United States v. Futch ( 2008 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 15, 2008
No. 06-20248 Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA
Plaintiff-Appellee
v.
JERRY ALFRED FUTCH, JR
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:04-CR-511
Before GARWOOD and CLEMENT, Circuit Judges.*
PER CURIAM:**
Jerry Alfred Futch, Jr. pleaded guilty to one count of false reporting in
violation of 7 U.S.C. § 13(a)(2) and agreed to waive all non-jurisdictional appeals.
Futch was sentenced to fifty-seven months of imprisonment under the United
States Sentencing Guidelines. He appeals the factual and jurisdictional bases
for his plea. Futch also raises issues regarding the procedures used in his
*
Judge Elrod was a member of the panel, but did not participate in this decision. The
case is being decided by a quorum. 28 U.S.C § 46(d).
**
Pursuant to 5TH CIR. R. 47.5, this Court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 06-20248
sentencing, which are barred by the waiver of appeal in his plea agreement.
Finding no error, we affirm the plea agreement and sentence.
I. FACTS AND PROCEEDINGS
Futch was a natural gas trader for Reliant Energy (“Reliant”) in Houston,
Texas. On November 29, 2000, Futch responded by e-mail to a survey conducted
by the Washington, D.C.-based natural gas industry publication Inside FERC
Gas Market Report (“Inside FERC”). Futch reported that Reliant had entered
into “twelve fixed-price baseload trades of natural gas” at “Transco Zone 6” on
November 28, 2000. At the time he sent the e-mail, Futch knew that Reliant
had not entered into any of the trades at the prices and volumes he reported.
The survey to which Futch falsely responded was a monthly survey
performed by Inside FERC to learn the prices at which energy companies bought
and sold natural gas. Inside FERC used this data to calculate an index price for
natural gas. Energy companies like Reliant traded natural gas at prices tied to
the index price. Other energy companies, including public utilities, purchased
natural gas under long-term contracts tied to the index price. Owners of natural
gas mineral rights (including, for example, the State of Texas) received royalties
tied to the index price calculated by Inside FERC and other energy publications.
Index prices also affected the price of natural gas futures contracts traded on the
New York Mercantile Exchange (“NYMEX”).
Natural gas travels in interstate commerce through a national pipeline
system. Because contracts for future delivery of natural gas are traded on the
NYMEX, natural gas is a commodity under the Commodity Exchange Act
(“CEA”), 7 U.S.C. § 1 et seq.
On November 17, 2004, Futch was indicted on four counts of knowingly
delivering inaccurate reports concerning market information that tended to
affect the price of natural gas, in violation of 7 U.S.C. § 13(a)(2). On June 9,
2005, Futch filed two motions to dismiss the indictment, arguing that § 13(a)(2)
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was unconstitutionally vague and overbroad.1 On June 16, 2005, Futch pleaded
guilty to one count of false reporting under § 13(a)(2) and agreed to waive his
right to appeal “the sentence imposed or the manner in which it was
determined.” Futch also waived his right “to contest his conviction or sentence
by means of any post-conviction proceeding.”
Prior to sentencing, Futch moved to dismiss the indictment because of
prosecutorial misconduct. He twice moved for an evidentiary hearing regarding
the loss calculations in his presentence report (“PSR”). The district court denied
Futch’s motions. Following both parties’ submission of expert reports concerning
the amount of loss caused by Futch’s actions, the district court adopted the
recommendations of the PSR and sentenced Futch to fifty-seven months of
imprisonment, the upper end of the Guidelines range for his offense. Futch now
appeals.
