Court Opinion

ID: 7011301
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:07:07.516968+00
Date Added: 2024-06-11T16:10:14.058538
License: Public Domain

JON O. NEWMAN, Circuit Judge,
concurring:
I concur in the Court’s judgment and in substantially all of Judge Parker’s opinion, but believe that additional views are warranted on two aspects of the sentencing issue in this case: (1) whether the District *196Court erred in “grouping” the mail fraud and tax fraud offenses pursuant to subsection (c) instead of subsection (d) of section 3D1.2 of the Sentencing Guidelines, and (2) if so, whether that sentencing error is subject to review under “plain error” standards.
1. The “Grouping” Error
The District Court placed Gordon’s mail fraud and tax fraud offenses in one group, pursuant to subsection (c) of section 3D1.2, resulting in assigning to that group the offense level of the fraud offenses. See U.S.S.G. § 3D1.3(a). This Court concludes that the mail fraud and tax fraud offenses should have been grouped pursuant to subsection (d) of section 3D1.2, resulting in a slightly higher offense level based on the level corresponding to the aggregate of the dollar losses from both the tax fraud and the mail fraud.1 See id. § 3D1.3(b). The issue as to which grouping subdivision applies is more complicated than the Court acknowledges; indeed, it is debatable whether any grouping is appropriate.
Subsection (c) governs “[w]hen one of the counts embodies conduct that is treated as a specific offense characteristic in, or other adjustment to, the guideline.applicable to another of the counts.” Id. § 3D1.2(c). The District Court understandably thought subsection (c) applied because mail fraud appears to be a specific offense characteristic of tax fraud: when the source of unreported income exceeding $10,000 is criminal activity, the offense level for the tax offense is increased two levels. See id. § 2T1.1(b)(1); United States v. Haltom, 113 F.3d 43 (5th Cir.1997). The Court’s opinion never tells the District Judge why the seemingly applicable wording of subsection (c) does not apply to Gordon’s offenses.
The Government offers two reasons why subsection (c) is inapplicable. First, it contends that subsection (c) does not literally apply because the conduct that resulted in enhancement of the tax offense level was the failure to report income from the fraud, not the fraudulent conduct itself. Second, it relies on language in Application Note 5 to section 3D1.2, in which the Commission explains that offenses are to be grouped under subsection (c) “only if the offenses are closely related.” The Government argues that the mail and tax fraud offenses are at best “inter-related,” but not “closely related,” and therefore subsection (c) is not applicable. See Brief for Cross Appellant at 332. The first argument seems strained, and the second argument, if valid, would defeat application of subsection (d) as well. After all, all four subsections of section 3D1.2 are contained in a section captioned “Groups of Closely Related Counts.” Obviously, the Commission thinks that counts groupable under subsection (c) and those groupable under subsection (d) are “closely related.”
The Court’s opinion opts for subsection (d) because the mail fraud and tax fraud offenses both involve money, a,nd subsection (d) applies to offenses, otherwise grou-pable, where the offense level is determined by aggregating loss or harm, such as with money and drugs. But the fact that both offenses involve money tells us, at most, that subsection (d) is available to be applied; it does not tell us why subsection (c), the text of which appears to apply, is not also available to be applied.
The Court’s opinion supports its application of subsection (d) on the normally conclusive ground of relevant precedent: in *197two prior decisions this Court has used that subsection to group mail fraud and tax fraud offenses. See United States v. Petrillo, 237 F.3d 119, 125 (2d Cir.2000); United States v. Fitzgerald, 232 F.3d 315, 320 (2d Cir.2000). What the Court’s opinion does not discuss, however, is that neither Petrillo nor Fitzgerald considered the possibility that subsection (c) might apply (the sentencing judges had not grouped at all), and, more important, that the reason we deemed subsection (d) applicable was that the loss tables for mail fraud and tax fraud, in force at the time of the offenses punished in those cases, were “substantially identical.” See Petrillo, 237 F.3d at 125 (“[B]oth tax evasion and mail fraud follow offense level schedules that trigger substantially identical offense level increments based on the amount of loss.”); Fitzgerald, 232 F.3d at 320 (“[Fraud and tax] offenses have tables that increase at the same rate and use the same monetary division points”) The substantially identical nature of the two loss tables persuaded our Court that the offenses were “of the same general type,” id. (quoting U.S.S.G. § 3D1.2 comment, (n.6)). However, Gordon is being sentenced in 2000, and the loss tables for mail and tax fraud in the 2000 Guidelines Manual are not the same. At every loss amount over $3,000, the tax loss table provides an offense level higher than the level in the fraud loss table. See U.S.S.G. § 2T4.1 (2000) (tax loss table); id. § 2F1.1(b)(1) (fraud loss table); id. App. C, amend. 491 (1993 amendment revising tax loss table). Whether Petrillo and Fitzgerald would have decided to use subsection (d) if the 2000 Guidelines Manual had been in force is not clear.
