Court Opinion

ID: 3012147
Source: CourtListenerOpinion
Date Created: 2015-10-13 21:05:47.467237+00
Date Added: 2024-06-11T11:46:42.560702
License: Public Domain

Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

7-26-2002

USA v. Pharis
Precedential or Non-Precedential: Precedential

Docket No. 00-2855

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2002

Recommended Citation
"USA v. Pharis" (2002). 2002 Decisions. Paper 448.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/448

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2002 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL

       Filed July 26, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 00-2855

UNITED STATES OF AMERICA,
       Appellant

v.

DAVID M. PHARIS; EDWARD J. HABINA;
WILLIAM M. DULL; HARRY GANGLOFF

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Criminal Nos. 99-cr-00743-1; 99-cr-00743-2;
99-cr-00743-3; and 99-cr-00743-4)
District Judge: Hon. Herbert J. Hutton

Argued May 31, 2001

Before: SLOVITER, FUENTES and COWEN, Circuit Judges

Reargued En Banc February 13, 2002

Before: BECKER, Chief Judge, SLOVITER, MANSMANN,*
SCIRICA, NYGAARD, ALITO, ROTH, McKEE, RENDELL,
BARRY, AMBRO, FUENTES and COWEN, Circuit Judge s

(Filed: July 26, 2002)
_________________________________________________________________

* Hon. Carol Los Mansmann participated in the oral argument and
decision in this case, but died before she could join or concur in this
Opinion.

       Michael R. Stiles
        United States Attorney
       Walter S. Batty, Jr.
       Robert A. Zauzmer (ARGUED)
       Amy L. Kurland
       Kathleen Rice
        Assistant United States Attorneys
       Philadelphia, PA 19106

        Counsel for Appellant

       Peter Goldberger (ARGUED)
       Law Office of Peter Goldberger
       Ardmore, PA 19003-2276

        Counsel for Appellee
       David M. Pharis

       John Rogers Carroll
       Ellen C. Brotman
       Carroll & Carroll
       Philadelphia, PA 19106

       Thomas A. Bergstrom
       Malvern, PA 19355

        Counsel for Appellee
       William M. Dull

       Thomas Colas Carroll
       Carroll & Cedrone
       Philadelphia, PA 19106

        Counsel for Appellee
       Harry Gangloff

       John W. Morris
       Philadelphia, PA 19102

        Counsel for Appellee
       Edward J. Habina

                                  2

OPINION OF THE COURT

SLOVITER, Circuit Judge:

After the jury for this federal criminal case had been
sworn, after two witnesses had testified, and after the
testimony of a third witness had been stipulated, the
Government filed a notice of appeal from an adverse ruling
by the District Court. The issue before us is whether we
can hear its appeal.

I.

FACTS AND PROCEDURAL BACKGROUND

On November 23, 1999, a federal grand jury returned a
six-count indictment charging that from January 1988
until June 1995 David Pharis, Edward Habina, William
Dull, and Harry Gangloff (Defendants) committed mail
fraud, in violation of 18 U.S.C. S 1341 (2001), by inflating
consulting bills that they submitted to insurance
companies. Defendants’ business, S.T. Hudson
International, Inc., and its affiliates specialized in providing
services to insurance companies which had large influxes of
claims following disasters. Pharis was the CEO and
president of Hudson, Habina the vice president, Dull an
associate, and Gangloff a computer consultant.

According to the indictment, Defendants began their
fraudulent scheme in 1989 by manually changing
consulting bills. Specifically, the indictment alleged that
starting in 1989 and continuing until February 1994,
Pharis, Habina, and Dull "manually changed, or instructed
their employees to manually change, the ‘pre-bills’ that
accurately reflected the consultants’ billings, by inflating
the number of hours the consultant worked." App. at 14.
The indictment further alleged that in February 1994,
Pharis directed Gangloff to develop a computerized billing
program, known as the "gooser," that automatically
multiplied the hours each consultant worked by a factor of
1.15 and then added an additional half hour to the total

                                3

hours billed. App. at 15. In payment of bills produced by
this computer program, Hudson’s clients mailed to Hudson
the six checks that form the basis for the Government’s
charge of mail fraud.

The trial was scheduled to start on Monday, September
25, 2000. When the Government filed its trial
memorandum on Wednesday, September 20, it included a
motion in limine seeking to offer, under either Federal Rule
of Evidence 402 or 404(b), evidence of an incident of
uncharged misconduct by Dull (specifically, the wrongful
retention of a client’s overpayment) that appears to be
unrelated to the alleged inflation of any client’s bill. On
Friday, September 22, Habina responded in opposition to
the Government’s in limine motion, arguing that the
proposed evidence was "utterly irrelevant." App. at 47. That
motion was among the matters addressed in the order
entered by the District Court on September 26, 2000 and
was denied. The Government does not press that matter on
appeal.

Also on Friday, September 22, Pharis filed a Joint Trial
Motion to Redact Indictment and Motion In Limine No. 1
(hereafter "Motion to Redact"), accompanied by a
supporting memorandum of law from all Defendants. In
that memorandum, Defendants argued that the
Government exhibits revealed that there were really two
separate schemes -- the manual billing scheme which
ended in February 1993 and the computerized billing
scheme which began in February 1994. Defendants claimed
that the schemes differed in methodology, scope, and
participants, that the statute of limitations barred criminal
liability for the manual billing scheme, that there was no
federal jurisdiction alleged as to that manual billing
because there were no related mailings alleged and that
only the computerized billing scheme was actionable as
federal mail fraud. The motion, which specifically alleged
that the Government was improperly charging two separate
fraud schemes, requested that the District Court redact
from the indictment all references to the earlier scheme and
exclude all evidence relating to it or, in the alternative, that
the court direct the Government to show the admissibility
of such evidence under Rule 404(b) by demonstrating that

                                4

the probative value of the pre-1994 evidence was
substantially greater than its prejudicial effect. Defendants
sought by their Motion to Redact to preclude the
Government from presenting any evidence about the
manual changes to bills that occurred from 1989 to
February 1994, a period that covers all but roughly a year
and a half of the time described in the indictment.

On Monday, September 25, the Government responded to
the Motion to Redact, defending the indictment’s allegation
of a single scheme. The jury was sworn in that afternoon.

On Tuesday, September 26,1 after the jury had been
given preliminary instructions but before opening
statements in the trial, the District Court granted
Defendants’ Motion to Redact. In its memorandum, the
District Court, in addressing the Government’s motion
regarding the evidence of Dull’s wrongful retention of a
client’s overpayment, discussed the circumstances under
which evidence of uncharged misconduct could be admitted
pursuant to Rule 404(b). Interspersed with the District
Court’s discussion of that evidence were comments more
pertinent to the issue raised by the Defendants’ Motion to
Redact. Thus, the court stated, "Here, the Government
seeks to introduce evidence of acts allegedly occurring
between 1989 and February 1994." United States v. Pharis,
No. 99-CR-743, slip op. at 3 (E.D. Pa. filed Sept. 26, 2000)
[hereinafter Sept. 26 order].

After additional comments on the wrongfully retained
payment, the court then shifted to a discussion of the scope
of the federal mail fraud statute, stating that the statute
reaches "only those limited instances in which the use of
the mails is part of the execution of the fraud." Id. at 3-4.
The court, noting that " ‘[t]he mailings in this case are
checks that customers sent to Hudson in payment for
Hudson’s services’ " and that " ‘[t]he scheme was not
complete until Hudson received the fruits of the scheme,
that is, the checks,’ " concluded that inasmuch as all six
counts in the indictment relate to mailings in 1994 and
1995, those "acts relating to conduct other than that
_________________________________________________________________

1. The court’s order and memorandum were dated September 25 but
were issued and filed September 26.

                                5

alleged in the indictment constitute other acts that do not
demonstrate violations of the mail fraud statute, but show
other acts of Defendants’ bad character." Id. at 4 (quoting
Government’s in limine motion) (first alternation in
original). This led the District Court to hold that evidence of
such other acts was inadmissible under Rule 404(b) and to
conclude, after performing the balancing test required
under Rule 403, that the probative value of such evidence
was substantially outweighed by the danger of unfair
prejudice. Id. at 5.

After the District Court granted Defendants’ motion,
Government counsel, prior to delivering her opening
statement, requested a sidebar conference for clarification
of the court’s order. The court denied this request. Counsel
then presented her opening statement and called a witness.
During this testimony, the District Court reiterated that the
Government would not be permitted to prove any acts of
altering of bills prior to 1994. App. at 174-76. After the
Government’s first witness, the court recessed until the
following morning.

On September 27, the day after the District Court’s
original ruling was announced but before the trial
continued, the Government filed a motion for
reconsideration. In that motion the Government made
essentially the same arguments it has raised before us on
appeal. The District Court declined the Government’s
request for a continuance until the motion for
reconsideration was ruled upon. The Government
proceeded to call another witness and the parties agreed to
a stipulation about the testimony of a third witness.

The following day, September 28, in rejecting the motion
for reconsideration, the District Court again quoted Rule
404(b) at length, said the manually changed bills were a
"collection of uncharged bad acts . . .[that are] utterly
unrelated to the offenses which are charged," United States
v. Pharis, No. 99-CR-743, slip op. at 3 (E.D. Pa. Sept. 28,
2000) [hereinafter Sept. 28 order] (emphasis added), and
held those "prior bad acts" to be inadmissible. Id. at 4-5.
And again, citing Rule 403, the District Court, using the
language of Rule 404(b), repeated that, although the
evidence could be used to show Defendants’ "motive, intent,

                                6

plan, scheme or course of conduct," the probative value of
the evidence was substantially outweighed by the danger of
unfair prejudice. Id. at 3-4. The Court concluded:

        To the extent to which the Court’s prior Order
       intimated that it redacted the indictment, the Court
       now clarifies its prior order. First, the Court based its
       decision to bar admission of any evidence during the
       period 1989 to 1992 on the basis of Federal Rules of
       Evidence 403, rather than on any authority to redact
       the indictment. . . .

