USA. v. Laney

• Decision Date: 12 February 1999
• Docket Number: No. 98-10032,98-10032
• Citation: 189 F.3d 954
• Parties: (9th Cir. 1999) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. PAUL FREDERICK LANEY, Defendant-Appellant
• Court: U.S. Court of Appeals — Ninth Circuit

Page 954

189 F.3d 954 (9th Cir. 1999)

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. PAUL FREDERICK LANEY, Defendant-Appellant.

No. 98-10032

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted February 12, 1999--San Francisco, California

Decided August 30, 1999

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] H. David Grunbaum, Assistant Federal Public Defender, San Jose, California, for the defendant-appellant.

D. Anthony West, Assistant United States Attorney, San Jose, California, for the plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California; James Ware, District Judge, Presiding. D.C. No. CR-96-20113 JW.

Before: Phyllis A. Kravitch,^* Stephen Reinhardt, and Thomas G. Nelson, Circuit Judges.

Opinion by Judge Kravitch; Concurrence by Judge T.G. Nelson; Partial Concurrence and Partial Dissent by Judge Reinhardt

KRAVITCH, Circuit Judge:

Defendant-appellant Paul Frederick Laney pled guilty to three counts of conspiring to engage in and engaging in activities relating to the sexual exploitation of children. The district court sentenced him to 81 months in prison and ordered him to pay restitution to one of the conspiracy's victims. Laney's appeal of the sentence and the restitution order raises several issues concerning the United States Sentencing Guidelines ("U.S.S.G." or the "Guidelines") and the restitution statutes.

I.

In late 1995, Laney and several other men began meeting regularly in an Internet chat room called Kids Sex Pics to discuss and trade child pornography.¹ Laney also had direct conversations by e-mail with one of Kids Sex Pics' members, Ronald Riva. In early 1996 Riva and a few of the other Kids Sex Pics participants created a private, invitation-only chat room called the "Orchid Club." The Orchid Club eventually grew to include sixteen members. Laney, the last to join, joined the club in February 1996. Orchid Club participants told each other stories about their sexual contact with minors and sent each other, via the Internet, digital files containing pornographic photographs and videos of children. Laney claims that he thought that the men were exchanging fantasies and publicly available pornography, rather than true stories and "homemade" images. Laney did, however, make a sexually explicit videotape of himself with two female children of his neighbors who were ages ten and eight ("Jane Does Two and Three"), and sent images from the tape to Riva. Laney claims that he refused to send the photos to any other Orchid Club member and asked Riva not to share them. Riva nevertheless forwarded the images to other members of the Orchid Club.

For several years Riva regularly had been molesting Jane Doe One, a friend of his young daughter's. In January 1996, Riva told other members of the Orchid Club that Jane Doe One, then age ten, was willing to be photographed performing sexual acts. Some of the members requested that Jane Doe One perform "live" over the Internet. Laney was not a party to these conversations. On March 16, 1996, Riva asked Laney for advice on how to teach a ten-year-old girl how to insert a vibrator. Laney sent Riva suggestions on how best to perform this act.

An "on-line molestation" of Jane Doe One occurred on April 1, 1996. Riva and another Orchid Club member, Melton Lee Myers, videotaped Jane Doe One engaging in various sexual acts, including having a vibrator inserted into her vagina. They immediately transmitted the images over the Internet to other members, who replied with requests for further sexual acts. Laney did not participate in the on-line molestation or know about it beforehand. Riva sent him copies of the images of Jane Doe One on April 6, 1996, and he and Laney discussed them.

After one of Riva's victims complained, the police arrested Riva and Myers. A search of Riva's computer files led to Laney's arrest in June 1996. Laney immediately agreed to cooperate with the government's investigation; his cooperation helped the government identify at least four other participants in the conspiracy. A grand jury returned a 24-count indictment, and a substantially similar superseding indictment, against Laney and fifteen co-defendants, charging various violations relating to the sexual exploitation of children. The indictment listed three charges against Laney: Count One (conspiracy to sexually exploit children in violation of 18 U.S.C. SS 2251(a), (d)); Count Two (conspiracy to engage in certain activities relating to the sexual exploitation of children in violation of 18 U.S.C. S 2252(a), (b)(1)); and Count Eighteen (distribution of visual depictions of minors engaged in sexually explicit conduct in violation of 18 U.S.C. S 2252(a)(1)). Laney pled guilty to all three counts without reaching an agreement with the government on sentencing.

