Commonwealth v. Henry , 475 Mass. 117 ( 2016 )

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SJC-11965
COMMONWEALTH vs. KIM HENRY.
Essex. February 10, 2016. - August 8, 2016.
Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, &
Hines, JJ.
Restitution. Practice, Criminal, Probation, Restitution.
Supreme Judicial Court, Superintendence of inferior courts.
Complaint received and sworn to in the Salem Division of
the District Court Department on November 7, 2013.
A proceeding to determine restitution was had before
Michael C. Lauranzano, J.
The Supreme Judicial Court granted an application for
direct appellate review.
Rebecca Kiley, Committee for Public Counsel Services, for
the defendant.
Kenneth E. Steinfield, Assistant District Attorney, for the
Commonwealth.
Matthew R. Segal & Jessie J. Rossman, for the American
Civil Liberties Union Foundation of Massachusetts, amicus
curiae, submitted a brief.
2
GANTS, C.J. This case presents two issues on appeal:
first, whether a defendant's ability to pay should be considered
by a judge in deciding whether to order restitution as a
condition of probation and in deciding the amount of any such
restitution; and second, where goods are stolen from a retail
store, whether the amount of the victim's actual economic loss
for purposes of restitution is the replacement value or the
retail sales value of the stolen goods. As to the first issue,
we hold that in determining whether to impose restitution and
the amount of any such restitution, a judge must consider a
defendant's ability to pay, and may not impose a longer period
of probation or extend the length of probation because of a
defendant's limited ability to pay restitution. As to the
second issue, we hold that, in cases of retail theft, the amount
of actual economic loss for purposes of restitution is the
replacement value of the stolen goods unless the Commonwealth
proves by a preponderance of the evidence that the stolen goods
would otherwise have been sold, in which case the retail sales
value is the better measure of actual loss.1
Background. The defendant was employed as a cashier at a
Walmart department store in Salem. A Walmart video camera
captured the defendant "free-bagging" items; that is, with
1
We acknowledge the amicus brief submitted by the American
Civil Liberties Union of Massachusetts.
3
certain customers, she placed some store items into bags without
scanning the items at the cash register, so that these customers
received these items without paying for them. As a result, in
November, 2013, a complaint issued in the Salem Division of the
District Court Department alleging that the defendant stole the
property of Walmart having a value of more than $250 pursuant to
a single larcenous scheme on various dates between July 20 and
September 4, 2013, in violation of G. L. c. 266, § 30 (1). In
April, 2014, the defendant admitted to facts sufficient to
warrant a finding of guilty, and the judge continued her case
without a finding for eighteen months, with restitution to be
determined at a later date.2 The defendant was placed on
administrative probation for eighteen months, with a special
condition that she have no contact with Walmart.
At a restitution hearing in September, 2014, the defendant
stipulated that the loss to Walmart was $5,256.10, and a judge
(who was not the plea judge) ordered that restitution in that
amount be paid. However, in October, 2014, the defendant filed
a motion to revise and revoke the order of restitution, which
2
The defendant recommended that her case be continued
without a finding for eighteen months. The prosecutor
recommended that a guilty finding be entered, that she be placed
on probation for a period of two years, and that she be ordered
as a condition of probation to pay Walmart $5,256.10 in
restitution. The defendant accepted the judge's disposition
even though it exceeded her recommendation. See G. L. c. 278,
§ 18.
4
was allowed, and a new restitution hearing was held in November,
2014, before yet another judge. At this evidentiary hearing,
the Commonwealth offered testimony from Ronald Capistran, the
loss protection manager at the Salem Walmart, who calculated
that the retail sales price of the items stolen totaled
$5,256.10. He estimated that the "markup" on most of the items
sold in the store was "somewhere between [seven per cent] and
probably [fifteen per cent]" but, in a rare case, "it could be
[fifty]" per cent. The defendant testified that she was
"discharged" from Walmart in September, 2013, after working
there as a cashier for nearly twelve years. She received
unemployment benefits for approximately three months following
her termination, but was found ineligible for such benefits
after a department of unemployment assistance hearing and was
ordered to reimburse the Commonwealth for the benefits she had
received. At the time of the restitution hearing, she had been
unable to find employment and had no income or government
assistance of any kind. She had been evicted from her apartment
and was staying with someone, but not paying rent. She
testified that she "free-bagged" the items only for friends, and
received only fifty dollars once for having done so.
