Opinion ID: 4394859
Heading Depth: 1
Heading Rank: 8

Heading: disaggregation

Text: On appeal, Rothenberg first argues that, as to all nine victims, the district court failed to “disaggregate” their losses. Rothenberg contends that Paroline requires district courts to engage in disaggregation at two levels: first, by disaggregating the portion of the victim’s losses caused by the original abuse; and second, by disaggregating the losses caused by the defendant from those caused by other possessors or distributors. Rothenberg asserts that the district court here failed at the first level by relying on total loss estimates for each victim that did not separate out and deduct the losses caused by the original abuser. Because the expert reports did not disaggregate the losses caused by the original abuser from those caused by the distributors or possessors, Rothenberg contends that the district court was required 40 Case: 17-12349 Date Filed: 05/08/2019 Page: 41 of 67 to conduct that separating out itself. Rothenberg maintains that the district court also failed to disaggregate at the second level by failing to use the amounts of the prior restitution orders against other defendant possessors or distributors for the same victims as a guidepost for determining his relative level of culpability. The government responds that nothing in Paroline requires district courts to engage in the sort of formal disaggregation Rothenberg envisions. Rather, the government contends that Paroline simply requires that the district court consider the Paroline factors and exercise its discretion in determining the amount of a victim’s losses caused by the instant defendant. The government submits that the district court here complied with those requirements, explicitly stating it was not holding Rothenberg accountable for the original abuse or distribution of the victims’ images and setting restitution amounts that “best approximat[ed] Rothenberg’s relative role.” This Court has not yet addressed whether, in awarding restitution postParoline, district courts first must formally disaggregate a victim’s losses between the original abuser, distributors, and subsequent possessors. Several of our sister circuits, however, have grappled with that question, and the results are mixed.
We start with the Eighth Circuit’s decision in United States v. Bordman, 895 F.3d 1048, 1058-59 (8th Cir. 2018), cert. denied, 2019 WL 1886056 (U.S. Apr. 29, 41 Case: 17-12349 Date Filed: 05/08/2019 Page: 42 of 67 2019), a restitution case involving a defendant convicted of only possessing child pornography. In Bordman, the Eighth Circuit expressly held that a district court is not required to formally disaggregate categories of loss before ordering restitution, such as the loss caused by the initial abuser. Id. at 1058-59. In doing so, the Eighth Circuit affirmed the district court’s $3,000 award of restitution to a victim where the district court considered multiple factors, including: (1) the 1/n method, which took into account the number of defendants (32) who had already paid the victim restitution plus 1 (the defendant Bordman), for a total of 33; (2) the child pornography being videos with two copies of the same video in different folders; and (3) the “very aggravating factor” of the nature of the video. Id. at 1052-53, 1059. The victim’s losses included $91,900 in therapy, related expenses, and for a vocational assessment and counseling, legal costs of $10,187.13, and attorney’s fees. Id. at 1052. At the sentencing hearing, the government took the sum of $95,295.71 ($91,900 plus one third of the attorney’s fees) and divided it by 33 defendants, resulting in the sum of $2,887.75. Id. at 1052-53. One-third of the attorney’s fees was used because this same attorney had represented three victims. Id. at 1052. The district court imposed a $3,000 restitution amount for the victim. Id. at 1054. On appeal, the defendant-possessor Bordman specifically claimed that “the district court abused its discretion by failing to disaggregate the harm caused by the 42 Case: 17-12349 Date Filed: 05/08/2019 Page: 43 of 67 initial abuse from the harm that his later possession caused.” Id. at 1058. In rejecting that claim, the Eighth Circuit reasoned that “one of the Paroline factors already accounts for disaggregation”—namely, “whether the defendant had any connection to the initial production of the images.” Id. at 1059 (quoting Paroline, 572 U.S. at 460, 134 S. Ct. at 1728). The Eighth Circuit “decline[d] to transform” this disaggregation factor “from a ‘rough guidepost’ into a ‘rigid formula.’” Id. (quoting Paroline, 572 U.S. at 460, 134 S. Ct. at 1728). The Fifth Circuit also has rejected, under plain error review, a defendant’s challenge to restitution awards that relied on psychological reports that “did not separate the losses caused by [the defendant possessor] from the losses caused by other abusers.” United States v. Halverson, 897 F.3d 645, 654-55 n.4 (5th Cir. 2018). The Fifth Circuit reasoned that nothing in Paroline clearly required victims to present a new psychological report in each case that “disaggregates a defendant’s conduct from all other possible sources of the victim’s losses.” Id. The Fifth Circuit approved the district court’s use of a restitution method which awarded each victim (1) a base $5,000 amount of restitution, plus (2) an additional sum of $1,409 for each image of the victim that the defendant possessed because the district court discussed factors that bore on the relative significance of the defendant’s conduct and the district court was not required to make findings as to all of the Paroline factors. Id. at 653-54. 43 Case: 17-12349 Date Filed: 05/08/2019 Page: 44 of 67
