United States v. Lucido

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 10a0223p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiff-Appellee, -
UNITED STATES OF AMERICA,
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Nos. 09-1410/1412
v.
,
>
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Defendant-Appellant. -
SEBASTIAN LUCIDO,
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 92-80152-009—Nancy G. Edmunds, District Judge.
No. 93-81310-003—Paul D. Borman, District Judge.
Argued: June 10, 2010
Decided and Filed: July 28, 2010
Before: BATCHELDER, Chief Judge; SUTTON and KETHLEDGE, Circuit Judges.

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COUNSEL
ARGUED: Sarah Riley Howard, WARNER NORCROSS & JUDD LLP, Grand Rapids,
Michigan, for Appellant. Jennifer J. Sinclair, ASSISTANT UNITED STATES
ATTORNEY, Detroit, Michigan, for Appellee. ON BRIEF: Sarah Riley Howard, John J.
Bursch, WARNER NORCROSS & JUDD LLP, Grand Rapids, Michigan, for Appellant.
Jennifer J. Sinclair, ASSISTANT UNITED STATES ATTORNEY, Detroit, Michigan, for
Appellee.
SUTTON, J., delivered the opinion of the court, in which KETHLEDGE, J., joined.
BATCHELDER, C.J. (pp. 10-11), delivered a separate dissenting opinion.
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OPINION
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SUTTON, Circuit Judge. Over a two-year period starting eighteen years ago,
Sebastian Lucido stood trial on a number of federal money-laundering charges, for which
a jury acquitted him in one case and a trial judge acquitted him in the other. In 2008, Lucido

1
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filed motions in the district court that presided over his trials to expunge all records of those
proceedings held by the FBI, complaining that the maintenance and publication of his arrest
records has caused reputational harm to him and to his money-management business. The
district court denied Lucido’s motions on the merits. As we conclude that the court lacked
jurisdiction to entertain these requests, we vacate the district court’s orders and remand the
cases to the court to dismiss them for lack of jurisdiction.

I.

On March 31, 1992, a federal grand jury indicted fourteen co-defendants for various
racketeering, conspiracy and money laundering crimes. The indictment named Lucido in
one of the eighty-two counts. Lucido pled not guilty, and, after the government had
presented its evidence but before the case went to the jury, the district court granted his
motion for a judgment of acquittal under Rule 29 of the Federal Rules of Criminal
Procedure.

On March 10, 1993, another federal grand jury in the same district court indicted
fourteen co-defendants on a variety of money-laundering and conspiracy crimes. The
indictment named Lucido in seven of the twenty-two counts. Lucido pled not guilty, and a
jury acquitted him of all charges.

Fifteen years later, Lucido filed “motion[s] for expungement of arrest record” in the
same district court under his original criminal case numbers, filing one motion with Judge
Edmunds and the other with Judge Borman. Lucido claimed that records of his indictments
appeared in a database maintained by the Financial Industry Regulatory Authority (FINRA).
A private entity, FINRA uses information self-reported by its financial-industry members,
and verified by the FBI (at the direction of the Attorney General and Congress), to assist
investors in researching securities brokers. The public availability of these records through
FINRA, Lucido claimed, damaged his investment management business. The government
responded that the court lacked jurisdiction to entertain Lucido’s motions.

Judge Edmunds held that the court had jurisdiction over the motion in her case but
denied it on the merits. One week later, Judge Borman adopted “Judge Edmunds’ decision
and the reasons set forth in her opinion” and rejected Lucido’s second motion as well.
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R.333. Lucido filed timely appeals from both orders, and we have consolidated them on
appeal.

II.

Before considering the merits of Lucido’s expungement motions, we must consider
a more “fundamental question”: our power to do so. Steel Co. v. Citizens for a Better Env’t,
523 U.S. 83, 94 (1998). “[E]very federal appellate court has a special obligation to satisfy
itself not only of its own jurisdiction, but also that of the lower courts in a cause under
review.” Id. at 95 (internal quotation marks omitted). As “courts of limited jurisdiction,”
federal courts “possess only that power authorized by Constitution and statute” and may not
expand that power “by judicial decree.” Kokkonen v. Guardian Life Ins. Co. of Am., 511
U.S. 375, 377 (1994).