I note that in the 2001 Guidelines Manual the Commission has revised the tax and fraud loss tables once again and now makes them more congruent than they were in 2000. The tables are now identical for losses above $120,000; below that dollar level, the tax loss table yields offense levels that are the same or slightly more severe than the levels from the fraud loss table for the same amount. See U.S.S.G. § 2T4.1 (2001) (tax loss table); id. § 2B1.1(b)(1) (combined larceny and fraud loss table); id. App. C Supp., amend. 617 (2001 amendment revising tax and fraud loss tables).
If we were to distinguish Fitzgerald and Petrillo on the ground that their reasoning depended on the substantial identity of the tax and fraud loss tables in 1993, there would be a plausible argument that mail fraud and tax fraud offenses should now not be grouped at all, as the Government unsuccessfully argued in the pending case in the District Court. The argument starts with our decision in United States v. Napoli, 179 F.3d 1 (2d Cir.1999), in which we refused to group money laundering and the underlying offense because the victims were different. See also United States v. McCarthy, 271 F.3d 387, 400-01 (2d Cir.2001). It is true that the Commission has rejected Napoli and elected to have money laundering and underlying offenses grouped, see U.S.S.GApp. C Supp., amend. 634, but the Commission took that step only after significantly increasing the offense levels for money laundering. See U.S.S.G. § 281.1(a) (2001); id. App. C Supp., amend. 634, at 233-36 (reasons for amendment). Since the Commission has not made a similar increase in the tax loss table, there is a considerable basis for following the reasoning of Napoli, recognizing that tax fraud and mail fraud harm different interests, and leaving these offenses ungrouped. See, e.g., Weinberger v. United States, 268 F.3d 346, 354-55 (6th Cir.2001); United States v. Lindsay, 184 F.3d 1138, 1142-43 (10th Cir.1999); United States v. Vitale, 159 F.3d 810, 815 (3d Cir.1998).
*198Ultimately, the Commission needs to cut through this morass and tell us in plain English whether it wants tax offenses grouped with the offenses that produced the income on which the taxes were evaded. Money derived from criminal offenses is frequently unreported to tax authorities, and tax and fraud offenses are frequently charged together. In dealing with this recurring issue, the Commission can either opt for no grouping, grouping under subsection (c), or grouping under subsection (d). The Commission once proposed an amendment that would explicitly have provided for grouping tax and fraud offenses under subsection (c), see Notice of Proposed Amendments to the Sentencing Guidelines for United States Courts, 66 Fed.Reg. 7962-01, 8003 (proposed Jan. 26, 2001), but did not promulgate the amendment. The Commission staff has informally advised that grouping should occur pursuant to subsection (c), see United States Sentencing Commission, Most Frequently Asked Questions About the Sentencing Guidelines No. 45* at 14 (7th ed. June 1, 1994), but has also advised that informal staff advice is not authoritative, see id. Until the Commission makes its position clear, I agree with the Court’s opinion that we should continue to follow Fitzgerald and Petrillo, despite the arguable basis for distinguishing them, and group mail fraud and tax fraud offenses under subsection (d).
2. Plain Error Review
The Court’s opinion concludes that the District Court’s application of subsection (c) is not only error but plain error of the sort we may notice under Fed.R.Crim.P. 52(b) in the absence of specific objection by the Government in the District Court. The initial issue is" whether the Government’s position at sentencing adequately raised the grouping issue.
Adequacy of the Government’s objection at trial. The Government made clear to the District Court its view concerning grouping: it believed that the mail fraud and tax fraud offenses should not be grouped at all. There is a substantial argument that this position should be sufficient to preserve for review the Government’s fail-back position, now asserted on its cross-appeal, that if grouping is to occur, it should occur under subsection (d), not subsection (c). In prior cases, we have been rather indulgent in permitting a sentencing objection to comprehend related points not explicitly articulated to the sentencing judge. See United States v. Sprei, 145 F.3d 528, 533 (2d Cir.1998) (Government objection at trial that “family circumstances” departure was not legally permissible sufficient to permit claim on appeal that evidence to support departure was speculative); United States v. Shumard, 120 F.3d 339, 340 & n. 1 (2d Cir. 1997) (Government request that sentencing judge “consider” two-level adjustment for defrauding more than one victim sufficient to permit particularized claim on appeal that number of victims had been improperly counted by disregarding relevant conduct); United States v. Rodriguez-Gonzalez, 899 F.2d 177, 180 (2d Cir.1990) (defendant’s objection at trial to appropriateness of sentence enhancement sufficient to permit claim on appeal that enhancement was unlawful on double jeopardy and due process grounds). In the pending case, however, the Court rules that the Government’s objection to any grouping was insufficient to challenge grouping under subsection (c) of section 3D1.2 and faults the Government for its “failure to consider all available grouping provisions as possible alternative mechanisms.” 291 F.3d at 191. I doubt if district judges will welcome the suggestion in the Court’s opinion that the Government in this case should have taken the sentencing judge’s *199time to canvass all the possible grouping alternatives in order to preserve a fallback position for appeal.