II. STANDARD OF REVIEW
We review the district court’s determination that Futch’s plea agreement
had an adequate factual basis for plain error, because Futch presents “a plain,
straightforward issue of law: is the undisputed factual basis sufficient as a
matter of law to sustain his plea.” United States v. Johnson, 194 F.3d 657, 660
(5th Cir. 1999), vacated on other grounds, 530 U.S. 1201 (2000). We review the
validity of Futch’s appeal waiver de novo. United States v. Burns, 433 F.3d 442,
445 (5th Cir. 2005). Futch’s guilty plea does not waive his jurisdictional
challenges, which include the “claim that—judged on its face—the charge is one
which the State may not constitutionally prosecute.” United States v. Broce, 488
U.S. 563, 575 (1989) (internal quotations omitted). We review Futch’s
constitutional challenges to § 13(a)(2) and his challenge to the district court’s
1
On July 11, 2005, Futch filed a motion requesting that the court set a deadline for the
government to respond to his June 9 motions. On July 18, Futch filed a motion to withdraw
his July 11 motion. The district court granted the motion to withdraw on July 20, 2005.
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statutory interpretation de novo. United States v. Santos-Riviera, 183 F.3d 367,
369 (5th Cir. 1999).
III. DISCUSSION
A. Voluntariness of the plea agreement
Futch’s guilty plea and waiver of appeal foreclose all non-jurisdictional
challenges to his conviction and sentence. United States v. Owens, 996 F.2d 59,
60 (5th Cir. 1993) (citing United States v. Jennings, 891 F.2d 93, 95 (5th Cir.
1989)). However, Futch’s waiver of appeal does not bar claims based on the
voluntariness of his plea. United States v. Finney, 225 F. App’x 246, 246 (5th Cir.
2007) (per curiam) (unpublished).
“Due process requires that a guilty plea be a knowing and voluntary act;
the defendant must be advised of and understand the consequences of the plea.”
United States v. Pearson, 910 F.2d 221, 223 (5th Cir. 1990). In this Circuit, “[a]s
long as the defendant understood the length of time he might possibly receive he
was fully aware of his plea’s consequences.” United States v. Santa Lucia, 991
F.2d 179, 180 (5th Cir. 1993) (internal quotations omitted).
At his rearraignment, the district court reviewed the plea agreement with
Futch, including the waiver-of-appeal provisions. Futch stated that he
understood that his plea waived any non-jurisdictional challenges to his
conviction. Futch also stated that he understood that the statutory maximum
penalty for his crime was a five-year prison term and a $500,000 fine. Futch and
his attorney also signed an addendum to the plea agreement attesting that his
attorney had “fully explained” Futch’s rights and reviewed the applicable
sentencing guidelines with him. Futch and his attorney both attested that
Futch’s decision to enter into the plea agreement was “an informed and
voluntary one.” We hold that his plea agreement was knowing and voluntary
and that Futch has waived all non-jurisdictional challenges to his conviction and
sentence.
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B. Basis for the plea agreement
“A guilty plea does not waive the right of a defendant to appeal a district
court’s finding of a factual basis for the plea on the ground that the facts set
forth in the record do not constitute a federal crime.” United States v. Reasor,
418 F.3d 466, 470 (5th Cir. 2005). Futch was indicted under 7 U.S.C. § 13(a)(2),
which makes it a felony for
[a]ny person . . . knowingly to deliver or cause to be delivered
for transmission through the mails or interstate commerce . . . false
or misleading or knowingly inaccurate reports concerning crop or
market information or conditions that affect or tend to affect the
price of any commodity in interstate commerce . . . .
To state a claim for false reporting, the prosecution must allege “(1) that a
defendant knowingly delivered market reports or market information through
interstate commerce, (2) that the information was knowingly false or misleading;
and (3) that the information affected or tended to affect the price of a commodity
in interstate commerce.” United States CFTC v. Atha, 420 F. Supp. 2d 1373,
1380 (N.D. Ga. 2006) (citing United States v. Valencia, 394 F.3d 352, 356–57 (5th
Cir. 2004)). At the rearraignment, Futch admitted that he knowingly delivered
false sales reports to Inside FERC via e-mail sent from Texas to Washington,
D.C., that he knew that this information was false, that he knew that this
information tended to affect the index price published by Inside FERC, and that
he knew that the index price tended to affect the price of natural gas. He also
admitted that natural gas was a “commodity” under the CEA.
