United States Court of Appeals
For the First Circuit
Nos. 96-1021 & 1022
UNITED STATES OF AMERICA,
Appellee,
v.
ANTHONY G. OLBRES and SHIRLEY A. OLBRES,
Appellants.
ERRATA SHEET
ERRATA SHEET
The opinion of this Court issued on November 1, 1996 is
corrected as follows:
On page 5, line 20: end the paragraph after "appeal." Begin
new paragraph on line 21, with "Three"
On page 17, line 6: change "appears" to "appeared"
On page 17, line 10: delete apostrophe after "Guidelines"
United States Court of Appeals
For the First Circuit
Nos. 96-1021
96-1022
UNITED STATES OF AMERICA,
Appellee,
v.
ANTHONY G. OLBRES and SHIRLEY A. OLBRES,
Appellants.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
NEW HAMPSHIRE
[Hon. Steven J. McAuliffe, U.S.District Judge]
Before
Selya, Cyr and Lynch, Circuit Judges,
Gregory G. Katsas, with whom John B. Nalbandian, Jones, Day,
Reavis & Pogue, Scott P. Lopez, Terry Philip Segal, Segal &
Feinberg, Steven M. Gordon, and Shaheen & Gordon were on brief
for appellants.
Karen Quesnel, Attorney, Tax Division, Department of
Justice, with whom Loretta C. Argrett, Assistant Attorney
General, and Robert E. Lindsay and Alan Hechtkopf, Attorneys,
Tax Division, Department of Justice, were on brief for appellee.
November 1, 1996
LYNCH, Circuit Judge. This tax evasion case raises
LYNCH, Circuit Judge
two sentencing issues, one of import to tax cases and one of
larger import. We hold that a sentence in a tax evasion case
must be predicated on findings as to amounts that the
government has proven were willfully evaded and that it is
unlikely the requisite findings were made here. We also hold
that there is no categorical imperative prohibiting the very
consideration of whether a case is so unusual as to warrant a
downward departure based on the loss of jobs to innocent
employees occasioned by the imprisonment of the defendant
owner of a small business. We reject the argument that the
United States Sentencing Commission's comment discouraging
departures based on the "vocational skills" of the defendant
categorically prohibits consideration of such job loss to
third parties. Accordingly, we vacate defendants' sentences
and remand.
I
Anthony and Shirley Olbres, husband and wife, run a
business, Design Consultants ("DC"), which creates exhibit
booths for trade shows. Design Consultants currently employs
twelve people in addition to Anthony Olbres, who is president
of the company, and Shirley Olbres, who serves as DC's part-
time bookkeeper. In 1987, Mr. and Mrs. Olbres had a total
income of $837,480. In June 1987, they purchased a Rolls
Royce Corniche convertible for $158,000. They drove the
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Rolls to a local restaurant in Exeter, New Hampshire. A
passing IRS employee saw the luxury car parked outside of the
restaurant. His curiosity engaged, he wrote down the license
plate number with the intention of identifying the car's
owner and examining his or her tax returns. The IRS
employee's curiosity led to a 1989 audit of the Olbres' 1987
joint tax returns and eventually resulted in a criminal
investigation. The investigation led the government to
conclude that Mr. and Mrs. Olbres had committed criminal tax
evasion.
Mr. and Mrs. Olbres were indicted on three counts of
criminal tax evasion related to the income tax returns they
filed for the years 1986, 1987, and 1988. See 26 U.S.C.
7201. The returns understated the couple's taxable income
for those years by approximately $153,000, $749,000, and
$175,000, respectively. For 1987, the year with the bulk of
the unreported income, Mr. and Mrs. Olbres failed to report
income from three sources: 1) payments, totaling $630,000,
from business customers that were deposited directly into a
business savings account and not recorded in the cash
receipts journal provided to the Olbres' accountant; 2)
rental income, totaling $22,000, from various properties the
couple owned; and 3) rebates, totaling $97,000, paid by
shipping companies utilized by DC. Mr. and Mrs. Olbres
conceded all the understatements but defended on the basis
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that none were willful. The couple insisted that they had
relied on their accountant, who had prepared their returns
since 1977. That accountant died before the trial. The
couple attributed other errors, including the failure to
report the shipping rebates, to Mrs. Olbres, who was depicted
as a well-meaning but untrained bookkeeper.
