United States v. Bettye Kidd ( 2018 )

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued October 3, 2018
Decided November 1, 2018
Before
DANIEL A. MANION, Circuit Judge
DAVID F. HAMILTON, Circuit Judge
MICHAEL B. BRENNAN, Circuit Judge
No. 18-1532
UNITED STATES OF AMERICA, Appeal from the United States
Plaintiff-Appellee, District Court for the Eastern District
of Wisconsin.
v.
No. 17-CR-185-1-JPS
BETTYE R. KIDD,
Defendant-Appellant. J.P. Stadtmueller,
Judge.
ORDER
Bettye Kidd, a lead material handler at a high-end hair products manufacturer,
illicitly packaged and shipped products to unauthorized buyers for years before her
employer and authorities caught wind of the scheme. Kidd pleaded guilty to
transporting stolen goods, and the district court sentenced her below the guidelines
range to 18 months in prison. At issue in this appeal is the court’s decision to impose a
2-level sentencing enhancement under U.S.S.G. § 3B1.3 because Kidd abused a position
of trust. Kidd argues that her position lacked the requisite level of discretion to qualify
No. 18-1532 Page 2
as a position of trust. Because there was no clear error in the judge’s decision to apply
the enhancement, we affirm the judgment.
Kidd, now 57, worked for nearly twenty years for the Andis Company, a
family-owned business in Sturtevant, Wisconsin, which manufactures and distributes
high-quality hair products. Kidd’s position was “lead material handler,” responsible for
supervising other employees in the shipping department, directing their assignments,
and overseeing their work stations in the warehouse. Additionally, she filled customer
orders by creating UPS shipping labels and ensuring that the products were correctly
packaged and delivered to Andis’s customers.
As set forth in her plea agreement, beginning around 2012, Kidd started taking
orders from individuals who were not Andis customers and selling Andis products
“out the back door.” Over a five-year period before her discharge, Kidd pilfered the
products from Andis, secretly creating and printing UPS labels, and filling the illicit
orders alongside bona fide orders. Then she arranged for UPS to ship the stolen
products in the same shipment as the legitimate items but bound for a different
destination. Recipients of the stolen goods, in turn, directly paid Kidd or her cohorts in
the scheme. By the time the FBI and Andis uncovered the fraud, Kidd had shipped over
1400 packages of Andis’s products, causing a loss to the company of over half a million
dollars. She was charged with, and pleaded guilty to, transporting stolen goods, see 18
U.S.C. § 2314. Of relevance to this appeal, one provision in the plea agreement reflected
the parties’ acknowledgment that the government would recommend a 2-level
sentencing enhancement under U.S.S.G. § 3B1.3 based on Kidd’s “abuse of her
employer’s trust.”
The probation officer who prepared the presentence report agreed with the
government that a 2-level increase under § 3B1.3 was appropriate. The probation officer
accepted the government’s assertion that Kidd’s position subjected her to less oversight
than other warehouse employees; she had private workspace (a cubicle in the office and
a workstation in the warehouse) and the “discretion” to fill orders and create shipping
labels without approval.
At sentencing, the parties debated whether the guideline should apply to Kidd’s
circumstances. A 2-level increase to a defendant’s offense level is proper “[i]f the
defendant abused a position of public or private trust, or used a special skill, in a
manner that significantly facilitated the commission or concealment of the offense.”
U.S.S.G. § 3B1.3. The commentary to § 3B1.3 defines “position of public or private trust”
No. 18-1532 Page 3
as one “characterized by professional or managerial discretion (i.e., substantial
discretionary judgment that is ordinarily given considerable deference).” Id. at cmt. n.1.
Kidd denied holding a position of trust that was characterized by professional or
managerial discretion; she said she was not the only employee who worked in the
shipping department or who was authorized to ship products, and she maintained that
she did not have any special skill that allowed her to facilitate or conceal the offense.
The government countered that Kidd was entrusted with the discretion to control
assignments and employees’ whereabouts within the shipping area and, further, as lead
material handler, she had the authority to assign herself to prime locations to facilitate
the scheme.
The district court applied the 2-level enhancement, accepted the probation
officer’s guideline calculations (offense level 19 and criminal history category I, which
together yielded a sentencing range of 30 to 37 months), and sentenced Kidd below that
range to 18 months. The judge highlighted Kidd’s role as lead material handler in which
she had “the discretion to assign [] others” and noted that her position allowed her to
perpetuate her scheme by directing unwitting subordinates to prepare illicit packages.
Andis, the judge explained, was a “very, very close-knit family business,” whose
principals “reposed in Ms. Kidd a level of trust, a level of responsibility that would not
have otherwise allowed this sort of conduct to occur, particularly over a protracted
period of time.”
On appeal, Kidd contends that the district court wrongly applied § 3B1.3 based
on a misunderstanding of the discretionary nature required of the position of trust. She
maintains that her job does not fit either of the two types of positions of trust identified
by this court as involving the requisite amount of discretion: (1) jobs requiring
specialized expertise or (2) jobs empowering the employee to exercise, on a case-by-case
basis, significant decision-making to determine whether certain expenditures are
necessary or beneficial to the company. United States v. Tiojanco, 286 F.3d 1019, 1020–21
(7th Cir. 2002) (surveying cases); see also United States v. Miller, 607 F.3d 144, 150 (5th Cir.
