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Sixth Circuit Follows Trend of Reigning in Commentary’s Impermissible Expansion of Sentencing Guidelines

Former postal employee Jennifer Riccardi pleaded guilty to fraud charges stemming from her theft of 1,505 gift cards from the mail. The Government alleged that 1,322 of the cards had a total face value of around $47,000 and did not identify the value of the remaining cards. Following Guidelines commentary, the U.S. District Court for the Northern District of Ohio increased Riccardi’s sentencing range based upon the amount of “loss.” U.S.S.G. § 2B1.1(b)(1). Since the Guideline does not define the word ‘loss,’ the district court turned to the commentary which instructs that the loss “shall not be less than $500” for each “unauthorized access device.” U.S.S.G. § 2B1.1 cmt. n.3(F)(i).

Riccardi acknowledged that each gift card is an “access device,” and the district court calculated the loss to be $752,500 (1,505 cards x $500 each). That amount required the district court to add 14 months to her offense level, resulting in a Guidelines range of 46 to 57 months’ imprisonment. The court sentenced her to 56 months. Riccardi appealed, arguing, inter alia, that the district court should not have applied the $500 minimum loss amount to each card as the actual value of the cards was only a fraction of that amount.

The Sixth Circuit observed “[t]he Sentencing Reform Act of 1984 [“SRA”] ... tasked the [Sentencing] Commission with creating ‘guidelines’ that contain sentencing ranges for various categories of offenses.” 28 U.S.C. § 994(a)(1), (b)(1); Stinson v. United States, 508 U.S. 36 (1993). Congress required district courts to follow the Guidelines when imposing a sentence, and until 2005, the Guidelines were mandatory. United States v. Havis, 927 F.3d 382 (6th Cir. 2019). Even though no longer mandatory, the Guidelines continue to affect individual liberty because sentencing courts must use them as the initial benchmark for a proper sentence. Havis.

As a procedural safeguard, Congress required the Commission to submit the original Guidelines for its review and to give Congress six months to review all amendments. 28 U.S.C. § 994(p). All amendments must also go through notice-and-comment rule making. 28 U.S.C. § 994(x).

But from the beginning, the Commission also included “application notes” in “commentary” to “interpret the guideline or explain how it is applied.” U.S.S.G. § 1B.1.7; 2B1.1 cmt. nn. 1-8 (1987). And the SRA doesn’t require the Commission to follow the same procedures to amend or change the commentary as that required to amend the Guidelines. Havis. For this reason, many federal circuits held that they are not bound by the commentary’s interpretation of the Guidelines. Id.

The U.S. Supreme Court changed that view of the commentary. It viewed the Guidelines as the “equivalent of legislative rules adopted by federal agencies” and the commentary “akin to an agency’s interpretation of its own legislative rules.” Stinson. In Stinson, the Supreme Court applied the test from Auer v. Robbins, 519 U.S. 452 (1997), and ruled that the commentary’s interpretation of a Guideline “must be given controlling weight unless it is plainly erroneous or inconsistent with” the Guideline. The Commission could effectively amend a Guideline by amending the commentary provided that “the guideline which the commentary interprets will bear the [amended] construction.” Stinson.

Stinsons plain-error test was applied in the same manner that circuit courts review unpreserved arguments on appeal: the error “must be clear or obvious, rather than subject to reasonable dispute.” Puckett v. United States, 556 U.S. 129 (2009). Consequently, the federal circuits in the past had been quick to give “controlling weight” to the commentary without asking whether a Guideline could bear the construction the commentary gave to it. See, e.g., United States v. Jarman, 144 F.3d 912 (6th Cir. 1998).

But in Kisor v. Wilkie, 139 S. Ct. 2400 (2019), the Supreme Court acknowledged that Auer’stest “suggest[ed] a caricature of the [classic plain-error test] in which deference is ‘reflexive.’” The Supreme Court cautioned that a court should not reflexively defer to an agency’s interpretation and clarified in Kisor that before courts defer to a changed reading of the rule, a court must “first decide whether the rule is clear; if it is not, whether the agency’s reading falls within its zone of ambiguity; and even if the reading does so, whether it should receive deference.”