The prosecutor argued that restitution should be based on
the retail sales value of the items stolen because the theft was
at the point of sale, and Walmart was deprived of the value of
5
the goods that should have been paid by the customer. The
prosecutor also argued that the amount of restitution should not
be reduced based on the defendant's inability to pay because the
defendant "by her actions created her inability to pay in that
she was fired from a job by stealing." The defendant argued
that the actual loss to Walmart is the replacement cost of the
stolen goods, not their retail price, because Walmart is not
entitled to recover in restitution for its lost profits. The
defendant also argued that she should not be ordered to pay
restitution because she was financially unable to pay, noting
that, if ordered to pay "any figure remotely near" the amount of
restitution sought, she will be in violation of her probation
because of her inability to pay. The judge declared that the
loss is measured by the retail loss and ordered that restitution
in the amount of $5,256 be paid during the period of probation
at a rate to be determined by the probation department.3 The
defendant timely appealed from this order, and we allowed the
defendant's application for direct appellate review.
Discussion. A judge may order a defendant to pay
restitution to the victim as a condition of probation provided
that the "[r]estitution is limited to economic losses caused by
the defendant's conduct and documented by the victim."
3
The judge waived the probation supervision fee and the
indigent counsel fee.
6
Commonwealth v. McIntyre, 436 Mass. 829, 833-834 (2002). See
Commonwealth v. Nawn, 394 Mass. 1, 6 (1985) ("There is no
question that restitution is an appropriate consideration in a
criminal sentencing"). "The procedure used to determine the
amount of restitution or reparation must be reasonable and
fair." Id. at 6-7. The prosecution should disclose prior to
the hearing the amount of restitution it seeks. Id. at 7,
citing People v. Gallagher, 55 Mich. App. 613, 620 (1974).
Where the defendant does not stipulate to the amount, the judge
should conduct an evidentiary hearing at which "the Commonwealth
bears the burden of proving by a preponderance of the evidence
the amount of the victim's losses." Nawn, 394 Mass. at 7-8. At
such a hearing, the victim may testify regarding the amount of
the loss, and the defendant may cross-examine the victim, with
such cross-examination limited to the issue of restitution. Id.
at 8. The defendant may rebut the victim's estimate of the
amount of loss with expert testimony or other evidence. Id. at
7.
1. Ability to pay. In deciding whether to order
restitution and, if so ordered, the amount, the judge should
"consider whether the defendant is financially able to pay the
amount ordered." Nawn, 394 Mass. at 7, citing Model Sentencing
and Corrections Act § 3-601(d), 10 U.L.A. 322 (Supp. 1984), and
ABA Standards Relating to Probation § 3.2(d) (1970). "The
7
amount of restitution is not merely the measure of the value of
the goods and money stolen from the victim by the defendant; . .
. the judge must also decide the amount that the defendant is
able to pay and how such payment is to be made." Nawn, supra at
8-9.
In practice, this means that, at the close of the
evidentiary hearing, the judge must make two findings in
deciding whether to order restitution as a condition of
probation and, where ordered, the amount of restitution to be
paid during the period of probation. First, the judge must
determine the amount of the victim's actual economic loss
causally connected to the defendant's crime. See McIntyre, 436
Mass. at 834. The Commonwealth bears the burden of proof as to
this finding. See Nawn, 394 Mass. at 7-8. The order of
restitution may not exceed this amount. See Commonwealth v.
Rotonda, 434 Mass. 211, 221 (2001). Second, the judge must
determine the amount the defendant is able to pay. See Nawn,
supra at 8-9. Where a defendant claims that he or she is unable
to pay the full amount of the victim's economic loss, the
defendant bears the burden of proving an inability to pay. See
Commonwealth v. Porter, 462 Mass. 724, 732-733 (2012) (defendant
bears burden of persuasion regarding indigency, in part because
"[a] criminal defendant is the party in possession of all
material facts regarding her own wealth and is asserting a
8
negative"). Cf. United States v. Fuentes, 107 F.3d 1515, 1532
(11th Cir. 1997) (regarding restitution, "the defendant must
establish her financial resources and needs by a preponderance
of the evidence").