The jury acquitted Mr. and Mrs. Olbres on the charges
relating to the 1986 and 1988 returns and convicted on the
charge related to the 1987 return. The jury verdict was
general; the district judge instructed the jury that it could
convict on a count if it found that Mr. and Mrs. Olbres had
willfully attempted to evade a "substantial" amount of taxes
for the relevant year. There was no specific jury finding as
to the amounts willfully evaded, or as to whether the willful
evasion encompassed some or all of the categories of income
involved.
The district court granted the Olbres' motion for
judgment of acquittal on the conviction relating to the 1987
tax return on the basis that the government had failed to
prove willfulness beyond a reasonable doubt. United States
v. Olbres, 881 F. Supp. 703, 706 (D. N.H. 1994). The
government appealed, and this court reversed, holding that
there was evidence of willfulness sufficient to uphold the
conviction. United States v. Olbres, 61 F.3d 967, 970-73
(1st Cir.), cert. denied, 116 S. Ct. 522 (1995). This court
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did not parse the evidence as to the specific amounts
willfully underreported for the year 1987. See id.
On remand, the district court determined that the tax
loss caused by Mr. and Mrs. Olbres totalled $632,158, which,
according to the Sentencing Guidelines' Tax Table, places the
Olbres' base offense level at 15. See U.S.S.G. 2T4.1. The
$632,158 amount included the $470,236 tax loss from 1987 as
well as the tax losses from 1986 and 1988, despite the
defendants' challenge to the inclusion of certain amounts
from 1987 and of the entire 1986 and 1988 amounts.
The district court judge sentenced Mr. and Mrs.
Olbres to 18 months in prison, the lowest possible sentence
within the level 15 sentencing range for their Criminal
History Category of I. That sentence is predicated upon the
willfulness requirement having been met for the entire sum
underreported for 1987. It is also predicated on the entire
sums underreported for 1986 and 1988, as the court felt it
was required to consider those amounts as relevant conduct,
despite the acquittals. Stating that it was legally required
to do so, the court rejected Mr. and Mrs. Olbres' argument
that there should be a downward departure from the sentence
because sending them to prison would mean the demise of their
small business and loss of employment for a dozen innocent
employees. It is from these determinations that Mr. and Mrs.
Olbres appeal.
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Three issues are argued. Mr. and Mrs. Olbres argue
that the district court erred in failing to determine whether
they willfully evaded all of the taxes on which their
sentence was based. They also argue that the consideration
of the acquitted conduct stemming from the 1986 and 1988 tax
years violated the Sentencing Reform Act and the Double
Jeopardy and Due Process Clauses of the Constitution.
Finally, Mr. and Mrs. Olbres argue that the district court
erred as a matter of law in adopting a per se rule that a
trial court may never consider a downward departure to
prevent termination of an ongoing business enterprise and the
loss of employment to innocent persons. We vacate the
sentence and remand for further proceedings on the first and
third grounds and do not reach the Olbres' acquitted conduct
argument.
II
The United States and defendants agree on this appeal
that for sentencing purposes the trial judge was required by
Rule 32(c)(1), Fed. R. Crim. P., to find that Mr. and Mrs.
Olbres willfully attempted to evade all of the taxes used in
determining their base offense level. The dispute is over
whether the court adequately, or ever, made such findings.
The government contends that although the trial court made no
specific findings, the trial judge, by expressly adopting the
findings of the Presentence Investigation Report ("PSR"),
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implicitly found that Mr. and Mrs. Olbres had willfully
evaded taxes on income of approximately $1.1 million,
encompassing the tax years 1986, 1987, and 1988. Mr. and
Mrs. Olbres contend that the trial court improperly declined
to make such findings and instead erroneously assumed that
the general jury verdict and this court's opinion in its
sufficiency review established that the entire sum of $1.1
million was willfully evaded. Because the record is unclear
as to what the district court actually found, and in light of
our disposition of the downward departure issue, we vacate
the Olbres' sentences and remand for further proceedings.