While not directly ruling on the initial-abuser-disaggregation issue, two other decisions of our sister circuits bear mentioning. That is because both decisions, post-Paroline, (1) emphasized the district court’s wide discretion inherent in determining the amount of restitution, (2) affirmed restitution awards under various methodologies against possessors of child pornography, and (3) refused to impose more structure beyond the Supreme Court’s multi-factored test. See United States v. Dillard, 891 F.3d 151, 160-62 (4th Cir. 2018) (noting that Paroline did not set any “evidentiary minimums” for establishing restitution, that “[p]ost-Paroline, our sister courts of appeals have approved of various methods of determining a restitution award,” and that “[d]istrict courts have great discretion in selecting an appropriate methodology”); United States v. Sainz, 827 F.3d 602, 605-07 (7th Cir. 2016) (discussing the district court’s ability to employ varying methodologies, including the 1/n method, to calculate a restitution amount under Paroline and stating that “the bottom line here is that the amount of the award is substantively reasonable”). We discuss Dillard and Sainz in detail, as they demonstrate not only how to apply the Paroline factors, but also a commonsense, practical approach to restitution for victims whose losses are caused by the continuing traffic in their child pornography images. 44 Case: 17-12349 Date Filed: 05/08/2019 Page: 45 of 67 In the Fourth Circuit’s Dillard decision, while the defendant was the initial abuser of one child victim, he also possessed images of other child victims with whom he had no contact. Dillard, 891 F.3d at 154. The district court denied all restitution to the non-contact victims because the record contained no evidence that the victims were aware Dillard had their images and no evidence connecting the non-contact victims’ harm to Dillard. Id. at 156. In reversing, the Fourth Circuit explained Paroline disavowed any such requirements. Id. at 159-60. The Fourth Circuit held the “[g]overnment satisfied its burden of causation by the uncontested evidence that Dillard’s offense conduct included the seven non-contact victims’ images” and “that these victims have outstanding losses caused by the continuing traffic in those images.” Id. at 160 (internal quotation marks omitted). As to how to calculate those non-contact victims’ losses caused by Dillard, the Fourth Circuit said the district court “‘might, as a starting point, determine the amount of the victim’s losses caused by the continuing traffic in the victim’s images’” and “‘then set an award of restitution in consideration of factors that bear on the relative causal significance of the defendant’s conduct in producing those losses.’” Id. at 160 (quoting Paroline, 572 U.S. at 460, 134 S. Ct. at 1728). The Fourth Circuit remanded for the district court to consider the Paroline factors and award at least some “non-nominal amount of restitution” for the losses of the noncontact victims whose images Dillard possessed. Id. at 161-62. Where it was 45 Case: 17-12349 Date Filed: 05/08/2019 Page: 46 of 67 “uncontested that the individuals seeking restitution were Dillard’s victims and had outstanding losses associated with the continued trade in their images, they were entitled by statute to some non-nominal amount of restitution.” Id. at 161 (citing Paroline, 572 U.S. at 458-60, 134 S. Ct. at 1727-28). Similarly, the Seventh Circuit’s decision in Sainz stresses the district court’s “considerable discretion in deciding the extent of a defendant’s restitution” who possessed child pornography. Sainz, 827 F.3d at 605. The defendant Sainz possessed six images of the victim that had circulated widely on the internet, but had no role in creating or distributing them. Id. at 604. The victim had “incurred financial losses such as future lost earnings, attorney fees, and medical and psychiatric expenses” that totaled $1.1 million. Id. at 604, 605 n.1. On appeal, the defendant Sainz did not challenge that he must pay some amount of restitution but argued that the $8,387.43 amount he was ordered to pay was “disproportionate to his relative role in causing” the victim’s losses. Id. at 604-05. Sainz also claimed “he was not a legal cause of [the victim’s] harm because hundreds or thousands of others also possessed the images, so she would have been harmed by others even if he had never possessed the images of her.” Id. at 604. Using the 1/n method advocated for by the government, the district court divided the total loss of $1.1 million by 136 because defendant Sainz was the 