        [U]nder Federal Rule of Evidence 403, this Court is
       granted substantial discretion in balancing the
       probative value of evidence on the one hand and the
       unfair prejudice of evidence on the other.

Id. at 4.

After receiving the District Court’s denial of its motion for
reconsideration, the Government filed a notice of appeal
from both the District Court’s order filed September 26,
2000, the day after the jury was sworn, and its order dated
September 28, 2000 denying the Government’s motion for
reconsideration. The Government requested that the case
be stayed pending the appeal. Defendants filed motions for
judgment of acquittal. Defendants also asked the District
Court to continue the trial with the current jury. The
District Court denied these three requests and dismissed
the jury.

II. ANALYSIS

A. The District Court’s September 26 Order

On appeal, Defendants do not defend the District Court’s
order of September 26, its order denying the Government’s
motion for reconsideration and the court’s justification for
these orders. See Transcript of Oral Argument (Feb. 13,
2002) at 57 [hereinafter Tr.] (agreeing that the indictment
charged a single scheme) and Tr. at 59-60 (stating that the
District Court misunderstood both the Government’s
motion in limine and Defendant’s Motion to Redact).

                                7

The District Court’s September 26 order, in addition to
denying the Government’s motion to admit evidence of
other misconduct of Defendants, also denied "the
Government’s motion to admit evidence of uncharged
misconduct" under Rule 404(b) and granted Defendant’s
Motion to Redact. Sept. 26 order at 7-8. In so ruling, the
District Court appears to have operated under a
misunderstanding as to the nature of the Government’s
charge and the applicable law.2 The court stated that
because all six counts of the indictment rested on mailings
in 1994 and 1995, the earlier manually changed bills could
not be part of the mail-fraud scheme. On this point the
District Court was plainly mistaken. The elements of the
mail-fraud counts are: (1) a scheme to defraud; (2) use of
the mails to further that scheme; and (3) fraudulent intent.
See United States v. Sturm, 671 F.2d 749, 751 (3d Cir.
1982). The indictment charged that Defendants perpetrated
a single scheme of mail fraud -- one that encompassed
both the manually altered bills and the computerized bills.
It is not of any legal significance that the mailings used to
bring the scheme under the mail-fraud statute occurred at
the end of this single scheme. A fraudulent scheme can
span many years with the mailings occurring only at the
end of the period. See Schmuck v. United States , 489 U.S.
705, 711-14 (1989); United States v. Sampson, 371 U.S. 75,
80 & n.5 (1962); United States v. Ruuska, 883 F.2d 262,
264-65 (3d Cir. 1989); United States v. Lebovitz , 669 F.2d
894, 896 (3d Cir. 1982).

In interpreting the federal mail-fraud statute, the
Supreme Court has long held that "[i]t is not necessary that
the scheme contemplate the use of the mails as an
essential element." Pereira v. United States , 347 U.S. 1, 8
(1954). All that is required is that the defendants knowingly
participated in a scheme to defraud and caused a mailing
to be used in furtherance of the scheme. See, e.g., Sturm,
671 F.2d at 751; United States v. Pearlstein, 576 F.2d 531,
534 (3d Cir. 1978).3
_________________________________________________________________

2. We note that the misunderstanding was likely initiated by Defendants’
mischaracterization of the indictment in their Motion to Redact.

3. Defendants’ Motion to Redact noted that any loss to Hudson’s clients
that resulted from the manual billing scheme occurred before the statute

                                8

The fact that in 1994 Defendants changed the method
that they used to make increases to the bills they sent their
clients does not establish that there were two different
schemes. The District Court was in error if it believed that
the shift from increasing bills manually to increasing them
by use of the "gooser" computer program gave rise to a
different scheme. By itself, changing the method used to
commit a fraud does not inaugurate a new fraudulent
scheme.

Once the District Court concluded that the manually
altered bills were not properly part of the charged scheme,
it applied Rule 404(b), finding that the evidence of the
manually changed bills constituted prior bad acts that
should be excluded from evidence. Again, the District Court
was mistaken. Once certain fraudulent conduct is properly
included as part of the charged scheme, Rule 404(b) poses
no obstacle because evidence that is part of the charged
crime does not fall under Rule 404(b). See, e.g. , United
States v. Gibbs, 190 F.3d 188, 217-18 (3d Cir. 1999); see
also United States v. Bowie, 232 F.3d 923, 929 (D.C. Cir.
2000); United States v. Miller, 116 F.3d 641, 682 (2d Cir.
1997); United States v. Chin, 83 F.3d 83, 87-88 (4th Cir.
1996).

The District Court, apparently as part of its Rule 404(b)
analysis, then applied Rule 403’s balancing test. 4 The
_________________________________________________________________

of limitations. That was not an issue because mailings that fall outside
the statute of limitations can be considered as evidence to prove later
fraud that was within the statute of limitations. See, e.g., United States
v. Ashdown, 509 F.2d 793, 797-98 (5th Cir. 1975). Moreover, a mailing
that is within the statute of limitations can impose criminal liability for
conduct that was part of the same scheme but that was initiated outside
the statute of limitations. See, e.g., United States v. Crossley, 224 F.3d
847, 857-59 (6th Cir. 2000). Since a mailing is an element of mail fraud,
"the offense of mail fraud is completed and the statute of limitations
begins to run on the date on which the defendant, depending on the
specific use of the mails charged in the indictment,‘places,’ ‘deposits,’
‘causes to be deposited,’ ‘takes,’ or ‘receives’ mail, or ‘knowingly causes’
mail ‘to be delivered’ as part of the execution of a scheme to defraud." Id.
at 859; see also United States v. Bach, 172 F.3d 520, 521-22 (7th Cir.
1999); United States v. Pemberton, 121 F.3d 1157, 1163-64 (8th Cir.
1997); United States v. Eisen, 974 F.2d 246, 263-64 (2d Cir. 1992).

4. The court’s analysis in this respect is consistent with our holding that
Rule 403’s balancing test is one prong of a four-part test for admitting
                                9

District Court explained that whatever the manually
changed bills showed about Defendants’ motive, intent,
plan, scheme, etc., the probative value of the evidence was
"substantially outweighed by the danger of unfair
prejudice." Sept. 26 order at 4.

Both parties agree that the District Court made mistakes.
What should be done about these mistakes is, however, a
question we can reach only if we have jurisdiction to hear
this appeal.

B. Jurisdiction

1. Dismissal

The threshold issue before us is whether we have
jurisdiction to hear the Government’s appeal -- an appeal
filed after the jury was sworn, after several Government
witnesses testified, and after the District Court, on the
Government’s motion, reconsidered and clarified its initial
ruling.5

In its brief, the Government rests our jurisdiction over its
interlocutory appeal on 18 U.S.C. S 3731. Br. of Appellant
at 20. That statute, the Criminal Appeals Act, states, in
relevant part:

        In a criminal case an appeal by the United States
       shall lie to a court of appeals from a decision,
       judgment, or order of a district court dismissing an
_________________________________________________________________

evidence under Rule 404(b). See, e.g., Becker v. ARCO Chem. Co., 207
F.3d 176, 189 (3d Cir. 2000); United States v. Himelwright, 42 F.3d 777,
781 (3d Cir. 1994).

5. The District Court’s initial order precluded the Government’s use of
evidence through February 1994. The District Court’s subsequent order,
in response to the Government’s motion for reconsideration, modified its
initial ruling and precluded evidence up until the end of 1992. Sept. 28
order at 4. The District Court did not explain its modification. The
dissent, using its telepathic powers to read between the lines, ascribes
the District Court’s barring of evidence "during the period 1989 to 1992"
to "merely a scrivener’s error." Dis. op. at 39. Although it does not bear
on our disposition, we are not convinced by the dissent’s attempt at
mind reading.

                                10

       indictment . . . as to any one or more counts, except
       that no appeal shall lie where the double jeopardy
       clause of the United States Constitution prohibits
       further prosecution.

        An appeal by the United States shall lie to a court of
       appeals from a decision or order of a district court
       suppressing or excluding evidence . . . in a criminal
       proceeding, not made after the defendant has been put
       in jeopardy and before the verdict or finding on an
       indictment or information, if the United States attorney
       certifies to the district court that the appeal is not
       taken for purpose of delay and that the evidence is a
       substantial proof of a fact material in the proceeding.

        The provisions of this section shall be liberally
       construed to effectuate its purpose.

18 U.S.C. S 3731.

The Government argues that the District Court’s order
amounted to a dismissal of the indictment by preventing it
from proving substantial, material allegations of the
indictment. However, nothing in the District Court’s order
purports to dismiss the indictment, all six counts alleged in
the indictment constituting the mail fraud charges
remained in the indictment as returned by the grand jury,
and Defendants’ Motion to Redact, which the court granted,
did not ask for dismissal of the indictment. Further, in its
original objection to Defendants’ Motion to Redact, the
Government did not object that granting the motion would
amount to a dismissal. That contention emerged only in
connection with the Government’s motion for
reconsideration.

The Government’s argument that the District Court’s
order "amounted to" a dismissal of the indictment focuses
on the supposed effect of the order, namely that the order
precluded the Government from proving the allegations of
the mail fraud contained in the indictment. The
Government argues that the District Court "barred the
government from proving the fraudulent scheme which the
grand jury described." Br. of Appellant at 22. The
Government amplified this contention at oral argument
before us when it stated that the District Court’s ruling

                                11

"gutted" its case because the ruling prevented it from
proving the scheme to defraud. Tr. at 12. In effect, the
Government is claiming that a dismissal occurred simply
because it lost an evidentiary ruling important to its case.
Thus, the underlying basis for the Government’s appeal
appears to be the considerable effect the District Court’s
evidentiary ruling may have had on the Government’s case.