Having ruled that the Government has insufficiently preserved its objection to the sentencing judge’s erroneous method of grouping, the Court’s opinion proceeds to consider whether the error may be reviewed as plain error under Fed.R.Crim.P. 52(b). That issue comprehends two matters: whether sentencing errors are subject to Rule 52(b) plain error standards, and, if so, whether those standards should be applied to sentencing errors as rigorously as the standards are applied to trial errors.
Application of Rule 52(b) to sentencing errors. Although we have stated that the plain error standards of Rule 52(b) apply to sentencing errors, see United States v. Keppler, 2 F.3d 21, 23 (2d Cir.1993), and have acted on that premise, see United States v. Thomas, 274 F.3d 655, 666-72 (2d Cir.2001) (in banc); United States v. Martinez-Rios, 143 F.3d 662, 675-76 (2d Cir.1998), there is a substantial argument that these standards should have no application to such errors. Rule 52(b) was adopted at a time when sentences could not be appealed, and the focus of the rule-makers was on errors occurring at trial. As the Supreme Court long ago observed, “It is a familiar rule, that a thing may be within the letter of the statute and yet not within the statute, because not within its spirit, nor within the intention of its makers.” Church of the Holy Trinity v. United States, 143 U.S. 457, 459, 12 S.Ct. 511, 36 L.Ed. 226 (1892). Moreover, the Supreme Court’s elaboration of the plain error standards of Rule 52(b) has occurred in the context of trial errors. See Johnson v. United States, 520 U.S. 461, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997); United States v. Olano, 507 U.S. 725, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993).2
Before the widespread availability of sentencing appeals, inaugurated by the Sentencing Reform Act of 1984, see 18 U.S.C. § 3742, sentences that were unlawful under applicable law could be corrected under the pre-1984 version of Rule 35(a) of the Federal Rules of Criminal Procedure, see United States v. Morgan, 346 U.S. 502, 506, 74 S.Ct. 247, 98 L.Ed. 248 (1954) (“Sentences subject to correction under [Rule 35] are those that the judgment of conviction did not authorize.”); United States v. Huss, 520 F.2d 598, 602 (2d Cir.1975) (“An illegal sentence for purposes of Rule 35 is one in excess of a statutory provision or otherwise contrary to the applicable statute.”). Under that regime, claims of illegality with respect to a sentence were entertained under Rule 35 without consideration of whether the sentencing error met the plain error standards of Rule 52(b). See, e.g., United States v. Golay, 560 F.2d 866, 870-71 (8th Cir.1977) (granting relief); United States v. Sternman, 433 F.2d 913, 914 (6th Cir.1970) (denying relief). In Golay, the Eighth Circuit rejected the Government’s *200contention that the sentencing error should not be corrected because it had not been raised on direct appeal from the conviction. See Golay, 560 F.2d at 870. In Natarelli v. United States, 516 F.2d 149 (2d Cir.1975), we noted that a sentencing error that had not been raised in the trial court or on direct appeal could be corrected under Rule 35. Id. at 152 n. 4. There was no suggestion that the error had to meet plain error standards. I doubt if Congress, in authorizing sentencing errors to be corrected by sentencing appeals in lieu of the prior practice under Rule 35, intended to permit correction of unlawful sentences only when the plain error standards of Rule 52(b) could be met.
It is also significant that we have corrected sentencing errors under 28 U.S.C. § 2255 that could have been raised on direct appeal, see Natarelli, 516 F.2d at 152 n. 4; Gorman v. United States, 456 F.2d 1258, 1259 (2d Cir.1972), which we would not normally have done if a trial error had been involved, see Natarelli, 516 F.2d at 152 n. 4 (“[H]ere, as in Gorman, the claim goes to the illegality of the sentence itself, and not to trial errors tainting the underlying conviction.”). Thus, before the era of sentencing appeals, we generally recognized that the standards applicable to correction of trial errors did not apply to sentencing errors. At least where a sentencing error involves only an issue of law, as is normally the case, the error should be correctable without regard to the standards of Rule 52(b).
