Opinion ID: 606347
Heading Depth: 2
Heading Rank: 1

Heading: Whether The District Court Erred By Excluding Evidence

Text: 11 That No Mail Or Wire Fraud Occurred Because 12 American Was Not Deprived Of Any Of Its Property
13 Although a district court's construction of the Federal Rules of Evidence is a question of law subject to de novo review, United States v. Cuozzo, 962 F.2d 945, 947 (9th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 475, 121 L.Ed.2d 381 (1992), we examine its rulings on the admissibility of evidence involving factual determinations for an abuse of discretion. United States v. Wood, 943 F.2d 1048, 1055 n. 9 (9th Cir.1991). We apply the same abuse of discretion standard when reviewing a district court's decision to exclude evidence based on an improper defense. United States v. Slaughter, 891 F.2d 691, 696 (9th Cir.1989) (citing United States v. Cottier, 759 F.2d 760, 763 (9th Cir.1985)), appeal after remand, 956 F.2d 276 (9th Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 3053, 120 L.Ed.2d 919 (1992).
14 The first--and principal--argument raised by all three appellants is that they did not commit mail or wire fraud because they did not deprive American of anything of value. Boiled to its essence, their contention is that credit for miles flown on an airline is the property of the passenger who does the flying, and a passenger who elects not to become a member of an airline's frequent flyer program constructively abandons his property, i.e., his mileage credit, to anyone else who wants it. Since deprivation of property is an essential element of both mail fraud and wire fraud, see 18 U.S.C. §§ 1341, 1343, and the appellants' actions did not deprive American of any of its property, the appellants could not have been guilty of either of those offenses. Accordingly, the district court erred by excluding evidence showing that American not only placed little or no value on those mileage credits, but actually viewed them as a liability. 15 This argument was rejected by the Tenth Circuit in a case nearly on all fours with the instant appeals. In United States v. Schreier, 908 F.2d 645 (10th Cir.1990), cert. denied, 498 U.S. 1069, 111 S.Ct. 787, 112 L.Ed.2d 850 (1991), the court held that: 16 The Schreiers' scheme involved the accumulation of mileage for which American would not otherwise be liable because it was not claimed by the passengers who actually flew. When liability is created on American's books, through a transfer of mileage from nonmember passengers to members, the victim is American, because that corporation thereby owes a liability that otherwise would not exist. By their device of replacing nonmember passengers' names in the computer with a fictional name and account number, the Schreiers have victimized American, by fraud, and through use of computer access, wire fraud. The wire fraud here is not essentially different from that in United States v. Giovengo, 637 F.2d 941 (3d Cir.1980), where airline ticket agents used their access to computer generated tickets to collect from cash paying customers, pocket the money, returning to the airline as void the tickets the customers bought. 17 908 F.2d at 647. 18 Similarly, in United States v. Loney, 959 F.2d 1332 (5th Cir.1992), the Fifth Circuit upheld the wire fraud conviction of a travel agent who conspired to deprive American of award coupons, redeemable for free airline tickets, by adding bogus mileage to legitimate AAdvantage accounts. In an excellent discussion of the relevant background law, including many of the cases cited by the appellants in the instant appeals, 4 the court in Loney ruled that frequent flyer award coupons, being something of value because they could be used to obtain free airline tickets, were obviously property for purposes of the federal wire fraud statute. Id. at 1336. 19 Citing our decision in Transworld Airlines, Inc. v. American Coupon Exch., Inc., 913 F.2d 676 (9th Cir.1990) (TWA), the appellants counter by arguing that, because frequent flyer award coupons represent contractual rights and not property rights per se, credit for miles flown on an airline cannot be the property of the airline. The appellants' reliance on TWA is misplaced. We explicitly noted in that case that airline tickets could be construed as property when they are deemed to be things of value. 913 F.2d at 688. Accord United States v. Loney, 959 F.2d at 1336 (citing TWA and distinguishing property rights from contract rights in the context of the public policy against restraints on alienation of property). 20 In the instant cases the appellants obtained things of value, viz., credit for miles flown by others and mileage coupons that were convertible to free airline tickets, see Loney, 959 F.2d at 1336, and did so by misusing confidential information provided by American. See United States v. Schreier, 908 F.2d at 647. Cf. United States v. Bruchhausen, 977 F.2d 464, 467-68 (9th Cir.1992) (distinguishing a manufacturer's property interest in confidential information from any interest the manufacturer might have in a product's ultimate destination). Because the appellants' conduct resulted in the fraudulent deprivation of things of value which resulted in the imposition of liabilities on American that American would not otherwise have borne, the district court did not err by excluding evidence concerning the purported non-property status of frequent flyer mileage. 5 21