There are three possible avenues for finding jurisdiction here. First, does the court’s
original authority over Lucido’s criminal cases directly provide the requisite jurisdiction?
When Lucido’s criminal cases first came before the district court in 1992 and 1993, no one
could doubt the court’s authority to hear them. “The district courts of the United States shall
have original jurisdiction, exclusive of the courts of the States, of all offenses against the
laws of the United States.” 18 U.S.C. § 3231. The court, then, plainly had authority over
the criminal charges. Yet those two cases have come and gone, ending when the district
court entered unchallenged final judgments in each of them, “divest[ing]” the district courts
“of all jurisdiction” over them. United States v. Martin, 913 F.2d 1172, 1174 (6th Cir.
1990). The essential effect of entering a final (unappealed) judgment acquitting an
individual of charges brought against him is to end the government’s and the court’s
authority over the individual, not to let it linger. The statutory premise for the court’s
original authority over Lucido thus does not by itself provide a basis for considering
Lucido’s expungement motions.

Second, if § 3231 does not directly empower the district court to entertain this
expungement motion, is there any other statute that does? Not that we, or for that matter
Lucido, have been able to identify. Several statutes permit expungement motions, but they
do not apply to Lucido’s case. One authorizes district courts to entertain expungement
requests from certain individuals convicted of violating the Controlled Substances Act. See
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18 U.S.C. § 3607(c); see also 21 U.S.C. § 844a(j). Another authorizes the same to correct
inaccurate government records. See 5 U.S.C. § 552a(g). And still others authorize the
expungement of DNA records. See 42 U.S.C. § 14132(d); 10 U.S.C. § 1565(e). All told,
however, no statute authorizes the district court to entertain this type of expungement
motion.

Third, if neither § 3231 nor any other federal statute directly empowers district courts
to entertain expungement motions, is it possible that § 3231 indirectly does so? Section 3231
of course says nothing about expungement motions. Yet once the courts have original
authority to address a criminal charge, Lucido argues, they retain “inherent, equitable power”
to consider expungement motions filed under their “ancillary jurisdiction”—ancillary, that
is, to the primary criminal action. Reply Br. at 6–10.

Yet the ancillary power of the federal courts does not “stretch” that “far.” Kokkonen,
511 U.S. at 379. In Kokkonen, the defendant removed state-law claims to federal court based
on diversity jurisdiction. The parties settled the case, and the district court dismissed it with
prejudice under Rule 41(a)(1)(ii) of the Federal Rules of Civil Procedure through an order
that did not reserve the trial court’s authority to enforce the settlement agreement. Id. at
376–77. Roughly one month later, a dispute arose over the meaning of the settlement
agreement and the parties’ obligations under it, prompting one of the parties to return to the
district court to seek enforcement of the settlement contract. Invoking its “‘inherent power,’”
the district court enforced the settlement, and the court of appeals affirmed. Id. at 377.

The Supreme Court disagreed, noting that enforcement of the agreement was “more
than just a continuation or renewal of the dismissed suit, and hence required its own basis
for jurisdiction.” Id. at 378. In the absence of “some independent basis for federal
jurisdiction,” the Court held that the district court had no basis for resolving the parties’
contract dispute. Id. at 382. “[A]ncillary jurisdiction,” the Court explained, allows federal
courts to hear “some matters (otherwise beyond their competence) that are incidental to other
matters properly before them,” id. at 378 (emphasis added), and identified two legitimate
forms of ancillary jurisdiction: “(1) to permit disposition by a single court of claims that are,
in varying respects and degrees, factually interdependent,” and “(2) to enable a court to
function successfully, that is, to manage its proceedings, vindicate its authority, and
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effectuate its decrees.” Id. at 379–80. Neither category sufficed to provide jurisdiction in
Kokkonen.

The same is true here. Lucido does not invoke the first category, and with good
reason. It concerns a single court’s authority to resolve “factually interdependent” claims,
which does not apply to claims filed sixteen years apart, that turn on different facts and that
rest on different sources of authority: a grand jury’s authority to indict in the one instance
and a federal court’s authority to remove any record of the indictment in the other.

The second category, which Lucido does invoke, is no more helpful. What is it
about “manag[ing]” a criminal case, “vindicat[ing]” its power over the case and
“effectuat[ing]” any orders in the case that requires a district court to have authority, sixteen
years later, to remove any record held by any federal entity of the proceeding? None that
we can see. These criminal cases have long since been resolved, and there is nothing left to
manage, vindicate or effectuate. So long as the records of what happened in the
proceedings—that he was twice indicted and twice acquitted—are accurate, it is difficult to
see what business the courts have as a matter of inherent power in removing any trace of the
proceedings.