Defendants concede that "hypothetically . . . an order
having the form of excluding evidence . . . so sweeping that
it precluded any and all proof of a count of an indictment
. . . might be characterized by an appellate court as a
dismissal under S 3731 rather than as an evidentiary
ruling," yet they contend that "that hypothetical is far from
this case." Br. of Appellees at 28-29. We agree. Even if the
District Court’s ruling were as preclusive as portrayed by
the Government, it did not preclude the Government from
attempting to prove a scheme to defraud using post-
February 1994 evidence relating only to the computerized
billing method. After all, the indictment alleged mail fraud,
all six mailings that constituted the acts of mail fraud were
made after February 1994 and arose out of the computer
generated bills, and those counts remained intact following
the order the Government seeks to appeal.

It is acknowledged by the parties that Defendants shifted
to computerized billing as a result of the influx of bills that
needed processing in the wake of the January 1994
Northridge Earthquake in Los Angeles. The Government
contends that before computerization, Defendants or their
employees would (a) draft a pre-bill that accurately reflected
the hours worked as listed on a consultant’s time sheet, (b)
manually "mark-up" that pre-bill to indicate that the
consultant had worked more hours than listed by the
consultant, and then (c) send a final bill charging the client
for the hours as increased. The Government explains that
once Defendants devised a computerized billing system,
with its automatic fraudulently inflated hours, there was no
need for any communication among Defendants and their
employees and hence no evidence comparable to that
available regarding the manual overbilling. The Government
candidly concedes that its concern is that the District
Court’s order would have prevented it from proving the

                                12

fraudulent scheme beyond a reasonable doubt because the
evidence of the earlier manual overbilling was necessary to
rebut Defendants’ defense that the computerized overbilling
was merely an error. But that effect cannot be the basis for
transforming an evidentiary ruling into a dismissal, any
more than a midtrial order rejecting essential evidence
proffered by the government in a drug trial can be
considered a dismissal.

The second paragraph of S 3731 authorizes the
government to take an interlocutory appeal from a decision
or order excluding evidence but only under certain
conditions. One such condition is that the order be one "not
made after the defendant has been put in jeopardy." 18
U.S.C. S 3731. The Government concedes that Defendants
were put in jeopardy by September 26, 2000. It thus follows
that the statutory provision fashioned to cover precisely
this situation, the exclusion of evidence that the
Government would have certified was a "substantial proof
of a fact material in the proceeding," id. , was not available
to the Government.

The Government could have protected itself from the
situation in which it finds itself. Defendants’ Motion to
Redact, which, inter alia, moved to exclude all evidence
pertaining to Hudson’s billings before February 1994, was
filed in the afternoon of Friday, September 22. The jury was
not impaneled until Monday, September 25. Federal Rule of
Criminal Procedure 12(e) requires that the District Court
decide pre-trial motions before the trial begins unless the
court has deferred decision for good cause; however, the
rule precludes such deferral if a party’s right to appeal is
adversely affected. Fed. R. Crim. P. 12(e).

The Government concedes that it did not ask the District
Court to withhold swearing the jury until the motion to
exclude evidence was decided nor did the Government call
Rule 12(e) to the attention of the District Court.
Government’s counsel has candidly conceded that in failing
to ask the District Court not to swear the jury until after
the pending motion was decided, the Government "made a
mistake." Tr. at 7. It was a mistake that is not without
consequences. Because the Government failed to timely
invoke the procedural rule and the statutory provision

                                13

designed for the specific situation in which it found itself,
the Government seeks to turn S 3731 upside down, inside
out, and have this court become the first to call the
exclusion of evidence a dismissal of the indictment, just so
it can appeal.

We cannot allow the Government’s concern about the
impact of an order in a particular case to lead us to
overlook the distinction between the first and second
paragraphs of S 3731. The distinction between an
evidentiary ruling and a dismissal exists and has meaning.
The District Court’s ruling was no more than "a decision or
order . . . suppressing or excluding evidence . . . in a
criminal proceeding" that occurred "after the defendant[s]
ha[d] been put in jeopardy," and thus cannot be appealed.
18 U.S.C. S 3731.6

The Government conceded at oral argument that it knew
of no other case in which a court has interpreted an
evidentiary ruling as a dismissal of an indictment. Tr. at
29. Yet it has maintained before us that the present case is
not unique but rather a "repetition" of United States v.
Maker, 751 F.2d 614 (3d Cir. 1984), which it asserts should
dictate this court’s analysis. Maker is of no help, and
indeed is irrelevant on the principal issue before us
because, unlike the present case, that case came to this
court after the district court had dismissed the indictment.
Id. at 615. Therefore, in Maker, we did not have occasion to
address the circumstances in which an evidentiary ruling
can amount to the functional equivalent of a dismissal of
an indictment falling within the first paragraph ofS 3731.
_________________________________________________________________

6. Further, we are not convinced that the ruling would have the
draconian effect that the Government posits. If the purpose of the
evidence was to show the intent to defraud over a lengthy period of time,
a skilled Government prosecutor may very well have been able to
question witnesses about that issue and elicit that background without
directly violating the court’s evidentiary ruling. As the trial unfolded, the
District Court may have modified what may have appeared at first to be
its rigid prohibition. Moreover, the Government did not attempt to elicit
testimony concerning what may have been an additional year period
given by the District Court, see supra note 5, about which to question
the witnesses.

                                14

In Maker, two defendants were indicted on eighteen
counts of mail fraud and charged with a single scheme to
defraud three different insurance companies arising out of
two car accidents. After jeopardy attached, the district
court ordered separate trials with respect to each accident
and also for each defendant. Id. at 615. Then, relying on
United States v. Camiel, 689 F.2d 31 (3d Cir. 1982), it
dismissed the indictment because the allegations in the
indictment did not support a single scheme to defraud but
rather two separate schemes, one arising from each
accident. Maker, 751 F.2d at 615. However, the court
denied the defendants’ motion for a judgment of acquittal.
Id. at 620. The government appealed.

The Maker defendants challenged this court’s jurisdiction
under S 3731, not because there was no dismissal but on
the ground the appeal was barred by the Double Jeopardy
Clause. We concluded that the district court had made a
legal determination, not a factual one, so that the Double
Jeopardy Clause was not implicated. Id. at 624. On review
of the merits of the government’s appeal, we concluded that
the indictment charged only one scheme to defraud, and
that the district court erred in dismissing the indictment.
Id. at 626.

The only questions at issue in Maker, whether the court
implicitly made a factual determination in dismissing the
indictment and whether the indictment charged one or two
schemes to defraud, are not contested in this case. Maker’s
analysis of the parameters of the scheme to defraud might
prove useful were we to reach that issue here, but because
the Maker decision does not pertain to the question when a
court should recharacterize an evidentiary ruling as a
dismissal of an indictment, that case does not support the
Government’s position.

The Government further relies on this court’s decision in
Camiel, but that is of no help either. In Camiel, following a
jury verdict of guilty, the district court found that the
indictment improperly charged a single fraudulent scheme,
and accordingly entered a directed verdict of acquittal. The
government argued that the proper remedy for the defective
indictment was retrial and severance of the three
defendants’ trials, rather than acquittal. We rejected that

                                15

view because a court may not correct an indictment, even
if flawed. Camiel, 689 F.2d at 39-40. Accordingly, we
determined that "a new trial with the possibility of
severance [was] not the answer," and thus affirmed the
judgment of acquittal. Id. at 40.

As with Maker, Camiel lends support to the conclusion
that the District Court in this case erred in attempting to
compartmentalize the evidence. See, e.g., Maker, 751 F.2d
at 625 ("Camiel . . . teaches that in evaluating whether one
scheme has been alleged or proved, a court should focus on
the identity of the actors and the overall purpose of their
conduct."). But the Camiel court never questioned whether
it lacked jurisdiction to hear the government’s appeal under
S 3731. Thus, Camiel does not establish, or even intimate,
that a district court order restricting the admission of
evidence, even one that amounts to an amendment of an
indictment, effectively constitutes a dismissal of that same
indictment. The irrelevance of Maker and Camiel, the legal
props on which the Government relies, demonstrates the
weakness of the Government’s argument.

More pertinent to the case before us is the Supreme
Court’s opinion in Sanabria v. United States, 437 U.S. 54
(1978). The first sentence of the opinion characterizes "the
issue presented [as] whether the United States may appeal
in a criminal case from a midtrial ruling resulting in the
exclusion of certain evidence and from a subsequently
entered judgment of acquittal." Id. at 56. The indictment in
Sanabria charged several defendants with one count of
conducting an illegal gambling business in violation of
federal law, a business that involved two different types of
conduct -- numbers betting and horse betting, both
allegedly in violation of Massachusetts law. Under the
federal statute defendants were charged with violating, 18
U.S.C. S 1955 (1976), the gambling business must have
been in violation of the law of the state where the business
was located. At the close of the defendants’ case at trial, the
court excluded evidence of numbers betting because the
state statute referenced in the indictment addressed only
horse betting and not numbers betting, but the court did
not strike or amend any language in the indictment. The
court then granted the motion for judgment of acquittal

                                16

filed by Sanabria, one of the defendants, because there was
no evidence linking him to the horse-betting activities. Id.
at 59.

Following the conviction of the other defendants, the
government appealed from the district court’s order
excluding evidence of the numbers-betting activities and
entering a judgment of acquittal. The government
recognized it could not appeal the ruling regarding
Sanabria’s involvement with horse betting, as that aspect of
the acquittal was based on the insufficiency of the evidence,
but it sought a new trial on the aspect of the charge
involving numbers betting. The court of appeals interpreted
the district court’s evidentiary ruling to be a"dismissal" of
the numbers-betting "charge," thus finding it had
jurisdiction under S 3731 to consider the government’s
claim that the "dismissal" was in error. Id. at 61. Reviewing
the merits, the court of appeals concluded that the
"dismissal" was in error and ordered a new trial. The
Supreme Court granted certiorari and reversed.
The order granting certiorari was limited to the question
whether "the Government’s appeal was authorized by
statute and not barred by the Double Jeopardy Clause." Id.
at 62 n.13. However, the Court did not thereafter discuss
the statute on which the court of appeals had relied for its
jurisdiction. It explained that it had previously observed
that "the jurisdictional statute authorizing Government
appeals, 18 U.S.C. S 3731 (1976), was ‘intended to remove
all statutory barriers’ to appeals from orders terminating
prosecutions. United States v. Martin Linen Supply Co., 430
U.S. 564, 568 (1977), quoting United States v. Wilson, 420
U.S. 332, 337 (1975)." Id. at 63 n.16 (quotation omitted). It
therefore turned immediately to the constitutional issue,
which was whether the Double Jeopardy Clause barred the
appeal.