See United States v. Garafano, 36 F.3d 133, 135 (1st Cir.
1994).
In order to determine the base offense level under
the Sentencing Guideline for tax evasion, the sentencing
court must determine the amount of "tax loss" to the
government. U.S.S.G. 2T1.1(a)(1987). In the pertinent
1987 Guidelines Manual, "tax loss" is defined as "the total
amount of tax that the taxpayer evaded or attempted to evade,
including interest to the date of filing of an indictment."
Id.
The primary difficulty presented by this case is that
the jury, in order to convict, was not required to find the
total amount of the tax that the taxpayers evaded or
attempted to evade. Indeed, the jury was instructed that
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"[t]he government does not have to prove the exact amount the
defendants owed, nor does the government have to prove that
all the tax charged in the indictment was evaded." Thus, the
sentencing judge is required to make a determination which is
not necessarily made by the jury and, in this case, was not
made.
Further enlarging the sentencing judge's task, the
Guidelines also state that "[w]hen more than one year is
involved, the tax losses are to be added." U.S.S.G. 2T1.1.
The Guidelines Commentary explains this instruction as
follows:
While the definition of tax loss corresponds
to "criminal deficiency," its amount is to be
determined by the same rules applicable in
determining any other sentencing factor. In
accordance with the "relevant conduct"
approach adopted by the guidelines, tax
losses resulting from more than one year are
to be added regardless of whether the
defendant is convicted of multiple counts.
U.S.S.G. Pt. T, comment. 1 (1987).
It is against this background that the district court
stated the task it thought it faced in light of the
government's position at that time:
With regard to the amounts evaded, I find
that the proper means of calculating the
amount of tax loss or the amount evaded under
the Sentencing Guidelines requires the Court
to look to the amounts not included as income
on the return that should have been included
as income and then to compute the tax based
upon that income plus interest based on the
statutory rate from the date of return to the
date of indictment.
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This is a correct statement of the first step of the
analysis. The next step, as the government now concedes, is
to identify the amount of taxes willfully evaded. We are
left with uncertainty as to whether that step was taken. In
determining what the district court did and did not do at
sentencing, "[w]e are guided . . . by the record -- a record
that flavors the judge's words and concomitantly, offers
insights into his thinking." United States v. Tavano, 12
F.3d 301, 304 (1st Cir. 1995).
In the court's most express statement of findings,
the judge stated that he adopted the findings and
recommendations set forth in the PSR. The court then held
that Mr. and Mrs. Olbres could be sentenced for all "amounts
not included as income that should have been included as
income." Other than the adoption of the PSR's findings, the
judge made no explicit finding regarding the willfulness of
evasion on specific amounts.
In many instances, a general statement that the judge
has adopted all the factual statements contained in the PSR
satisfies the requirements of Rule 32(c), Fed. R. Crim. P.
United States v. Skrodzki, 9 F.3d 198, 202 n.7 (1st Cir.