136th offender who was prosecuted and ordered to pay restitution. See id. at 605. By 46 Case: 17-12349 Date Filed: 05/08/2019 Page: 47 of 67 possessing and viewing the victim’s images, Sainz had re-victimized her and made her feel that the abuse was continuing. Id. at 604. In finding no legal error or abuse of discretion in the $8,387.43 restitution award, the Seventh Circuit affirmed and reasoned: (1) that the Supreme Court in Paroline “avoided rigid or mechanical rules” and left the district courts with “considerable discretion”; (2) the amount of restitution for a possessor like Sainz “should be neither ‘severe’ nor a ‘token or nominal amount’”; (3) Paroline does not require “district courts to consider in every case every factor mentioned” and the district court does “not err by not addressing every Paroline factor” 5; and (4) the Paroline factors are permissive, not mandatory and provide “rough guideposts” that “district courts might consider in determining a proper amount of restitution.” Id. at 605-07 (internal quotation marks omitted). The Seventh Circuit recognized that the 1/n method is not appropriate for all cases because, when n is “very small or very large, a more nuanced method may be required.” Id. at 607. The Seventh Circuit concluded, however, that the application of the 1/n method to Sainz’s case “resulted in a reasonable restitution order of $8,400 for an offender who possessed six images of the victim and indisputably contributed to her harm.” Id. 5 The Seventh Circuit explained some of the Paroline factors refer to information that may not be “reliably known,” such as “the number of offenders likely to be convicted in the future or the broader numbers of offenders who were involved but are unlikely to be caught.” Sainz, 827 F.3d at 607. The Seventh Circuit stated that “the Supreme Court made clear in Paroline that the difficulty of coming up with reasonable estimates for an indeterminate number of other offenders should not be a barrier to all compensation for victims of child pornography.” Id. 47 Case: 17-12349 Date Filed: 05/08/2019 Page: 48 of 67 We acknowledge that the defendant Sainz did not ask the court to disaggregate the losses from the initial abuser. Nonetheless, the Seventh Circuit’s decision is instructive because it emphasizes that (1) the district court has “considerable discretion,” (2) the court’s method of restitution calculation can vary from case to case depending on the facts, and (3) “the bottom line” is that the district court’s award of $8,387.43 was “substantively reasonable” for the defendant possessor Sainz, even though there were hundreds of other possessors of the same victim’s images. See id. at 604-607.
In contrast to these decisions, the Ninth and Tenth Circuits have determined that district courts must engage in some level of disaggregation as to the harms caused by the original abuse versus the harms caused by later distributors and possessors before awarding restitution against a particular possessor of child pornography. See United States v. Galan, 804 F.3d 1287 (9th Cir. 2015); United States v. Dunn, 777 F.3d 1171 (10th Cir. 2015). But even those post-Paroline decisions are nuanced and do not adopt a rigid, mathematical rule in that regard. Furthermore, the facts of the Tenth Circuit’s Dunn case are important to understand what the Tenth Circuit did or did not conclude in that case. In Dunn, one victim sought restitution of $583,955, which represented her total losses minus the amount of restitution already received from other defendants. 48 Case: 17-12349 Date Filed: 05/08/2019 Page: 49 of 67 See Dunn, 777 F.3d at 1174, 1179. Because Dunn was a distributor of the images, the district court determined that “he should be held jointly and severally liable for the entirety of [the victim’s] injuries.” Id. at 1179. The victim’s total losses were $1,330,015, and the district court held Dunn responsible for $583,955 of those total losses as the amount not yet paid. See id. at 1181. In reversing, the Tenth Circuit emphasized that the district court held the defendant Dunn liable for all of the victim’s unpaid losses, including those caused by the initial abuser, and erred by not assessing Dunn’s individual relative role in the causal process underlying the victim’s losses. See id. at 1181. The Tenth Circuit concluded: “[T]o the extent that the district court relied on an expert report that did not disaggregate [the harms caused by the original abuser], the district court’s adoption of $1.3 million as the total measure of damages cannot stand.” Id. at 1182.6 The disaggregation conclusion in Dunn must be read in the factual context of a reversal of a district court’s ruling that a defendant was jointly and 6 Though it has not addressed whether district courts must disaggregate, the First Circuit has held that a district court order comported with Paroline’s framework where it “excluded past costs and based its award on an estimate of [the victim’s] future therapy costs, occasioned by defendant’s conduct.” United States v. Rogers, 758 F.3d 37, 39 (1st Cir. 2014). The district court also “limited the losses to general losses from ‘continuing’ traffic” in the victim’s images and “distinguished the future therapy losses attributable to defendant from the harm resulting from other viewers and from [the victim’s] therapy needs relating to [the original abuser].” Id. The First Circuit commented that the district court’s $3,150 restitution award “represent[ed] the cost of 18 therapy visits,” but the district court “noted that 50 visits would also have been a reasonable conclusion.” Id. The mere fact that this type of formal disaggregation is permissible under Paroline, however, does not mean that it is required. 