The Sixth Circuit determined that the reasoning of Kisor applies to the commentary to the Guidelines. The claim argued in Kisor was that Auer permits an agency to change a legislative rule without submitting the change to the notice-and-comment rulemaking procedure. Similarly, the Commission could change the commentary without subjecting the amendment to the notice-and-comment rulemaking procedure.

The Third Circuit had likewise applied the Kisor reasoning in United States v. Nasir, 982 F.3d 144 (3d Cir. 2020). The Nasir Court determined its pre-Kisor cases upholding commentary that expanded the Guidelines could no longer stand because Kisor “cut back on what had been understood to be uncritical and broad deference to agency interpretation of regulations….”

Applying the Kisor test to the instant case, the Court observed that U.S.S.G. 2B1.1 does not define the word ‘loss.’ When a rule does not define a word or term, a standard method of interpretation is to turn to dictionaries to identify the range of meanings that a reasonable person would understand a word like ‘loss’ to have. United States v. Zabawa, 719 F.3d 555 (6th Cir. 2013). The Court examined several dictionary definitions and concluded the word ‘loss’ has a variety of meanings, ranging from “the person, thing, or amount lost,” Webster’s New World College Dictionary 799 (3d ed 1996), to emotional harms, as in “[the children] bore up bravely under the [loss] of both parents.” Webster’s Third International Dictionary 1338 (1986). Thus, it remained ambiguous as to whether the loss in the Guideline means only the monetary value of the card or includes the emotional loss of the giver and intended recipient or even whether it includes the expense related to time and trouble of obtaining a replacement card, the Court explained.

The Court reasoned that no matter the definition of ‘loss,’ the commentary’s $500 minimum loss amount for gift cards does not fall “within the zone of [any] ambiguity” in the Guideline. No reasonable person would define ‘loss’ from a stolen gift card as an automatic $500, the Court concluded.

Additionally, precedent dictates that a specific numeric amount does not qualify as “interpretation” of nonnumeric language. Catholic Health Initiatives v. Sebelius, 617 F.3d 490 (D.C. Cir. 2010). In Hoctor v. U.S. Dep’t. of Agric., 82 F.3d 165 (7th Cir. 1996), the court held that an agency does not “interpret” a rule requiring parties to use “structurally sound” facilities to house dangerous animals when it concluded the rule mandates an eight-foot fence. When an agency wants to state a principle in numerical terms that cannot be derived from a particular record, the agency is legislating (not interpreting) and must act through rulemaking. Catholic Health.

Finally, in Hoctor, the issue concerned the definition of “controlled substance offense” in the Guidelines. The Guideline does not include “attempt[ed]” offenses in its definition, but the Commission’s commentary enlarged the definition to include attempted offenses. The Hoctor Court ruled that the commentary was an improper attempt to expand, not interpret, the controlled substance Guidelines.

In the present case, the Court concluded that the $500 minimum loss amount for gift cards does not fall within the bounds of reasonable interpretation of § 2B1.1’s text.

Accordingly, the Court reversed Riccardi’s 56-month sentence and remanded for resentencing consistent with its opinion. See: United States v. Riccardi, 989 F.3d 476 (6th Cir. 2021).

Writer’s note: Professor Douglas A. Berman from the Moritz College of Law at The Ohio State University surmised in his blog that “a good many fraud cases involve commentary that could be considered an ‘improper expansion’ of the guideline term ‘loss.’” Berman also wrote that “the fraud guideline is not the only ... part of the federal sentencing guideline with an intricate set of commentary instructions that might be challenged as full of ‘improper expansions.’” He expects to see some variation of the issue in the U.S. Supreme Court soon. 

 

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Related legal case

United States v. Riccardi

 

 

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