However, in deciding the double jeopardy issue, i.e.,
whether the horse-betting and numbers-betting activities
were part of the "same offense" so that the acquittal for
insufficient evidence as to Sanabria’s participation in horse
betting barred the new trial ordered for Sanabria on the
numbers-betting conduct, the Supreme Court first
considered the nature of the district court’s order with

                                17

respect to the numbers-betting aspect of the charge. It did
so to ascertain whether "the numbers theory was dismissed
from the count before the judgment of acquittal was
entered," id. at 65, and therefore whether Sanabria was
acquitted of numbers betting, which would have entailed a
resolution of factual issues precluding a second trial for the
same offense.7 The government argued that the district
court’s order was a "dismissal" of a discrete portion of the
count in which the two types of gambling were included.
The Supreme Court was "not persuaded that it is correct to
characterize the trial court’s action as a ‘dismissal’ of a
discrete portion of the count." Id. at 66. It continued,
"[w]hile form is not to be exalted over substance . . . ,
neither is it appropriate entirely to ignore the form of order
entered by the trial court." Id.

The Court concluded that the district court’s order simply
constituted "an evidentiary ruling based on its
interpretation of the indictment," and not a dismissal. Id. at
68. As the Court noted,

       [N]ot every erroneous interpretation of an indictment
       for purposes of deciding what evidence is admissible
       can be regarded as a ‘dismissal.’ Here the District
       Court did not find that the count failed to charge a
       necessary element of the offense; rather, it found the
       indictment’s description of the offense too narrow to
       warrant the admission of certain evidence. To this
       extent, we believe the ruling below is properly to be
       characterized as an erroneous evidentiary ruling.

Id. (citation omitted).
The Supreme Court concluded that the evidentiary ruling
on the numbers charge, albeit erroneous, "led to an
acquittal for insufficient evidence," id., and held that the
Double Jeopardy Clause would be offended by a new trial
relating to the numbers charge, as that charge was part of
the "same offense" as the horse-betting charge on which the
defendant had been acquitted. Id. at 69.
_________________________________________________________________

7. The Double Jeopardy Clause of the Fifth Amendment provides that no
person shall "be subject for the same offense to be twice put in jeopardy
of life or limb." U.S. Const. amend. V.

                                18

The Government tries to minimize the significance of
Sanabria by limiting it to cases where the trial court
entered a judgment of acquittal. However, Sanabria’s
analysis of an evidentiary ruling based on an interpretation
of an indictment as distinguished from a dismissal of that
indictment is applicable here.

The district court in Sanabria "found the indictment’s
description of the offense too narrow to warrant the
admission of certain evidence." Id. at 68. The District Court
in this case made a similar ruling. Accordingly, the District
Court’s exclusionary ruling in this case did not constitute
a dismissal of one or more counts of the indictment within
the scope of S 3731, even construing that statute liberally,
as the statute requires. Moreover, the Government does not
argue that the District Court’s ruling dismissed"a portion
of a count," from which order an appeal to this court would
lie under S 3731 when "the dismissed portion of the count
constitutes an independent ground of criminal liability."
United States v. Serafini, 167 F.3d 812, 814 (3d Cir. 1999).
That argument would have been meritless, as it is plain
that the excluded evidence included no alleged mailings
and thus could provide no independent ground of liability.

Because the District Court’s evidentiary ruling did not
constitute a dismissal of the indictment, we reject the
Government’s argument that this court has jurisdiction to
hear its appeal under S 3731.8

We need not rest our disposition only on our
interpretation of the meaning of "dismissal" in S 3731. Even
if we were to limit our consideration to S 3731 and assume
that the order of the District Court were a dismissal of the
indictment (which we have held it was not), the first
paragraph of S 3731 permits the Government to retry
Defendants only if the Double Jeopardy Clause is not a bar
to further prosecution. The Government’s opening brief
_________________________________________________________________

8. Because we believe that the District Court’s ruling did not amount to
a dismissal at all, we need not consider further whether the District
Court’s order amounted to a dismissal of the indictment as it pertained
to defendant Harry Gangloff in particular, inasmuch as he appears to
have been implicated only in the inflated computer billing scheme.

                                19

conceded this in its section headed "There Is No Double
Jeopardy Bar to a Retrial." Br. of Appellant at 30.

Moreover, there is a plausible argument that the
Supreme Court’s statement in Wilson cited in Sanabria,
437 U.S. at 63 n.16, that the jurisdictional statute was
"intended to remove all statutory barriers to Government
appeals and to allow appeals whenever the Constitution
would permit," Wilson, 420 U.S. at 337, requires us to move
directly to the Constitution in determining our jurisdiction
over appeals from orders terminating prosecutions. 9 There
is legislative history to support the intent described in
Wilson. See, e.g., id. at 338-39. Under that theory, our
interpretation of S 3731 would not be dispositive,
notwithstanding the Government’s reliance upon it as a
basis for our jurisdiction and we turn to the Double
Jeopardy Clause for consideration of its effect on our
jurisdiction.10

2. Double Jeopardy

The first relevant question is whether Defendants were
placed in jeopardy. As discussed above, all parties agree
that the jury had been sworn and the trial had been
started. Defendants were, therefore, placed in jeopardy.
This does not end our inquiry. As we observed in Maker,

       [a]lthough the Supreme Court has explicitly held that
       "[t]he federal rule that jeopardy attaches when the jury
       is empaneled and sworn is an integral part of the
       constitutional guarantee against double jeopardy," Crist
_________________________________________________________________

9. The Court in Sanabria recognized some undefined limitation other
than the obvious Double Jeopardy Clause, as it stated in another
context, without explanation, "the Government is not authorized to
appeal from all adverse rulings in criminal cases." 437 U.S. at 67 n.21.

10. In Sanabria, the Supreme Court, after concluding that further
prosecution was barred because it viewed the district court’s order to
have been a judgment of acquittal, nevertheless proceeded to discuss
whether, even if the government were correct that the order was merely
a dismissal, further prosecution of Sanabria was barred by the Double
Jeopardy Clause. 437 U.S. at 69. Although there was no acquittal in this
case, all the parties acknowledge the relevance of the Double Jeopardy
Clause to our jurisdiction.

                                20

       v. Bretz, 437 U.S. 28, 38 (1978), this proposition . . .
       is the beginning rather than the end of our analysis.
751 F.2d at 620 n.22.
In Sanabria, the Court summarized the "limited
circumstances" when a second trial on the same offense is
constitutionally permissible. 437 U.S. at 63. It stated,

       A new trial is permitted, e.g., where the defendant
       successfully appeals his conviction, United States v.
       Ball, 163 U.S. 662, 672 (1896); where a mistrial is
       declared for a "manifest necessity," Wade v. Hunter,
       336 U.S. 684 (1949); where the defendant requests a
       mistrial in the absence of prosecutorial or judicial
       overreaching, United States v. Dinitz, 424 U.S. 600
       (1976); or where an indictment is dismissed at the
       defendant’s request in circumstances functionally
       equivalent to a mistrial, Lee v. United States , supra.
       See also Jeffers v. United States, 432 U.S. 137 (1977).

Id. at 63 n.15.

The situations listed in the passage quoted above from
Sanabria can be characterized as situations in which the
defendant consented to or requested the termination. This
is not such a situation, as illustrated by this court’s
precedents.

In Love v. Morton, 112 F.3d 131, 136-37 (3d Cir. 1997),
towards the close of the first day of Love’s criminal trial, the
trial judge learned that his mother-in-law had died
unexpectedly. Without the explicit consent of the parties,
the judge declared a mistrial and left the courthouse. Id. at
134-35. The next day, a new trial began with a new jury
and a new judge. Love’s request for dismissal on double
jeopardy grounds was overruled by the new judge, and he
was thereafter convicted. In considering Love’s habeas
petition, we held that "[t]o demonstrate manifest necessity,
the state must show that under the circumstances the trial
judge ‘had no alternative to the declaration of a mistrial.’
The trial judge must consider and exhaust all other
possibilities." Id. at 137 (quoting United States v. McKoy,
591 F.2d 218, 222 (3d Cir. 1979)). Applying this principle,
we held that there was no manifest necessity for declaring

                                21

a mistrial because there were other possibilities available.
For example, the trial could have been continued with a
replacement judge presiding after the new judge reviewed
the trial transcript. Further, we held that under the
circumstances, Love’s consent to the termination could not
be inferred from his failure to object to it. Id. at 138-39. We
therefore concluded that the Double Jeopardy Clause
prohibited Love’s second trial. See also McKoy , 591 F.2d at
222-23 (finding no manifest necessity for declaring mistrial
and, hence, holding further prosecution was prohibited by
double jeopardy).

In the present case, there were also clear alternatives to
termination. Before the District Court dismissed the jury,
the Government suggested that the trial be stayed briefly
without discharging the jury during the pendency of an
expedited appeal. Defendants suggested that the trial could
continue unless and until this court granted a stay.
Alternatively, as we noted previously, had the Government
raised and the District Court followed Federal Rule of
Criminal Procedure 12(e) by ruling on the pending motions
before the trial began, an appeal would have been feasible
without any attachment of jeopardy. In the present case, as
in Love, there was no manifest necessity to terminate the
trial.

In light of the lack of manifest necessity, we next
consider whether Defendants in effect consented to the
termination of the trial. The Government argues that the
termination was prompted by Defendants’ motion, and
thus, there is no double jeopardy bar to a remand for a new
trial on the theory that Defendants consented to the
termination.