49 Case: 17-12349 Date Filed: 05/08/2019 Page: 50 of 67 severally liable with all other defendants, including the abuser, for the entirety of the victim’s $1,330,015 total losses, minus only what other defendants had already paid. We read Dunn as requiring disaggregation in that case because the defendant was held jointly and severally liable with the abuser for the entirety of the losses; we do not read Dunn as requiring disaggregation in each and every restitution case. Unlike Dunn’s recounting of the restitution facts, the Ninth Circuit’s decision in Galan does not indicate the amounts of the victim’s losses or even the restitution award at issue. Galan, 804 F.3d at 1288. Rather, Galan recounts only these two facts: (1) the defendant Galan was not the victim’s original abuser, who “made images of his disgusting crimes against [the victim] over an extended period” of time; and (2) that abuse ended about 11 years before Galan possessed the images. See id. In reversing, the Ninth Circuit went much further than the Tenth. The Ninth Circuit held “that in calculating the amount of restitution to be imposed upon a defendant who was convicted of distribution or possession of child pornography, the losses, including ongoing losses, caused by the original abuse of the victim should be disaggregated from the losses caused by the ongoing distribution and possession of images of that original abuse, to the extent possible.” Id. at 1291. The Ninth Circuit concluded “that Galan should not be required to pay for losses caused by the original abuser’s actions.” Id. at 1290. The Ninth Circuit 50 Case: 17-12349 Date Filed: 05/08/2019 Page: 51 of 67 determined, in effect, that some type of calculation should be made between original abusers on the one hand and the distributors and possessors on the other. See id. at 1288, 1290. Importantly, however, the Ninth Circuit cautioned that it “express[ed] no opinion about what portion of the victim’s ongoing loss should be attributable to an original abuser.” Id. at 1291. It also did not instruct how the disaggregation calculation should be done, and it even added that “[i]f the ultimate apportionment is not scientifically precise, we can only say that precision is neither expected nor required.” Id.
After careful review of Paroline, we conclude that a district court is not required to determine, calculate, or disaggregate the specific amount of loss caused by the original abuser-creator or distributor of child pornography before it can decide the amount of the victim’s losses caused by the later defendant who possesses and views the images. Paroline requires no such disaggregation. Certainly, Paroline directed district courts to hold a defendant accountable only for his own individual conduct and set a restitution “amount that comports with the defendant’s relative role” in causing the victim’s general losses. See Paroline, 572 U.S. at 454-55, 458-59, 134 S. Ct. at 1725, 1727. How a district court arrives at that figure is largely up to the district court, so long as the number is a “reasonable 51 Case: 17-12349 Date Filed: 05/08/2019 Page: 52 of 67 and circumscribed award” that is “suited to the relative size” of the defendant’s causal role in the entire chain of events that caused the victim’s loss. Id. at 459, 134 S. Ct. at 1727. In arriving at that figure, Paroline does require some consideration by the district court of whether the defendant possessor was also an abuser-creator or a distributor. See id. Indeed, that is why Paroline includes among its list of relevant factors “whether the defendant had any connection to the initial production of the images,” and “whether the defendant reproduced or distributed images of the victim.” Id. at 460, 134 S. Ct. at 1728. But those factors do not require that the district court make fact findings about the amount of losses caused by different groups of offenders. To be clear, the district court should ensure that its restitution order relates only to the amount of harm and loss caused by the defendant possessor. But Paroline also repeatedly stresses the flexibility and broad discretion district courts have in arriving at such a reasonable restitution amount. See, e.g., id. at 459, 134 S. Ct. at 1727-28 (“[A] court must assess as best it can from available evidence the significance of the individual defendant’s conduct in light of the broader causal process that produced the victim’s losses. This cannot be a precise mathematical inquiry and involves the use of discretion and sound judgment.”); id. at 459-60, 134 S. Ct. at 1728 (“[I]t is neither necessary nor