U.S. v. Sellers, 99

• Decision Date: 06 December 1994
• Docket Number: No. 99,D,99
• Citation: 42 F.3d 116
• Parties: UNITED STATES of America, Appellee, v. Lee SELLERS, Defendant-Appellant. ocket 94-1069. Second Circuit
• Court: U.S. Court of Appeals — Second Circuit

Page 116

42 F.3d 116

UNITED STATES of America, Appellee, v. Lee SELLERS, Defendant-Appellant.

No. 99, Docket 94-1069.

United States Court of Appeals,Second Circuit.

Argued Oct. 7, 1994.

Decided Dec. 6, 1994.

Marjorie M. Smith, New York City Legal Aid Soc., Federal Defender Div., Appeals Bureau, for defendant-appellant.

Donald E. Clark, New York City Asst. U.S. Atty., S.D.N.Y. (Mary Jo White, U.S. Atty., S.D.N.Y. and Alexandra Rebay, Asst. U.S. Atty., of counsel), for appellee.

Before: FEINBERG, PIERCE and MAHONEY, Circuit Judges.

FEINBERG, Circuit Judge:

Lee Sellers appeals from a January 1994 judgment of conviction, after a guilty plea, of unauthorized use of a credit card in violation of 18 U.S.C. Sec. 1029(a)(2), entered in the United States District Court for the Southern District of New York, Allen G. Schwartz, J. Appellant was sentenced to two months of incarceration, followed by two years of supervision, and was required to make restitution of $2,435 and pay a special assessment of $50. In addition, Sellers was fined $7,800 based upon the costs of imprisonment and supervision pursuant to U.S.S.G. Sec. 5E1.2(i). The sentence did not include any fine based upon Sellers' offense level pursuant to U.S.S.G. Sec. 5E1.2(c). The issue on appeal is whether the district court had the power to impose a fine under subsection (i) of Sec. 5E1.2 without imposing a fine under subsection (c). (For convenience, the text of Sec. 5E1.2 is reproduced in full in Appendix A.) For reasons set forth below, we hold that the judge did have such power, and we affirm.

I. Background

In November 1993, pursuant to a plea agreement, Sellers pled guilty to using a falsely altered credit card to purchase $2,435 in merchandise from a clothing store in Manhattan. During the plea proceeding, Sellers explicitly acknowledged his understanding that as a result of pleading guilty to violating 18 U.S.C. Sec. 1029(a)(2) he might be fined as much as $250,000.

Despite the Probation Officer's efforts to compile information concerning Sellers, she was not able to verify key statements regarding his income, employment history and educational background. The presentence report (PSR) noted numerous inconsistencies between appellant's representations to the Probation Officer and information collected by Pretrial Services, stating, "It has been almost impossible to unravel fact from fiction in this case." It is undisputed, however, that although Sellers was unemployed at the time of sentencing, he had earned significant income in the past. He maintained throughout the proceedings that his educational background included business training, and he made other representations indicating that he had significant financial resources.

The Probation Officer calculated that appellant's offense level (8) and criminal history category (I) yielded a possible fine of $1,000 to $10,000 pursuant to U.S.S.G. Sec. 5E1.2(a) & (c) and a sentencing range of 0-6 months. The PSR recommended a three-year probationary sentence and stated that "upon verification of employment, the defendant shall pay [a $1,000] fine in addition to $2,435.57 in restitution, based upon a payment schedule...." The PSR, in an earlier section that summarized the sentencing options, had pointed out that if the defendant is able to pay, "the court shall impose an additional fine amount that is at least sufficient to pay the costs to the Government of any imprisonment, probation, or supervised release pursuant to U.S.S.G. 5E1.2(i)." The PSR then listed recent statistics regarding the monthly costs of imprisonment, supervision and community confinement.

During the sentencing hearing, the district court carefully considered the PSR, questioned appellant regarding inconsistencies and offered appellant, through his counsel, the opportunity to clarify or object to the report. Counsel raised several objections to the PSR, but did not object to the recommendation that a fine be imposed.

Judge Schwartz adopted the PSR's recommendations regarding offense level and criminal history category. The judge also followed the PSR's recommendation of restitution. He declined, however, to follow the PSR's recommendation of probation. Instead, he sentenced Sellers to two months imprisonment, noting the seriousness of the offense and appellant's "inclination to be involved in conduct which is not truthful, not forthcoming and that demonstrates a lack of recognition of the seriousness of this kind of behavior." He also imposed a larger fine than the PSR recommended, directing

that the defendant be fined an amount to cover two months in custody, which is 3,468, and that he be subject to two years of supervision at a cost of 4341, and the total of those two numbers as defined is 7,709, which I am going to round out to $7,800.