We require a judge to consider the defendant's ability to
pay when setting the restitution amount because a judge may
order restitution in a criminal case only as a condition of
probation, and therefore the collection of restitution is
enforced by the threat or imposition of a criminal sanction for
violation of a probation condition. See Commonwealth v. Denehy,
466 Mass. 723, 737 (2014); Commonwealth v. Goodwin, 458 Mass.
11, 15 (2010). Cf. G. L. c. 258B, § 3 (u) (victim shall be
informed of "right to pursue a civil action for damages relating
to the crime, regardless of whether the court has ordered the
defendant to make restitution to the victim"). A defendant can
be found in violation of a probationary condition only where the
violation was wilful, and the failure to make a restitution
payment that the probationer is unable to pay is not a wilful
violation of probation. See Commonwealth v. Canadyan, 458 Mass.
574, 579 (2010) ("where there was no evidence of wilful
noncompliance, a finding of violation of the condition of
wearing an operable [global positioning system (GPS)] monitoring
device was unwarranted, and is akin to punishing the defendant
for being homeless"); Commonwealth v. Gomes, 407 Mass. 206, 212-
9
213 (1990) (imposition of default costs permitted only when
default is wilful). Cf. Bearden v. Georgia, 461 U.S. 660, 669
n.10 (1983) ("Numerous decisions by state and federal courts
have recognized that basic fairness forbids the revocation of
probation when the probationer is without fault in his failure
to pay the fine" [footnote omitted]).
To allow a judge to impose a restitution amount that the
defendant cannot afford to pay simply dooms the defendant to
noncompliance. Such noncompliance may trigger a notice of
probation violation even though a probationer cannot be found in
violation for failing to pay a restitution amount that the
probationer cannot reasonably afford to pay. See Canadyan,
supra; Gomes, supra. Not only would a notice of violation under
such circumstances waste the time of the court, but it imposes
upon the blameless probationer the risk of an arrest on a
probation warrant, of payment of a warrant fee, of being held in
custody pending a hearing, and of probation revocation if the
judge were to fail to recognize that inability to pay is a
defense to the alleged violation. See G. L. c. 276, § 87A; Fay
v. Commonwealth, 379 Mass. 498, 504 (1980); Rule 3 of the
District/Municipal Courts Rules for Probation Violation
Proceedings, Mass. Ann. Laws Court Rules (LexisNexis 2015-2016).
Burdening a defendant with these risks by imposing
restitution that the defendant will be unable to pay violates
10
the fundamental principle that a criminal defendant should not
face additional punishment solely because of his or her poverty.
See Canadyan, supra; Gomes, supra at 212-213. Cf. Bearden, 461
U.S. at 668-669 ("if the probationer has made all reasonable
efforts to pay the fine or restitution, and yet cannot do so
through no fault of his own, it is fundamentally unfair to
revoke probation automatically without considering whether
adequate alternative methods of punishing the defendant are
available" [footnote omitted]). To avoid this unlawful result,
we require the judge to consider the defendant's ability to pay
when initially setting the restitution amount.4 See State v.
Blank, 570 N.W.2d 924, 927 (Iowa 1997) ("A court's assessment of
a defendant's reasonable ability to pay is a constitutional
prerequisite for a criminal restitution order"). Cf. Fuentes,
107 F.3d at 1529 ("Although a sentencing court may order
restitution even if the defendant is indigent at the time of
sentencing, . . . it may not order restitution in an amount that
the defendant cannot repay").
4
Where, because of the defendant's limited ability to pay,
the restitution amount is less than the victim's total economic
loss, nothing bars the victim from filing a civil action and
obtaining a judgment against the defendant for the full amount
of the loss. The victim may seek to collect on this judgment
through a civil execution. See Commonwealth v. Klein, 400 Mass.
309, 311 (1987); Commonwealth v. Malick, 86 Mass. App. Ct. 174,
178 (2014); Fidelity Mgt. & Research Co. v. Ostrander, 40 Mass.
App. Ct. 195, 199 (1996). See also G. L. c. 258B, § 3 (u).
