United States v. Jim Loveland

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 13-30162
Plaintiff-Appellee,
D.C. No.
v. 1:12-cr-00155-BLW-14
JIM ALLEN LOVELAND,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the District of Idaho
B. Lynn Winmill, Chief District Judge, Presiding
Argued and Submitted July 9, 2014
Submission Withdrawn March 16, 2015
Resubmitted May 26, 2016
Seattle, Washington
Filed June 3, 2016
Before: Alex Kozinski*, Andrew J. Kleinfeld,
and Mary H. Murguia, Circuit Judges.
Opinion by Judge Kleinfeld
*
Following the death of Judge Alarcón, Judge Kozinski was drawn to
replace Judge Alarcón on the panel. Judge Kozinski has read the briefs,
reviewed the record, and listened to the oral argument.
2 UNITED STATES V. LOVELAND
SUMMARY**
Criminal Law
The panel reversed the district court’s judgment and
vacated a defendant’s conviction and sentence for conspiracy
to possess methamphetamine with intent to distribute.
The panel held that despite the substantial evidence of the
defendant’s possession for purposes of sale, there was
insufficient evidence for a jury to conclude that he tacitly or
explicitly made the requisite agreement for a conspiracy.
COUNSEL
James K. Ball, Jr., (argued), Manweiler, Manweiler, Breen &
Ball PLLC, Boise, Idaho, for Defendant-Appellant.
Lynne W. Lamprecht (argued) and Syrena Case Hargrove,
Assistant United States Attorneys; Wendy J. Olson, United
States Attorney, Boise, Idaho, for Plaintiff-Appellee.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V. LOVELAND 3
OPINION
KLEINFELD, Senior Circuit Judge:
The government had a good case against Jim Loveland
for the felony of possession of methamphetamine with intent
to distribute. The evidence was persuasive that he committed
that crime. His apparent guilt was conceded for purposes of
discussion at oral argument. The barrier to convicting him of
that felony was that he was not charged with it. He was
charged instead with conspiracy to do that. Twelve other
defendants were charged with him and convicted. But even
though four of the others were charged with possession with
intent to distribute, Loveland was not.
Conspiracy means an agreement to commit a crime, not
commission of the crime.1 Though that might sound less
serious to a layman, lawyers know that the conspiracy charge
affects much about trial and sentencing, all to the advantage
of the prosecution. A conspiracy charge imposes one
substantial disadvantage to the prosecution: the prosecution
must prove the existence of the agreement beyond a
reasonable doubt.2 The agreement can be explicit or tacit,
and can be proved by direct or circumstantial evidence,
including inferences from circumstantial evidence,3 but it still
has to be proved. Without an agreement, there is no
1
See United States v. Lennick, 18 F.3d 814, 818–19 (9th Cir. 1994).
2
See United States v. Tran, 568 F.3d 1156, 1163–64 (9th Cir. 2009).
3
See United States v. Mincoff, 574 F.3d 1186, 1192 (9th Cir. 2009).
4 UNITED STATES V. LOVELAND
conspiracy.4 Despite the substantial evidence of Loveland’s
possession for purposes of sale, there was insufficient
evidence for a jury to conclude that he tacitly or explicitly
made the requisite agreement. Despite his apparent
criminality, we are compelled under circuit precedent to
vacate his conviction.
Facts.
The government charged twelve defendants with
conspiracy to possess with intent to distribute
methamphetamine. Nine pleaded guilty and cooperated with
the prosecution. Loveland, Jesus Sanchez, and Michael
Morris proceeded to trial and were convicted. We have
affirmed Sanchez and Morris’s sentences in separate
dispositions.5 The indictment includes three counts charging
some of the others with possession with intent to distribute,
but not Loveland. For Loveland, the government took it upon
itself, by its charging decision, to prove conspiracy or
nothing.