The district court did not impose any fine based on Sellers' offense level pursuant to Sec. 5E1.2(c). Nor did the judge make any explicit findings with respect to Sellers' ability to pay.

This appeal followed.

II. Discussion

The focus of the appeal is the fine of $7,800 that the district court imposed under Sec. 5E1.2(i) based upon the cost of imprisonment and supervision. See Appendix A. For convenience, we shall refer to that portion of the sentence as a cost of imprisonment fine.

Appellant argues that the Sentencing Guidelines do not permit a district judge to impose a cost of imprisonment fine under Sec. 5E1.2(i) if the judge did not first impose a fine linked to offense level pursuant to Sec. 5E1.2(c). In addition, appellant's brief originally urged us to follow the Third Circuit and hold that the Sentencing Commission lacked authority under the Sentencing Reform Act to promulgate Sec. 5E1.2(i). See United States v. Spiropoulos, 976 F.2d 155, 164-69 (3d Cir.1992). At oral argument, however, appellant acknowledged that this court's intervening decisions in United States v. Leonard, 37 F.3d 32, 39-40 (2d Cir.1994) and United States v. Orena, 32 F.3d 704, 716-17 (2d Cir.1994), which upheld the validity of Sec. 5E1.2(i), effectively preclude that ground of appeal. See also United States v. Turner, 998 F.2d 534, 536-37 (7th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 639, 126 L.Ed.2d 598 (1993); United States v. Hagmann, 950 F.2d 175, 186-87 (5th Cir.1991), cert. denied, --- U.S. ----, 113 S.Ct. 108, 121 L.Ed.2d 66 reh'g denied, 113 S.Ct. 485 (1992); United States v. Doyan, 909 F.2d 412, 415-16 (10th Cir.1990). Therefore, we consider only the issue of the interaction between subsections (c) and (i) of Sec. 5E1.2.

We review the district court's legal interpretation of the Sentencing Guidelines de novo. United States v. Hudson, 972 F.2d 504, 506 (2d Cir.1992). We review factual determinations under the clearly erroneous standard. United States v. Echevarria, 33 F.3d 175, 178 (2d Cir.1994).

A. Waiver

We note as a threshold matter that Sellers did not object to the fine in the district court. The government argues that he has therefore waived the issue on appeal. Appellant plausibly argues that until the judge actually imposed sentence, appellant could not reasonably have expected a cost of imprisonment fine under subsection (i) in the absence of what appellant calls a punitive fine under subsection (c). In response, the government points out that appellant had seven days after imposition of sentence to inform the court of its alleged error. Fed.R.Crim.P. 35(c). Although we agree that appellant should have raised objections during or shortly after the sentencing hearing, the issue on appeal is the subject of a circuit split and has not yet been addressed by this court. Also, the issue is important and is likely to recur. Under the circumstances, we believe that this is one of the rare instances where sound judicial administration suggests that we rule on the merits even though the issue was not raised in the district court. See, e.g., United States v. Hudson, 972 F.2d 504, 506 (2d Cir.1992); United States v. Paccione, 949 F.2d 1183, 1203 (2d Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 3029, 120 L.Ed.2d 900 (1992).

B. U.S.S.G. Sec. 5E1.2.

As Appendix A shows, U.S.S.G. Sec. 5E1.2 is a detailed portion of the Guidelines dealing specifically with "Fines for Individual Defendants." Under subsection (a), the court "shall impose a fine in all cases, except where the defendant establishes that he is unable to pay and is not likely to become able to pay any fine." According to subsection (b), the fine should generally be within the range specified in the subsection (c) fine table, except that the amount may vary in accordance with subsections (f) and (i). Subsection (c) lists fine range amounts according to offense level. Sellers' offense level of 8 yields a range of $1,000 to $10,000. Subsection (d) lists the factors that the court is required to consider "[i]n determining the amount of the fine." These include "the need for the combined sentence to reflect the seriousness of the offense ..." Sec. 5E1.2(d)(1). Subsection (e) provides that "the amount of the fine should always be sufficient to ensure that the fine, taken together with other sanctions imposed, is punitive." Under subsection (f), the fine may be lowered or waived if the "defendant establishes that (1) he is not able and, even with the use of a reasonable installment schedule, is not likely to become able to pay all or part of the fine required by the preceding provisions, or (2) imposition of a fine would unduly burden the defendant's dependents...." Subsection (g) permits the court to "establish an installment schedule for payment of the fine" in some circumstances. Finally, subsection (i) states, "Notwithstanding of the provisions of subsection (c) of this section, but subject to the provisions of subsection (f) herein, the court shall impose an additional fine amount that is at least sufficient to pay the costs to the government of any imprisonment, probation, or supervised release ordered." Pursuant to 42 U.S.C....