United States v. S. Union Co.

942 F.Supp.2d 235

UNITED STATES of America

v.SOUTHERN UNION COMPANY, Defendant.

CR No. 07–134 S.

United States District Court, D. Rhode Island.

April 25, 2013.

Dianne Chabot, U.S.E.P.A., Boston, MA, Kevin Cassidy, Department of Justice, Washington, DC, Terrence P. Donnelly, Donald C. Lockhart, U.S. Attorney's Office, Providence, RI, for United States of America.

Alexandra K. Callam, Gerald J. Petros, Hinckley, Allen & Snyder LLP, John A. Tarantino, Patricia K. Rocha, Adler Pollock & Sheehan P.C., Providence, RI, Daniel J. Fetterman, Kasowitz, Benson, Torres & Friedman, LLP, New York, NY, for Defendant.

PRELIMINARY SENTENCING MEMORANDUM

WILLIAM E. SMITH, District Judge.

This case has returned to the Court after making its way through the First Circuit Court of Appeals and the United States Supreme Court. A major part of the sentence imposed by this Court on Defendant Southern Union Company (“Southern Union”) was vacated by the Supreme Court, and the case was remanded for resentencing. The parties have several important questions regarding how to resolve the defects the Supreme Court found in the initial sentence, and what sentence is permitted in light of the Supreme Court's opinion. ( See United States' Mot. Concerning the Issues that Should Be Resolved on Remand, ECF No. 163.) This Memorandum answers those questions. Re-sentencing shall proceed in accordance with the holdings outlined below.

I. Background

On October 15, 2008, a jury convicted Defendant of knowingly storing waste without a permit in violation of 42 U.S.C. § 6928(d)(2) (the “Resource Conservation and Recovery Act” or “RCRA”) from “on or about September 19, 2002 to October 19, 2004.” (Jury Verdict, ECF No. 98.) The RCRA establishes a maximum penalty of $50,000 per day of violation. The probation office calculated a maximum fine of $38.1 million, on the basis that Southern Union had violated the RCRA for 762 days—each day from September 19, 2002 to October 19, 2004.

Defendant objected to the probation office's recommendation as a violation of Apprendi v. New Jersey, which holds that “any fact (other than prior conviction) that increases the maximum penalty for a crime must be charged in an indictment, submitted to a jury, and proven beyond a reasonable doubt.” 530 U.S. 466, 476, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000) (internal citation and quotation marks omitted). Southern Union noted that each day that it violated the RCRA would lead to a greater maximum fine, so the duration of the violation was a fact that a jury must find beyond a reasonable doubt.

Southern Union argued that the jury's verdict was ambiguous with respect to the duration of the violation and only necessarily means that Defendant violated the RCRA for one day. (Mem. of Law with Respect to the Maximum Possible Sentencing Fine, ECF No. 134.) In addition to the language from the verdict form, the district court's instructions to the jury stated “[t]he proof need not establish with certainty the exact date of the alleged offense. It is sufficient if the evidence in this case establishes beyond a reasonable doubt that the offense was committed on a date reasonably near the date alleged.” (Tr. of Jury Trial Vol. 13 148:12–16, October 14, 2008, ECF No. 119.) According to Southern Union, the guilty verdict meant that the jury found at least a one-day violation of the RCRA, but the number of days beyond that was unclear. Therefore, in Southern Union's view, the maximum penalty supported by the verdict would be $50,000.

This Court disagreed with Southern Union's position and found that, while Apprendi likely applied to criminal fines, the verdict form was specific enough to say that the jury had found beyond a reasonable doubt that Southern Union had violated the RCRA for 762 days and the maximum fine was $38.1 million. United States v. S. Union Co., Cr. No. 07–134 S, 2009 WL 2032097, at *3–4 (D.R.I. July 9, 2009). The Court then imposed a fine of $6 million and a community service obligation of $12 million.¹ (Judgment, ECF No. 147.)

Southern Union appealed the sentence to the First Circuit Court of Appeals, which found that the jury did not determine the duration of the RCRA violation because no special interrogatory was submitted to the jury and a finding on the number of days was not necessary for the jury's conviction of Southern Union. United States v. S. Union Co., 630 F.3d 17, 36 (1st Cir.2010). However, the First Circuit affirmed the sentence imposed because it found that Apprendi did not apply to criminal fines. Id. at 33–36. The Supreme Court granted certiorari and reversed the First Circuit, finding that Apprendi applies to criminal fines. S. Union Co. v. United States, –––U.S. ––––, 132 S.Ct. 2344, 2353, 183 L.Ed.2d 318 (2012).² The case was remanded to the First Circuit Court of Appeals, which vacated the fine and remanded the case to this Court for further proceedings consistent with the Supreme Court's opinion. (Order, ECF No. 162.)