The evidence showed that during the relevant period the
lead defendant, Jesus Guadalupe Sanchez,6 imported about
4
See United States v. Feola, 420 U.S. 671, 692 (1975) (“[T]he essence
of conspiracy is agreement and persons cannot be punished for acts
beyond the scope of their agreement.”); cf. United States v. Moe, 781 F.3d
1120, 1124 (9th Cir. 2015) (“The elements of conspiracy are (1) an
agreement to accomplish an illegal objective, and (2) the intent to commit
the underlying offense.” (internal quotation marks and citation omitted)).
5
See United States v. Sanchez, 583 Fed. App’x 727 (9th Cir. 2014);
United States v. Morris, 583 Fed. App’x 724 (9th Cir. 2014).
6
Also known as Jose Salazar and Che.
UNITED STATES V. LOVELAND 5
two pounds of methamphetamine per month to Idaho from
Mexico, Arizona, or California, which he bought for $10,000
a pound. He and his coconspirators resold the
methamphetamine to a number of buyers, typically in one- or
two-ounce lots, for about $1,200 per ounce. As might be
expected in a felonious trade, many of the buyers were
regulars, not strangers. Some of the regulars got caught, and
one made a recorded purchase for law enforcement in order
to get a better deal on sentencing. Several of the others
pleaded guilty and testified in exchange for benefits.
At Loveland’s jury trial, three of the coconspirators
testified to repeated sales to Loveland of two ounces at a
time, each time for $2,400. And each time, Loveland paid
cash on delivery. There was testimony that the quantities he
bought were too much for a person to consume himself
without getting sick, so the jury could reasonably infer that
Loveland bought the methamphetamine partly or entirely for
resale.
Two of the coconspirators had different arrangements
with Sanchez. Ben Vertner paid more,—$1,300 per ounce
instead of $1,200—and had an explicit agreement with
Sanchez to resell the drugs he bought. Mario Martinez
sometimes was “fronted” the methamphetamine, which
means he did not have to pay cash on delivery, and would
instead pay for his inventory after he resold it. For Loveland,
though, it was cash on the barrelhead every time—no
discounts, no credit, and no agreement about what he would
do with the drugs. Loveland would call when he wanted a
delivery, and the conspirators would deliver the usual two
one-ounce bags to his house and collect the usual $2,400.
The testimony put the number of deliveries to Loveland
somewhere between twelve and twenty. There was no
6 UNITED STATES V. LOVELAND
testimony supporting or implying any involvement by anyone
in the Sanchez group with whatever reselling Loveland might
have been doing.
Loveland moved unsuccessfully for judgment of acquittal
at the close of the government’s case, and at the close of
evidence, based on insufficient evidence of conspiracy.7 The
jury returned a verdict of guilty of conspiring to possess with
intent to distribute 50 grams or more of methamphetamine.
The district court imposed a mandatory sentence of life
imprisonment because Loveland had two prior convictions
for felony drug offenses.8
Analysis.
We review de novo claims of insufficiency of the
evidence.9 “Evidence is sufficient if, when viewed in the
light most favorable to the prosecution, any rational trier of
fact could have found the essential elements of the crime
beyond a reasonable doubt.”10
Conspiracy is an agreement to commit a crime, and the
intent to commit the underlying offense.11 We assume for
purposes of decision that Loveland intended to commit the
7
See Fed. R. Crim. P. 29(a).
8
See 21 U.S.C. § 841(b)(1)(A).
9
United States v. Webster, 623 F.3d 901, 907 (9th Cir. 2010).
10
Id. (emphasis added) (internal quotation marks and citation omitted).
11
United States v. Herrera-Gonzalez, 263 F.3d 1092, 1095 (9th Cir.
2001); see 21 U.S.C. § 846.
