United States v. Ricky Curtis Williams ( 1997 )

MORRIS SHEPPARD ARNOLD, Circuit Judge,

concurring.

I concur in the judgment of the court, but write separately to expose to view a difficulty that the case raises in my mind.

The district court equated the loss to the relevant companies with the amount of gain to the users of the pirated cellular telephones. In the first place, we do not know, and the government could not tell us at oral argument, how much of this amount might ultimately be collected from the unauthorized consumers of the telephone services. More fundamentally, however, I believe that the measure of loss employed in this case- is completely inappropriate, because the gain to the perpetrators of a crime such as this one may not (indeed, almost always will riot) equal the loss to the victims. The cellular telephone market is surely not perfect, and the price charged for cellular telephone calls therefore will not equal the cost to telephone companies of providing those calls. In other words, while a company may charge a customer, say, one dollar for making a certain call, the marginal cost to that company of providing that call may be only one cent. It makes no sense to make a defendant responsible for a dollar when the call cost only a penny to provide.

The telephone companies’ loss actually has two components. The first, as we have hinted, is the marginal cost to the companies of the pirated calls. The second is the legitimate business lost from the users of the pirated telephones, some of whom would, it seems likely, have paid for some amount of cellular calls had Williams not made, the cloned telephones available to them. The loss attributable to this component of the companies’ total losses will be their expected profit from these lost calls (here properly using the actual price of the calls, but subtracting the marginal cost of providing them because the companies would have had to incur that cost anyway if they had actually been providing the calls). One cannot simply assume that all of these calls would have been made, however, for the cloned-telephone users would certainly not have made thousands of dollars worth of calls if they had actually had to pay for them.

The method that the district court used, in contrast to the method outlined above, does not properly calculate loss; it instead compensates the telephone companies for the telephone users’ unlawful gain. This method would be appropriate (and even then the marginal cost of providing the calls would have to be subtracted) only if the relevant cellular-telephone companies were operating at 100% capacity when the pirated calls were made, so that every pirated call made prevented a legitimate (and therefore profit-making) call from being made. Then the price-based calculation would be an appropriate approximation of opportunity cost, assuming that the marginal cost was small. But because it is highly unlikely, despite the government’s creative response at oral argument, that all the pirated calls were made to the exclusion of legitimate calls, this method of measuring the loss simply misses the mark.

• While it therefore seems to me that-the district court committed plain error in applying the measure of loss that -it did, the record does not reveal that Mr. Williams’s substantial rights were affected, because it is not at all clear that he was prejudiced by the error. The record does not include data sufficient to support a conclusion that the error was prejudicial, and this is a matter on which the defendant has the burden of persuasion. See United States v. Olano, 507 U.S. 725, 734, 113 S.Ct. 1770, 1777, 123 L.Ed.2d 508 (1993). Appellant, moreover, did not assert plain error on appeal, and in such circumstances I think that it would be the rarest case, in fact, one in which an injustice was overtly manifest in the record, that would call for a reversal of a judgment. Since, as I have said, this record contains no data from which one could conclude that Mr. Williams’s sentence was grossly excessive (or, indeed, that it was excessive at all), I concur in the judgment of'the court.