Keep in mind that Lucido is not asking the court to remove records of its own
proceedings. That is not what Lucido wants, and it would not remedy the harm he targets.
What Lucido wants is to remove records of the indictments held by the executive branch (the
FBI) and kept at the direction of the legislative branch, which has ordered the Attorney
General to “acquire, collect, classify, and preserve” this kind of criminal history information.
28 U.S.C. § 534(a); see also 28 C.F.R. § 0.85(f) (instructing the Director of the FBI to
operate “a computerized nationwide index of law enforcement information”); 28 C.F.R.
§ 16.31 (“FBI identification record[s]” include “date of arrest,” “arrest charge” and “the
disposition of the arrest”); 28 C.F.R. § 20.3 (“Criminal history record information . . .
consist[s] of identifiable descriptions and notations of arrests, detentions, indictments,
informations, or other formal criminal charges, and any disposition arising therefrom,
including acquittal, sentencing, correctional supervision, and release.”). Lucido’s request,
if granted, would amount to an extraordinary inter-branch incursion, one that should not
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lightly be effectuated through the federal courts’ unexceptional right to oversee their own
criminal cases.

The key premises of Lucido’s motion, moreover, have nothing to do with the records
of the criminal cases. They concern matters that occurred after the criminal proceedings:
his good conduct since the acquittals, his successful investment business and (in some
tension with the last point) his difficulty attracting clients due to the records of the
indictments. Most of these are fair points to be sure, but all of them have nothing to do with
the facts underlying Lucido’s original criminal cases. Allowing the FBI to preserve these
records, as Congress has directed, is “entirely consistent with and respectful of the jury’s
ultimate judgment” in this case, as the records “accurately document his arrest, trial and
acquittal.” United States v. Coloian, 480 F.3d 47, 52 (1st Cir. 2007).

In holding that the federal courts lack ancillary jurisdiction to consider expungement
motions directed to the executive branch, we join all four circuits that have considered the
point and that have addressed Kokkonen in doing so. Since the Court decided Kokkonen in
1994, the First, Third, Eighth and Ninth Circuits all have declined to recognize ancillary
jurisdiction under § 3231 to entertain expungement motions and have revisited contrary pre-
Kokkonen circuit authority in the process. See Coloian, 480 F.3d at 47; United States v.
Meyer, 439 F.3d 855, 860 (8th Cir. 2006); United States v. Dunegan, 251 F.3d 477 (3d Cir.
2001); United States v. Sumner, 226 F.3d 1005 (9th Cir. 2000). The only authority to our
knowledge cutting the other way comes from decisions that predate Kokkonen, see, e.g.,
Livingston v. U. S. Dep’t of Justice, 759 F.2d 74, 78 (D.C. Cir. 1985); Allen v. Webster, 742
F.2d 153, 154–55 (4th Cir. 1984); United States v. Schnitzer, 567 F.2d 536, 539 (2d Cir.
1977); United States v. Linn, 513 F.2d 925, 927 (10th Cir. 1975), or that never discuss or
even cite Kokkonen, see, e.g., United States v. Flowers, 389 F.3d 737, 738–39 (7th Cir.
2004).

For like reasons, Lucido finds no refuge in two Sixth Circuit cases: United States
v. Doe, 556 F.2d 391, 393 (6th Cir. 1977); and United States v. Carey, 602 F.3d 738, 740
(6th Cir. 2010). Doe predates Kokkonen, and in one sentence it noted (without citation) that
“[i]t is within the inherent equitable powers of a federal court to order the expungement of
a record in an appropriate case.” 556 F.2d at 393. Although a “prior decision” by a “panel
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of this Court” is “controlling authority” in subsequent cases, “an inconsistent decision of the
United States Supreme Court” requires “modification” of the earlier panel decision. Darrah
v. City of Oak Park, 255 F.3d 301, 309 (6th Cir. 2001). This is just such a case: Doe cannot
be reconciled with Kokkonen because it extends the courts’ jurisdiction beyond that provided
by the Constitution, by statute and by the limited doctrine of ancillary jurisdiction. “[W]e
must—as a lower federal court—apply all pertinent Supreme Court precedent,” Rosales-
Garcia v. Holland, 322 F.3d 386, 414 (6th Cir. 2003), including precedent that overrules
Sixth Circuit decisions.