We observed in Love that "[m]istrials declared with the
defendants’ consent do not bar a later prosecution," and
cited United States v. Dinitz, 424 U.S. 600, 607 (1976).
Love, 112 F.3d at 133. In Dinitz, the trial judge dismissed
Dinitz’s counsel during his opening statement for repeated
misconduct. The trial judge asked co-counsel, who had not
discussed the case with any of the witnesses, to proceed
with trial. Dinitz expressed desire that his original counsel
be permitted to defend him. The trial judge offered Dinitz
the choice of (a) continuing the trial with co-counsel, (b)

                                22

recessing the trial during an attempt at interlocutory review
of the dismissal of original counsel, or (c) declaring a
mistrial to allow Dinitz to obtain new counsel. Dinitz chose
a mistrial. Before his subsequent trial, Dinitz argued that
the Double Jeopardy Clause barred his further prosecution.
The Supreme Court held that when a defendant requests a
mistrial, even in response to prosecutorial or judicial error,
double jeopardy does not bar mistrial, Dinitz , 424 U.S. 606-
612, unless the error that prompted it was " ‘bad-faith
conduct by judge or prosecutor.’ " Id. at 611 (quoting United
States v. Jorn, 400 U.S. 470, 485 (1971) (plurality opinion)).

In Love, we held that defendant’s failure to object to the
mistrial did not constitute express consent or implied
consent because he did not have a meaningful opportunity
to object to the mistrial. Because there was no consent to
the termination, the Double Jeopardy Clause barred a new
trial. Love, 112 F.3d 138-39.

In Lee v. United States, 432 U.S. 23 (1977), defense
counsel, immediately before the start of a trial for theft,
moved to dismiss the information for failure to include
allegations of knowledge and intent. The trial court denied
the motion but said that it would be reconsidered. At the
end of the trial, the court granted the defendant’s motion to
dismiss for failure to charge knowledge and intent, even
though the trial judge was convinced that the defendant
was guilty. The prosecution filed a corrected information
and, after the second trial, the defendant was convicted.
The Supreme Court held that the Double Jeopardy Clause
did not bar the second prosecution because the first
prosecution was terminated at the defendant’s request. See
also United States v. Scott, 437 U.S. 82, 98-99 (1978)
(holding that "defendant, by deliberately choosing to seek
termination of the proceedings against him on a basis
unrelated to factual guilt or innocence . . . suffers no injury
cognizable under the Double Jeopardy Clause if the
Government is permitted to appeal from such a ruling of
the trial court in favor of the defendant").

In United States v. Kennings, 861 F.2d 381 (3d Cir.
1988), we held that the fact that the district court rather
than the defendant first suggested dismissal does not bar
appeal so long as the defendant agreed to dismissal. Id. at

                                23

383-86. We found that the defendant’s consent and active
support of dismissal undercut the argument that the
defendant should only be tried by the first jury empanelled
to hear his case. Id. at 385.

Unlike the situations in Lee, Scott, and Kennings,
Defendants in the present case did not move for a mistrial,
for a termination of the trial, for the discharge of jury, or for
the dismissal of the indictment or any count of it. Moreover,
they objected to the District Court’s decision to terminate
the trial and asked the court to continue with the trial.11
Although Defendants, through their Motion to Redact, did
set in motion the chain of events that led to termination of
their trial, that alone is not enough to infer their consent to
the resulting termination of the trial.

In Kennings, we contrasted the situation before us with
that the court faced in United States v. Dahlstrum, 655 F.2d
971 (9th Cir. 1981). In Kennings, the defendant
"encouraged the dismissal solely on the grounds that the
statute was inapplicable" and "argued that the appropriate
action by the court was immediate, midtrial dismissal."
Kennings, 861 F.2d at 385 n.6. We noted that in Dahlstrum,
on the other hand, "the [trial] court dismissed the case sua
sponte" and "the defendant passively acquiesced . . . . in
response to the judge’s statements that he ‘did not believe
the government had proved its case,’ [and t]hus,
acquiescence could not have been read to mean that retrial
would be acceptable to the defendant." Id. (quoting
Dahlstrum, 655 F.2d at 975). We found that these
differences explained why the Double Jeopardy Clause did
not bar the appeal in Kennings but it did bar the appeal in
Dahlstrum. Id.

Our analysis in Kennings demonstrates that a defendant
who merely sets in motion a series of events that leads to
the termination of his or her trial is protected from being
retried by the Double Jeopardy Clause. Defendants in the
_________________________________________________________________
11. Defendants did, however, ask for an acquittal, but their motion for
acquittal was not granted. If Defendants had been acquitted, then the
Double Jeopardy Clause would bar any further prosecution. Defendants
do not claim that they were acquitted and do not base their argument
that double jeopardy bars their further prosecution on this ground.

                                24

present case did no more than set in motion events that
led, over their objections, to the dismissal of their trial. The
real cause of the trial being interrupted was the
Government’s desire to appeal the exclusion of some of its
evidence. Because Defendants did not consent to the
termination, even if the District Court’s decision to
terminate the trial did constitute a dismissal, the Double
Jeopardy Clause bars this court from having jurisdiction to
hear the Government’s appeal.

3. The Dissent

The dissent’s interesting discourse on the important
principle of separation of powers overlooks that the holding
of the majority in this case is that the court lacks
jurisdiction to hear the Government’s appeal. In each of the
cases cited by the dissent on pages 29 through 31, the
court’s appellate jurisdiction stood on firm statutory
ground. Thus, in United States v. Giannattasio , 979 F.2d
98, 100 (7th Cir. 1992), the court reviewed the dismissal of
an indictment; in United States v. Zabawa, 39 F.3d 279,
283 (10th Cir. 1994), and United States v. Nakashian, 820
F.2d 549, 550 (2d Cir. 1987), each court deemed the
district court’s requirement that the government select a
limited number of counts on which it would proceed to be
a dismissal of one or more counts, and thus expressly
covered by 18 U.S.C. S 3731; in United States v. Abdelhaq,
246 F.3d 990 (7th Cir. 2001), the defendant was appealing
his conviction, and thus there was no question of
jurisdiction under S 3731; in United States v. Marubeni
America Corp., 611 F.2d 763, 764-65 (9th Cir. 1980), the
court (following a similar decision by the Second Circuit)
held that dismissal of a substantial part of a count of an
indictment fell within S 3731; and in United States v.
Woolard, 981 F.2d 756, 757 (5th Cir. 1993), the court held
it had jurisdiction over the order of the district court
striking the death penalty as a possible sentence because it
effectively "removed a discrete basis of criminal liability."
The District Court’s order in this case is not comparable to
any of those cases. The court neither struck nor dismissed
a count or a portion of a count. Because the references to
the manual billing were included in the indictment only as
part of the history of Defendants’ scheme, the Government

                                25

never included them in any count, so the court’s order did
not remove any discrete basis for criminal liability.

The dissent concludes its discussion of this portion of its
opinion with the sentence that "the law governing the
separation of powers between the executive and judicial
branches is sufficient to demonstrate that the District
Court’s actions in this case must have resulted in a
dismissal." Dis. op. at 34 (emphasis added). The dissent’s
non sequitur is not an effective substitute for an order or
action by the District Court that does indeed fall within 18
U.S.C. S 3731. Had its separation of powers argument been
of any force, the Government, which has vigorously
pursued this appeal, would be likely to have included it.
But it didn’t.

When the dissent turns to the issue of the order the
District Court did enter, it appears to misread it, as it fails
to acknowledge that, whatever the effect of the order, it did
nothing more than exclude evidence of the manual scheme
(which, as we previously acknowledged, was erroneous).
Because no count in the indictment charged the manual
billing as an offense, the District Court’s exclusion of
evidence of the manual billing cannot be viewed as a
dismissal of any count or a part thereof. It follows that the
points made by the dissent are not persuasive.

III.

CONCLUSION

Despite the various mistakes that the District Court
made, this court lacks jurisdiction to hear the
Government’s appeal under S 3731 both because the
District Court did not dismiss the indictment and because
a retrial is barred by the Double Jeopardy Clause. We will
therefore dismiss the Government’s appeal.

                                26

COWEN, Circuit Judge, dissenting:

Under our system of government, judges do not draft
indictments. The power to decide whether charges will be
brought, which violations to allege, and what the scope of
those charges will be belongs to the executive branch and
grand jury, not to the judiciary. United States v. Armstrong,
517 U.S. 456, 464 (1996); Wayte v. United States , 470 U.S.
598, 607-608 (1985); Heckler v. Chaney, 470 U.S. 821, 832
(1985); United States v. Goodwin, 457 U.S. 368, 382 (1982);
Bordenkircher v. Hayes, 434 U.S. 357, 364 (1978); Oyler v.
Boles, 368 U.S. 448, 456 (1962); United States v. Chemical
Foundation, Inc., 272 U.S. 1, 14-15 (1926). See also, United
States v. Williams, 504 U.S. 36, 47-50 (1992). This
separation of powers is fundamental to our Constitution’s
design. "Time and again we have reaffirmed the importance
in our constitutional scheme of the separation of
governmental powers into the three coordinate branches."
Morrison v. Olson, 487 U.S. 654, 693 (1988) (citations
omitted). Just as the legislative branch cannot alter the
outcome of a case that the judiciary has decided, Plaut v.
Spendthrift Farms, Inc., 514 U.S. 211 (1995), so too the
judicial branch cannot assume the role of writing
indictments that initiate cases.

Undermining the important principle of separated
powers, the majority today grants trial courts substantial
powers to reshape indictments brought by the executive
and approved by a grand jury. The majority concludes that
the District Court in this case was permitted -- without
dismissing the indictment -- to cut in half the fraudulent
scheme alleged in each of the six counts of mail fraud
brought in the indictment, and to do so based on what the
majority admits are pure errors of law. This erroneous
alteration of the indictment changed allegations addressing
an essential element of the offense of mail fraud, the
fraudulent scheme, see United States v. Lane, 474 U.S.
438, 451 (1986) (quoting Kann v. United States , 323 U.S.
88, 94 (1944)); United States v. Sturm, 671 F.2d 749, 751
(3d Cir. 1982), and the evidence encompassed by the
excluded half of the fraudulent scheme is crucial, as the
government very plausibly insists, to proving any claim of
fraud.

