). Note 5, however, is not expressly labeled a special instruction. We apply the rules of statutory construction when interpreting the Guidelines, see United States v. Robinson, 94 F.3d 1325, 1328 (9th Cir. 1996), and under the well-established canon of statutory construction of expressio unius est exclusio alterius, the Guidelines’ failure to expressly designate Note 5 as a special instruction when this label is conspicuously affixed to many other provisions within the same chapter is 31 a clear sign that the authors of the Guidelines did not intend for Note 5 to operate as a special instruction. Indeed, all of the provisions prominently labeled asspecial instructions appear within the text of each Guideline, unlike Note 5, which appears within the commentary to S 2C1.7. Even if Milan is correct that it is more intuitive to apply the Note 5 departure, which is for systematic or pervasive governmental corruption causing loss of public confidence in government, only to Milan’s offenses that relate to his crimes as a public official, where the text of the Guidelines appears clear, as it does here, whatever intuition we may have must yield to the language of the Guidelines. Milan argues that even if Note 5 is not expressly designated as a special instruction, it is the functional equivalent thereof, and therefore ought to be treated as such for the purposes of step (b) of S 1B1.1. We disagree. As mentioned above, the text of S 1B1.1(b) refers only to specific offense characteristics, cross references, and special instructions, and does not include any sort of catch-all provision for subsections or commentary that, while different in form, are similar in function to these three very specifically defined Guideline terms. In contrast, subsection (i) of S 1B1.1, which is the step at which the district court applied Note 5, does contain a catch-all provision that refers to any other policy statements or commentary in the guidelines that might warrant consideration in imposing sentence. Moreover, Milan’s contention that Note 5 is the functional equivalent of a special instruction is simply a restatement of his claim that Note 5 ought to be applied at step (b) rather than at step (i); in other words, Note 5 is only a functional equivalent of a special instruction if Milan is correct that Note 5 should be applied before the grouping adjustment. For the reasons stated above, we reject this assertion on the basis of the Guidelines’ clear text.25 _________________________________________________________________ 25. As support for his position, Milan cites to United States v. Nguyen, 255 F.3d 1335 (11th Cir. 2001), in which the United States Court of Appeals for the Eleventh Circuit was called upon to determine when the sentencing court ought to have applied Application Note 1 of the 32 Moreover, applying the Note 5 departure after grouping is logical. Sentencing within the range prescribed by the _________________________________________________________________ commentary to U.S.S.G. S 2A1.1, which provides that a departure may be warranted in a murder conviction where the defendant did not intentionally or knowingly cause death (such as in the case of so-called felony-murder): during step (b) of the S 1B1.1 sequence, or after the determination of the combined offense level, at step (i). Interestingly, because the departure at issue in Nguyen was a downward rather than an upward departure, the roles of the parties in Nguyen were reversed: the government argued for applying the departure only to the particular offense, and the defendant argued for applying the departure to the combined offense level. The Eleventh Circuit agreed with the government and concluded that it was proper for the sentencing court to apply the departure only to the murder offense at step (b) before determining the combined offense level. Nguyen does not dissuade us from concluding that Milan’s argument is incorrect. As the dissent points out, the court in Nguyen implicitly concluded that the S 2A1.1 Note 1 departure is comparable to specific offense characteristics, cross references, and special instructions for purposes of S 1B1.1(b). Dis. Op. at 45. The reasoning of the Nguyen court, however, was only implicit and never explicit, as the court made no effort to reconcile its conclusion with the plain language of step (b). Indeed, the Nguyen court addressed this issue in only one paragraph, see 255 F.3d at 1344-45, and offered only the summary conclusion that the sentencing court did not err in first departing downward from the base offense level for murder and then applying the grouping rules . . . . Id. at 1345. Furthermore, Nguyen is arguably distinguishable because it addressed an application note from an entirely different guideline section than that presented here. Although the application note considered in Nguyen, S 2A1.1 Application Note 1, is similar to the application note at issue here in that it is not expressly labeled as aspecial instruction, it is different in that it makes no explicit citation to Chapter Five, Section K (Departures), as does S 2C1.7 Application Note 5. It may well be, therefore, that a better argument can be made thatS 2A1.1 Application Note 1 is a functional equivalent of a special instruction than can be put forth on behalf of S 2C1.7 Application Note 5. Nguyen illustrates how our holding today may not always be to the government’s advantage. Rather, as counsel for the government conceded at oral argument, in cases in which it is a downward departure rather than an upward departure that is at issue, it would be to the government’s advantage to have the departure deducted from the sentence before grouping rather than afterwards. See Trans. of Oral 33 Guidelines is supposed to be the norm, and departures the exception, see U.S.S.G., Chapter One, Part A, Intro. Comment 4(b) (departures permitted only when the sentencing court finds an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described (quoting 18 U.S.C.S 3553(b)). Therefore it is sensible to first calculate the correct Guidelines sentencing range before the court determines whether a sentence within that range provides an appropriate punishment for the defendant or whether a departure is necessary. In this sense, Note 5 simply serves to flag for the sentencing judge an aggravating circumstance likely to occur in a S 2C1.7 offense for later consideration at the more discretionary departure stage.26 _________________________________________________________________ Argument at 44-45 (This isn’t always going to hurt the defendant, it may be that if you get in a situation where there’s going to be a downward departure, the defendant is better off having the departure applied after the grouping . . . . [S]o, this isn’t a procedure that always helps the government . . . .). The United States Attorney’s Office for the District of New Jersey, therefore, has apparently made the tactical decision that it would prefer that these departures be applied after grouping, a decision which appears to be in conflict with the strategy of its sister office, the United States Attorney’s Office for the Northern District of Georgia, in Nguyen. 