Carey suffers from similar problems. It involved an expungement request—filed,
as in this case, under the original criminal docket number—premised on a claim that records
of the defendant’s criminal history prevented him from owning a firearm in violation of his
constitutional right to bear arms. See 602 F.3d at 740–41. The district court denied the
request, and the panel affirmed on the merits after noting, again in one sentence, that “[a]n
order on a motion to expunge a conviction is within the equitable jurisdiction of a federal
district court.” Id. at 740. The opinion cited only Doe for this proposition. There was no
further discussion of the point, let alone a reference to Kokkonen or an analysis of its
application to expungement motions. Neither Carey’s nor the Government’s briefs cited
Kokkonen, discussed ancillary jurisdiction or otherwise challenged the court’s power to
consider the requests. Cases implicating issues that “merely lurk in the record, neither
brought to the attention of the court nor ruled upon,” do not establish binding precedent on
the unexamined point. Rinard v. Luoma, 440 F.3d 361, 363 (6th Cir. 2006). “[D]rive-by
jurisdictional rulings . . . have no precedential effect.” Steel Co., 523 U.S. at 91; see Lewis
v. Casey, 518 U.S. 343, 353 n.2 (1996) (“[S]tanding was neither challenged nor discussed
in that case, and we have repeatedly held that the existence of unaddressed jurisdictional
defects has no precedential effect.”); Fed. Election Comm’n v. NRA Political Victory Fund,
513 U.S. 88, 97 (1994) (“The jurisdiction of this Court was challenged in none of these
actions, and therefore the question is an open one before us.”); Will v. Mich. Dept. of State
Police, 491 U.S. 58, 63 n.4 (1989) (“[T]his Court has never considered itself bound by [prior
sub silentio holdings] when a subsequent case finally brings the jurisdictional issue before
us.”); United States v. L. A. Tucker Truck Lines, Inc., 344 U.S. 33, 38 (1952) (“[T]his Court
has followed the lead of Chief Justice Marshall who held that this Court is not bound by a
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prior exercise of jurisdiction in a case where it was not questioned . . . .”); United States v.
More, 7 U.S. (3 Cranch) 159, 172 (1805) (Marshall, C.J.) (“No question was made, in that
case, as to the jurisdiction. It passed sub silentio, and the court does not consider itself as
bound by that case.”).

*****

In one sense, the resolution of this dispute, like the resolution of many jurisdictional
disputes, seems unduly technical and legalistic. The equitable premise of Lucido’s motion
after all is not illegitimate: He claims to have gotten wrapped up unfairly in a criminal
prosecution eighteen years ago and, even though he was acquitted of all charges and even
though he has had an untarnished law-abiding record ever since, the taint of the indictments
lives on, undermining his reputation and money-management business. Why shouldn’t the
federal courts be able to clean the slate on decades-old indictments when fair-minded reasons
exist for doing so?

That the federal courts are courts of limited jurisdiction, empowered only to wield
power Congress and the Constitution have given them, is one answer.

Another answer is that one person’s equitable power is another person’s authority
to remake federal law and to cross serious separation-of-power divides in the process. The
power to expunge an indictment is the power to undermine a web of federal (and state) laws
designed to collect and preserve such information for law enforcement purposes. Congress,
as noted, has commanded the Attorney General to “acquire, collect, classify, and preserve
identification, criminal identification, crime, and other records” and to “exchange such
records and information with, and for the official use of, authorized officials of the Federal
Government, including the United States Sentencing Commission, the States, cities, and
penal and other institutions.” 28 U.S.C. § 534(a)(1). In implementing this authority, the
Attorney General has delegated to the Director of the FBI responsibility for creating a
nationwide computer index of law enforcement information under the direction of the
National Crime Information Center. See 28 C.F.R. §§ 0.85(f), 16.31, 20.3. And, as relevant
here, securities firms must submit their employees’ fingerprint information to the “Attorney
General of the United States for identification,” and “the Attorney General” must provide
organizations such as FINRA “with access to all criminal history record information.”
Nos. 09-1410/1412 United States v. Lucido Page 9

15 U.S.C. § 78q(f)(2); 17 C.F.R. § 240.17f-2; FINRA Rule 3070. These record-keeping and
reporting requirements are extensive and not inconsequential as a matter of law-enforcement
policy. To the extent a federal court has the power to nullify these rules—to erase
indictments and convictions that Congress had commanded the executive branch to
preserve—it hardly seems unfair to insist that Congress, not a court’s inherent equitable
power, be the source of that authority.