Futch argues that the factual basis for his plea was deficient, because the
natural gas “spot” or “swap” transactions in which Futch engaged are exempted
from the oversight of the Commodity Futures Trade Commission (“CFTC”), the
regulatory body charged with enforcing the CEA. Futch argues that the CEA
should never have been applied to him. Futch cites to the legislative history of
the CEA, statutory language in 7 U.S.C. § 2(g)-(i), and a 1993 CFTC Final Order
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No. 06-20248
exempting certain energy markets from CFTC regulation. 7 U.S.C. § 2(g)-(h);
Exemption for Certain Contracts Involving Energy Products, 58 Fed. Reg.
21286, 21294–95 (May 20, 1993) [hereinafter 1993 Final Order].
Futch’s argument is without merit because the statutory and regulatory
provisions he cites do not apply to his conduct. Subsections 2(g) and 2(h) of the
CEA were part of the Commodity Futures Modernization Act, which became law
in December 2000, after the offense conduct at issue here.2
Even if these subsections had been in force when Futch sent his false
report to Inside FERC, they would not exonerate him. Subsections 2(g)-(i)
exempt “agreement[s], contract[s] or transaction[s]” in, inter alia, the natural
gas markets, from CFTC oversight. 7 U.S.C. §§ 2(g), (h)(1), (i)(1). Futch was not
indicted for entering into an “agreement, contract or transaction,” but for
distributing false market information under § 13(a)(2). The federal courts which
have evaluated § 13(a)(2)’s false reporting offense have concluded that it extends
to “any commodity in interstate commerce” and is not limited to futures
contracts regulated by the CFTC. See, e.g., United States CFTC v. Reed, 481 F.
Supp. 2d 1190, 1198 (D. Colo. 2007); United States v. Reliant Energy Servs., Inc.,
420 F. Supp. 2d 1043, 1061 (N.D. Cal. 2006). Federal courts have found that
“false reporting of market information concerning natural gas and attempted
manipulation of natural gas price indices does not implicate an agreement,
contract or transaction” and thus does not come under the exceptions in 7 U.S.C.
§ 2(g)-(h). Reed, 481 F. Supp. 2d at 1198 (internal quotations omitted); Atha,
420 F. Supp. 2d at 1380; United States CFTC v. Bradley, 408 F. Supp. 2d 1214,
1219 (N.D. Okla. 2005); United States v. Valencia, No. H-03-024, 2003 U.S. Dist.
LEXIS 15264, at *32–36 (S.D. Tex. Aug. 25, 2003), vacated in part on other
2
According to the Library of Congress records, the Commodity Futures Modernization
Act, H.R. 5660, was incorporated by reference in the conference report to H.R. 4577. H.R. 4577,
the Consolidated Appropriations Act of 2001, became Public Law 106-554 on December 21,
2000.
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grounds, 2003 U.S. Dist. LEXIS 24327 (S.D. Tex. Nov. 13, 2003), rev’d on other
grounds, 394 F.3d 352 (5th Cir. 2004).
The 1993 Final Order explicitly states that § 13(a)(2) continues to apply
to the energy markets that are otherwise exempted from the CEA by the order.
58 Fed. Reg. at 21291. Because the statutory and regulatory language is clear,
we need not consider the legislative history. Valencia, 394 F.3d at 355 n.2. We
hold that § 13(a)(2) applies to Futch’s conduct as charged in the indictment and
that the district court did not err when it found that Futch’s plea agreement had
an adequate factual basis.
C. Jurisdictional challenges to the plea agreement
(1) Unconstitutional overbreadth
Futch argues that § 13(a)(2) is unconstitutionally overbroad because it is
a limitation on speech which is not narrowly tailored to promote the interests set
out in the findings and purpose section of the CEA. See 7 U.S.C. § 5. A prior
panel of this Court has held that § 13(a)(2) is not constitutionally overbroad
because it only criminalizes knowingly false speech, which is not constitutionally
protected speech. Valencia, 394 F.3d at 355–57; accord Reed, 481 F. Supp. 2d at
1198–99; see also Colson v. Grohman, 174 F.3d 498, 507 (5th Cir. 1999)
(“[I]ntentional or reckless falsehood, even political falsehood, enjoys no First
Amendment protection.”). Futch’s overbreadth argument is foreclosed by
Valencia.
