Court Opinion

ID: 3158518
Source: CourtListenerOpinion
Date Created: 2015-11-27 18:01:02.808393+00
Date Added: 2024-06-11T11:57:06.407655
License: Public Domain

FILED
                                                                   United States Court of Appeals
                                       PUBLISH                             Tenth Circuit

                      UNITED STATES COURT OF APPEALS                   November 27, 2015

                                                                       Elisabeth A. Shumaker
                                  TENTH CIRCUIT                            Clerk of Court

 UNITED STATES OF AMERICA,

        Plaintiff - Appellee,

 v.                                                         No. 15-1107

 BLAKE DOUGLAS SNOWDEN,

       Defendant - Appellant.

           APPEAL FROM THE UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF COLORADO
                     (D.C. No. 1:13-CR-00476-CMA-1)

O. Dean Sanderford, Assistant Federal Public Defender (Virginia L. Grady, Federal
Public Defender, with him on the briefs), Denver, Colorado, for Defendant - Appellant.

Paul Farley, Assistant United States Attorney (John F. Walsh, United States Attorney,
with him on the brief), Denver, Colorado, for Plaintiff – Appellee.

Before TYMKOVICH, Chief Judge, HARTZ, and BALDOCK, Circuit Judges.

HARTZ, Circuit Judge.

I.    INTRODUCTION

      Defendant Blake Snowden pleaded guilty to unlawfully obtaining information

from a protected computer, see 18 U.S.C. § 1030(a)(2)(C), and to intercepting emails, see
id. § 2511(1)(a). In calculating his offense level under the sentencing guidelines, the

district court applied a 16-level enhancement after finding that these crimes caused losses

exceeding a million dollars. The resulting guideline sentencing range was 41–51 months’

imprisonment. Varying downward, the court imposed a 30-month sentence.

       Defendant argues that the district court erred in calculating loss and thereby

arrived at an unduly high guideline sentencing range. We discuss the court’s calculation

but ultimately hold that if there was any error, it was harmless because it did not affect

the sentence. The court, after thoroughly exploring the matter, explained why the

sentence was proper under 18 U.S.C. § 3553 and unequivocally stated that it would

impose the same sentence even if 30 months exceeded the correct guideline range. On

one ground, however, we must reverse. The district court ordered restitution in the

amount of $25,354. Both parties agree that this was an oversight that should be corrected

on remand to $24,174.

II.    BACKGROUND

       Onyx, M.D., Inc. is a physician-staffing service that specializes in locum tenens

recruiting, placing physicians in hospitals and clinics for short terms. To respond quickly

to requests from hospitals, Onyx relies heavily on data it maintains on individual

physicians, such as one’s area of practice and willingness to work in a particular location.

Onyx’s sales team develops relationships with physicians to gather this type of

information.

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          Onyx enters all such information into a software platform called Bullhorn.

“Bullhorn is a single repository for all of Onyx’s sales-related communications and

information, and it contains a cumulative record of all sales and customer relations data

from the beginning of Onyx in 2005 to the present.” R., Vol. 6 at 12. Sales associates

have “pretty much lived and breathed within [Bullhorn].” Id., Vol. 5 at 45. Onyx sees its

Bullhorn database as a competitive advantage. It has never sought to market its data to

others.

          Defendant worked as an Onyx sales associate until it terminated his employment

in August 2010. He then decided to compete with Onyx in physician placement, in large

part by stealing Onyx’s proprietary data. In March 2011 an Onyx employee gave

Defendant an executive’s password, which Defendant used to set up a Bullhorn account.

Over the next few months Defendant logged in dozens of times, copying gigabytes of

data. He was also able to intercept the emails of four Onyx executives. Every time they

sent or received an email, a copy would be sent to Defendant. Almost 20,000 messages

were forwarded. Defendant’s repeated and unfettered access to Bullhorn went undetected

for six months. Onyx eventually noticed the hack, which the FBI traced to a computer at

Defendant’s address.

