United States v. Cadden

51 F.4th 32

UNITED STATES, Appellee,

v.Barry J. CADDEN, Defendant, Appellant.

Nos. 21-1602

21-2003

United States Court of Appeals, First Circuit.

October 13, 2022

Michelle R. Peirce, with whom Bruce A. Singal and Hinckley, Allen & Snyder LLP were on brief, for appellant.

Chris Looney, Assistant United States Attorney, with whom Rachael S. Rollins, United States Attorney, was on brief, for appellee.

Before Barron, Chief Judge, Selya and Howard, Circuit Judges.

BARRON, Chief Judge.

Barry J. Cadden was convicted on fifty-seven counts under the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 301 et seq., and the federal mail fraud statute, 18 U.S.C. § 1341. He was initially sentenced for these crimes to a 108-month prison term, but the government appealed, and we vacated and remanded that sentence. United States v. Cadden, 965 F.3d 1, 40 (1st Cir. 2020). He now appeals from the 174-month prison term that he received at his resentencing. We affirm.

I.

We have described the circumstances underlying Cadden's criminal conduct in prior cases. See United States v. Cadden, 965 F.3d 1 (1st Cir. 2020) ( Cadden I ), United States v. Chin, 965 F.3d 41 (1st Cir. 2020) ( Chin I ), United States v. Chin, 41 F.4th 16 (1st Cir. 2022), cert. denied, No. 22-5534, ––– U.S. ––––, ––– S.Ct. ––––, ––– L.Ed.2d ––––, 2022 WL 6573283 (Oct. 11, 2022) ( Chin II ). Suffice it to say, Cadden was the founder and partial owner of the New England Compounding Center ("NECC"), a company that carried out pharmaceutical compounding operations to produce medications used nationwide. In 2012, a deadly outbreak of fungal meningitis was traced to methylprednisolone acetate ("MPA") that NECC produced. A federal criminal investigation ensued. It resulted in Cadden, Glenn Chin, and other NECC staff being indicted on federal charges, including charges arising under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the Federal Food, Drug, and Cosmetic Act ("FDCA"), and the federal mail fraud statute. Cadden and Chin were found guilty of the RICO and mail fraud charges, as well as some of the FDCA charges.¹

Cadden's first sentencing hearing was held in June 2017. There, the District Court calculated Cadden's range under the United States Sentencing Guidelines ("U.S.S.G.") to be 87 to 108 months of imprisonment and sentenced Cadden to a prison term of 108 months.

Chin's first sentencing, before the same judge as Cadden's, was held in January 2018. The District Court calculated Chin's Sentencing Guidelines range to be 78 to 97 months of imprisonment. The District Court then imposed a prison term of 96 months.

During both Cadden's and Chin's initial sentencings, the District Court determined that enhancements set forth in two Sentencing Guidelines did not apply to either Cadden or Chin. See Cadden I, 965 F.3d at 33-36 ; Chin I, 965 F.3d at 52-55. The two enhancements are set out, respectively, in U.S.S.G. § 2B1.1(b)(16)(A), "which imposes a two-level increase in the base offense level of those convicted of certain crimes ‘[i]f the offense involved ... the conscious or reckless risk of death or serious bodily injury’ " ("conscious or reckless risk enhancement"), and U.S.S.G. § 3A1.1(b), "which imposes a two-level increase in the base offense level ‘[i]f the defendant knew or should have known that a victim of the offense was a vulnerable victim’ and an additional two-level increase if that enhancement applies and ‘the offense involved a large number of vulnerable victims’ " ("vulnerable victims enhancement"). Chin II, 41 F.4th at 19 (alterations in original) (quoting U.S.S.G. §§ 2B1.1(b)(16)(A), 3A1.1(b) ).