                                27

The upshot of the majority’s rule is that district courts in
this circuit now possess unchanneled discretion to rewrite
indictments without having the effect of dismissing them,
even though the changes to the offense elements are
substantial enough to prevent the government from proving
the defendants’ crimes. At most the only limitation that can
be extracted from the majority’s opinion is that perhaps the
number of counts and type of offense must be maintained,
together with some unspecified facts about some
unspecified elements of the offense. See Majority Op. at 12-
13. Thus, it would seem that a district court could, without
dismissing the indictment, force the government to proceed
on a lesser included offense that was never expressly
charged in the indictment, even though the greater offense
was supported by the law and evidence. Or a district court
could alter the type of fraudulent scheme alleged by
changing, for example, a scheme alleging fraudulent over
billing to one charging fraudulent billing for services that
were never performed, even though the latter was
unsupported by the evidence. Or a district court could
decide to reduce by a third the total losses alleged from a
fraudulent scheme. If the majority’s rule is limited only to
changes to certain categories of offense elements, or even
more specifically to just the duration of a fraudulent
scheme in mail-fraud prosecutions, the majority certainly
does not say so, nor does its opinion offer any explanation
of how such an anomalous special limitation could be
justified.

In describing its standard, the majority says, quoting the
appellees’ brief, that "hypothetically . . . an order having
the form of excluding evidence . . . so sweeping that it
precluded any and all proof of a count of an indictment . . .
might be characterized by an appellate court as a dismissal
under S 3731 . . . ." Id. at 12. But the majority concludes
that this standard was not met in this case because,"[a]fter
all, the indictment alleged mail fraud, all six mailings that
constituted the acts of mail fraud were made after February
1994 and arose out of the computer generated bills, and
those counts remained intact following the order the
Government seeks to appeal." Id. at 12. In other words, it
is of no consequence that the District Court cut in half the
scope of one element of the offense, the fraudulent scheme,

                                28

and did so in a manner that made proof of the remaining,
narrower criminal offense considerably more difficult if not
impossible. Conspicuously, the majority does not cite any
legal authority supporting its sweeping standard for altering
indictments without dismissing them.

And there is legal authority that concludes that the
separation of powers prevents district courts from reaching
so far into the executive branch’s role of selecting the type
and scope of criminal charges. Cases like Armstrong,
Wayte, Heckler, Goodwin, Bordenkircher, Oyler, and
Chemical Foundation, Inc. establish that the task of
selecting charges belongs to the executive. Similarly, several
courts have concluded that it transgresses the separation of
powers for a district court to force the government to
proceed on only parts of an indictment. See, e.g., United
States v. Zabawa, 39 F.3d 279 (10th Cir. 1994); United
States v. Giannattasio, 979 F.2d 98 (7th Cir. 1992). These
cases embody the fundamental principle that unelected
federal judges are not vested under the Constitution with
the responsibility to exercise prosecutorial discretion and
"take Care that the Laws be faithfully executed." Art. II,
Sec. 3. A more democratically responsive branch must be
left to make the difficult choices about whom to charge,
which crimes to pursue, and how numerous and serious
the charges will be. District courts of course retain the
power to dismiss legally defective indictments, but they
cannot engage in a freewheeling process of rewriting
indictments and offering defendants lighter or different
charges.

In Zabawa after the district court required the
government to proceed to trial on a limited portion of the
indictment, the government objected and sought to appeal
because it believed that reducing the counts prevented the
government from "presenting the necessary evidence to
convict all defendants." Zabawa, 39 F.3d at 284. Although
the district court did not dismiss those counts that the
government was not permitted to pursue at trial, the Tenth
Circuit concluded that "the district court’s order -- forcing
a choice of counts without a formal dismissal of the other
counts -- is not significantly different from ordering a
formal dismissal without prejudice." Id. at 283. The Tenth

                                29

Circuit continued that the district court’s attempt to limit
the counts presented would violate the separation of
powers: "Because the district court’s ruling forces the
government to abandon, at least temporarily, the
prosecution of separate crimes it has charged against
defendants who are scheduled to be tried, we believe the
ruling goes beyond those subject to the court’s
discretionary control and impinges upon the separation of
powers. Prosecutorial discretion is a function of the
executive branch, not the judiciary." Id. at 284.

In Giannattasio the Seventh Circuit similarly held that a
district court violated the separation of powers when it
forced the government to select five of fifteen counts to
present at trial. Judge Posner’s opinion explained:

       A judge in our system does not have the authority to
       tell prosecutors which crimes to prosecute or when to
       prosecute them. Prosecutorial discretion resides in the
       executive, not in the judicial branch, and that
       discretion, though subject of course to judicial review
       to protect constitutional rights, is not reviewable for a
       simple abuse of discretion. This principle is most often
       involved when the issue is whom to prosecute . . . but
       it has equal force when the issue is which crimes of a
       given criminal to prosecute. If Dr. Giannattasio
       committed fifteen Medicare frauds, a judge cannot tell
       the Justice Department to prosecute him for only five
       of the frauds, or to prosecute him for five now and the
       rest later, if necessary . . . . No rule authorizes the
       judge to sever offenses in an indictment because he
       believes that a trial of all the counts charged would
       clog his docket without yielding any offsetting benefit
       in the form of a greater likelihood of conviction or a
       more severe punishment.

Giannattasio, 39 F.3d at 100 (citations omitted). Cf. United
States v. Abdelhaq, 246 F.3d 990, 992 (7th Cir. 2001) ("The
judge felt that the government didn’t need the extra counts.
He may have been right. There would be no sentencing
increment from conviction of the other charges if the
government succeeded in convicting the defendant of the
main charge . . . . And indeed, after she was convicted on
that charge and sentenced to 21 years in prison, the

                                30

government dismissed the counts that had been severed.
But the decision on how many counts are needed to
present an effective case is a managerial decision
committed to the discretion of the prosecution."); United
States v. Woolard, 981 F.2d 756, 757 (5th Cir. 1993)
(finding jurisdiction for "orders that did not dismiss an
entire count but altered it in a significant way from the
grand jury’s charge."); United States v. Nakashian, 820 F.2d
549, 550 (2d Cir. 1987) ("an order compelling an election
between counts is a ‘dismissal’ for Section 3731
purposes."); United States v. Marubeni America Corp., 611
F.2d 763, 764-65 (9th Cir. 1980) (finding jurisdiction for a
government appeal of an order striking forfeiture allegations
from RICO indictment).
Two other lines of authority confirm that the District
Court should not be permitted to alter the scope of the
fraudulent scheme alleged in the indictment. The first line
of authority interprets the scope of Fed.R.Crim.P. 7(d),
which allows a defendant to request that a court remove
surplusage from the charging indictment. Under the rule,
the "scope of a district court’s discretion to strike material
from an indictment is narrow." United States v. Oakar, 111
F.3d 146, 157 (D.C. Cir. 1997) (citing United States v.
Jordan, 626 F.2d 928, 931 n.1 (D.C. Cir. 1980));"Words
descriptive of what is legally essential to the charge in the
indictment cannot be stricken as surplusage." Wright,
Federal Practice and Procedure S 127, at 635. See also
United States v. Collins, 920 F.2d 619, 631 (10th Cir. 1990);
United States v. Figueroa, 900 F.2d 1211, 1218 (8th Cir.
1990); United States v. Behenna, 552 F.2d 573, 576 (4th
Cir. 1977); United States v. Root, 366 F.2d 377, 381 (9th
Cir. 1966). "Material that can fairly be described as
‘surplus’ may only be stricken if it is irrelevant and
prejudicial." Oakar, 111 F.3d at 157. See also United States
v. Rezaq, 134 F.3d 1121, 1134 (D.C. Cir. 1998); Untied
States v. Huppert, 917 F.2d 507, 511 (11th Cir. 1990);
United States v. Scarpa, 913 F.2d 993, 1013 (2d Cir. 1990).

The second   line of authority is based not on the
separation   of powers or on the scope of Fed.R.Crim.P. 7(d),
but on the   Fifth Amendment’s Grand Jury Clause limiting
amendments   to indictments. See Ex parte Bain, 121 U.S. 1

                                  31

(1887). While Bain has been rejected and limited in a
number of important respects, the Supreme Court recently
noted that by limiting Bain, the Court "need not retreat"
from the "settled proposition" in Bain that "an indictment
may not be amended except by resubmisson to the grand
jury, unless the change is merely a matter of form." United
States v. Cotton, 122 S. Ct. 1781, 1785 (2002) (quoting
Russell v. United States, 369 U.S. 749, 770 (1962)). In Bain
the Supreme Court stated:

       If it lies within the province of a court to change the
       charging part of an indictment to suit its own notions
       of what it ought to have been, or what the grand jury
       would probably have made it if their attention had
       been called to suggested changes, the great importance
       which the common law attaches to an indictment by a
       grand jury, as a prerequisite to a prisoner’s trial for a
       crime, and without which the Constitution says "no
       person shall be held to answer," may be frittered away
       until its value is almost destroyed.
121 U.S. at 10.

The one limitation of Bain relevant here is the rule that
a prosecutor may choose to withdraw a portion of the
indictment that the evidence does not support and proceed
on a lesser included offense without resubmitting the
indictment to the grand jury. United States v. Miller, 471
U.S. 130 (1985). The defendant in Miller had been charged
with defrauding his insurer both by consenting to a
burglary of his place of business and by lying to the insurer
about the value of his losses. After the grand jury returned
the indictment, the government moved to strike the part of
the indictment alleging that the defendant had prior
knowledge of the burglary, but the government correctly
maintained that the remaining allegations of lying about
the value of the loss still supported the indictment’s
allegation of mail fraud. In finding no violation of Bain, the
Supreme Court explained, "A part of the indictment
unnecessary to and independent of the allegations of the
offense proved may normally be treated as a ‘useless
averment’ that ‘may be ignored.’ " Miller, 471 U.S. at 136
(quoting Ford v. United States, 273 U.S. 593, 602 (1927)).