26. The dissent observes that the Note 5 departure for systematic or pervasive corruption of government that may cause loss of public confidence in government is distinct from the S 5K2.7 departure for disruption of governmental function. See Dis. Op. at 43 n.7. We agree. However, we fail to see how this distinction sheds any light on the question of when in the U.S.S.G. S 1B1.1 sequence to apply the Note 5 departure. The dissent’s reasoning seems to be that since we know that S 5K2.7 is a departure to be applied at step (i), the fact that Note 5 is different from S 5K2.7 in terms of the conduct to which it applies indicates that Note 5 does not apply at step (i). In our opinion, however, the dissent has taken one distinction between the two provisions -- the types of conduct to which they apply -- and erroneously inferred from this distinction another, unrelated distinction-- the point at which to apply each departure. We see no justification for this inference; the mere fact that Note 5 and S 5K2.7 apply to different types of conduct does not indicate to us that they should also apply at different stages of the S 1B1.1 sequence. 34 Then, when the sentencing court considers Note 5 at step (i), it may determine the propriety of a departure in light of full information regarding other factors relevant to the defendant’s sentence, such as the defendant’s background, conduct, and character. See U.S.S.G. S 1B1.1(c)-(h).27 In contrast, under Milan’s scenario, the sentencing court would be forced to make a departure decision before it had made any of these findings, which would have the effect of placing, as the government colorfully observes,the departure cart before the Guidelines Range horse. The dissent believes that even if we are correct that a Note 5 departure must be applied only during step (i), it does not follow logically that the court may apply the departure only to the final offense level. Dis. Op. at 41. Rather, the dissent submits, because step (i) directs a sentencing court only to refer to, rather than apply the Chapter Five departures, the sentencing court is free to  ‘refer’ to a provision of the guidelines at step (i) but nevertheless then ‘apply’ the departure at an earlier step of its calculations. Id. We find the dissent’s reading of a supposed distinction between refer and apply to be inconsistent with our case law interpreting S 1B1.1 as imposing a sequential order for the application of steps (a) through (i). See United States v. Johnson, 155 F.3d 682, 684 (3d Cir. 1998) (The court reads these instructions as providing a sequence of steps for the court to follow in the _________________________________________________________________ 27. The language of U.S.S.G. S 5K2.0, entitled Grounds for Departure (Policy Statement), seems to contemplate a phenomenon akin to what has presented itself here. It notes: [A] factor may be listed as a specific offense characteristic under one guideline but not under all guidelines. Simply because it was not listed does not mean that there may not be circumstances when that factor would be relevant to sentencing. For example, the use of a weapon has been listed as a specific offense characteristic under many guidelines, but not under other guidelines. Therefore, if a weapon is a relevant factor to sentencing under one of these other guidelines, the court may depart for this reason. (Emphasis added.) This excerpt only confirms our conclusion that when a factor resembles a special instruction, but is not specifically labeled as such, the Guidelines intend for it to be considered by the sentencing court at the departure stage, which is step (i) of the S 1B1.1 sequence. 35 order in which they appear.) (second emphasis added); United States v. McDowell, 888 F.2d 285, 293 (3d Cir. 1989) (construing S1B1.1 as reflecting [t]he intent of the Sentencing Commission . . . that the Guidelines be applied like a formula; a court should go down each guideline in order, making the necessary calculations) (emphasis added). Under the dissent’s proposed reading, step (i) departures could be applied retroactively at step (b), thereby creating an end-around to our requirement that the steps of S 1B1.1 be applied in strict sequential order. While we recognize that, as the dissent correctly observes, neither Johnson nor McDowell considered whether all of the steps of S 1B1.1 ought to be applied in sequential order, we see no logical reason why the rule endorsed in each decision should not extent to subsection (i). Moreover, we think that the dissent is incorrect in its view as to why the authors of the Guidelines use the term refer to, rather than apply, in step (i). The departures referenced in step (i) are discretionary in nature. See United States v. Kikumura, 918 F.2d 1084, 1110 (3d Cir. 1990) (noting that district courts have a substantial amount of discretion in deciding whether to depart). It is for this reason (and, as far as we can discern, this reason alone) that the Guidelines instruct the district court merely to refer to the departure provisions. Refer is defined by Webster’s as to direct attention, Webster’s Third New Int’l Dict. 1907 (Phillip B. Gove ed., 1966), and this is precisely what step (i) intends to do -- direct the attention of the sentencing judge to the appropriate factors to be considered in deciding whether to depart. Refer to, therefore, is a more appropriate term for the inherently discretionary exercise of departing than apply, which is defined by Webster’s as to put into effect, id. at 105, and connotes a rote, mechanical, non-discretionary execution of duties. We believe that it is for this reason, and not for the reasons offered by the dissent, that step (i) uses refer to instead of apply. For the foregoing reasons, we hold that the district court was correct to apply the Note 5 departure at step (i), after 36 the grouping of the counts, and we will therefore affirm the sentence.28