United States v. Decinces

• Decision Date: 22 December 2015
• Docket Number: 15–50058.,Nos. 15–50033,s. 15–50033
• Parties: UNITED STATES of America, Plaintiff–Appellant, v. Douglas V. DECINCES, Defendant–Appellee, David Parker; F. Scott Jackson; Roger Wittenbach; James Mazzo, Defendants. United States of America, Plaintiff–Appellee, v. James V. Mazzo, Defendant–Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

808 F.3d 785

UNITED STATES of America, Plaintiff–Appellant,

v.Douglas V. DECINCES, Defendant–Appellee,David Parker; F. Scott Jackson; Roger Wittenbach; James Mazzo, Defendants.

United States of America, Plaintiff–Appellee,

v.James V. Mazzo, Defendant–Appellant.

Nos. 15–50033

15–50058.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Sept. 1, 2015.

Filed Dec. 22, 2015.

Eileen M. Decker, United States Attorney, Robert E. Dugdale, Assistant United States Attorney, Chief, Criminal Division, Stephen A. Cazares (argued), Assistant United States Attorney, Deputy Chief, Major Frauds Section, Mark R. Yohalem (argued), Lawrence E. Kole, Jennifer L. Waier, and Ivy A. Wang, Assistant United States Attorneys, Los Angeles, CA, for Plaintiff–Appellant/Plaintiff–Appellee.

Richard Marmaro, Douglas A. Smith, Skadden, Arps, Slate Meagher & Flom LLP, Los Angeles, California; Clifford M. Sloan (argued), Michael A. McIntosh, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, D.C., for Defendant–Appellee/Defendant–Appellant James Mazzo.

Kenneth B. Julian (argued), Arunabha Bhoumik, Andrea Ruth Bird, and Garrett Mott, Manatt, Phelps, & Phillips, LLP, Costa Mesa, CA, for Defendant–Appellee Douglas DeCinces.

Appeal from the United States District Court for the Central District of California, Andrew J. Guilford, District Judge, Presiding. D.C. No. 8:12–cr–00269–AG–1, D.C. No. 8:12–cr–00269–AG–5.

Before: SUSAN P. GRABER, JOHNNIE B. RAWLINSON, and PAUL J. WATFORD, Circuit Judges.

Opinion by Judge RAWLINSON

; Concurrence by Judge WATFORD.

OPINION

RAWLINSON, Circuit Judge:

This case presents two appeals, one from the government and one from Defendant–Appellant James Mazzo (Mazzo). In Appeal No. 15–50033, the government appeals the district court's pretrial order granting motions in limine to exclude certain pieces of evidence in a case in which Douglas DeCinces (DeCinces), Mazzo, and others were charged with insider-trading offenses relating to the stock of Advanced Medical Optics, Inc.

Appeal No. 15–50058 is Mazzo's cross-appeal challenging the district court's order denying his motion to dismiss a securities fraud charge under 18 U.S.C. § 1348 for failing to state an offense and for violating the Double Jeopardy Clause. We conclude that we have jurisdiction over the government's interlocutory appeal, and we reverse the district court's ruling on the motions in limine. We conclude that we lack jurisdiction over Mazzo's cross-appeal, which we dismiss.

I. BACKGROUND

The government's original indictment charged DeCinces, F. Scott Jackson (Jackson), and other defendants, not including Mazzo, with insider trading and money laundering. The grand jury also returned a First Superseding Indictment and a Second Superseding Indictment that became the operative charging document, and added Mazzo as a defendant.

The Second Superseding Indictment alleged that Mazzo and DeCinces participated in a scheme to defraud Mazzo's company, Advanced Medical Optics, Inc. (EYE),¹ and its shareholders. See id. According to the Second Superseding Indictment, as President, Chief Executive Officer, and Chairman of the Board of Directors of EYE, Mazzo had access to material, nonpublic information about EYE's forthcoming merger and acquisition activities, which he shared with DeCinces in violation of a duty of trust and confidence to EYE and for a personal benefit.

The Second Superseding Indictment alleged that, in December, 2006, based on one or more tips from Mazzo that EYE was preparing to acquire IntraLase, DeCinces sold all of his shares in EYE and purchased stock in IntraLase. After the public announcement of the acquisition, DeCinces sold his IntraLase stock, profiting approximately $33,000.

The government intimated, although it did not charge in the indictment, that Mazzo also tipped DeCinces in the summer of 2007 about EYE's attempt to acquire Bausch and Lomb. The government asserted that DeCinces sold $250,000 of EYE stock and purchased Bausch and Lomb stock mere hours before EYE publicly announced that it had submitted a proposal to buy Bausch and Lomb.

The Second Superseding Indictment also alleged that, in late 2008 and early 2009, Mazzo tipped DeCinces that EYE would be acquired by Abbot Laboratories, and that DeCinces thereafter liquidated his diversified stock portfolio, invested the proceeds in EYE stock, and shared nonpublic information about the impending acquisition with several other people, urging them to purchase EYE stock. After the Abbott acquisition, DeCinces sold his shares of EYE stock, realizing a profit of approximately $1.3 million.

