United States v. Wilfong

FILED
United States Court of Appeals
Tenth Circuit

December 23, 2008
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,
v. No. 07-6214
NEIL JASON WILFONG,

Defendant-Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
(D.C. No. CR-07-103-001-H)

John C. Richter, United States Attorney, (Jonathon E. Boatman, Assistant United
States Attorney, with him on the brief), Oklahoma City, Oklahoma, for Plaintiff-
Appellee.

June E. Tyhurst, Assistant Federal Public Defender, Oklahoma City, Oklahoma,
for Defendant-Appellant.

Before HARTZ, McWILLIAMS and McCONNELL, Circuit Judges.

McCONNELL, Circuit Judge.

Neil Jason Wilfong pled guilty to charges arising from a bomb threat he

made against Tinker Air Force Base, which resulted in the evacuation of a
building at the base for several hours. As part of his plea, Mr. Wilfong agreed to

pay restitution to the government. The question before us is whether the

restitution may include compensation for the employee work hours lost as a result

of the evacuation. We conclude that it can. We also affirm Mr. Wilfong’s above-

guidelines sentence.

I. BACKGROUND

On December 15, 2006, at around 7:30 a.m., Mr. Wilfong called Tinker Air

Force Base, asking to speak to his mother, Fran Ferreira. The person taking the

call said that Ms. Ferreria was not in the office and asked if Mr. Wilfong wanted

to leave a message. Wilfong replied: “Well, there’s a bomb in the building.” The

building—called Building 3001—was evacuated. The evacuation lasted between

two-and-a-half and three-and-a-half hours (the parties disagree on the exact

amount of time) and involved thousands of employees. There was no bomb; the

threat had been a hoax.

Federal agents identified Mr. Wilfong as the caller and located him at the

home of his girlfriend. Officers set up a blockade around the house, but Wilfong

left the home (apparently carrying a loaded crossbow) and drove off in his truck.

After a high speed chase, he was taken into custody. After the court determined

he was competent to stand trial, Mr. Wilfong pled guilty to calling in the bomb

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threat, in violation of 18 U.S.C. § 844(e). 1 He was sentenced to 48 months

imprisonment, which represented an upward variance from the recommended

sentencing guidelines range of 24-30 months. He was also ordered to pay

$475,631.00 in restitution under the Mandatory Victims Restitution Act (MVRA).

The bulk of the restitution was for lost employee work hours caused by the

evacuation. Mr. Wilfong appeals the district court’s decision to order restitution

based on the loss of employee work hours at the Tinker Base. He also appeals his

above-guidelines sentence.

II. THE RESTITUTION ORDER

Federal courts may not order restitution in criminal cases except “as

explicitly empowered by statute.” United States v. Nichols, 169 F.3d 1255, 1278

(10th Cir. 1999) (internal quotation marks omitted). The Mandatory Victims

Restitution Act, 18 U.S.C. § 3663A, requires persons convicted of certain

offenses to pay restitution to those harmed by their acts. The Act prescribes a

different methodology for calculating restitution for property crimes and for

bodily injury crimes. In cases where there is bodily injury to a victim, the statute

allows for restitution for the costs of medical care, occupational therapy, and “for

1
The indictment charged that Mr. Wilfong “through the use of a telephone,
willfully made a threat and maliciously conveyed false information knowing it to
be false to Tinker Air Force Base concerning an attempt and an alleged attempt to
be made to kill, injury, and intimidate individuals and unlawfully to damage and
destroy a building by means of an explosive. All in violation of 18 U.S.C. §
844(e).”

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income lost by such victim as a result of such offense.” 18 U.S.C. §

3663A(b)(2)(A)-(C). In cases where the offense has resulted in “damage to or

loss or destruction of property of a victim,” the statute requires the defendant

either to return the property or, if return is impossible, impractical, or inadequate,

to pay “an amount equal to the greater of: (I) the value of the property on the date

of the damage . . ., or (II) the value of the property on the date of sentencing,”

minus the value of any part of the property that may have been returned. 18

U.S.C. §3663A(b)(1)(B)(i)(I)-(II). Section 3663(b) does not expressly authorize

restitution for lost income or lost profits in property damage cases, and the term

“value” is undefined. It is undisputed that this is a property damage case, not a

bodily injury case.

Mr. Wilfong does not dispute that his offense is one for which restitution is

mandatory under the MVRA. However, he argues that he cannot be required to

pay restitution for the value of the lost employee work time entailed by his phony

bomb threat. He offers two related arguments in support of this conclusion: (1)

that restitution for employee work hours is tantamount to restitution for “lost

income” and is not authorized by the MVRA, and (2) that restitution for employee

work hours would be a form of “consequential damages,” which this Court has

interpreted the MVRA to disallow.

