Opinion ID: 2810258
Heading Depth: 3
Heading Rank: 2

Heading: Evidence of a Return Policy and a Friendship

Text: During direct examination of Schmidt, the government introduced evidence of an alleged return policy between him and Pulgar: A. Okay. The cocaine, if it was real bad, I could give it back to him. Q. Was this some sort of … return policy or some- thing? A. Yeah, I guess you could say that -- call it that. Q. How many times would you say that happened during your relationship? A. Maybe just a couple. Two or three. The government relies heavily on this testimony. It also points out that Pulgar screened the cocaine for quality before he sold it to Schmidt. A return policy, the government argues, demonstrates that “no transaction between Schmidt and Pulgar was final until Schmidt resold the drugs.” That in turn means that Pulgar held a “stake in the venture” of Schmidt’s downstream sales, which in turn demands an inference of conspiracy to distribute cocaine. Or so the argument goes. Not so, contends Pulgar. For he reads Schmidt’s testimony differently. Pulgar first notes that evidence of a return policy—like evidence of fronting—did not surface until Schmidt testified at trial. And when it did surface, the government’s introduction of the phrase “return policy” seemed to catch Schmidt by surprise: “Yeah, I guess you could say that -- call it that.” Thus, Pulgar contends that the alleged “return policy” is little more than a rebranding effort by the 8 No. 14-3503 government to help support its conspiracy case. As he puts it, “2-3 returns of poor quality cocaine over 11 years surely do not constitute a return policy.” The stakes on this point are high. For when a “seller permits the buyer to return unsold drugs,” he stands on the precipice of a consignment sale. Brown, 726 F.3d at 999. And consignment sales are “quintessential evidence” of a drugdistribution conspiracy. Id. (citing Johnson, 592 F.3d at 755 n.5)). But other factors are typically involved in consignment sales. A middleman is usually present, and profits are delayed “until the middleman distributes the drugs to others.” Johnson, 592 F.3d at 755 n.5 (explaining that, in a consignment sale, “the supplier will not get paid until the middleman resells the drugs.”) (citations omitted). We address this point in greater detail below. The last piece of government evidence worth mentioning is that of a bourgeoning friendship between Pulgar and Schmidt. This friendship, the government argues, shows a trusting, close-knit relationship between Pulgar and Schmidt from which a rational jury could infer conspiracy. But the evidence is not overwhelming. It consists of two vacations, one baby shower, and one house renovation. Specifically, Schmidt testified that their families went on joint vacations to Mexico and Jamaica. Schmidt also testified that he attended Pulgar’s baby shower, and that Pulgar helped renovate his house. “All of this suggests,” the government argues, “the men were not a buyer and seller dealing solely at arm’s- length.” No. 14-3503 9