In a judgment dated December 22, 1997, the district court sentenced Laney to 81 months' incarceration. Three aspects of the sentence are relevant to this appeal. First, the court increased Laney's base offense level for Counts Two and Eighteen by five levels for "distribution" pursuant to section 2G2.2(b)(2) of the Guidelines.² Second, the court included the on-line molestation of Jane Doe One as "relevant conduct" to Count One under U.S.S.G. S 1B1.3(a), which increased Laney's Combined Offense Level by one level under U.S.S.G. S 2G2.1(c) and Chapter 3, Part D. Third, the court awarded Laney a downward departure of five levels for substantial assistance to the government pursuant to U.S.S.G. S 5K1.1. The government had requested a five-level departure at sentencing, while Laney requested a ten-level departure. The district court denied Laney's request for an evidentiary hearing on the extent of departure. In addition, pursuant to 18 U.S.C. S 2259, the district court ordered Laney and five other Orchid Club members jointly and severally to pay $60,000 restitution to Jane Doe One. This amount included the cost of psychological treatment that Jane Doe One and her family expected to need in the future as a result of the defendants' crimes.

Laney appeals his sentence and the restitution order. Finding no error, we affirm.

II.

A.

The district court increased Laney's base offense level by five levels for "distribution" of child pornography pursuant to U.S.S.G. S 2G2.2(b)(2).³ Laney argues that "distribution," for purposes of section 2G2.2(b)(2), means distribution for pecuniary gain. Because he sent pornographic images only to Riva and had no intention of receiving any financial compensation for the images, he contends, the district court erred by imposing the five-level increase.

We review a district court's interpretation and application of the Guidelines de novo. See United States v. Bailey 139 F.3d 667, 667 (9th Cir. 1998). This circuit has not addressed the question of whether a defendant who delivers child pornography for non-pecuniary reasons engages in "distribution" for purposes of section 2G2.2(b)(2). The circuits that have considered this issue are in conflict. In United States v. Black, 116 F.3d 198, 202-03 (7th Cir.), cert. denied , _______ U.S. _______, 118 S. Ct. 341 (1997), the Seventh Circuit held that section 2G2.2(b)(2) only applies to transactions entered into for pecuniary gain. The court noted, however, that the definition of "pecuniary gain" included "the possibility of swaps, barter, in-kind transactions, or other valuable consideration." Id. at 203.⁴ Four circuits, on the other hand, have refused to confine section 2G2.2(b)(2)'s applicability solely to acts committed for monetary gain. See United States v. Horn, 187 F.3d 781, 791(8th Cir. Aug. 4, 1999); United States v. Lorge, 166 F.3d 516, 518-19 (2d Cir.), cert. denied, _______ U.S. _______, 119 S. Ct. 1372 (1999); United States v. Hibbler, 159 F.3d 233, 237-38 (6th Cir. 1998), cert. denied , _______ U.S. _______, 119 S. Ct. 1278 (1999); United States v. Canada, 110 F.3d 260, 263-64 (5th Cir.) (per curiam), cert. denied, _______ U.S. _______, 118 S. Ct. 195 (1997).

"This court applies the rules of statutory construction when interpreting the Sentencing Guidelines." United States v. Fellows, 157 F.3d 1197, 1200 (9th Cir. 1998), petition for cert. filed, _______ U.S.L.W. _______ (U.S. June 4, 1999) (No. 989780). Under these rules, "we begin with the language of the statute itself, looking not only to the disputed provision, but also to the provisions of the whole law, and to its object and policy." United States v. Butler, 74 F.3d 916, 922 (9th Cir. 1996) (internal quotation omitted), cited in Fellows, 157 F.3d at 1200. "Ultimately, the goal is to ascertain the intent of the drafters." Fellows, 157 F.3d at 1200. Examining the plain language of the Guidelines in accordance with these principles, we conclude that "distribution" under section 2G2.2(b)(2) requires an element of pecuniary gain. We agree with the Black court's suggestion, however, that this element may exist in a criminal transaction even if no cash has changed hands, so long as the offender acted to acquire something with economic value (such as goods or services).

Our first reason for concluding that section 2G2.2(b)(2) requires an element of pecuniary gain lies in Application Note 1 to section 2G2.2, which states in pertinent part that " `[d]istribution,' as used in this guideline, includes any act related to distribution for pecuniary gain, including production, transportation, and possession with intent to distribute." U.S.S.G. S 2G2.2, comment. (n.1). Because the word "includes," as used in the Guidelines, is not exclusive, see U.S.S.G. S 1B1.1, comment. (n.2), the "act[s] related to distribution for pecuniary gain" described in Application Note 1 do not constitute the entire universe of acts that count as "distribution" for purposes of section 2G2.2. Application Note 1 helps us define that universe, however, by mentioning acts of production, transportation, and possession that are related to...