Rigor of Rule 52(b) standards as applied to sentencing errors. If the plain error standards of Rule 52(b) are to be applied to the correction of sentencing errors, we should use a less rigorous version of those standards, as we have done in numerous eases. See, e.g., United States v. Sofsky, 287 F.3d 122, 125 (2d Cir.2002) (correcting sentencing error under “relaxed]” plain error standards); United States v. Pico, 966 F.2d 91, 92 (2d Cir.1992) (correcting sentencing error with conclusory compliance with plain error standards); United States v. Alba, 933 F.2d 1117, 1120 (2d Cir.1991) (same). Indeed, we have repeatedly stated that a sentence imposed in violation of law is plain error, a conclusion reached without applying the four-component plain error standards relevant to trial errors. See United States v. Merced, 263 F.3d 34, 36 (2d Cir.2001); United States v. A-Abras Inc., 185 F.3d 26, 30 (2d Cir.1999); United States v. Kinlock, 174 F.3d 297, 299 (2d Cir.1999); United States v. Abrar, 58 F.3d 43, 47 (2d Cir.1995); United States v. Eng, 14 F.3d 165, 172 n. 5 (2d Cir.1994).
There are several reasons for applying plain error standards less rigorously to sentencing errors than to trial errors. First, as we have previously observed, noticing unobjected to errors that occur at trial precipitates an entire new trial that could have been avoided by a timely objection, whereas correcting a sentencing error results in, at most, only a remand for resentencing. See Sofsky, 287 F.3d at 125; United States v. Leung, 40 F.3d 577, 586 n. 2 (2d Cir.1994); United States v. Baez, 944 F.2d 88, 90 n. 1 (2d Cir.1991). Second, a sentencing error is normally prejudicial, and, where the sentence is unlawfully too high, the prejudice to a defendant is extremely serious. Third, there is no interest to be served by applying to sentencing errors the same plain error standards applicable to trial errors.
Even if some version of plain error review needs to be invoked to consider the sentencing error in this case, surely it should be the less rigorous version we have invoked in other sentencing cases, both for the benefit of the Government, see Alba, 933 F.2d at 1120, and defendants, see *201Sofsky, 287 F.3d at 125; Pico, 966 F.2d at 92.
Instead, the Court’s opinion asserts that rigorous plain error standards are applicable, and then concludes that the standards of such review are met. In view of the extended discussion the Court’s opinion has undertaken to show why grouping under subsection (c) was error, a discussion to which I have felt obliged to add further amplification, I do not see how it can be said that the District Judge’s error in applying subsection (c) met the plain error standard of “clear” or “obvious.” See Olano, 507 U.S. at 734, 113 S.Ct. 1770. Moreover, the Supreme Court has instructed that we are to use our discretion to correct plain errors only if the error “seriously affect[s] the fairness, integrity or public reputation of judicial proceedings.” Id. at 732, 113 S.Ct. 1770 (alteration in original). I find it difficult to accept the idea that the public reputation of judicial proceedings will be impaired in the slightest if Gordon’s already substantial sentence of eight years for an economic crime is not increased by eleven more months (or even by the twenty-four months that the Government’s questionable calculation would impose). Indeed, some might think that Gordon’s offense — selling listings in a Who’s Who directory that was not limited, as claimed, to carefully selected, prestigious individuals — is sufficiently outside the heartland of fraud offenses, such as selling worthless stock or fake health remedies, to warrant a downward departure.
Despite its use of the language of the “full rigor” plain error review, 291 F.3d at 191, I think the majority’s opinion in substance and effect has applied a relaxed version of plain error standards to the District Court’s grouping error. Because I agree that, if Rule 52(b) applies at all to sentencing errors, this is the appropriate approach in most sentencing appeals, and surely in this case, I concur in the Court’s decision to notice the error and correct it.

. The increase is probably one level, which would increase the sentencing range of 97-121 months to 108-135 months, and possibly two levels, in which event the sentencing range would increase to 121-151 months. See 291 F.3d at 184, n. 3.

. The Supreme Court has recently decided that plain error analysis applies to the unob-jected to omission from an indictment of a fact that enhances a sentence above a statutory maximum. United States v. Cotton, — U.S. -, 122 S.Ct. 1781, 1784, 152 L.Ed.2d 860 (2002). Although that decision applied plain error analysis to an Apprendi error, see Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000), the Court had no occasion to consider whether plain error analysis applies to the sort of sentencing error in the pending appeal — an error in application of the Sentencing Guidelines. Even though an unobjected to Apprendi error in omitting drug quantity from an indictment need not result in resentencing when proof of the quantity was overwhelming, as in Cotton, there is no reason to insist on the rigorous standards of plain error analysis before correcting a Guidelines application error that can readily be corrected upon resentencing.