Opinion ID: 204447
Heading Depth: 4
Heading Rank: 2

Heading: The loss to General Motors

Text: The Probation Office proposed that General Motors suffered a loss of $30,474.76 as a result of complying with Douglas's and Campbell's threat, and accordingly proposed a four-level enhancement to Douglas's and Campbell's offense levels. It measured the loss according to the salaries that General Motors paid to the unqualified relatives before GM evaluated and retained those men based on their work performance. The United States, Douglas, and Campbell all objected to this recommendation. The district court rejected the loss enhancement entirely because the relatives performed their jobs well and caused General Motors no workplace loss. In other words, General Motors obtained valuable services in exchange for the salaries that it paid. The United States appeals the loss determination. First, the parties disagree about whether workplace loss is a meaningful measure in an extortion case. Douglas and Campbell cite many older cases in which courts concluded that the value of fraudulently provided services offset any loss for purposes of loss calculation. See, e.g., United States v. Maurello, 76 F.3d 1304, 1311-12 (3d Cir.1996) (A client who obtains a satisfactory contract, settlement, or verdict has received something of value, irrespective of whether the lawyer was licensed at the time.). The United States distinguishes fraudulent services from the services provided in this case because GM did not ask for these services; rather, it was forced to create two new positions for people who were not qualified as journeymen. According to the record, General Motors might not have hired the unqualified relatives were it not for the threat, but the company would have filled these positions with other applicants regardless. Furthermore, based on General Motors's choice to retain the employees, we can only assume that they performed satisfactorily and General Motors got its money's worth. Therefore, the district court's finding that General Motors did not suffer any direct loss by hiring and paying the relatives is not clearly erroneous. Second, the district court did not consider General Motors's consequential losses. Section 2B3.2 expressly anticipates consequential losses, see U.S.S.G. § 2B3.2 cmt. 5, but consequential losses are irrelevant under section 2B3.3, which looks only at the greater of the amount obtained or demanded, U.S.S.G. § 2B3.3(b)(1). Because we conclude that the district court should have applied section 2B3.2, the district court should have also determined whether General Motors suffered any consequential losses. Here, when General Motors hired the non-qualified relatives, they violated the hiring priorities set forth in the national and local Union agreements. As a result, multiple qualified Union members filed grievances because they should have had higher priority. General Motors had to pay $450,000 in legal fees, plus salaries and expenses for in-house counsel, and the salaries for two Union members who were hired as journeymen as a way to settle their grievances. The district court did not make a factual finding as to consequential damages. Therefore, on remand, the district court must calculate consequential damages to General Motors according to section 2B3.2(b)(2), and apply the appropriate offense level enhancement.