DeCinces moved to strike the IntraLase allegations from the Second Superseding Indictment as prejudicial surplusage and as time-barred. The district court denied the motion, ruling that "the [2006 and 2007 IntraLase] allegations can show a common scheme, lack of mistake, or intent to defraud in the alleged 2008 and 2009 actions when viewing the contested allegations collectively and comparing them to the 2008 and 2009 actions." The court further ruled that "[p]art of a section 1348 prosecution includes proving a scheme to defraud and knowing intent by the defendant to do the same. Among other things, the contested factual allegations appear to directly mirror meetings and trades that took place in 2008 and 2009 and provide context for making this comparison." Accordingly, the district court held that "Decinces has not shown the contested allegations are ‘irrelevant or immaterial to the charges.’ "

Mazzo and DeCinces subsequently filed motions in limine to exclude evidence involving the IntraLase and Bausch and Lomb transactions as inadmissible "other acts" evidence under Rule 404(b) of the Federal Rules of Evidence, and as evidence that should be excluded under Rule 403. Specifically, DeCinces and Mazzo asserted that admission of the evidence would unduly consume time and require additional mini-trials.

At a hearing on the motions in limine the court gave its tentative ruling, granting the motions in limine to exclude evidence regarding the IntraLase and Bausch and Lomb transactions. The court provided no explanation of the ruling. The minute order memorializing the ruling stated only: "GRANTS the motion [to exclude propensity/other act evidence] without prejudice to asking the Court outside the presence of the jury to consider permitting the introduction of the evidence."

The government filed a timely notice of appeal, challenging the district court's grant of the motions in limine. Mazzo filed a timely cross-appeal.

II. STANDARDS OF REVIEW

We have jurisdiction to determine our jurisdiction. See Allen v. Meyer, 755 F.3d 866, 867 (9th Cir.2014). We review this question de novo. See United States v. W.R. Grace, 526 F.3d 499, 505 (9th Cir.2008) (en banc). We review a district court's exclusion of evidence for abuse of discretion. See Servs. Emps. Int'l Union v. Nat'l Union of Healthcare Workers, 718 F.3d 1036, 1050 (9th Cir.2013), as amended. A district court abuses its discretion when it makes an error of law or acts arbitrarily. See United States v. Hinkson, 585 F.3d 1247, 1260 (9th Cir.2009) (en banc); see also Tapley v. Locals 302 & 612 of Int'l Union of Operating Engineers–Employers Const. Indus. Ret. Plan, 728 F.3d 1134, 1139 (9th Cir.2013).

III. DISCUSSION

Appeal No. 15–50033–Government's Interlocutory Appeal of the District Court's Order Granting DeCinces' and Mazzo's Motions in Limine

A. We have jurisdiction pursuant to 18 U.S.C. § 3731 to entertain the government's interlocutory appeal.

Title 18 U.S.C. § 3731 provides, in pertinent part:

In a criminal case ... [a]n appeal by the United States shall lie to a court of appeals from a decision or order of a district court suppressing or excluding evidence ... not made after the defendant has been put in jeopardy and before the verdict or finding on an indictment or information, if the United States attorney certifies ^{[2 ]} to the district court that the appeal is not taken for purpose of delay and that the evidence is a substantial proof of a fact material in the proceeding....

(Emphasis Added). DeCinces and Mazzo argue that the district court's rulings were tentative and nonfinal, and that we therefore lack jurisdiction to consider the government's appeal. We disagree.

First, DeCinces argues that the district court's evidentiary ruling was not a "final decision" under 28 U.S.C. § 1291. Relying on our decision in United States v. Dior, 671 F.2d 351 (9th Cir.1982), he contends that 18 U.S.C. § 3731 permits the government "to appeal only those orders that are final decisions under" § 1291. Id. at 355 (footnote reference omitted). Although Dior appears to have concluded that § 3731 did not replace the finality requirement of § 1291, we have since explicitly recognized, in an en banc decision, the government's "right to an interlocutory appeal from a district court's evidentiary rulings." W.R. Grace, 526 F.3d at 505 ; see also United States v. Chaudhry, 630 F.3d 875, 878 (9th Cir.2011). ("[D]espite 28 U.S.C. § 1291's finality requirement, Section 3731 can, and does, make it lawful for the government to take certain appeals even though there is no final judgment ....") (citations omitted).

Because evidentiary rulings are by their very nature nonfinal, see Hoffman v. Constr. Protective Servs., Inc., 541 F.3d 1175, 1178 (9th Cir.2008), as amended, our recognition in W.R. Grace, 526 F.3d at 505, of the government's right to appeal a nonfinal evidentiary ruling was a sub silentio reversal of the language in Dior engrafting a finality requirement onto § 3731. See Herzog v. United States, 226 F.2d 561, 567–68 (9th Cir.1955) (concluding that a sub silentio reversal has occurred when two cases "cannot both be right"). The fact that the district court's order was not final under § 1291 does not bar the government's interlocutory appeal under § 3731.

Second, Mazzo argues that the district court's order granting the motions in limine was insufficiently final even within the scope of §...