Upon remand, the government argues that (1) the Court should empanel a second jury to determine the duration of the RCRA violation and impose a new fine in accordance with the jury's findings; (2) the Supreme Court's ruling did not affect the $12 million community service obligation imposed by this Court; and (3) if the Court finds that it cannot empanel a second jury and that the Supreme Court's decision vacated the $12 million community service obligation, the Court may fine Southern Union $500,000 under 18 U.S.C. § 3571(c) (the “Corporate Fine Statute”). These are close calls, but I have concluded that the Court may not empanel a second jury for sentencing and the Supreme Court's decision vacated the $12 million community service obligation. The Court may, however, impose a fine of $500,000 under the Corporate Fine Statute and/or a commensurate community service obligation.

II. Empanelment of a Second Jury

The government requests that the Court empanel a second jury to determine the duration of the RCRA violation beyond a reasonable doubt. This suggestion must be rejected because the government had the opportunity to submit a special interrogatory or more precise verdict form during the initial trial and failed to do so; thus, the government waived its ability to request a jury finding on the precise numberof days by not objecting to the jury instructions or verdict form that was submitted to the first jury.

Rule 51(b) of the Federal Rules of Criminal Procedure states that “[a] party may preserve a claim of error by informing the court—when the court ruling or order is made or sought—of the action the party wishes the court to take, or the party's objection to the court's action and the grounds for that objection.” Fed.R.Crim.P. 51(b). In the context of a jury charge and verdict form, “[a] party who objects to any portion of the instructions or to a failure to give a requested instruction must inform the court of the specific objection and the grounds for the objection before the jury retires to deliberate.” Fed.R.Crim.P. 30(d). The First Circuit has held repeatedly that “[t]he failure to object to the structure of a verdict form before the jury retires, like the failure to object to any other portion of the judge's charge, constitutes a waiver.” Scott–Harris v. City of Fall River, 134 F.3d 427, 435 (1st Cir.1997), rev'd on other grounds, Bogan v. Scott–Harris, 523 U.S. 44, 118 S.Ct. 966, 140 L.Ed.2d 79 (1998); see also Petsch–Schmid v. Boston Edison Co., No. 96–1399, 1997 WL 100904, at *1 (1st Cir. Feb. 27, 1997) (“[T]he failure to object before the jury retires to the charge or the verdict form constitutes a waiver.”).

A waiver is the “intentional relinquishment or abandonment of a known right.” United States v. Olano, 507 U.S. 725, 733, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993) (quoting Johnson v. Zerbst, 304 U.S. 458, 464, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938)). The government argues that the necessity of a more specific verdict was not “known” because the attorneys representing the government did not know that Apprendi applies to criminal fines because the Supreme Court had not so held until this case. However, the available case law and the government's official position on the issue at the time the instructions and verdict form were submitted to the jury both indicated that Apprendi did, in fact, apply to fines. See United States v. LaGrou Distribution Sys., Inc., 466 F.3d 585, 594 (7th Cir.2006). In LaGrou, the trial court imposed a fine of double the maximum statutory penalty that was supported by the jury's verdict. Upon appeal, the government conceded that Apprendi applies to criminal fines, and therefore, the sentence was unlawful. See Brief and Appeal of the United States at 34 (Dec. 20, 2005), filed in LaGrou, 466 F.3d 585 (“Apprendi does apply to monetary fines, that is, any fact increasing the maximum fine above the prescribed statutory maximum must be proven beyond a reasonable doubt.”). The government noted in its brief that this concession was made in consultation with the Office of the Solicitor General. Id. at 34 n. 12. The Seventh Circuit agreed, holding that the imposition of the fine that exceeded the statutory maximum without a jury finding the necessary facts was a reversible error. LaGrou, 466 F.3d at 594. The government's concession in LaGrou and the subsequent Seventh Circuit opinion meant that the government officially “knew” that Apprendi applies to fines and, by failing to object to the initial jury instructions and verdict form, it waived its ability to submit new instructions and verdict form to a jury now.³

The government argues that the individual attorneys representing the government in this case did not know that the jury instructions and verdict form created Apprendi issues, so they did not knowingly waive the right to later revise those instructions. However, the government conceded at oral argument in this case that the government “speaks with one voice.” (Tr. Oral Argument, Dec. 3,...