III.

“Jurisdiction is power to declare the law, and when it ceases to exist, the only
function remaining to the court is that of announcing the fact and dismissing the cause.”
Steel Co., 523 U.S. at 94 (quoting Ex Parte McCardle, 74 U.S. (7 Wall.) 506, 514 (1868)).
We therefore vacate the district court’s orders and remand the cases to the district court to
dismiss them for lack of jurisdiction.
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DISSENT
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ALICE M. BATCHELDER, Chief Circuit Judge, dissenting. If we were writing on
a clean slate, I would join the portion of the majority opinion that explains why we do not
have subject matter jurisdiction here. But we are not writing on a clean slate, and I am
therefore compelled to write separately because I believe that we are bound by United States
v. Carey, 602 F.3d 738 (6th Cir. 2010). Accordingly, I must respectfully dissent.

Sixth Circuit Rule 206(c) is unequivocal: “Reported panel opinions are binding on
subsequent panels. Thus, no subsequent panel overrules a published opinion of a previous
panel. Court en banc consideration is required to overrule a published opinion of the court.”
6 Cir. R. 206(c) (adopted 1998; rules last updated Dec. 1, 2009). Carey is a published
opinion of a previous panel and, consequently, we as a subsequent three-judge panel may
not overrule it.

The majority contends — in a most persuasive opinion — that we must overrule
Carey because it is inconsistent with Kokkonen v. Guardian Life Insurance Company of
America, 511 U.S. 375 (1994). But as the majority also makes evident, Carey is almost
exactly on point with the present case, whereas neither Carey nor the present case is exactly
on point with Kokkonen. It is therefore necessary to extend Kokkonen (albeit reasonably, I
agree) to cover the expungement issue raised here. But, more importantly, Kokkonen is not
intervening. Kokkonen was decided in 1994, some 16 years before Carey. The four Circuits
that applied Kokkonen to this expungement issue did so three, four, nine, and ten years
before Carey. See United States v. Coloian, 480 F.3d 47 (1st Cir. 2007); United States v.
Meyer, 439 F.3d 855 (8th Cir. 2006); United States v. Dunegan, 251 F.3d 477 (3d Cir.
2001); United States v. Sumner, 226 F.3d 1005 (9th Cir. 2000). Thus, Kokkonen’s rule and
its application to the present issue were well established at the time Carey issued.

The majority explains the Carey panel’s failure to cite, follow, or reconcile
Kokkonen as little more than an oversight, inasmuch as neither Carey nor the Government
raised the issue in their briefs to this court. But I cannot agree that subject matter jurisdiction
is an issue that “merely lurk[s] in the record, neither brought to the attention of the court nor
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ruled upon.” Quite the contrary, subject matter jurisdiction is unique — federal courts are
courts of limited jurisdiction and we must inquire into our subject matter jurisdiction sua
sponte if the parties have not raised it. See Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 94-95 (1998) (“The requirement that jurisdiction be established as a threshold matter
springs from the nature and limits of the judicial power of the United States and is inflexible
and without exception.” (quotation and editorial marks omitted)); Liberty Mut. Ins. Co. v.
Wetzel, 424 U.S. 737, 740 (1976); Mickler v. Nimishillen & Tuscarawas R.R., 13 F.3d 184,
189 (6th Cir. 1993) (“Although neither party raised this issue on appeal, this Court must raise
the matter sua sponte because it goes to the issue of subject-matter jurisdiction.”). Nor can
I agree that the Supreme Court’s approach to “drive-by jurisdictional rulings” serves to
overcome Sixth Circuit Rule 206(c). The Supreme Court is not bound by Sixth Circuit Rule
206(c), of course, nor does it have any similar, self-governing rule inasmuch as the Supreme
Court always sits en banc and never as a three-judge panel. Our station as a panel is not
equal to that of the Supreme Court.

I believe that our decision in Carey is wrong. Nonetheless, I believe that the
governing law of this Circuit, namely Sixth Circuit Rule 206(c), requires us to adhere to the
published opinion in Carey and hold that — until such time as we can consider this issue en
banc or the Supreme Court speaks again to this issue — we have equitable jurisdiction to
decide a motion to expunge. Because, based on the present record, I cannot conclude that
the district court abused its discretion by denying the motion, I would affirm the district court
on the merits.