11
A judge may not ignore a defendant's ability to pay in
determining restitution under the rationale that, if the
defendant were to violate the probation condition of payment of
restitution because of an inability to pay, the judge would not
revoke probation but would instead extend the period of
probation to allow the defendant more time to pay. Probation
"serves as a disposition of and punishment for a crime; it is
not a civil program or sanction" (emphasis in original).
Commonwealth v. Cory, 454 Mass. 559, 566 (2009). It punishes a
defendant by ordering the defendant to comply with conditions
deemed appropriate by the sentencing judge and, "[i]f a
defendant violates one or more conditions of probation, a judge
may revoke his probation and sentence him to a term of
imprisonment for his underlying conviction, or return the
defendant to probation, with new or revised conditions."
Commonwealth v. Goodwin, 458 Mass. 11, 15 (2010).
An extension of the period of probation punishes a
defendant in two ways. First, it extends the restrictions on a
defendant's liberty arising from probation. Under the general
conditions of probation, a probationer may be required to report
periodically to his or her probation officer, may not leave the
State without permission, and must pay a monthly probation fee
or, in lieu of payment, provide community service, unless
payment is waived by the judge because of the order of
12
restitution. See G. L. c. 276, § 87A; Commentary to Rules 2 and
4 of the District/Municipal Courts Rules for Probation Violation
Proceedings, Mass. Ann. Laws Court Rules, at 77-78, 86
(LexisNexis 2015-2016). A probation officer may search the home
of a probationer by obtaining a warrant supported only by
reasonable suspicion rather than probable cause. See
Commonwealth v. LaFrance, 402 Mass. 789, 792-793 (1988).
Special conditions, where ordered, may impose further
restrictions and obligations, such as drug and alcohol testing
and evaluation, participation in treatment programs, GPS
monitoring, and home confinement curfews. See G. L. c. 276,
§ 87A.
Second, where a probationary period is extended, and a
defendant commits a new crime during the extended period, the
defendant, in addition to being convicted and sentenced for the
new crime, can have his or her probation revoked and be
sentenced anew on the conviction for which he or she was placed
on probation. See Goodwin, 458 Mass. at 17. And probation may
be revoked for the commission of a new crime based on proof by a
preponderance of the evidence, so a defendant may be found not
guilty at trial of committing the new crime where the evidence
fell short of proof beyond a reasonable doubt but still have his
or her probation revoked because a judge found it more likely
than not that he or she committed the new crime. See
13
Commonwealth v. Hartfield, 474 Mass. 474, 481-483 (2016). Thus,
extending the length of a probationary period because of a
probationer's inability to pay subjects the probationer to
additional punishment solely because of his or her poverty. See
Canadyan, 458 Mass. at 579; Gomes, 407 Mass. at 212-213. We
need not reach the question whether an extension of the length
of probation in such circumstances violates the Massachusetts
Declaration of Rights, because we invoke our superintendence
power to declare that a judge may not extend the length of
probation where a probationer violated an order of restitution
5,6
due solely to an inability to pay.
For the same reasons, equal justice means that the length
of probation supervision imposed at the time of sentence should
not be affected by the financial means of the defendant or the
ability of the defendant to pay restitution. See Superior Court
5
A judge remains free to revoke probation or extend the
term of probation where a probationer violates a condition of
probation by willfully failing to pay a restitution amount he or
she had the ability to pay. See Bearden v. Georgia, 461 U.S.
660, 668 (1983) ("If the probationer has willfully refused to
pay the fine or restitution when he has the means to pay, the
State is perfectly justified in using imprisonment as a sanction
to enforce collection"); .Commonwealth v. Avram A., 83 Mass.
App. Ct. 208, 212-213 (2013).
6
We acknowledge that extending the length of probation in
such circumstances has not been recognized to be in violation of
Federal constitutional law. See Bearden, 461 U.S. at 674 (where
defendant on probation is unable to pay fine, court may extend
time for payment).