The United States appealed from the sentences imposed on both Cadden and Chin. We vacated Cadden's sentence in Cadden I, while clarifying the circumstances in which the enhancements set out in the two Sentencing Guidelines quoted above would apply. Cadden I, 965 F.3d at 33-36. We specified that, if the District Court found on remand "that the enhancements should have been applied [to Cadden] and that the Guidelines range it originally calculated requires modification," it should "update[ ] the Guidelines range to account for the application of one or both of these enhancements," then "of course consider the parties' updated arguments for what Cadden's sentence should be in light of the modified range." Id. at 36. We also specified that the "District Court may not, however, reconsider on remand other enhancements or aspects of its initial sentencing calculation beyond those issues narrowly required by its reconsideration of the two enhancements" at issue in that appeal. Id. We similarly vacated Chin's sentence in Chin I, while issuing similar instructions to the District Court in that case about how to determine whether these two enhancements should be applied on remand. Chin I, 965 F.3d at 56 ("In light of the issues we have identified with the treatment of [the] enhancements, the District Court may find on remand that application of one or more of these enhancements is warranted and that recalculation of Chin's sentencing range is necessary. If it does, then the District Court may of course in imposing a final sentence consider the parties' arguments about how the traditional concerns of sentencing play out given the modified range.").

The District Court resentenced Cadden on July 7, 2021. The District Court determined that both the conscious or reckless risk enhancement and the vulnerable victims enhancement applied to Cadden. The same sentencing judge then resentenced Chin over two days of proceedings on July 8 and July 21, 2021, and determined that each of the enhancements applied to him as well.

The District Court determined that the application of the two enhancements to Cadden resulted in a six-level increase to his base offense level under the Sentencing Guidelines. The District Court reached the same conclusion as to Chin.

The District Court recalculated Cadden's Sentencing Guidelines range, based on his increased offense level, to be 168 to 210 months of imprisonment, and imposed on Cadden a prison sentence of 174 months. The District Court similarly recalculated Chin's Sentencing Guidelines range to be 151 to 188 months of imprisonment, but chose to vary below that range and sentenced Chin to 126 months.

Chin and Cadden each appealed the District Court's determination that the conscious or reckless risk enhancement and the vulnerable victims enhancement applied to them. On July 15, 2022, we affirmed Chin's sentence in Chin II. We now address Cadden's.

II.

Much of Cadden's appeal focuses on whether the District Court erred in applying the conscious or reckless risk and vulnerable victims enhancements when calculating his base offense level. But, as Cadden acknowledged at oral argument, the District Court did not err in construing the Guidelines setting forth those enhancements, at least given our decision in Chin II, which was decided prior to oral argument in this case but after briefing had been completed. Cadden also does not contend -- again, in consequence of our ruling in Chin II -- that the District Court erred in finding that the conscious or reckless risk enhancement applied to Cadden.

Notwithstanding Chin II, Cadden does still appear to be challenging the District Court's determination that the vulnerable victims enhancement applied to him. Specifically, he appears to be contending that the government has failed to meet its burden to show that he had the required knowledge that the victims of the MPA contamination were vulnerable because the record does not suffice to show that he "knowingly ship[ped] contaminated drugs." The record's failure to show that he had such knowledge about his offense, according to Cadden, necessarily means that it fails to show that he had "reason to know that patients were receiving contaminated MPA at all, let alone reason to know that [those patients] were ‘unusually vulnerable.’ "

Because this argument was not raised below, our review is only for plain error. As a result, Cadden must show "(1) that an error occurred (2) which was clear or obvious and which not only (3) affected the defendant's substantial rights, but also (4) seriously impaired the fairness, integrity, or public reputation of judicial proceedings." United States v. Duarte, 246 F.3d 56, 60 (1st Cir. 2001). But, he fails to do so, given our ruling in Chin II. There, Chin contended that the "absence of record evidence of his individualized knowledge of both who the end users of NECC drugs would be and that the drugs that NECC shipped were contaminated" precluded the District Court from applying the vulnerable victims enhancement to him. Chin II, 41 F.4th at 29. But, we upheld the District Court's application of the enhancement because "evidence was presented at trial that tended to show that Chin was aware of the particularly grave risks associated with injecting contaminated medication into a patient's spinal fluid, as opposed to other routes of drug administration," and other evidence "brought home the certainty that Chin and other of the coconspirators were fully aware of the risks involved in the distribution of defective drugs." Id.

The District Court likewise found here that Cadden "did design and preside over what was, as he recognized[,] a high-risk enterprise" and that he ignored "warnings [and] signals," at least some of "which he had to have been aware," including issues with "specification tests, incomplete testing, falsification of drug lab cleaning reports, ... [and] the appearance of mold and other contaminants in the clean room." And, Cadden neither argues nor points to anything in the record that shows, let alone clearly shows, that he was any less aware than Chin either that MPA was being administered via "injecti[on] ... into a patient's spinal fluid" or of the "particularly grave risks" associated with doing so. Chin II, 41...