1993) (express adoption of PSR defeats Rule 32 challenge);
United States v. Barnett, 989 F.2d 546, 551 n.5 (1st
Cir.)(checking a box on judgment form indicating that court
adopted all findings from PSR constituted specific finding as
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to the quantity of drugs for which defendants were held
responsible), cert. denied, 510 U.S. 850 (1993); United
States v. Wells Metal Finishing, Inc., 922 F.2d 54, 58 (1st
Cir. 1991)(judge briefly explained sentence at hearing and
then completed memorandum indicating that he adopted all
factual statements in PSR, noting that one fact had been
disputed). Here, however, because the PSR did not resolve
all of the disputed factual issues, simple reliance on it is
not enough.1
The original PSR made no reference to willfulness and
did not consider the defendants' acquitted conduct. After a
government objection, the PSR was amended to include the tax
loss amounts attributed to the acquitted conduct. The PSR
addendum noted that, in the district court's Order for
Acquittal on the 1987 charge, the judge conceded that a
different result would obtain under the civil preponderance
1. This Circuit has also repeatedly held that an implicit
resolution of disputed facts is sufficient "when the court's
statements and the sentence imposed showed that the facts
were decided in a particular way." United States v. Van, 87
F.3d 1, 3 (1st Cir. 1996)(citing cases). "As a general rule,
a trial court lawfully may make implicit findings with regard
to sentencing matters, incorporating by reference suitably
detailed suggestions limned in the PSI Report or advanced by
a party." Tavano, 12 F.3d at 307; see also United States v.
Ovalle-Marquez, 36 F.3d 212, 227-28 (1st Cir. 1994)(finding
that trial court's statement that offense level was "based .
. . on the amount of cocaine involved in the offense" showed
that the court adopted the PSR's recommendations and
implicitly made the necessary findings as to drug quantity),
cert. denied, 115 S. Ct 1322 (1995). In this case, however,
the PSR was not "suitably detailed."
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standard. See Olbres, 881 F. Supp. at 717. The PSR addendum
concluded:
Although the Court's remarks only addressed
[1987], there is little difference between
the evidence submitted as to the acquitted
conduct. . . . The question regarding their
intent is the same, regardless of whether one
is focusing on [1987] or the acquitted
conduct.
This reference back to the district court's order is
ineffective; whether defendants willfully evaded all, or
specific portions of, the tax on their 1987 unreported income
is not clearly established in that order or in any other
statement made by the district court. As defense counsel
points out, a willfulness finding for each of the disputed
amounts stemming from factually distinct sources for each
year in question (as to each of which different lack-of-
willfulness arguments are made) is necessary here in order to
determine the correct base offense level.2
Lastly, at sentencing the district court also stated
that "willfulness isn't an issue . . . as to [19]87" because
this court, in its sufficiency opinion, "found a jury could
find beyond a reasonable doubt that intent was present."
That appellate opinion did not, and could not, make any
2. It is the defendants' position, for example, that the
guilty verdict could have been based on as little as $22,000
of unreported rental income in 1987.
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findings of willful evasion of any specific amount of taxes.3
Rather, the opinion addressed whether there was legally
sufficient evidence to support a verdict that Mr. and Mrs.
Olbres willfully evaded a "substantial" amount of taxes on
their 1987 income. See generally Olbres, 61 F.3d 967.
As we are unable to settle the issue of willfulness
findings based on the jury's general verdict, the trial
judge's statements, or the documents he incorporates by
reference, see United States v. Tavares, 93 F.3d 10, 16 (1st
Cir.), cert. denied, No. 96-6067 (Oct. 21, 1996), we leave it
to the sentencing court on remand to clarify the specific
amounts on which the sentence is based -- that is, those
amounts as to which payment of taxes was willfully evaded as
proven by the government under the preponderance of the
evidence standard. See Garafano, 36 F.3d at 136. We express
no opinion on the appropriateness of the sentence previously
imposed. United States v. Quinones, 26 F.3d 213, 220 (1st
Cir. 1994).
III
The defendants appeal the denial of their downward
departure motion based on their argument that, if they are
imprisoned, their business will fail. Should this occur, the
3. Such factual determinations are either for the jury at
trial, see, e.g., United States v. Gaudin, 115 S. Ct. 2310,
2313-14 (1995), or for the district court at sentencing, see,
e.g., 18 U.S.C. 3742(d).
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Olbres allege, twelve innocent employees will lose their jobs
and suffer severe hardship. The government argues that the
Guidelines discuss "vocational skills" as a discouraged
factor, not "ordinarily relevant," U.S.S.G. 5H1.2,4 and so
there is no room for the Olbres' "business failure" argument
-- an argument that, it contends, is not unusual.