(2) Unconstitutional vagueness
Futch argues that § 13(a)(2) contains terms that are too vague to support
a criminal conviction. “[T]he void-for-vagueness doctrine requires that a penal
statute define the criminal offense with sufficient definiteness that ordinary
people can understand what conduct is prohibited and in a manner that does not
encourage arbitrary and discriminatory enforcement.” Kolender v. Lawson, 461
U.S. 352, 357 (1983). Vagueness challenges to statutes which, like § 13(a)(2),
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“do not involve First Amendment freedoms” should be “examined in the light of
the facts of the case at hand.” United States v. Mazurie, 419 U.S. 544, 550
(1975).
Futch argues that the terms “any person,” “market,” “information and
conditions,” “price,” “tends to affect,” “for transmission” and “commodity” are
unconstitutionally vague. Futch argues that the term “any person” is vague
because it could be interpreted either to include “any person” already regulated
by the CEA, or “any person” who makes a statement about any commodity in
interstate commerce. We reject this argument. The term “person” is defined
broadly in 7 U.S.C. § 1a(28) to include “individuals, associations, partnerships,
corporations, and trusts.” Section 13(a)(1) is limited to “[a]ny person registered
or required to be registered” under the CEA. The contrast between the
limitations in § 13(a)(1) and the use of the phrase “any person” in § 13(a)(2)
clearly indicates that Congress intended to include a broader class of persons
under § 13(a)(2). See Russello v. United States, 464 U.S. 16, 23 (1983) (“[W]here
Congress includes particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that Congress acts
intentionally and purposely in the disparate inclusion or exclusion.” (internal
quotations omitted)). The phrase “any person” as it is used in § 13(a)(2) is not
vague.
Futch argues that the term “market” is vague because it could (as the
government urges here) refer to any market for a commodity in interstate
commerce, or (as Futch urges) refer only to markets regulated under the CEA.
We first note that the statute only applies to “market information” that “affect[s]
or tend[s] to affect the price of any commodity in interstate commerce.” The
term “market” is thus limited by the other terms of § 13(a)(2). Further, looking
at the statutory language in light of the facts of Futch’s plea, the term “market
information” is not vague because Futch’s false statements about the time, place,
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price, and volume of Reliant’s natural gas trades clearly qualified as “market
information” under almost any definition of the term. See Mazurie, 419 U.S. at
550 (“[V]agueness challenges to statutes which do not involve First Amendment
freedoms must be examined in the light of the facts of the case at hand.”).
Futch argues that the terms “information” and “conditions” are vague
because they overlap. We reject this argument because the fact that “market
information” and “market conditions” may overlap does not make them
unconstitutionally vague. See United States v. Batchelder, 442 U.S. 114, 123
(1979) (“So long as overlapping criminal provisions clearly define the conduct
prohibited and the punishment authorized, the notice requirements of the Due
Process Clause are satisfied.”).
Futch argues that the term “price” is overbroad and should be read as
“market price” in light of other sections of the statute, such as 7 U.S.C. §§ 9 and
2(h)(2)(C), which use the term “market price.” However, Futch has not
established that judicially inserting the word “market” would add clarity to §
13(a)(2). In the context of a natural gas contract, this Court has stated that the
“[m]arket price is the price that is actually paid by buyers for the same
commodity in the same market.” Shamrock Oil & Gas Corp. v. Coffee, 140 F.2d
409, 410 (5th Cir. 1944); see also Cargill, Inc. v. Hardin, 452 F.2d 1154, 1166
(8th Cir. 1971) (construing 7 U.S.C. §§ 9 and 13 and finding that the “market”
for a commodity is “composed of products that have reasonable
interchangeability for the purposes for which they are produced—price, use and
qualities considered” (internal quotations omitted)). Given this broad definition,
adding the term “market” to modify “price” would not significantly alter the
scope of § 13(a)(2). In addition, as with the term “market information” above,
Futch has not shown that § 13(a)(2) was vague in light of the facts of this case.