UNITED STATES V. LOVELAND 7
crime of possession of methamphetamine for purpose of
distribution.12 And we assume for purposes of decision that
the Sanchez group knew Loveland was probably reselling the
methamphetamine they sold to him, because the quantity
exceeded what he could use himself.13 But Loveland’s intent
to possess for purpose of distribution and the Sanchez group’s
sales to him do not add up to conspiracy.14 The Sanchez
group has to have agreed with Loveland, expressly or tacitly,
that Loveland should resell the methamphetamine in order for
them to have conspired together.15
We have a long line of decisions directed at the problem
of distinguishing between sale of an illegal substance and
conspiracy of the seller with the buyer for the buyer to
resell.16 The parties agree that United States v. Ramirez and
United States v. Lennick are the most challenging cases for
the government, but disagree on whether Loveland’s
conviction can stand despite these precedents.
12
See 21 U.S.C. § 841(a)(1).
13
Cf. United States v. Ocampo, 937 F.2d 485, 488 (9th Cir. 1991)
(“Possession of a large quantity of cocaine alone may be sufficient to infer
both knowledge and intent [to distribute it].”).
14
United States v. Ramirez, 714 F.3d 1134, 1140 (9th Cir. 2013).
15
United States v. Moe, 781 F.3d 1120, 1124–25 (9th Cir. 2015).
16
See, e.g., United States v. Lapier, 796 F.3d 1090, 1095 (9th Cir. 2015);
Moe, 781 F.3d at 1124–25; Ramirez, 714 F.3d at 1140; United States v.
Webster, 623 F.3d 901, 907 (9th Cir. 2010); United States v. Mincoff,
574 F.3d 1186, 1193–94 (9th Cir. 2009); United States v. Lennick, 18 F.3d
814, 818–19 & n.4 (9th Cir. 1994).
8 UNITED STATES V. LOVELAND
Lennick held that the evidence was insufficient to support
a conviction for conspiracy to distribute narcotics, where
Lennick distributed marijuana, but there was no evidence that
he had agreed with the people to whom he sold or gave the
drugs that they should distribute it to others.17 We held that
even Lennick’s knowledge of their distribution would not
suffice without an intention and agreement that they would
distribute to others.18 “[C]onspiracy requires proof of ‘an
agreement to commit a crime other than the crime that
consists of the sale itself.’”19 The case before us is stronger
for the government than Lennick on the facts because in
Lennick, arguably, the quantities were too small to support an
inference that Lennick knew his distributees would
redistribute.20 But we worded our holding broadly: “To show
a conspiracy, the government must show not only that
Lennick gave drugs to other people knowing that they would
further distribute them, but also that he had an agreement
with these individuals to so further distribute the drugs.”21 In
17
Lennick, 18 F.3d at 819.
18
Id. at 818 (“Although an agreement may be inferred from the
defendant’s acts or from other circumstantial evidence, ‘simple
knowledge, approval of, or acquiescence in the object or purpose of a
conspiracy, without an intention and agreement to accomplish a specific
illegal objective, is not sufficient.’” (citation omitted) (quoting United
States v. Melchor-Lopez, 627 F.2d 886, 891 (9th Cir. 1980))).
19
Id. at 819 (quoting United States v. Lechuga, 994 F.2d 346, 347 (7th
Cir. 1993)).
20
Id.21
Id.UNITED STATES V. LOVELAND 9
so holding, we agreed with the First, Seventh, and Tenth
Circuits.22
We held in United States v. Mincoff that “fronting,” which
means providing the inventory to the buyer on credit, to be
paid after he resells it, could support proof of a conspiracy
between the seller and the buyer for the buyer to resell to a
third party.23 Mincoff, the buyer, ordered very large
quantities of cocaine, and Mincoff’s seller knew that Mincoff
was purchasing “on behalf of [Mincoff’s] buyer.”24 The
extension of credit to Mincoff in these circumstances helped
to show a conspiracy between the seller and the buyer for the
buyer to resell.25 After all, it is hard to imagine how Mincoff
could have paid his supplier without first selling the inventory
bought on credit. We distinguished Lennick based on the
large quantities of drugs transferred, the testimony that the
seller was acquiring the cocaine for the buyer’s subsequent
buyers, and the extension of credit to the buyer until he
completed the resale. These facts showed a “shared stake” in
the buyer’s reselling enterprise amounting to a conspiracy
between the seller and the intermediate buyer for the buyer to
resell.26
22
See id. at 819 n.4 (citing United States v. Moran, 984 F.2d 1299, 1302
(1st Cir. 1993); United States v. Fox, 902 F.2d 1508, 1514–15 (10th Cir.