2010); United States v. Sicher, 576 F.3d 64, 76 (1st Cir. 2009); United States v. Edwards, 325
F.3d 1184, 1188 (10th Cir. 2003) (sister circuits endorsing Tiojanco’s reasoning).
Regarding the latter category, she argues that she did not make complex decisions or
determine how best to use Andis’s funds.
Our review of a district court’s application of § 3B1.3, including its factual
finding as to whether a defendant held a position of trust, is highly deferential,
United States v. DeMarco, 784 F.3d 388, 396 (7th Cir. 2015). Here, the district judge did
No. 18-1532 Page 4
not clearly err in applying the enhancement. Relevant to this case, Tiojanco’s second
category of positions of trust includes employees who provide “initial authorization [for
the expenditure of company funds or other valuables] that “for reasons of efficiency is
subject only to nominal review.” 286 F.3d at 1021. Supervisors of such employees defer
to these low-level decision-makers because of their “first-hand knowledge of the
relevant facts through personal observation, customer interaction, or document
review.” Id. Over a five-year period, Kidd authorized and arranged for the shipment of
company products without management looking over her shoulder. She does not
dispute the government’s assertion that Andis management deferred to her first-hand
knowledge of the inventory when they sought her assistance to solve the shortages after
they began noticing inventory discrepancies. Kidd tries to distinguish Tiojanco by
arguing that she did not have “unfettered authority to spend company money,” id., but
authority over company money is not dispositive. See United States v. Fuchs, 635 F.3d
929, 934–35 (7th Cir. 2011).
The “common thread” in our decisions upholding the application of § 3B1.3 is
“the victim’s special trust and reliance.” United States v. Bradshaw, 670 F.3d 768, 770
(7th Cir. 2012) (citing Fuchs, 635 F.3d at 935). Like the employer in Bradshaw, Andis
“placed more than the ordinary degree of reliance on [Kidd’s] integrity and honesty.”
670 F.3d at 770. As an employee of the company for nearly twenty years, Kidd enjoyed
the trust of her superiors to authorize materials for final shipment without further
review. Management’s request for Kidd to help address the inventory shortages
underscores the degree of its reliance and trust in her; this was not an ordinary arms-
length, commercial relationship, see Fuchs, 635 F.3d at 937, but one built on almost two
decades of work within a “very, very close-knit family business.”
Moreover, the judge expressly considered Kidd’s authority—subject to minimal
oversight—to exercise discretion when assigning tasks to other employees. The judge
highlighted her ability to direct these employees to assemble products to fulfill illicit
orders. The scheme could have continued for so many years, the judge pointed out,
only because Andis entrusted her with responsibilities to the degree that it did. The
large number of items (1400 packages) that she fraudulently shipped and the crime’s
duration over five years are evidence that she had discretion and occupied a position of
trust. See United States v. Deal, 147 F.3d 562, 564 (7th Cir. 1998).
Next, Kidd asserts that the district court erred by conflating the colloquial
meaning of trust with “position of trust” described in § 3B1.3. Relying on decisions from
sister circuits, see United States v. Douglas, 885 F.3d 124, 135 (3d Cir. 2018) (en banc);
No. 18-1532 Page 5
United States v. Tann, 532 F.3d 868, 875–76 (D.C. Cir. 2008), Kidd contends that “position
of trust” for purposes of § 3B1.3 is a term of art that requires “professional or
managerial discretion,” demanding more than the conversational understanding of
trust (i.e., that an employee will refrain from abusing her access to company property).
Kidd argues that her physical access to her employer’s products, without more, does
not amount to the “professional or managerial discretion” required to apply the
enhancement.
Kidd misapprehends Douglas’s significance. Even if we applied the Third
Circuit’s analysis, Kidd likely would be found to have held a position of trust. In
Douglas, the court conditioned application of § 3B1.3 on one of two circumstances:
whether the defendant had the authority to make decisions “substantially free from
supervision” based on (1) a fiduciary-like relationship or (2) an authoritative status that
would lead the employee’s judgment to be “presumptively accepted.” Douglas, 885 F.3d
at 133. Douglas, an “ordinary line mechanic,” was found not to occupy a position of
trust because he was not a fiduciary and his job did not require him to exercise any
judgment, much less judgment that others accepted. Id. at 134–35. Kidd, by contrast,
exercised judgment to supervise employees in the shipping department and ensure that
the department accurately selected and packaged merchandise for customer orders.
Moreover, Kidd’s ability to authorize illicit shipments for over five years without
oversight demonstrates that her judgment was “presumptively accepted.” Id. at 133.
Finally, Kidd argues that the district court erred in applying the enhancement
because she had no fiduciary powers. She asserts that the proper inquiry of a position of
trust asks whether a fiduciary-like relationship exists. See Douglas, 885 F.3d at 133. One
rationale for § 3B1.3, she continues, is to punish those in fiduciary positions where the
business cedes its decision-making authority to someone in control of its affairs.
See United States v. Tatum, 518 F.3d 369, 373 (6th Cir. 2008).
But a fiduciary relationship is merely one way to demonstrate a position of trust.
Indeed, Tiojanco expressly contemplates a second category of positions of trust that does
not require a fiduciary duty, but instead involves low-level, situation-specific
decision-making by an employee with nominal review, a description that fits Kidd.
286 F.3d at 1021. The employee’s level of discretion, not the existence of a fiduciary
relationship, is the “touchstone for finding that the defendant occupies a position of
trust.” Tatum, 518 F.3d at 374.
AFFIRMED