          Defendant told an Onyx competitor that he was “going to go after” Onyx,

including by targeting its largest client. Id. at 38 (internal quotation marks omitted). But

his actions did not produce their intended results. They were completely ineffectual,

neither benefiting him nor harming Onyx’s business. At Defendant’s sentencing hearing
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Onyx’s vice president of software development acknowledged that he could not “point to

any single doctor of the entire universe of doctors in Bullhorn . . . that [Defendant] placed

in a position after he left [Onyx].” Id., Vol. 5 at 84–85. The only impact on Onyx’s

bottom line was its loss of about $25,000 in legal fees and employee time incurred in

response to the intrusion.

       Under the applicable sentencing guideline, Defendant’s base offense level was 6,

see USSG § 2B1.1(a)(2) (theft offenses), subject to increase based on the amount of loss

suffered by Onyx, see id. § 2B1.1(b)(1). The district court found Onyx’s actual loss to

include the $25,000 in response costs and more than $1.5 million in costs to develop the

Bullhorn database. These findings increased Defendant’s offense level by 16, leading to

a guideline sentencing range of 41–51 months’ imprisonment. Had the court limited its

loss finding to response costs—as Defendant advocates—it would have applied only a

4-level increase, leading to a guideline range of 8–14 months.

       From the 41–51 month guideline range, the court varied downward to sentence

Defendant to 30 months. The court also stated that in case it had incorrectly calculated

the guideline range, it would in the alternative impose the same 30-month sentence as an

upward variance.

III.   DISCUSSION

       A.     Loss Calculation

       Before imposing sentence a district court must calculate the defendant’s

sentencing range in accordance with the sentencing guidelines. See United States v.
                                              4
Todd, 515 F.3d 1128, 1130 (10th Cir. 2008). The calculation requires determining (1) the

offense level for the criminal activity and (2) the defendant’s criminal-history category.

The offense level under USSG § 2B1.1(b)(1), the guideline applicable to Defendant’s

crimes, increases with the amount of the victim’s loss. The word loss is not defined in

the guideline itself, but the commentary to the guideline provides guidance. It states that

“loss is the greater of actual loss or intended loss.” Id. § 2B1.1 cmt. n.3(A). Because the

government has not pursued any theory of intended loss, we need consider only actual

loss. The commentary defines actual loss as “the reasonably foreseeable pecuniary harm

that resulted from the offense.” Id. cmt. n.3(A)(i). Pecuniary harm is “harm that is

monetary or that otherwise is readily measurable in money” and “does not include

emotional distress, harm to reputation, or other non-economic harm.” Id. cmt. n.3(A)(iii).

       The district court did not identify any pecuniary harm other than $25,000 in

response costs. It acknowledged, and did not dispute, Defendant’s claim at sentencing

that “his conduct . . . did nothing to diminish the value of Onyx’s database and did not

damage or disrupt Onyx’s business . . . , and there is no evidence he placed Onyx’s

candidates in a hospital position or placed another physician in any of Onyx’s client’s

hospital openings.” R., Vol. 6 at 19‒20. But the court included as “actual loss” the $1.5

million cost to Onyx of creating the Bullhorn database. It relied on the provision in the

commentary to § 2B1.1 stating that the court “need only make a reasonable estimate of

the loss,” and may take into account, “[i]n the case of proprietary information (e.g., trade

secrets), the cost of developing that information.” USSG § 2B1.1 cmt. n.3(C)(ii). Based
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on that loss calculation and other undisputed findings under the guidelines, the court set

Defendant’s sentencing range at 41–51 months. If, as Defendant insists, the loss did not

include the cost of creating the database, his sentencing range would have been 8‒14

months.

       We have some sympathy with the district court’s calculation of the offense level.

Development costs seem to us to be a reasonable measure of the severity of offenses such

as Defendant’s. He appropriated to his own use information that cost Onyx $1.5 million

to develop. One’s sense of outrage at the nonconsensual copying of a proprietary

database is likely to be proportional to the time, effort, and expense incurred in creating

the database. Indeed, this measure of severity has been adopted in the statute under

which Defendant was convicted. Whether a violation of 18 U.S.C. § 1030(a)(2)(C) is a

misdemeanor or a felony can depend entirely on whether “the value of the information

obtained exceeds $5,000,” 18 U.S.C. § 1030(c)(2)(B)(iii); and the cost of development is

a reasonable (if rough) measure of value.