appropriate to prescribe a precise 52 Case: 17-12349 Date Filed: 05/08/2019 Page: 53 of 67 algorithm for determining the proper restitution amount at this point in the law’s development. Doing so would unduly constrain the decisionmakers closest to the facts of any given case.”); id. at 460, 134 S. Ct. at 1728 (“These factors need not be converted into a rigid formula . . . . They should rather serve as rough guideposts for determining an amount that fits the offense.”); id. at 462, 134 S. Ct. at 1729 (stating, “the approach articulated above involves discretion and estimation,” and “courts can only do their best to apply the statute as written in a workable manner”). Like the Eighth Circuit, we think it would be inconsistent with Paroline’s flexible, discretionary framework to require district courts to perform an initial, formal step of calculating and then separately assigning a total loss amount to the initial abuser, then one to the distributors and possessors generally, and only then one to the particular defendant possessor. Rather, even if a victim’s total loss estimate includes losses caused both by the original abuser-creator, the distributors, and other possessors, the district court need only indicate in some manner that it has considered that the instant defendant is a possessor, and not the initial abuser or a distributor, and has assigned restitution based solely on the defendant possessor’s particular conduct and relative role in causing those losses. See id. at 458-62, 134 S. Ct. at 1727-29. 53 Case: 17-12349 Date Filed: 05/08/2019 Page: 54 of 67 Here, the district court did exactly that. In its restitution order, the district court explicitly found up front that “there is no evidence with respect to any victim that [Rothenberg] reproduced or distributed images of the victim or that he had [a] connection to the initial production of the images.” The district court expressly stated that it had “taken these factors into consideration in assigning [Rothenberg] a relative role as the proximate cause of these victims’ losses.” And in setting each individual award, the district court reiterated that Rothenberg “neither created nor distributed” the victim’s image. Under Paroline, that is enough. We therefore reject Rothenberg’s disaggregation argument. Before concluding, we recognize that the Supreme Court in Paroline did note in dicta that “[c]omplications may arise in disaggregating losses sustained as a result of the initial physical abuse, but those questions may be set aside for present purposes.” Id. at 449, 134 S. Ct. at 1722. We do not read this dicta, which is contained in a parenthetical, as requiring in any way that the district courts in possessor cases take on the job of determining the harm and loss caused by the initial abuser or the distributors. 7 Rather, the district court’s job is to determine the 7 We acknowledge that the Ninth Circuit concluded that the set-aside statement in this parenthetical meant the Supreme Court “plainly perceived a need for separation” of losses from the initial abuser and the later possessor defendants. Galan, 804 F.3d at 1290. However, we read the dicta in this parenthetical sentence not in isolation, but in the context surrounding it, which to us signals that in possessor cases a court is not required to delve into the special losses caused by the original abuser. Rather, in possessor cases, the court is examining only the general losses caused by the continuing traffic in the pornographic images and awarding restitution that 54 Case: 17-12349 Date Filed: 05/08/2019 Page: 55 of 67 defendant possessor’s causal role in the general losses caused by his participation in the ongoing traffic in the victim’s images. We likewise reject Rothenberg’s argument that the district court erred in creating restitution disparities between himself and other possessors by “impos[ing] restitution in amounts substantially above the average [for other possessors] without providing any explanation at all.” We recognize that the Supreme Court in Paroline listed as a factor “the number of past criminal defendants found to have contributed to the victim’s general losses” and noted that the government “could also inform district courts of restitution sought and ordered in other cases.” See id. at 460, 462, 134 S. Ct. at 1728-29. However, the Supreme Court did not require district courts to dive into the facts of every past order and position their restitution findings in relation to those of other courts. See id. The district court is not required to say why it did not follow or disagreed with restitution orders as to the same victim imposed by other courts. Paroline requires no such fact findings or analysis. Rather, the number of past criminal defendants and their restitution amounts, even as to the same victim, are just one of many comports with the defendant possessor’s relative role as a possessor. In our view, nothing in Paroline requires disaggregation, and everything in Paroline suggests otherwise. 55 Case: 17-12349 Date Filed: 05/08/2019 Page: 56 of 67 factors the district court considers generally without having to make mathematical calculations. 8 See id.