Ward v. Chavez

• Decision Date: 08 May 2012
• Docket Number: No. 09–17016.,09–17016.
• Citation: 12 Cal. Daily Op. Serv. 5038,678 F.3d 1042,2012 Daily Journal D.A.R. 6031
• Parties: Jack Richard WARD, Petitioner–Appellant, v. Ricardo E. CHAVEZ, Warden, Respondent–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

678 F.3d 1042

12 Cal. Daily Op. Serv. 5038

2012 Daily Journal D.A.R. 6031

Jack Richard WARD, Petitioner–Appellant,

v.Ricardo E. CHAVEZ, Warden, Respondent–Appellee.

No. 09–17016.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Jan. 10, 2012.

Filed May 8, 2012.

Douglas C. Erickson (argued), Maynard Cronin Erickson Curran & Reiter, P.L.C., Phoenix, AZ, for the petitioner-appellant.

Karla Hotis Delord (argued), Dennis K. Burke, and Randall M. Howe, United States Attorney's Office for the District of Arizona, Phoenix, AZ, for the respondent-appellee.

Appeal from the United States District Court for the District of Arizona, G. Murray Snow, District Judge, Presiding. D.C. No. 2:09–cv–00246–GMS.

Before: J. CLIFFORD WALLACE and MILAN D. SMITH, JR., Circuit Judges, and JED S. RAKOFF, Senior District Judge.^*

Opinion by Judge JED S. RAKOFF; Dissent by Judge WALLACE.

OPINION

RAKOFF, Senior District Judge:

The issue in this case is whether, under the Mandatory Victims Restitution Act of 1996 (“MVRA”), a district court impermissibly delegates its obligation to set a restitutionpayment schedule when it orders “immediate” payment with the expectation that the Bureau of Prisons (“BOP”) will work out a payment schedule with the prisoner pursuant to the Inmate Financial Responsibility Program (“IFRP”). We hold that where the sentencing court has failed to consider whether the defendant has the financial resources to pay restitution immediately, ordering immediate payment impermissibly delegates to the BOP the court's obligation to set a payment schedule.

BACKGROUND

On December 9, 2002, petitioner Jack Richard Ward was sentenced in the Eastern District of California to 300 months' imprisonment and 3 years' supervised release after being convicted of one count of attempted Armed Bank Robbery and nine counts of Armed Bank Robbery. In addition to his prison term, the sentencing court ordered Ward to pay a $1,000 Crime Victim Fund Assessment and $27,885 in restitution to the crime victims. The “Schedule of Payments” portion of the court's judgment stated that the Crime Victim Fund Assessment and restitution were due and payable “immediately.” Ward was then sent for incarceration to the Federal Correctional Institution in Phoenix, Arizona, where he was voluntarily employed by Unicor (the prison employment system). See United States v. Ward, No. CR 02–5231 AWI, 2008 WL 5220959, at *1 (E.D.Cal. Dec. 12, 2008). In accordance with standard practice, portions of Ward's Unicor pay was deducted and applied to his restitution obligation.

Ward subsequently filed motions in the California district court that sentenced him, requesting deferral and/or reduction in his restitution payments. The California district court construed this as a motion to vacate, set aside, or correct sentence under 28 U.S.C. § 2255, and amendments to that motion. Id. at *1–2. The court then concluded that its order for “immediate” repayment of restitution impermissibly delegated to the BOP the court's obligation to set a repayment schedule, and ordered the BOP to cease collecting money from Ward for payment of restitution until the court issued a new restitution order. Id. at *2–4. After the Government moved for reconsideration, however, the district court concluded that because neither 28 U.S.C. § 2255 nor 18 U.S.C. § 3664(k) allows a district court to rule on the legality of a restitution order, and because Ward was incarcerated in Arizona, it lacked jurisdiction to issue its prior Order, and accordingly vacated the Order. See United States v. Ward, No. CR 02–5231 AWI, 2009 WL 160690, at *1–2 (E.D.Cal. Jan. 22, 2009) (noting § 3664(k) allows district court to change a restitution schedule based only on changed financial circumstances and citing United States v. Gross, 307 F.3d 1043, 1044 (9th Cir.2002)).

After the termination of his California district court proceeding, Ward initiated this habeas proceeding pursuant to 28 U.S.C. § 2241 in the District of Arizona, claiming:

The BOP lacks a lawful order of restitution from the district court in accordance with the Mandatory Victims Restitution Act of April 1996, to collect restitution from the Petitioner during his incarceration. The BOP, without a lawful order of restitution, cannot force the Petitioner to participate in the Inmate Financial Responsibility Program and must place Petitioner on “no obligation” status.

The Government argued that Ward's habeas petition should be denied because Ward had not exhausted his administrative remedies and because his claim was meritless. Ward argued that the district court should exercise its discretion to hear his petition because any attempt to exhaust his administrative remedies would be futile.