14
Working Group on Sentencing Best Practices, Criminal Sentencing
in the Superior Court: Best Practices for Individualized
Evidence-Based Sentencing, at 15 (Mar. 2016) (Superior Court
Best Practices for Sentencing) ("An extended period of
supervision for the purpose of collecting money can be
particularly troublesome since it necessarily means that greater
burdens are imposed on poor offenders compared to those with
economic resources"). To ensure that a defendant does not face
a longer probationary period because of his or her limited
means, the ability to pay determination should be made only
after the judge has determined the appropriate length of the
probationary period based on the amount of time necessary to
serve the twin goals of rehabilitating the defendant and
protecting the public. See Cory, 454 Mass. at 567; Commonwealth
v. Lapointe, 435 Mass. 455, 459 (2011). See also State v.
Farrell, 207 Mont. 483, 498-499 (1984) (to impose longer
suspended sentence because of defendant's indigency in order to
extend time to pay restitution would violate due process and
fundamental fairness). Cf. Superior Court Best Practices for
Sentencing, supra ("probationary terms should generally be
limited in duration, extending only long enough to facilitate a
period of structured reintegration into the community"). Once
the judge has determined the appropriate length of the
probationary period, restitution may be a condition of probation
15
for the length of that period at the maximum monthly amount that
the defendant is able to pay, provided the total amount does not
exceed the actual loss. The amount of restitution ordered
should not exceed this monthly amount multiplied by the months
of probation, even if that amount is less than the amount of
financial loss sustained by the victim. The monthly amount must
be determined by the judge; it cannot be delegated to the
probation department. But the judge may be aided in that
determination by the guidance of the probation department.7
7
For example, where a defendant has been found guilty of
shoplifting and the judge determines that the economic loss to
the victim is $5,000, the judge might decide that the
defendant's risk of future criminal conduct is most effectively
diminished by two years of treatment for the defendant's drug
and mental health problems, and that the defendant should
therefore be placed on supervised probation for two years, with
special conditions of drug and mental health treatment. Once
the judge has decided on this two-year probationary period, the
judge must then consider the defendant's ability to pay and
determine the amount of restitution that the defendant is able
to pay. The judge might determine that, for example, the
defendant has the ability to pay fifty dollars per month for
each of the twenty-four months. If the defendant successfully
completes the probation period and meets the required monthly
payments, the defendant's probation must be terminated, even
though the defendant paid only $1,200 in restitution; probation
may not be extended so that the victim may be paid the balance
of $3,800. The victim may initiate a civil action to recover
the unpaid balance of economic loss.
Where a judge determines that there is no reason to impose
probation other than to collect restitution, a judge may impose
a brief period of probation (e.g., thirty or sixty days) and
determine how much of the economic loss the defendant is able to
pay during that time period, and make that amount of restitution
a condition of the brief period of probation.
16
The defendant may be required to report to his or her
probation officer any change in the defendant's ability to pay,
and the probation officer may petition the judge to modify the
condition of probation by increasing or decreasing the amount of
restitution due based on any material change in the
probationer's financial circumstances. See Goodwin, 458 Mass.
at 18, quoting Buckley v. Quincy Div. of the Dist. Court Dep't,
395 Mass. 815, 820 (1985) ("A judge may add or modify a
probation condition that will increase the scope of the original
probation conditions only where there has been a 'material
change in the probationer's circumstances since the time that
the terms of probation were initially imposed,' and where the
added or modified conditions are not so punitive as to
significantly increase the severity of the original probation").
Cf. United States Sentencing Commission Guidelines Manual
§ 5B1.3(a)(7) (updated Nov. 2015) ("the defendant shall notify
the court of any material change in the defendant's economic
circumstances that might affect the defendant's ability to pay
restitution").
Because we have not previously had the opportunity to
articulate the legal standard for determining the defendant's
ability to pay restitution, we do so here for the first time.
In determining the defendant's ability to pay, the judge must
consider the financial resources of the defendant, including
17
income and net assets, and the defendant's financial
obligations, including the amount necessary to meet minimum
basic human needs such as food, shelter, and clothing for the
defendant and his or her dependents. Cf. G. L. c. 261, § 27A
(a) (defining "[i]ndigent" with respect to civil litigants who
seek waiver of court fees as person who is "unable to pay the
fees and costs of the proceeding in which he is involved or is
unable to do so without depriving himself or his dependents of
the necessities of life, including food, shelter, and
clothing"); United States v. McGiffen, 267 F.3d 581, 589 (7th
Cir. 2001), citing United States v. Embry, 128 F.3d 584, 586
(7th Cir. 1997) (in determining whether defendant is financially
able to contribute to cost of appointed counsel, judge must find
"whether requiring the contribution would impose an extreme
hardship on the defendant, whether it would interfere with his
obligations to his family, and whether there were third parties
with valid claims to the funds"); Museitef v. United States, 131
F.3d 714, 716 (8th Cir. 1997) (test of inability to pay costs of
appointed counsel "is whether repayment would cause such
financial hardship as to make it impractical or unjust . . . .