A. Loss of Employee Work Hours

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 Looking to the language of the statute and its evident purposes, we have no

hesitation in affirming the district court’s award of restitution. An employee’s

work time is the property of the employer. United States v. Hand, 863 F.2d 1100,

1103 (3rd Cir. 1988). When Mr. Wilfong issued his bomb threat and Building

3001 was evacuated, Tinker Air Force Base lost the value of this “property” just

as surely as a printing plant would lose the value of its property if an arsonist

struck a match to its paper supply. Value was destroyed. The property could not

be returned. There would be no question, in the arson case, that restitution should

include the value of the paper that was destroyed. In this case, the cost of the lost

employee work time should similarly be included in the restitution order. As the

Third Circuit wrote in Hand, “When the time for which the government

compensated its employees was ‘lost’ because of [someone’s] illegal acts,” it is

just “as significant a financial loss to the government as when, in [another case]

food stamps were stolen and fraudulently used.” 863 F.2d at 1103.

The Supreme Court has stated that “the ordinary meaning of ‘restitution’ is

restoring someone to a position he occupied before a particular event.” Hughey v.

United States 495 U.S. 411, 416 (1990) (citing W EBSTER 'S T HIRD N EW

I NTERNATIONAL D ICTIONARY 1936 (1986); B LACK 'S L AW D ICTIONARY 1180 (5th

ed. 1979)). Before Mr. Wilfong’s bomb threat, Tinker Air Force Base was

entitled to the value of the services of its employees. Unless Mr. Wilfong

compensates for this loss, the purpose of restitution will not have been met.

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 When property is damaged or lost and cannot be returned, the victim is

entitled under the plain language of the statute to receive as restitution an amount

equal to “the value of the property on the date of the damage, loss, or

destruction.” 18 U.S.C. § 3663A(b)(1)(B)(i)(I). The statute does not define the

term “value,” but one logical way to assess the value of the lost property is by its

cost to the victim—how much the victim paid for the lost property. 2 That is what

the district court did, and we see nothing wrong with its reasoning.

But perhaps matters are not that simple. As Mr. Wilfong notes, the MVRA

authorizes restitution for “lost income” in bodily injury cases but contains no such

provision for cases of injury to property. Some courts have inferred from this

statutory difference that Congress has not authorized (and therefore has impliedly

prohibited) restitution for lost income or lost profits in property damage cases. In

United States v. Mitchell, 876 F.2d 1178 (5th Cir. 1989), for example, the

defendant was convicted of possession of stolen property, namely three Mack

trucks. As part of restitution, the district court ordered the defendant to pay the

2
We do not hold that the cost to the victim is the only reasonable form of
valuation. In some cases, replacement cost may be more appropriate. If, for
example, Tinker Air Force Base had been forced to pay the employees time and a
half to work on weekends to make up for their lost time during the bomb scare,
that cost might well have been allowable as the value of the lost property. In
other cases, repair or restoration costs may be most appropriate. See, e.g., United
States v. Barton, 366 F.3d 1160, 1167 (10th Cir. 2004); United States v. Quarrell,
310 F.3d 664, 678 (10th Cir. 2002). The value of the defendant’s property loss is
not limited to the gain to the defendant, United States v. Anglian, 784 F.2d 765,
767 (6th Cir. 1986), which in this case would be zero.

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owners of the trucks the income they lost as a result of the thefts, calculated by

multiplying the daily earnings the victims would have made from the use of the

trucks by the number of days the trucks were illegally held by the defendant. The

government defended the restitution order, in part, on the ground that denying

recovery for lost income would fall short of the statutory goal of full

compensation to victims for their losses. The Fifth Circuit reversed, finding that

lost income could not properly be the object of restitution. It pointed to the

difference between 18 U.S.C. § 3663(b)(1), which authorizes restitution for lost

income in bodily injury cases, and 18 U.S.C. § 3663(b)(2), 3 which makes no

mention of lost income or profits in property damage cases. Id. at 1183. It

explained:

[T]he fact that the goals of the Act may be thwarted by denying lost
income restitution does not authorize us to ignore the plain language
of the statute. Congress is clearly capable of authorizing restitution
for lost income when it chooses to do so. See 18 U.S.C. §
3663(b)(2). Despite this fact, it has not included lost income in the
type of restitution that may be ordered in property cases and, unless
and until it amends the statute to include lost income, courts may not
order such restitution in property cases.

Id.

3
Mitchell, like Milstein and Sharp (which we discuss below), was decided
under a predecessor statute to the MVRA, the Victim and Witness Protection Act
(VWPA), 18 U.S.C. §§ 3663-64, which contains identical relevant language.
Interpretations of the VWPA are relevant to the MVRA, except where the
language is different. United States v. Brock-Davis, 504 F.3d 991, 996 (9th Cir.
2007).

