Opinion ID: 173168
Heading Depth: 3
Heading Rank: 2

Heading: Requirement of Direct and Proximate Harm

Text: As noted above, Merrill Lynch may still be a victim of Mr. Speakman's fraud if it meets the first criterion of § 3663A(a)(2): that is, Merrill Lynch may be a victim under the MVRA if it was directly and proximately harmed as a result of  Mr. Speakman's fraud. Id. (emphasis added). Although this was not the basis of the district court's determination that Merrill Lynch was a victim, the parties have briefed the issue to this court and we can consider whether to affirm the district court's determination on this alternate ground. See United States v. Sandia, 188 F.3d 1215, 1217 (10th Cir.1999) ([W]e are free to affirm a district court decision on any grounds for which there is a record sufficient to permit conclusions of law, even grounds not relied upon by the district court. (quotation omitted)). We first note that phrase directly and proximately uses the conjunctive and, which indicates that direct harm and proximate harm have separate meanings. Cf. Qwest Commc'ns Int'l, Inc. v. F.C.C., 398 F.3d 1222, 1236 (10th Cir.2005) (noting that use of the word and in setting out F.C.C.'s duties clearly indicates that the Commission cannot satisfy the statutory mandate by simply doing one or the other). Other circuits that have considered the phrase directly and proximately harmed in the MVRA and other federal restitution statutes have required more than but for causation. The Second Circuit, for example, has held that the requirement that the victim be `directly and proximately harmed' encompasses the traditional `but for' and proximate cause analyses. In re Rendon Galvis, 564 F.3d 170, 175 (2d Cir.2009). [3] This interpretation makes a good deal of sense, as it essentially requires a showing of but-for causation to show that a victim was directly harmed, and a showing of proximate causation to show that a victim was proximately harmed. See also In re Antrobus, 519 F.3d 1123, 1126 (10th Cir.2008) (Tymkovich, J., concurring) ([a]pplying traditional rules of `but-for' and `proximate' causation in the CVRA context, and noting that direct [ ] harm encompasses a `but-for' causation notion that is different from proximate harm). Similarly, the First Circuit has held that a two-pronged approach is appropriate when defining the causation standard required to show that someone is a victim under the MVRA. [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). United States v. Cutter, 313 F.3d 1, 7 (1st Cir.2002); see also United States v. Robertson, 493 F.3d 1322, 1334 (11th Cir. 2007) (quoting Cutter, 313 F.3d at 7). We agree with these courts that to show that one is a victim under the MVRA, the government must show both that the defendant's conduct is the but-for cause of the individual's harm and that the defendant proximately caused the harm. In Mr. Speakman's case, the parties do not dispute that Mr. Speakman was a but-for cause of Merrill Lynch's loss, as Merrill Lynch never would have had to pay Mrs. Speakman any money under the arbitration award if not for Mr. Speakman's fraud. The district court stopped here in its analysis, concluding that Merrill Lynch was directly harmed by the defendant's criminal conduct in the course of the scheme and was therefore a victim within the meaning of the MVRA. (R. Vol. 2 at 14-15.) As noted above, however, because Merrill Lynch was not harmed in the course of Mr. Speakman's fraud, the district court also needed to consider whether Merrill Lynch was proximately harmed by Mr. Speakman's fraud. The court could thus only order restitution if Mr. Speakman's fraud against his wife proximately caused the loss to Merrill Lynch.