                                32

In our case, however, the government has not sought to
abandon any allegations or charges and pursue a
separately alleged or lesser included offense, and the
government has steadfastly maintained, quite plausibly,
that the allegations excluded by the District Court are
essential for proving the defendants’ guilt of any charge of
mail fraud. The allegations can hardly be described as
"unnecessary" and "independent" to the offense that the
government wished to pursue, or even to the truncated
offense that the District Court wanted the government to
pursue. If there is any meaning to the screening function
performed by a grand jury, it must be implicated when a
district court amends an indictment in a fashion that
excludes evidence that the government itself believes makes
its case difficult if not impossible to prove, and thus very
likely did play an important role in the grand jury’s decision
to indict.

One potential caveat presented by applying Bain ’s
prohibition on amending indictments is that the rule might
be regarded as only a defendant’s right. The government
may be the wrong party to complain about amendments
that undermine the grand jury’s role in screening charges.
Cf. Rakas v. Illinois, 439 U.S. 128, 134 (1978) (limiting
those who have standing to assert Fourth Amendment
violations). See also Minnesota v. Carter, 525 U.S. 83
(1998)); Rawlings v. Kentucky, 448 U.S. 98, 105 (1980).
And Bain’s rule can be waived. United States v. Cotton, 122
S. Ct. at 1786. Of course, the defendants have not waived
their right to a grand jury indictment, and the government
has steadily asserted its objections to the District Court’s
rulings.

But more important, the grand jury through its
investigatory powers serves a public role beyond protecting
the defendant charged, and hence the rule against
amending indictments may serve more than the defendant’s
interests. "The investigation of crime by the grand jury
implements a fundamental governmental role of securing
the safety of the person and property of the citizen." United
States v. Calandra, 414 U.S. 338, 344 (1974) (quoting
Branzburg v. Hayes, 408 U.S. 665, 700 (1972)) (internal
quotations and brackets omitted). The Supreme Court in
Williams explained:

                                33

       Rooted in long centuries of Anglo-American history, the
       grand jury is mentioned in the Bill of Rights, but not
       in the body of the Constitution. It has not been
       textually assigned, therefore, to any of the branches
       described in the first three Articles. It is a
       constitutional fixture in its own right. In fact the whole
       theory of its function is that it belongs to no branch of
       the institutional Government, serving as a kind of
       buffer or referee between the Government and the
       people.
504 U.S. at 47 (citations and quotation marks omitted).
While refusing in Williams to expand judicial oversight of
the grand jury’s evidence-taking process, the Supreme
Court added: "The grand jury’s functional independence
from the Judicial Branch is evident both in the scope of its
power to investigate criminal wrongdoing and in the
manner in which that power is exercised. ‘Unlike a court,
whose jurisdiction is predicated upon a specific case or
controversy, the grand jury can investigate merely on
suspicion that the law is being violated, or even because it
wants assurance that it is not.’ " Williams, 504 U.S. at 48
(quoting United States v. R. Enterprises, Inc. , 498 U.S. 292,
297 (1991) and United States v. Morton Salt Co. , 338 U.S.
632, 642-643 (1950)) (brackets omitted). See also In Re
Grand Jury, 286 F.3d 153 (3d Cir. 2002); In re Grand Jury,
223 F.3d 213 (3d Cir. 2000). These considerations may
militate against allowing only the defendant to invoke the
rule against amending indictments. Chief Justice Marshall’s
famous declaration that in a grand jury proceeding,"The
public has the right to every man’s evidence," United States
v. Burr, 25 Fed. Cas. 38 (No. 14,692e) (CC Va. 1807),
emphasizes that body’s purpose of serving the broader
public’s interests, and not just the defendant’s.

In the end, however, I believe that the law governing the
separations of powers between the executive and judicial
branches is sufficient to demonstrate that the District
Court’s actions in this case must have resulted in a
dismissal. For that reason, I need not reach whether the
government can assert a violation of Bain’s rule against
amending indictments.

                                34

The majority is obliged, however, to address this issue
since the government has invoked the rule against
amending indictments. But not only has the majority failed
to address amendments adequately, it also insists that it
may ignore the implications that its decision has for the
separation of powers because the government never
discussed, and hence waived, the issue.

I believe that by arguing against the amendment to the
indictment, the government has not slept on its rights and
has invoked rules designed to protect the separation of
powers. But regardless, the threat posed to the separation
of powers is substantial and cannot be waived any more
than jurisdiction can be. As the Supreme Court has said on
numerous occasions, the separation of powers prevents
"encroachment or aggrandizement of one branch at the
expense of the other. To the extent this structural principle
is implicated in a given case, the parties cannot by consent
cure the constitutional difficulty for the same reason that
the parties by consent cannot confer on federal courts
subject-matter jurisdiction beyond the limitations imposed
by Article III, Section 2." Commodity Futures Trading Comm.
v. Schor, 478 U.S. 833, 850-51 (1986) (citations omitted).
See also Freytag v. Comm. of Internal Revenue, 501 U.S.
868, 879 (1991). ("[T]he disruption to sound appellate
process entailed by entertaining objections not raised below
does not always overcome what Justice Harlan called" ‘the
strong interest of the federal judiciary in maintaining the
constitutional plan of separation of powers.’ ") The Court’s
conclusion in Freytag about why a challenge under the
Appointments Clause could not be waived applies equally
here. "The structural interests protected by the
Appointments Clause are not those of any one branch of
Government but of the entire Republic." Id. at 880. Cf. Steel
Co. v. Citizens for a Better Environment, 523 U.S. 83, 94
(1998) (The doctrine of "hypothetical jurisdiction" that was
once invoked by lower courts improperly "carries the courts
beyond the bounds of authorized judicial action and thus
offends fundamental principles of separation of powers.").

The majority’s best effort to avoid the subject of
impermissible amendments to indictments is to rely on the
defendant’s argument that the District Court merely made

                                35

an evidentiary ruling. Like the District Court in its second
opinion responding to the government’s motion for
reconsideration, the majority attempts to characterize the
District Court’s decision as just an evidentiary ruling that
happened to be especially damaging to the government’s
case. "In effect, the Government is claiming that a dismissal
occurred simply because it lost an evidentiary ruling
important to its case." Majority Op. at 12.

As a threshold matter, whether a district court’s ruling
resulted in a dismissal turns on what the ruling
accomplished and not whether the district court called it an
evidentiary ruling rather than a dismissal. In evaluating
when there was a dismissal and when the government’s
appeal is barred by the Double Jeopardy Clause, the
Supreme Court has repeatedly said, "The trial judge’s
characterization of his own action cannot control . . . ."
Smalis v. Pennsylvania, 476 U.S. 140, 144 n.5 (1986)
(quoting United States v. Scott, 437 U.S. 82, 96 (1978)
(internal brackets and quotation marks omitted)); Martin
Linen Supply Co., 430 U.S. 564, 567 n.4 (1977); United
States v. Maker, 751 F.2d 614, 621 n.26 (3d Cir. 1984);
United States v. Ember, 726 F.2d 522, 524 (9th Cir. 1984).
The principle is analogous to the Supreme Court’s
extension of Bain that even if a trial court does not
expressly allow an amendment to an indictment, the court
can constructively amend the indictment by allowing the
government to rest on proof of an offense crucially different
than the one alleged in the indictment. See Stirone v. United
States, 361 U.S. 212, 217 (1960). In flatly declaring that
there was no dismissal, and hence no jurisdiction under
S 3731, the majority never acknowledges or discusses these
cases and begs a central question in this case.

The fact that a district court’s label does not control is
not of course an open-ended license for the government to
claim that there was a dismissal of an indictment every
time the government loses an evidentiary ruling significant
to its case. The Supreme Court’s rule was not intended to
give the government in practical effect a broader right of
interlocutory appeal than even ordinary civil litigants have.
If the majority is motivated by a concern that the
government not secure such a broad right of appeal, then

                                36

I am in agreement with their sentiment -- but not with
their estimation of what occurred in this case. To call the
District Court’s ruling a merely evidentiary one is to
misunderstand what transpired at trial and to jeopardize a
constitutional value -- the separation of judicial and
executive functions -- carrying as great importance as the
concern with limiting government appeals.

To understand why this case does not simply involve a
damaging evidentiary ruling, it is important to review both
the District Court’s initial ruling, which granted the
defendants’ motion to redact the indictment, as well as the
Court’s second opinion, which denied the motion for
reconsideration but purported to recast the ruling as an
evidentiary one. In both opinions, the District Court made
it abundantly clear that it believed that there were two
schemes alleged in the indictment and that the earlier
scheme should not properly be considered part of the
indictment. The District Court was not limiting a way of
proving allegations in the indictment, such as by excluding
hearsay evidence of the manually altered bills. Rather, the
Court was saying that the scheme alleged in the indictment
was contrary to the law and could not be validly proved by
any means.

When the District Court was discussing what evidence it
was excluding, the Court said in its opinion after the
motion for reconsideration:

       The evidence that the Government proposes is utterly
       unrelated to the offenses which are charged. Those
       prior bad acts have nothing to do with the computer
       programming of bills, they have nothing to do with the
       California earthquake program, they are not temporally
       continuous; and they involve different insurance
       companies. The six counts involve automatic computer
       adjustment of bills. The legitimacy of that process is the
       issue in the case.

Supp. App. at 11 (emphasis added).

The government also points out that at trial the district
judge said: "All six counts relate to acts the Government
alleges were violated in 1994 and 1995. The Court
concludes that acts relating to conduct other than that

                                37

alleged in the indictment in those years constitute other
acts that do not demonstrate violations of the mail fraud
statute." App. at 176. Like the statement quoted from the
District Court’s second opinion, this statement at trial also
strongly supports the government’s contention that the
District Court sought to preclude all evidence about the
manually altered bills.

Moreover, when the government asked its first witness at
trial about her observation that the company began having
financial problems in 1989, the defense objected that the
part of the indictment relevant to that period had been
redacted. App. at 173-74. And the District Court sustained
the objection, stating, "Anything she has to tell us about
1988 and 1989 is not relevant." App. at 175. A fair reading
of the record makes plain that what the District Court did
was exclude categorically all evidence about the defendants’
conduct prior to the period when the gooser program was
created and used.