The Olbres' argument is based on the premise that
their circumstances take their case out of the "heartland" of
the Tax Guidelines. "U.S.S.G. 5K2.0 allows sentencing
courts to depart from the guideline sentencing range in a
given case if the court finds aggravating or mitigating
circumstances that render the case atypical and take it out
of the 'heartland' for which the applicable guideline was
designed." United States v. Carrion-Cruz, 92 F.3d 5, 6 (1st
Cir. 1996).
The district court found that if Mr. Olbres was
jailed, DC would become defunct and its employees would lose
their jobs. The district court ruled, nonetheless, that the
Sentencing Commission must have necessarily understood that
small businesses will often fail if their principals are
incarcerated and that job loss to innocent third parties was
4. Discouraged factors are those "not ordinarily relevant
in determining whether a sentence should be outside the
guidelines . . . ." U.S.S.G. 5H1.2.
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therefore "not an unusual situation" under the Guidelines.5
In so doing, the district court expressly stated it was
following the Third Circuit opinion in United States v.
Sharapan, 13 F.3d 781 (3d Cir. 1995), and declined to follow
the Second Circuit opinion in United States v. Milikowsky, 65
F.3d 4 (2d Cir. 1995). The district court understood
Sharapan to hold that "as a matter of law this is not a basis
for departing because the Sentencing Commission has
considered the failure of business in constructing heartland
guidelines."6
Apparently believing that, as a matter of law,
business failure and third party job loss, regardless of the
magnitude or the severity of the consequences, could not
serve as the basis for a downward departure motion, the trial
judge stated at the end of the sentencing hearing:
I also want the record to be clear that if
the fact that your business were to fail
could serve legally as a basis for departing
under the Sentencing Guidelines, then I would
depart, and I would depart in a manner
sufficient to keep the business from failing
and putting those people out of work. But as
I say, I can't as I sit here find a principal
[sic] basis for departing from the guidelines
on those factual assumptions.
5. The issue is not moot because the district court granted
defendants' motion for bail pending resolution of this
appeal. The government agreed that Mr. and Mrs. Olbres do
not present a danger to the community or a flight risk.
6. It is not necessary to resolve whether this is a correct
reading of Sharapan.
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In Sharapan, the Third Circuit reversed the district
court's grant of a downward departure. 13 F.3d at 786. The
trial court had found that incarceration of the defendant
would cause his business to fail, resulting in the loss of
approximately thirty jobs. Id. at 782. It therefore
departed from the Guidelines' sentence and sentenced the
defendant to probation with conditions. Id. at 783. The
Third Circuit reversed, holding that the departure was
inconsistent with U.S.S.G. 5H1.2, p.s., which provides that
departures based on a defendant's "vocational skills" are not
ordinarily appropriate. Id. at 784-85. The Third Circuit
viewed the Commission's policy statement on "vocational
skills" as being based on an underlying "principle . . . that
a sentencing judge may grant a departure based on a
defendant's ability to make a work-related contribution to
society only in extraordinary circumstances." Id. at 785;
see also United States v. Reilly, 33 F.3d 1396, 1424 (3d Cir.
1994); United States v. Mogel, 956 F.2d 1555, 1564 (11th
Cir.), cert. denied, 506 U.S. 857 (1992); accord United
States v. Rutana, 932 F.2d 1155 (6th Cir.) ("[E]ven assuming
that [defendant's] imprisonment would lead to the failure of
his business and the loss of his employees' jobs, this fact
does not distinguish [defendant] from other offenders."),
cert. denied, 502 U.S. 907 (1991).
In contrast, the Second Circuit in Milikowsky
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affirmed a downward departure taken by the district court
because of the effect that Milikowsky's imprisonment would
have on his employees. 65 F.3d at 6. The Second Circuit
noted "that business ownership alone, or even ownership of a
vulnerable small business, does not make downward departure
appropriate," id. at 9, but held that the district court was
nonetheless free to, and indeed required to, consider the
possibility of downward or upward departure "when there are
compelling considerations that take the case out of the
heartland factors upon which the Guidelines rest." Id. at 7
(citations omitted).