       Nevertheless, the guideline requires proof of loss, and the guideline commentary

does not depart from that approach. To be sure, the loss caused by a theft will typically

be the value of the property stolen. Thus, the note relied on by the district court allows

the “estimate of the loss” to “tak[e] into account, as appropriate . . . , the cost of

developing” the stolen proprietary information. USSG § 2B1.1 cmt. n.3(C) (emphasis

added). But we do not read that language in the commentary as contradicting the

guideline by substituting cost of development for loss in calculating the offense level; and
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the evidence before the district court was that Onyx did not suffer any business loss from

Defendant’s acts. Perhaps one could assess Onyx’s loss by treating Defendant’s theft as

an involuntary sale of the data by Onyx and estimating the price that Onyx would

reasonably demand if it had to share its database; but neither the district court nor the

government has suggested this approach or what that reasonable price would be.

         All this is to say that we would be reluctant to affirm Defendant’s sentence on the

ground that his offense level (and, hence, his guideline sentencing range) was correctly

calculated. “Loss” is the key, and the development cost was not adequately tied to any

loss actually suffered by Onyx.

         B.     Harmless Error

         Nevertheless, we affirm Defendant’s sentence because the district court would

have imposed the same sentence even if the guideline range had been much lower than

what it calculated. The court was not required to impose a sentence within the guideline

range. See United States v. Booker, 543 U.S. 220 (2005). It could decide to vary from

that range and impose a harsher or more lenient sentence if persuaded that doing so better

took into account the sentencing factors set forth in 18 U.S.C. § 3553(a).1 Indeed, the

1
    These factors include:

         (1) the nature and circumstances of the offense and the history and
         characteristics of the defendant;
         (2) the need for the sentence imposed‒
                 (A) to reflect the seriousness of the offense, to promote respect for
                 the law, and to provide just punishment for the offense;
                                                                                 Continued . . .
                                                7
court did not impose a sentence within the guideline range it calculated. Based on its

assessment of the § 3553 factors, it varied downward from the range by 11 months. And,

more importantly, it made clear that those factors would cause it to impose the same

sentence even if it had miscalculated the guideline range as higher than it should have

been.

        This is the rare case in which any error in the loss calculation was harmless,

because “the error did not affect the district court’s selection of the sentence imposed.”

United States v. Glover, 413 F.3d 1206, 1210 (10th Cir. 2005) (internal quotation marks

omitted). The district court devoted a great deal of time and reflection to Defendant’s

sentence; and we have no reason to doubt its repeated assertion that it would impose the

same sentence even if Defendant’s true guideline range was below what the court

calculated.

        Before the proceeding at which it imposed sentence the court had conducted a six-

hour evidentiary hearing (in two sessions) and had received briefs and proposed findings

and conclusions from the parties. The court said that it had devoted many hours to

reviewing these submissions and the evidence. After reciting its evidentiary findings at

               (B) to afford adequate deterrence to criminal conduct;
               (C) to protect the public from further crimes of the defendant; and
               (D) to provide the defendant with needed educational or vocational
               training, medical care, or other correctional treatment in the most
               effective manner[.]

18 U.S.C. § 3553(a)(1)–(2).

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length, it declared that Defendant’s offense level was 21, but it added that if the proper

offense level were found lower on appeal, it would vary upward. (The court also stated

that it would depart upward but, as the government concedes, the court did not give

proper notice that it might depart, so we consider only the variance.) In the court’s

words:

                 And I want to say that in the event that on appeal the Tenth Circuit
         may find that I have incorrectly calculated the loss for purposes of United
         States Sentencing Guideline Section 2B1.1, I want to make sure that it is
         clear that in the alternative, I find that the sentencing guidelines do not
         adequately account for the seriousness of the offense, to provide adequate
         deterrence, or to sufficiently protect the public and innocent victims from
         the infliction of a further harm at the defendant’s hands for the following
         reasons:

         [The court discusses upward departure.]

         [A]pplying the 18 United States Code Section 3553(a) factors, in particular
         the seriousness of this offense, providing adequate deterrence, sufficiently
         protecting the public and innocent victims, the Court finds that an upward
         variance in this case would also be appropriate.