In a Report and Recommendation, the magistrate judge recommended the district court deny the petition, concluding that Ward had not exhausted his administrative remedies as required by the Prison Litigation Reform Act, 42 U.S.C. § 1997e(a). See Ward v. Chavez, No. 2:09–cv–00246–GMS, Dkt. No. 11 (D.Ariz. May 26, 2009). The district court, after considering Ward's objections to the R & R and the Government's responses, adopted the R & R in part. Ward v. Chavez, No. CV–09–00246–PHX–GMS, 2009 WL 2753024 (D.Ariz. Aug. 27, 2009). The district court agreed with Ward that the PLRA's exhaustion requirement does not apply to § 2241 habeas petitions, but declined to waive the judicially-created exhaustion requirement on the grounds of futility. Id. at *2–4 (“Petitioner has failed to show sufficient evidence that his exhaustion of the BOP appeals process would have been futile.”).

Notwithstanding its refusal to waive the exhaustion requirement, the district court then addressed the merits of Ward's claim and found it meritless for two reasons. First, the court concluded that Ward was not being forced to participate in the IFRP, as it is a voluntary program that Ward chose to participate in and could exit at anytime. Id. at *5. Second, the court concluded that since the sentencing court had not required the BOP to set a schedule of payments, it had not delegated its authority to set a restitution schedule to the BOP. Id. at *6. Because the sentencing court neither directed the BOP to set a schedule nor required Ward to participate in the IFRP, the court concluded that the cases Ward relied on did not apply to his claim. Id. Ward appeals to this Court from this decision.

DISCUSSION

Before considering the merits of Ward's petition, we first address the issue of exhaustion. As a prudential matter, courts require that habeas petitioners exhaust all available judicial and administrative remedies before seeking relief under § 2241. Castro–Cortez v. INS, 239 F.3d 1037, 1047 (9th Cir.2001), abrogated on other grounds, Fernandez–Vargas v. Gonzales, 548 U.S. 30, 126 S.Ct. 2422, 165 L.Ed.2d 323 (2006). This exhaustion requirement is subject to waiver in § 2241 cases because it is not a “jurisdictional prerequisite.” Id. Typically, exhaustion can be waived “if pursuing those [administrative] remedies would be futile.” Fraley v. U.S. Bureau of Prisons, 1 F.3d 924, 925 (9th Cir.1993).

Here, Ward exhausted only step one of the three-step BOP administrative remedy system: he filed a formal administrative grievance with the Warden, which the Warden denied. 28 C.F.R. § 542.10 et seq.¹ Ward argues, however, that any administrative appeal would have been futile, as the denial was based on an official policy of the BOP: the IFRP. See Sours v. Chavez, No. 2:08–cv–01903–SRB, Dkt. No. 22, slip op. at *2–3 (D. Ariz. June 17, 2009) (report and recommendation) (concluding exhaustion not required where request for relief denied based on official BOP policy), as cited in Sours v. Chavez, No. CV08–1903–PHX–SRB, 2009 WL 2714028, at *1, 2009 U.S. Dist. LEXIS 76965, at *2–3 (D.Ariz. Aug. 26, 2009). Sours, like this case, involved a petitioner seeking to set aside a restitution order that improperly delegated scheduling authorityto the BOP. Sours, No. 2:08–cv–01903–SRB, Dkt. No. 22, slip op. at *1–2. In waiving exhaustion, the Sours court relied on our opinion in Fraley, which held there was futility where the petitioner's claim was denied based on official BOP policy. Fraley, 1 F.3d at 925. The petitioner in Sours, unlike Ward, had gone through three out of four levels of BOP review, Sours, No. 2:08–cv–01903–SRB, Dkt. No. 22, slip op. at *3–4. But it was the reliance on the “official policy” that led to a finding of futility in Sours (and Fraley ), and the Sours court expressly noted that the level of Sours's exhaustion simply showed his petition was even more futile than Fraley, where the prisoner had gone through only one level of review. Sours, No. 2:08–cv–01903–SRB, Dkt. No. 22, at *3–4.

Because of the existence of official BOP policy—the IFRP—exhaustion would be futile here, as it was in Sours and Fraley. The district court incorrectly dismissed the probative value of the BOP's return to collecting restitution from Ward after the sentencing court vacated, for lack of jurisdiction, its order that granted Ward relief. Ward, 2009 WL 2753024, at *3–4. The fact that the BOP resolved to continue collecting restitution from Ward after the sentencing court determined its own restitution order was unlawful, before then vacating for lack of jurisdiction after the Government moved for reconsideration, shows a return by the BOP to the official policy of the IFRP. It also shows that any further appeal by Ward would unquestionably have been denied. Accordingly, the district court erred in not waiving the exhaustion requirement, as Ward's exhaustion of his administrative remedies would have been futile.

Turning to the merits of Ward's petition, the MVRA directs that a sentencing court “shall ... specify in the restitution order the manner in which, and the schedule according to which, the restitution is to be paid.” 18 U.S.C. § 3664(f)(2). We have previously held that the district court's statutory...