The ability to pay must be evaluated in light of the liquidity
of the individual's finances, his personal and familial needs,
or changes in his financial circumstances"); Model Penal Code:
Sentencing § 6.04(2) (Proposed Official Draft 2012) ("The total
18
severity of economic sanctions imposed on an offender may never
exceed the offender's ability to pay while retaining sufficient
means for reasonable living expenses and existing family
obligations").
The payment of restitution, like any court-imposed fee,
should not cause a defendant substantial financial hardship.
See People v. Jackson, 483 Mich. 271, 275 (2009) (in determining
defendant's ability to pay, judge must consider "whether the
defendant remains indigent and whether repayment would cause
manifest hardship"). Cf. S.J.C. Rule 3:10, § 10 (a), 475
Mass. (2016) ("The indigent counsel fee shall be waived
where a judge, after the indigency verification process,
determines that the party is unable without substantial
financial hardship to pay the indigent counsel fee within 180
days"). Restitution payments that would deprive the defendant
or his or her dependents of minimum basic human needs would
cause substantial financial hardship. Where a defendant has
been found indigent by the court for purposes of the appointment
of counsel, a judge should consider carefully whether
restitution can be ordered without causing substantial financial
hardship.
A judge may also consider a defendant's ability to earn
based on "the defendant's employment history and financial
prospects," Nawn, 394 Mass. at 9, but a judge may attribute
19
potential income to the defendant only after specifically
finding that the defendant is earning less than he or she could
through reasonable effort. Cf. Child Support Guidelines (Aug.
1, 2013) (allowing attribution of potential income "[i]f the
Court makes a determination that either party is earning less
than he or she could through reasonable effort").
2. Order of restitution. We now turn to the order of
restitution in this case. The judge here ordered restitution in
the amount of the "retail loss" -- $5,256 -- even though the
judge appeared to recognize that the defendant could not afford
to pay that amount during the remaining period of her probation.8
The judge did not set a monthly amount for the defendant to pay,
but instead directed that the probation department set a payment
schedule. It was error for the judge to order restitution based
only on the amount of loss, without considering whether the
defendant was financially able to pay that amount during the
remaining period of her probation. It was also error for the
8
When the restitution hearing was conducted, the defendant
had only approximately eleven months remaining on her eighteen-
month probation term. The judge acknowledged that "you can't
get blood out of a stone" and declared it "a sad case." He said
that he did not know whether "she can get a job somewhere at
Dunkin' Donuts and pay it off that way." He added, "I'm not
sitting here feeling great about this, believe me. I feel
terrible. . . . [B]ut a lot of that's on her. . . . [I}t's
tough. I feel bad for her."
20
judge to delegate to the probation department the responsibility
of establishing a payment schedule.
The consequence of these errors demonstrates why it is so
important that the ability to pay be considered in setting the
amount of restitution. Although the record does not reveal what
payment schedule was established by the probation department, a
notice of violation issued on May 11, 2015, for the defendant's
failure to pay the required amount,9 and a warrant issued for her
arrest when she failed to appear at the probation violation
hearing on May 22. The warrant was recalled on June 4, and she
stipulated to a violation of her probation at a hearing on July
15, where the judge restored her to the same terms and
conditions of probation, but ordered her to make restitution
payments of thirty dollars per month. Although the defendant
made the required monthly payments, on October 28, 2015, the day
her probation was set to expire, the probation department issued
a second notice of violation for her failure to pay the balance
of her restitution, which the probation department calculated as
$5,176.10 The probation hearing on that notice of violation has
9
The record on appeal reflects that the defendant made only
two payments of five dollars for restitution.
10
The Commonwealth correctly noted that this amount is in
error, and that the amount of restitution due on that date was
actually $5,126.