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 In United States v. Sharp, 927 F.2d 170 (4th Cir. 1991), defendants

responsible for exploding a home-made pipe bomb at a mine were ordered to pay

restitution for the “loss of income” caused by the destruction of the mine. Id. at

172–73. It is not clear from the appellate opinion how this loss was measured.

Adopting the reasoning of Mitchell, but without much analysis, the Fourth Circuit

reversed the award. It commented that “on the plain language of the statute, the

district court should not have included lost income in the calculation of

restitution.” Id. at 174.

Other appellate decisions are in seeming conflict. In United States v.

Milstein, 481 F.3d 132 (2d Cir. 2007), the defendant was convicted of

fraudulently distributing misbranded drugs in violation of trademark law. The

district court ordered restitution to drug manufacturers based on the value of lost

sales. Id. at 137. The Second Circuit noted the holdings of Mitchell and Sharp,

but concluded that “[n]othing in the text or legislative history of the [Act]

precludes restitution for lost profits under section 3663(b)(1) where such losses

amount to the ‘value of the property’ the victim lost.” Id. at 136–37. The court

reasoned that trademarks are a recognized property right, that the term “property”

in the statute includes intangible property, and that “[t]he standard measure for

determining the value to the victim of infringed trademarks is the victim's lost

sales.” Id. at 137. Consequently, the court concluded: “Here, the District Court,

acting within its broad discretion to determine restitution, properly employed this

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measure, and, based on the evidence before it, made a reasonable estimate of the

amount of lost sales.” Id.

The Sixth Circuit followed a similar approach in United States v. Lively, 20

F.3d 193, 202-03 (6th Cir.1994). The defendants had fraudulently acquired

merchandise from mail-order retailers and could not return it. The district court

ordered restitution in the amount of the retail price of the stolen goods; on appeal,

the defendants argued that they could be held responsible only for the cost to the

victim, that is, the wholesale price. The Sixth Circuit upheld the district court’s

award, reasoning:

[I]n order to restore the mail order companies to their prior state of
well being the order of restitution had to include their lost profits.
Before [the defendant] victimized these companies, they had
merchandise that could be sold at the retail price level. After [the
defendant] victimized these companies, they no longer had this
merchandise to sell at the retail price level. [The defendant]
precluded these companies from being able to realize the profits of
their labor. Thus, including lost profits in the order of restitution
was the only way to assure the restoration of these victims to their
prior state of well being.

Id. at 202-03.

Fortunately, in this case we need not determine whether the two lines of

precedent are in genuine conflict or, if they are, which is correct. Contrary to Mr.

Wilfong’s argument, awarding restitution to Tinker Air Force Base for lost

employee work time, valued at the employees’ wages, is not economically

equivalent to compensating for lost profits or income. The restitution award did

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nothing more than give the government compensation for the cost of the property

that was destroyed by Mr. Wilfong’s actions. In accounting terms, the restitution

order compensated for the cost of an input that was destroyed, not for the

diminution in future income. If the district court had ordered Mr. Wilfong to pay

for the value of the product the employees would have created if they had been

able to work (whatever that would be), Mr. Wilfong might have a point. If a

widget factory were shut down by a bomb threat, there would be a difference

between restitution based on the hourly wages of the workers versus restitution

based on lost profits from reduced widget production. Under the logic of Mitchell

and Sharp, restitution based on the latter would arguably be impermissible. But

on these facts, even under the legal analysis of Mitchell and Sharp, the district

court was within its discretion to award restitution for the cost to the government

of the property that Mr. Wilfong destroyed, namely the employee work hours that

the government paid for but did not receive.

B. Consequential Damages

Mr. Wilfong also argues that the restitution amount awarded by the district

court amounts to “consequential” or “incidental damages.” Mr. Wilfong is

correct that we have interpreted the MVRA as not allowing recovery for

consequential damages. See, e.g., Barton, 366 F.3d at 1167 (noting that “there is

general agreement that a restitution order under the MVRA cannot encompass

consequential damages resulting from the defendant’s conduct”). But we do not

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think it is true that the lost work time associated with the evacuation amounts to a

mere “consequential damage.”