Milikowsky arose under the antitrust guideline,
U.S.S.G. 2R1.1 (1990), and not the tax guideline involved
here. Contrary to the government's argument, this is a
distinction without a difference. The Second Circuit
considered the same argument the government makes here --
that "the Commission could hardly have overlooked the effect
that imprisonment of offenders would have on small businesses
that are likely to be heavily dependent on those very
offenders for their continuing success." Milikowsky, 65 F.3d
at 8. That may be so, reasoned the Second Circuit, but "in
considering, and taking into account, the effect of
imprisonment on antitrust offenders' businesses . . . the
Commission did not thereby take into account the effect such
imprisonment would have in 'extraordinary circumstances.'"
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Id.
The structure of analysis we follow in considering
sentencing departures is governed by the Supreme Court's
decision in Koon v. United States, 116 S. Ct. 2035 (1996).
The Supreme Court agreed with the analytical structure
adopted by this Circuit in United States v. Rivera, 994 F.2d
942, 949 (1st Cir. 1993):
The Commission's treatment of departure factors led
then-Chief Judge Breyer to explain that a sentencing
court considering a departure should ask the
following questions:
"1) What features of this case,
potentially, take it outside
the Guidelines' 'heartland' and
make of it a special, or
unusual, case?
2) Has the Commission forbidden
departures based on those
features?
3) If not, has the Commission
encouraged departures based on
those features?
4) If not, has the Commission
discouraged departures based on
those features?"
We agree with this summary.
Koon, 116 S. Ct. 2035, 2045 (quoting Rivera, 994 F.2d 942).
The Supreme Court continued:
If the special factor is a discouraged
factor, or an encouraged factor already taken
into account by the applicable Guideline, the
court should depart only if the factor is
present to an exceptional degree or in some
other way makes the case different from the
ordinary case where the factor is present.
If a factor is unmentioned in the Guidelines,
the court must, after considering the
"structure and theory of both relevant
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guidelines and the Guidelines taken as a
whole," decide whether it is sufficient to
take the case out of the Guideline's
heartland. The court must bear in mind the
Commission's expectation that departures
based on grounds not mentioned in the
Guidelines will be "highly infrequent."
Id.
To adopt the categorical approach to job loss from
business failures that the district court appeared to take
would run afoul of one of the important concerns articulated
in Koon. The Supreme Court has held that generally courts
should not categorically reject a factor as a basis for
departure from a Guidelines sentence because:
Congress did not grant federal courts
authority to decide what sorts of sentencing
considerations are inappropriate in every
circumstance. Rather, 18 U.S.C. 3553(b)
instructs a court that, in determining
whether there exists an aggravating or
mitigating circumstance of a kind or to a
degree not adequately considered by the
Commission, it should consider "only the
sentencing guidelines, policy statements, and
official commentary of the Sentencing
Commission." . . . . The Commission set
forth factors courts may not consider under
any circumstances but made clear that with
those exceptions, it "does not intend to
limit the kinds of factors, whether or not
mentioned anywhere else in the guidelines,
that could constitute grounds for departure
in an unusual case." 1995 U.S.S.G. ch. I,
pt. A, intro. comment. 4(b). Thus, for the
courts to conclude a factor must not be
considered under any circumstances would be
to transgress the policymaking authority
vested in the Commission.
Id. (emphasis added). Categorical interpretations "would
nullify the Commission's treatment of particular departure
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factors and its determination that, with few exceptions,
departure factors should not be ruled out on a categorical
basis." Id. at 2051.7
The district court's categorical approach also
presents a question of law, which, if incorrectly decided,
constitutes an abuse of discretion. As the Supreme Court
noted:
The Government is quite correct that whether
a factor is a permissible basis for departure
under any circumstances is a question of law,
and the court of appeals need not defer to
the district court's resolution of the point.
. . . A district court by definition abuses
its discretion when it makes an error of law.