21
been continued in light of this pending appeal.11 If the
defendant had not been poor, she could have afforded to pay the
restitution in full before October 28, 2015, and would no longer
have been subject after that date to the conditions of probation
or the risk that a new crime might result in her being
resentenced on her larceny from Walmart. It was only because of
her poverty that she was subject to the prolonged punishment of
probation.
3. Calculation of amount of economic loss. The defendant
claims that the judge erred, not only in failing to consider her
ability to pay, but also in calculating the amount of
restitution as the retail price of the items stolen. We earlier
noted that the payment of restitution "is limited to economic
losses caused by the defendant's conduct and documented by the
victim." McIntyre, 436 Mass. at 834. Because the purpose of
restitution is to reimburse the victim "for any economic loss
caused by the defendant's actions," Rotonda, 434 Mass. at 221,
the amount of restitution may not exceed the victim's actual
loss. See McIntyre, supra. See also United States v. Ferdman,
779 F.3d 1129, 1132 (10th Cir. 2015), quoting United States v.
James, 564 F.3d 1237, 1243 (10th Cir. 2009) ("a district court
may not order restitution in an amount that exceeds the actual
11
The record reflects that the defendant continued to make
monthly restitution payments of thirty dollars at least through
December, 2015.
22
loss caused by the defendant's conduct, which would amount to an
illegal sentence constituting plain error"); United States v.
Boccagna, 450 F.3d 107, 119 (2d Cir. 2006) ("Criminal
restitution . . . is not concerned with a victim's disappointed
expectations but only with [its] actual loss").
Where items are stolen from a retail store, the actual loss
to the victim is the replacement value of the items, that is,
their wholesale price, unless the Commonwealth proves by a
preponderance of the evidence that the items would have been
sold were they not stolen, in which event the actual loss would
be the retail price of the items. See Ferdman, 779 F.3d at 1140
(considering restitution in the context of retail theft and
holding that, "unless the Government can show the defendant's
crime depleted the stock of a particular fungible or readily
replaceable good . . . at a time when the victim might otherwise
have been able to sell that good to a willing buyer, something
akin to replacement or wholesale cost clearly appears the more
accurate measure of actual loss"); People v. Chappelone, 183
Cal. App. 4th 1159, 1178-1179 (2010) (because prosecutor
presented no evidence that store lost any sales of "mass-
produced consumer goods" that it "sold in abundance," judge
erred in awarding restitution in amount of retail value rather
than replacement cost); State v. Islam, 359 Ore. 796, 807 (2016)
("[W]hen goods for sale are stolen from a retail seller and not
23
recovered, . . . the measure of 'economic damages' for the
seller in a restitution proceeding is the same measure of
damages that would be available to the seller in a tort action
for conversion[:] . . . the reasonable market value of the goods
converted at the time and place of conversion, and the market
that determines that reasonable value is the market to which the
seller would resort to replace the stolen goods, generally the
wholesale market"). But see State v. Smith, 144 Idaho 687, 693
(Ct. App. 2007) ("the district court did not err in calculating
the amount of restitution owed for the property stolen . . . by
using the ascertained retail value of that property").12
Here, the record reflects that the theft occurred when the
defendant's friends brought merchandise to her cashier counter,
and that the defendant scanned some items and "free-bagged"
others. Although the record is silent as to how the defendant
chose which items to "free-bag" and whether her friends knew in
advance that she would "free-bag" particular items (or "free-
bag" any), the judge reasonably could have inferred from the
circumstances of the theft that, had the defendant scanned these
12
The concurrence contends that we should declare the
retail price to be the best measure of actual loss in order to
avoid placing an "extra burden" on victim retailers who seek
restitution. Post at . A retailer should be able to
ascertain the wholesale price of stolen items as easily as the
retail price, and we do not think it unfair to require the
victim retailer to show that it is more likely than not that the
stolen items would have been sold to obtain the higher retail
price as the measure of restitution.
24
items at her counter, the friends would have paid for them.