This argument is closely related to one we have just rejected, in that lost

profits are often a form of consequential damages. But the two arguments are not

the same. The first argument focused on the presumed difference between the

value of property and the income it generates. The consequential damages

argument focuses instead on causation. Consequential damages are damages that

are not the direct and immediate result of the injury, but depend in part on factors

outside the control or expectation of the parties. See B LACK ’ S L AW D ICTIONARY

394 (8th ed. 2004) (defining consequential damages as “[l]osses that do not flow

directly and immediately from an injurious act but that result indirectly from that

act”). As another court put it in the restitution context, “we have approved

restitution awards that included losses at least one step removed from the offense

conduct itself,” but “[t]he causal chain may not extend so far, in terms of the facts

or the time span, as to become unreasonable.” United States v. Gamma Tech

Indus., 265 F.3d 917, 928 (9th Cir. 2001).

The causation here was both proximate and direct. The natural and

expected (whether or not intended) consequence of issuing a bomb threat is that

the building will be evacuated, thus leading to a loss in work time. Indeed, at the

sentencing hearing Mr. Wilfong conceded that the threat was “why they evacuated

the building.” According to the Ninth Circuit, the “main inquiry for causation in

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restitution cases [is] whether there was an intervening cause and, if so, whether

this intervening cause was directly related to the offense conduct.” United States

v. De La Fuente, 353 F.3d 766, 772 (9th Cir. 2003) (internal quotation marks

omitted). Mr. Wilfong cannot argue that the injury to Tinker Air Force Base was

attributable to any intervening cause or unexpected circumstance. He told the

person who answered his telephone call that there was a bomb in Building 3001,

and the building accordingly was evacuated. The damages were therefore not

consequential.

Our conclusion follows a fortiori from the holding of the Ninth Circuit in

De La Fuente. In that case, the defendant mailed letters containing white powder

and a threatening note to a former boss and former girlfriend, identifying the

powder as anthrax. One of the letters accidentally broke open in a post office

processing center, causing the building to be evacuated and necessitating a

hazardous materials cleanup. 353 F.3d at 768. The Ninth Circuit held that the

losses sustained, which included employee work hours, 4 were both “directly and

proximately caused” by the threats, despite the defendant’s argument that the

threats had been mailed to other parties and the fact that the letter had come open

in the postal processing center was purely adventitious. Id. at 773. Here the

4
Mr. Wilfong points out that De La Fuente did not distinguish in his appeal
between lost employee work time and other injury suffered by the postal service,
such as clean-up cost. For purposes of the consequential damages argument,
however, there would appear to be no distinction.

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causation was even more direct: Mr. Wilfong phoned his bomb threat to Building

3001 at Tinker Air Force Base. These damages cannot be described as remote or

indirect, or the causal chain as attenuated.

III. THE ABOVE-GUIDELINES SENTENCE

Mr. Wilfong separately challenges his above-guidelines sentence. When a

defendant makes a timely objection to the sentence, we review for abuse of

discretion. See, e.g., United States v. Smart, 518 F.3d 800, 805-06 (10th Cir.

2008). When a defendant fails to object to a sentence, the standard is plain error.

United States v. Romero, 491 F.3d 1173, 1176-77 (10th Cir. 2007). The two

parties disagree on whether Mr. Wilfong objected in a timely manner, and as a

result, disagree on what is the proper standard of review. In reviewing a

sentencing decision, this court “must first ensure that the district court committed

no significant procedural error” and then consider the “substantive reasonableness

of the sentence.” Gall v. United States, 128 S. Ct. 586, 597 (2007).

Mr. Wilfong argues, cursorily, that the sentencing judge abused his

discretion because he (1) based his decision on alleged criminal conduct not

resulting in convictions, both pending and previously dismissed charges, (2) did

not specify which pending or dismissed charges he relied on, and (3) did not

calculate how the criminal conduct not resulting in convictions would affect his

criminal history points if counted. Mr. Wilfong does not cite any authority, nor

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give any discussion beyond simply listing the ways in which (he believes) the

district court abused its discretion. We find that Mr. Wilfong has waived his

arguments due to inadequate briefing. United States v. Wooten, 377 F.3d 1134,

1145 (10th Cir. 2004) (“The court will not consider such issues adverted to in a

perfunctory manner, unaccompanied by some effort at developed argumentation.”

(internal quotation marks omitted)).

In any event, it is well established that sentencing courts may rely on

uncharged conduct within a discretionary sentencing system. United States v.

Magallanez, 408 F.3d 672, 684 (10th Cir. 2005). The district court correctly

calculated the advisory guidelines range. Because the district judge sentenced the

defendant pursuant to his discretion under 18 U.S.C. § 3553(a), and not pursuant

to the guidelines, it was not necessary for him to frame his reasoning in terms of

criminal history points. We believe that the explanation offered for the above-

guidelines sentence was fully adequate to meet the standards of procedural

reasonableness, and that the resulting sentence was within the court’s ample

sentencing discretion.

IV. CONCLUSION

We AFFIRM the judgment of the district court.

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