Id. at 2047.
Koon, we believe, reinforces this Circuit's view that
"[p]lenary review is appropriate where the question in review
is simply whether the allegedly special circumstances (i.e.,
7. The Government's argument here relies on a general
distinction between harm to society, which, it says, may be
an extraordinary factor, and business failure, which, it
says, may not. The Supreme Court rejected this type of
argument in Koon:
The Government seeks to avoid the factual
nature of the departure inquiry by describing
it at a higher level of generality linked
closely to questions of law. The relevant
question, however, is not, as the Government
says, "whether a particular factor is within
the 'heartland'" as a general proposition,
but whether the particular factor is within
the heartland given all the facts of the
case. . . . These considerations are factual
matters.
Koon, 116 S. Ct. at 2047 (citations omitted).
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the reasons for the departure) are of the 'kind' that the
Guidelines, in principle, permit the sentencing court to
consider at all." Rivera, 994 F.2d at 951. This is so
because this court, "in deciding whether the allegedly
special circumstances are of a 'kind' that permits departure,
will have to perform the 'quintessentially legal' function
of interpreting a set of words, those of an individual
guideline, in light of their intention or purpose." Id.
It is clear that the Guidelines do not explicitly
list the factor at issue here among the forbidden or the
discouraged factors. The question is whether the
Commission's "vocational skills" comment8 implicitly
discourages consideration of job loss to innocent employees.
We note first that "vocational skills" themselves are not a
forbidden factor, but a discouraged factor. Compare U.S.S.G.
5H1.10 (race, sex, national origin et al. "are not
relevant" in determination of sentence) with U.S.S.G. 5H1.2
("vocational skills are not ordinarily relevant").
Therefore, even if the present case merely concerned
vocational skills, a per se approach would be inappropriate
8. The Commission statement results from the instructions of
Congress that the Commission's guidelines and policy
statements "reflect the general inappropriateness of
considering the . . . vocational skills, employment record, .
. . and community ties of the defendant." 28 U.S.C.
994(e); see Mogel, 956 F.2d at 1564.
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and the district court would still have to consider whether
the case was in some way "different from the ordinary case
where the factor is present." Koon, 116 S. Ct. at 2045.
"[A] federal court's examination of whether a factor can ever
be an appropriate basis for departure is limited to
determining whether the Commission has proscribed, as a
categorical matter, consideration of the factor. If the
answer to the question is no . . . the sentencing court must
determine whether the factor, as occurring in the particular
circumstances, takes the case outside the heartland of the
applicable Guideline." Id. at 2051.
We do not agree with the Government's contention that
the loss of employment to innocent employees necessarily
falls within the term "vocational skills."9 That a defendant
may have vocational skills of great value or rarity does not
necessarily tell one whether incarceration of that defendant
will entail job loss to others totally uninvolved in the
defendant's crimes. Vocational skills may or may not be
related to job loss to others.
Our belief that courts should be careful not to
construe the categories covered by the Guidelines' factors
too broadly finds support in Koon. There, the Supreme Court
9. The dictionary definitions of "vocational skills" do not
import notions of business failures. See Sharapan, 13 F.3d
at 784 (describing a dictionary definition of "vocational
skills").
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recognized that while "socio-economic status" of the
defendant is an impermissible ground for departure and "a
defendant's career may relate to his or her socio-economic
status, . . . the link is not so close as to justify
categorical exclusion of the effect of conviction on a
career. Although an impermissible factor need not be invoked
by name to be rejected, socio-economic status and job loss
are not the semantic or practical equivalents of each other."
Koon, 116 S. Ct. at 2051.10
As Koon holds that job loss by the defendant
resulting from his incarceration cannot be categorically
excluded from consideration, we think it follows that job
loss to innocent employees resulting from incarceration of a
defendant may not be categorically excluded from
consideration. Further, the rejected link between the socio-
economic status of a defendant and a defendant's personal job
loss is, we think, stronger than the link the Government
posits between "vocational skills" of a defendant and certain
loss of employment to innocent employees. To add a judicial
gloss equating job loss by innocent third parties with
"vocational skills" is to run headlong into the problem of
judicial trespass on legislative prerogative against which
10. Koon similarly rejected the government's argument that
because "physical appearance" is a discouraged factor, the
broader category of physical abuse in prison, including that
resulting from physical appearance, could not be considered.