                 Now, this is only if my calculation under 2B1.1 was not appropriate.
         I find that the guideline range provided by an offense level 21 is a more
         appropriate guideline range.

R., Vol. 6 at 32–33.

         The court proceeded to set forth in detail its justifications for its sentence under the

§ 3553 factors, including that Defendant’s “conduct was egregious”; “[h]e knew what he

was doing was wrong”; he assaulted the personal privacy of the victims; he gained an

unfair competitive advantage over Onyx; and he does not respect the law. Id. at 33–39.

It stated its inclination to sentence Defendant to 41 months’ imprisonment, the bottom of
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the guideline range, and noted also that it would upwardly vary to 41 months if it had

incorrectly calculated that range. See id. at 39–40. But after counsel pleaded on behalf

of Defendant, the court agreed to vary downward to 30 months, even after expressing its

general view that “[t]he guidelines are definitely much lower than they should be” with

“white collar fraud criminals.” Id. at 44. Again it indicated that if the properly calculated

guideline range was less than 30 months, it would vary upward to 30 months:

       Before I get to the special conditions, I want to clarify that my variance
       [downward to 30 months] is based on the assumption that my calculation of
       the guideline range under 2B1.1 is correct, so I vary downward from that.
       If that is incorrect, based on the reasons I previously stated for an upward
       departure or variance, my inclination would be wherever that guideline
       range is, that it is 30 months that is a sufficient but not greater than
       necessary sentence based on the factors that I enumerated.

Id. at 62.

       By varying downward from the guideline range it had calculated and stating that it

would vary upward to the same sentence if the correct guideline range was below the

30-month sentence, the court made utterly clear that the specifics of Defendant’s offense

overrode the intricacies of the guideline calculations.

       Defendant argues that we should not recognize the validity of the district court’s

alternative upward variance for two reasons. First, he contends that the court did not

state that it would impose a 30–month sentence by varying upward, only that it would

find such a variance “appropriate.” Aplt. Br. at 24. This is an artificial reading of the

district court’s position. We have no doubt about what the court meant. Its language was

as precise as one could expect in the circumstances. It suffices that the court clearly
                                             10
indicated that it would impose the same 30-month sentence either as a downward

variance if the guideline range was 41–51 months or as an upward variance if the range

was lower. It could hardly have been more forceful in conveying that it had decided what

the proper sentence should be, whatever the guidelines might advise.

       Second, citing to United States v. Pena-Hermosillo, 522 F.3d 1108, 1117–18 (10th

Cir. 2008), Defendant argues that because the district court failed to give proper notice

that it might depart upward, its decision to vary was “tainted by legal error.” Aplt. Br. at

26. We see no taint. The decisions to vary and to depart were independent. Pena-

Hermosillo does not help Defendant. In that case we refused to rely on the district

court’s statement that it would impose the same sentence even if the guideline range was

different from its calculation, but that was because the court “offer[ed] no more than a

perfunctory explanation for its alternative holding.” Pena-Hermosillo, 522 F.3d at 1118.

Such a variance, we said, required more explanation. See id. at 1117. The court’s

explanation here, however, was far from perfunctory.

       We recognize the importance of the sentencing court’s properly calculating the

guideline sentencing range. That range provides an anchor for the court in evaluating the

effects of the § 3553(a) factors. It might have been better if the district court had

explicitly stated that it would have varied upward to impose the same sentence even if it

had been informed that the correct guideline range was 8–14 months. But in the context

of the presentations at sentencing, that was implicit in the court’s statement that it would

impose the same sentence even if the guideline range had been set too high. And that
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statement was not some boilerplate remark to avoid reversal. The court had devoted

uncommon attention to Defendant’s sentence. And the court’s thoughtful independence

from the guidelines was demonstrated by its setting a sentence below what it considered

the correct guideline range even though its general view was that the guidelines were too

lenient on white-collar criminals. In short, we are confident that if the district court erred

in its guideline calculation (a matter we need not decide), that error did not affect

Defendant’s sentence. To put it another way, a remand to correct the offense-level

calculation would be a waste of everyone’s time and effort because Defendant would

receive the same sentence.

IV.    CONCLUSION

       We REMAND for entry of restitution in the amount of $24,174 and otherwise

AFFIRM Defendant’s sentence.

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