Seizing on a clever but mistaken argument by the
defendants, the majority suggests that despite all the
passages quoted above, the District Court did not flatly
prohibit all evidence about the earlier scheme of manually
altered bills. See Majority Op. at 10 n.5 and 14 n.6. The
defendants’ argument, endorsed by the majority, is that
once the District Court switched so that its decision
purported to rest on evidentiary grounds, the District Court
struck a compromise, allowed one year’s worth of evidence
about the manually altered bills, and for the other, earlier
years still did not foreclose all discussion of the defendants’
business. All of these points, the defendants maintain,
indicate that the District Court did not prohibit the
government from going forward with its prosecution of the
single scheme covering the period described in the
indictment, and hence the District Court’s ruling did not
effectively dismiss the indictment.

The reason the defendants and the majority maintain
that the District Court intended to permit evidence about
one year’s worth of the manually altered bills,
notwithstanding the Court’s emphatic language quoted
above, is that in several places the Court’s opinion in
response to the government’s motion for reconsideration

                                38

said it was barring evidence "during the period 1989 to
1992." Supp. App. at 12 (emphasis added). The references
to "1992" appear to give the government one year of
evidence about the manual bills, because, as the majority
opinion notes, the gooser program was not initiated until
February 1994. By comparison, before the government’s
motion for reconsideration, the Court’s first order referred
to the period where the evidence would be excluded as
covering 1989 to February 1994, which did correctly
capture the end of the period when the indictment alleges
that bills were manually altered.

There are a number of reasons for believing that the
District Court’s several references to 1992 were merely a
scrivener’s error. First, the use of 1992 is inconsistent with
the Court’s explanation of why it was ruling the way it did
-- namely that it believed the manually altered bills could
not properly be included in the fraudulent scheme. Given
the passages quoted earlier, one of which comes directly
from the Court’s second opinion, denying the government’s
motion for reconsideration, the defendants’ and majority’s
theory that the District Court meant to write "1992" leaves
inexplicable the fact that the Court never discussed why it
was purportedly having a change of heart midway through
its second opinion and allowing roughly one year of
evidence about the manually altered bills. Why allow any of
the evidence, given the Court’s views? And why permit the
roughly one year of evidence that the majority and
defendants say the Court allowed? There was nothing
particularly unique about that time span. Given the
arbitrariness of that proposed line, it is reasonable to
expect that the Court would give some explanation for this
change from the earlier opinion and from other language in
its second opinion. This is especially so given that the
District Court, which made a point of stressing the
substantial deference given to its rulings under Rule 403,
was undoubtedly aware that we have held that when a
district court fails to give its reasons for its exercise of
discretion under Rule 403, and the court’s reasons are not
apparent from the record, we are unable to conduct any
meaningful review and do not defer to the district court’s
determination. Becker v. ARCO Chemical Co., 207 F.3d 176,
181 (3d Cir. 2000); United States v. Sriyuth, 98 F.3d 739,

                                39

749 n.9 (3d Cir. 1996); United States v. Himelwright, 42
F.3d 777, 781 (3d Cir. 1994).

Another reason to believe that the reference to 1992 was
in error is that in a number of places the Court’s opinion
copied language from defendant Habina’s brief, and, as it
happens, that brief mistakenly referred to the period of
manually altered bills as covering 1989 to 1992. Given
these reasons for doubting that the District Court intended
to write "1992" rather than "1994", reasons that the
majority never addresses, the majority’s reliance on the
1992 date in defending the District Court’s ruling as not
excluding all evidence about the manually changed bills is
difficult to understand. Under the circumstances, I would
think that the most the majority could claim, if it believes
anything of consequence rides on the 1992 date, is that a
remand to the District Court for clarification is in order.
Certainly the evidence calls for more than a flip reference to
needing "telepathic powers" to interpret the District Court’s
actions. See Majority Op. fn. 5 at 10. The majority’s failure
to engage the evidence apparently flows from its refusal to
acknowledge cases like Smalis, Scott, Martin Linen Supply,
Maker, and Ember, which holds that the name a District
Court gives to its ruling does not control.

But in any event, I believe that whether the District Court
intended to write "1992" or "1994" is irrelevant. The fact
remains that the District Court erroneously believed that
the fraudulent scheme alleged in the indictment was
improper and as a result erroneously precluded the
government from presenting any evidence about a very
crucial period of the fraudulent scheme alleged in the
indictment. It really doesn’t matter whether the ban on
manually altered bills extends to 1992 or 1994, for under
either scenario the District Court improperly changed the
indictment on an offense element. Indeed, if the District
Court did intend to include one year of the manually
altered bills as part of the fraudulent scheme, that may
only make the Court’s action worse because it would be
even clearer that the Court was exercising the type of
purely prosecutorial discretion in framing charges that
should never rest with the judiciary.

                                40

Once it is established that the District Court’s action
must be deemed a dismissal of the indictment, the question
then becomes whether the government is entitled to an
appeal even though a jury had been sworn and testimony
taken from witnesses. Although the majority’s discussion
confuses the analysis of this point by discussing appeals
from acquittals and mistrials, neither of which is implicated
in this case, the analysis of an appeal from a dismissal is
straightforward. Existing Supreme Court precedent holds
that if a defense motion prompts a district court to grant a
dismissal before any determination of the defendant’s guilt,
as is true in this case, then the government is entitled to an
appeal -- even though the jury has already been empaneled
and sworn. See United States v. Scott, 437 U.S. 82, 95-101
(1978); United States v. Lee, 432 U.S. 23, 27-28, 33 (1977).
Just as a defendant whose conviction is reversed on appeal
due to legal error may be subjected to retrial, so too there
is no double-jeopardy bar "where the defendant, instead of
obtaining reversal of his conviction on appeal, obtains the
termination of the proceedings against him in the trial
court without any finding by a court or jury as to his guilt
or innocence." Scott, 437 U.S. at 100.
The majority attempts to distinguish Scott and Lee on two
grounds. First, the majority says that the appeal is in fact
controlled by Sanabria v. United States, 437 U.S. 54 (1978),
which dealt with an appeal where the trial court had
entered an acquittal. Second, the majority attempts to limit
Scott and Lee by grafting onto them a requirement that the
defendants consent to the termination of their trial, a
standard that the majority insists was not met here. This
consent requirement, according to the majority, would in
fact bar the appeal in this case even if the District Court’s
ruling did constitute a dismissal. Both attempts to
distinguish Scott and Lee are flawed.

Sanabria was handed down on the same day as Scott and
amplifies on a crucial condition in Scott. As noted earlier,
Scott stated that if the government appealed a dismissal
after jeopardy attached, the appeal would only be allowed if
the judge or jury had not made a factual determination
about the defendant’s guilt or innocence. This caveat
follows the longstanding rule that an acquittal bars

                                41

appellate review and any further prosecution of that count.
See e.g., Martin Linen Supply Co., 430 U.S. at 571 (citing
United Sates v. Ball, 163 U.S. 662, 671 (1896)). The Court’s
decision in Sanabria had to interpret how that rule would
apply when the judge made an erroneous evidentiary ruling
excluding allegations that could have independently
supported criminal liability, but then entered an order of
acquittal for insufficient evidence. In analyzing this
scenario, the Supreme Court decided that it would not
breach its firm rule against reviewing the correctness of
acquittals and hence would not look behind them to see if
they rested on an error of law. When the majority attempts
to apply Sanabria to this case, what they overlook is that
the central element of Sanabria’s analysis, an acquittal, is
not present here. Indeed, the defendants in our case filed a
motion for acquittal, and the District Court denied it.
Sanabria is therefore not controlling, and Lee, the case
handed down on the same day as Sanabria, is.

The majority’s second attempt to limit Scott and Lee is its
"consent" requirement. According to the majority, even if
there was a dismissal, and even if the defendants filed a
motion that would necessarily require a dismissal, this case
still does not fall within Scott and Lee because the
defendants did not expressly ask for a dismissal of the
indictment and termination of their prosecution before the
empaneled jury. One obvious weakness with their theory is
that if a district court’s labeling of its action does not
control for the purposes of analyzing appeals underS 3731
and the Double Jeopardy Clause, see, e.g., Smalis v.
Pennsylvania, 476 U.S. at 144 n.5; Scott, 437 U.S. at 96;
Martin Linen Supply Co., 430 at 567 n.4.; Maker, 751 F.2d
at 621 n.26, then it is very difficult to understand why
defendants’ labeling of their actions should -- particularly
given the defendants have strong motives for manipulating
the names they give to their motions. The majority’s
position practically invites defendants to wait until the eve
of trial and file motions to redact the indictment when what
they wish to achieve is a dismissal or substantial reworking
of the indictment to make the government’s case impossible
to prove.

It is also telling that the only authority the majority has
for its hard and fast rule of what constitutes "consent" is a

                                42

case where the defendant never filed any motion and simply
expressed agreement with the district court’s dismissal. See
United States v. Kennings, 861 F.2d 381, 385 (3d Cir.
1988). If the majority intends to convert the focus on
subjective intent in Kennings from a sufficient condition to
a necessary one, then the majority has indeed limited Scott
and Lee to their facts, for what defendant will ever agree to
a government appeal instead of going scot-free?

One last point bears mention. The majority complains
that the government should not be heard to complain now
because it did not invoke Fed.R.Crim.P. 12(e) after the
defendants filed their motion to redact on the eve of trial. In
Lee, however, the Supreme Court rejected precisely this
argument as a grounds for denying the government an
appeal when there was a dismissal of the indictment. As
the Court noted, the defendant "had only himself to blame"
for the fact that the dismissal occurred after the court
began to hear evidence, for by "the last minute timing of his
motion to dismiss, he virtually assured the attachment of
jeopardy." Lee, 432 U.S. at 28.

The majority’s position goes too far in allowing the
judiciary to rewrite indictments and misinterprets
controlling Supreme Court precedent. I dissent. Judge
Fuentes joins in this dissent.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

                                43