116 S. Ct. at 2051.
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the Supreme Court warned in Koon. We do not travel this
path.
Because we are remanding on the tax loss issue and
the district court will make further findings on that point,
we believe the wisest course is to remand on this issue as
well. In addition, it is unclear to us whether the
government and defendants have had the opportunity to put on
the evidence they would have wished had a non-categorical
approach been taken.11 In rejecting the government's
categorical imperative approach,12 we do not suggest that the
defendants' argument establishes that they fall outside of
the heartland. It is a rare case which does fall outside.
As courts have recognized, incarceration of a defendant
inevitably means that the defendant will no longer be
employed in his previous position and that fact inevitably
will have consequences. See, e.g., Milikowsky, 65 F.3d at 8
("[T]he Commission could hardly have overlooked the effect
11. Though the defense treated Mr. and Mrs. Olbres
identically for sentencing purposes, evidence was presented
only on Mr. Olbres' importance to DC. Each defendant must be
considered individually. We note that there was no evidence
to suggest that the business would fail were Mrs. Olbres
incarcerated.
12. We note that the opinions from our sister circuits on
which the government has relied, Sharapan, Rutana, and Mogel,
were all decided without the benefit of Koon. In
distinguishing those cases, we decide only that there is no
categorical barrier to the district court's consideration of
a departure -- not that a departure would be proper on these
facts.
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that imprisonment of offenders would have on small businesses
that are likely to be heavily dependant on those very
offenders for their continuing success."). The mere fact
that innocent others will themselves be disadvantaged by the
defendants' imprisonment is not alone enough to take a case
out of the heartland. These issues are matters of degree,
involving qualitative and quantitative judgments. Bruce M.
Selya & Matthew Kipp, An Examination of Emerging Departure
Jurisprudence Under the Federal Sentencing Guidelines, 67
Notre Dame L. Rev. 1, 7-8 (1991). As this court said in
Rivera:
It may not be unusual, for example, to find
that a convicted drug offender is a single
mother with family responsibilities, but, at
some point, the nature and magnitude of
family responsibilities (many children? with
handicaps? no money? no place for children to
go?) may transform the "ordinary case" of
such circumstances into a case that is not at
all ordinary.
United States v. Rivera, 994 F.2d at 948; accord United
States v. Sclamo, 997 F.2d 970 (1st Cir. 1993); see also
Koon, 116 S. Ct. at 2051 (it is not unusual for public
officials convicted of violating 18 U.S.C. 242 to be
subject to career related consequences, so these consequences
alone do not make a case unusual).
Given our decision to vacate the sentence and remand
for further proceedings, consideration of the defendants'
acquitted conduct arguments would be premature.
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We close with words from Koon on which all of the
Justices agreed:
The goal of the Sentencing Guidelines is, of
course, to reduce unjustified disparities and
so reach towards the evenhandedness and
neutrality that are the distinguishing marks
of any principled system of justice. In this
respect, the Guidelines provide uniformity,
predictability, and a degree of detachment
lacking in our earlier system. This too must
be remembered, however. It has been uniform
and constant in the federal judicial
tradition for the sentencing judge to
consider every convicted person as an
individual and every case as a unique study
in the human failings that sometimes
mitigate, sometimes magnify, the crime and
the punishment to ensue. We do not
understand it to have been the congressional
purpose to withdraw all sentencing discretion
from the United States District Judge.
Discretion is reserved within the Sentencing
Guidelines.
Id. at 2053. Even were we not obliged to agree, we would.
We vacate the sentence and remand. United States v.
Carvell, 74 F.3d 8 (1st Cir. 1996).
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