Therefore, because these items were stolen, not from inventory,
but after they were brought to the cashier's counter, the judge
reasonably could have found by a preponderance of the evidence
that these items would have been sold had they not been stolen,
and that the retail price of the items was the appropriate
measure of the victim's actual loss. Although it is not plain
that the judge applied this analysis in calculating the amount
of restitution as the "retail loss," we conclude that the judge
did not err in determining that the appropriate amount of the
victim's actual loss in these circumstances was the aggregate
retail price of the items stolen.
Conclusion. Because the judge erred in failing to consider
the defendant's ability to pay in determining whether to order
restitution and in determining the amount of restitution, we
vacate the judge's restitution order and remand the case to the
District Court for further proceedings consistent with this
opinion.
So ordered.
CORDY, J. (concurring in part). I agree that in setting an
amount of restitution especially as a condition of a probation,
a judge can and should take into account the likely ability of
the defendant to pay that amount during the term of the
probation imposed. I disagree with the extra burden the court
seems prepared to place on victims in establishing their
economic loss in the context of thefts from a retail enterprise.
It seems to me that the economic loss incurred in that
context should be presumed to be the retail price of the goods
stolen, an amount that can be readily ascertained and presented
to the court at a restitution hearing. See State v. Smith, 144
Idaho 687, 693 (2007) (where retailer's items stolen, correct
value for restitution will generally be retail market value of
items).
The court suggests, however, that store owner victims are
only entitled to restitution based on the retail prices of the
items stolen if they can affirmatively prove by a preponderance
of the evidence that the specific items would have been sold at
the retail price if they had not been stolen. This is an
unnecessary burden in the ordinary case, and the cases cited by
the court in support of its proposition are far from ordinary.
For example, in People v. Chappelone, 183 Cal. App. 4th
1159 (2010), the victim was the Target department store, and the
principal defendant was an employee responsible for seeing that
2
damaged items and merchandise withdrawn by manufacturers were
taken off the sales floor and returned to the appropriate entity
for credit (or sold for deeply discounted prices to charitable
organizations). Id. at 1163, 1165-1166. The theft at issue
involved large quantities of such items awaiting disposal from
storage. Id. at 1165.
The court set restitution at $278,678, based on the full
retail price of the goods.1 Id. at 1170. On appeal, the Court
of Appeal noted that the vast majority of stolen goods had in
fact been recovered and returned to Target, and that the items,
even before the theft, were identified by Target as damaged or
otherwise not saleable at retail in any event.2 Id. at 1173-
1174. In these circumstances, the Court of Appeal reasonably
held that valuing the merchandise at its full retail price
highly inflated its actual value, and the recovery of that
amount would result in a windfall to Target. Id. at 1178-1179.
While the retail price was a "reasonable starting point the
value should have been discounted to reflect the true nature of
the goods." Id. at 1175. Consequently, the restitution order
was vacated and the matter remanded for a further hearing.
1
This amount also included $44,000 in expenses incurred by
the Target department store during the investigation. People v.
Chappelone, 183 Cal. App. 4th 1159, 1170 (2010).
2
The merchandise was ultimately donated by Target to
charities. See id. at 1171.
 3
The facts in United States v. Ferdman, 779 F.3d 1129
(2015), are also exceptional. The items at issue in that case
were eighty-six cellular telephones that the defendant purchased
at Sprint stores (fraudulently using various corporate accounts)
for a "subsidized price" contingent on Sprint service
agreements. Id. at 1131, 1136. The defendant then resold the
telephones. Id.
The trial judge ordered restitution in an amount based on
the full retail price that could have been charged to a customer
purchasing the telephones without a service agreement.3 Id. at
1131. While the Appeals Court concluded that the trial court
judge could ordinarily include lost retail sales and lost
profits in a restitution order, the specific language of the
Federal Mandatory Victims Restitution Act of 1996, as applied in
this case, required more than just an unverified letter from
Sprint stating that its losses were the full unsubsidized retail
prices of the telephones, without any evidence from which the
trial judge could infer that the defendant's theft caused the
victim to lose actual retail sales at those prices. Id. at
1136-1137, 1139-1140.
In sum, it is unnecessary in the present case to conclude
anything other than that the retail price of goods stolen from a
3
This amount included apparently $3,300 in investigative
costs incurred by Sprint. See United States v. Ferdman, 779
F.3d 1129, 1134 (2015).
4
retail store in the straightforward circumstances of this case
was proper.