See Mazurie, 419 U.S. at 550. Futch judicially admitted that his false reports
tended to affect the index price of natural gas and that the index price affected
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the price of gas in a wide variety of markets, including the price of natural gas
futures on the NYMEX.
Futch argues that the term “tends to affect” is vague. He cites to Mattern
v. Eastman Kodak Co., where this Court referred to actions under Title VII that
“would tend to deprive” employees of “opportunities” as “vague harms.” 104 F.3d
702, 709 (5th Cir. 1997) (discussing 42 U.S.C. § 2000e-2(a)(1), (2)), abrogated on
other grounds by Burlington N. & Santa Fe Ry. v. White, 126 S. Ct. 2405 (2006).
The Mattern court did not find, however, that it was impermissible for Congress
to impose civil penalties for inflicting these “vague harms” on their employees.
Id. Futch also cites to Justice Kennedy’s dissent in Hill v. Colorado, which
states that “[i]n the context of a law imposing criminal penalties for pure speech,
‘protest’ is an imprecise word; ‘counseling’ is an imprecise word; ‘education’ is an
imprecise word. No custom, tradition, or legal authority gives these terms the
specificity required to sustain a criminal prohibition on speech.” 530 U.S. 703,
773 (2000) (Kennedy, J., dissenting). We first note that, unlike the Colorado
clinic-access law at issue in Hill, § 13(a)(2) only penalizes unprotected false
speech. Second, we note that in the context of § 13(a)(2), the phrase “tends to
affect” operates to limit the scope of the prohibited false speech. Finally, we note
that even if the phrase “tends to affect” were found to be vague in some factual
contexts, it is sufficiently clear to have put Futch on notice that providing false
sales data in response to Inside FERC’s monthly index survey violated the law.
See Boyce Motor Lines, Inc. v. United States, 342 U.S. 337, 340 (1952).
Futch argues that the term “for transmission” in the phrase “deliver for
transmission” is vague. He argues that “for transmission” is vague because it
must have a meaning distinct from “deliver” in order to avoid surplusage. This
argument is without merit. The Universal Commercial Code defines the word
“Send” as “to deposit in the mail or deliver for transmission . . . .” U.C.C. § 1-
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201(b)(36)(A). In the present context, the phrase “deliver for transmission” is a
synonym for “send” and is not unconstitutionally vague.
Futch finally argues that the term “commodity” is vague because it is
“reasonable” to believe that natural gas is not a “commodity” under the CEA.
The CEA defines “commodity” to include “all . . . goods and articles . . . in which
contracts for future delivery are presently or in the future dealt in.” 7 U.S.C. §
1a(4). He argues that the false natural gas sales at issue in this case did not
involve a commodity because the futures contracts for natural gas that are
traded on the NYMEX state that they are for gas “delivered at Henry Hub,
Louisiana” and the gas in this case was delivered at “Transco Zone 6.” His
arguments on these points are frivolous and we reject them. Henry Hub is the
nexus of several major natural gas pipelines. The Henry Hub clause in the
NYMEX futures contracts merely specifies the location for gas delivery and does
not in any way limit the type of commodity in question, natural gas. We also
observe that Futch admitted in his plea agreement that natural gas was a
commodity in interstate commerce under the CEA.
D. Sentencing issues
Futch acknowledges that “a valid waiver of appellate rights would bar
appellate review” of the sentencing issues he raises. His plea agreement states
that “[d]efendant is aware that 18 U.S.C. [§] 3742 affords a defendant the right
to appeal the sentence imposed. The defendant waives the right to appeal the
sentence imposed or the manner in which it was determined.”3 The district court
reviewed this provision with Futch at his rearraignment and Futch stated that
he understood it. As discussed above, Futch’s waiver of appeal was knowing and
voluntary. His sentencing challenges are therefore foreclosed.
3
The plea agreement also states that “the defendant may appeal only a sentence
imposed above the statutory maximum.” Futch’s sentence was fifty-seven months, which is less
than the statutory maximum of five years for his offense.
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IV. CONCLUSION
We AFFIRM Futch’s conviction and sentence.
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