1990); United States v. Mancari, 875 F.2d 103, 105–06 (7th Cir. 1989);
United States v. McIntyre, 836 F.2d 467, 471 (10th Cir. 1987)).
23
574 F.3d 1186, 1192–93 (9th Cir. 2009).
24
Id. at 1190.
25
Id. at 1193, 1195.
26
Id. at 1194.
10 UNITED STATES V. LOVELAND
Applying Lennick in United States v. Ramirez, we
reiterated that
[t]o prove conspiracy, the government had to
show more than that Ramirez sold drugs to
someone else knowing that the buyer would
later sell to others. It had to show that
Ramirez had an agreement with a buyer
pursuant to which the buyer would “further
distribute the drugs.”27
We explained that when deciding if there is sufficient
evidence of an agreement, we look for “evidence of a
prolonged and actively pursued course of sales coupled with
the seller’s knowledge of and a shared stake in the buyer’s
illegal venture.”28 Unlike Lennick, which involved small
amounts of marijuana, Ramirez involved repeated sales of
“escalating” quantities of methamphetamine.29 But we held
that even repeated sales and large quantities could not sustain
a conspiracy conviction, in the absence of evidence of
involvement of Ramirez in his buyers’ drug sales.30
Ramirez was a stronger case for the government than this
one. Ramirez’s buyer collected money from the government
undercover agent while Ramirez was nearby and brought the
27
714 F.3d 1134, 1140 (9th Cir. 2013) (quoting Lennick, 18 F.3d at
819).
28
Id. (emphasis added) (quoting United States v. Thomas, 284 F.3d 746,
752 (7th Cir. 2002)).
29
Id. at 1136.
30
Id. at 1140.
UNITED STATES V. LOVELAND 11
money immediately to Ramirez. Ramirez exchanged the
methamphetamine immediately, which the go-between
immediately delivered to the undercover agent.31 In three out
of four of the sales proved, the undercover agent and Ramirez
were in sight of each other.32 Nevertheless, we held that there
was insufficient evidence of conspiracy between Ramirez and
the go-between.33 A fortiori, the Sanchez group’s sales to
Loveland, with no involvement in Loveland’s resales, does
not suffice to establish a conspiracy. In Ramirez, the seller
had been present for the resale. No one from the Sanchez
group observed or was told what Loveland was doing with
the methamphetamine.
Subsequently, in United States v. Moe, we held that
“[d]istinguishing between a conspiracy and a buyer-seller
relationship requires a fact-intensive and context-dependent
inquiry that is not amenable to bright-line rules.”34 We listed
ten factors that might aid in the “holistic” evaluation of
sufficiency of evidence.35 We noted that the prolonged
cooperation and mutual coded warning system between the
buyer and seller, as well as quantity and frequency of the
sales, supported an inference of a shared stake.36 We noted
that “fronting” drugs or supplying them on consignment
31
Id. at 1136.
32
Id. at 1140.
33
Id.
34
781 F.3d 1120, 1125 (9th Cir. 2015).
35
Id. at 1125–26.
36
Id. at 1126.
12 UNITED STATES V. LOVELAND
would also be strong indicators.37 Moe’s frequent 600-mile
round trips and her frequent texting and talking with her
supplier supplied a context from which the jury could infer a
stronger relationship than mere buyer and seller.38
Though courts once called the “buyer-seller rule” a
“narrow exception” to conspiracy,39 a particularly thoughtful
Supreme Court of Connecticut decision, State v. Allan, notes
that the buyer-seller relationship is a failure of proof of
conspiracy, not an exception to conspiracy.40 As we held in
Lennick and reiterated in Moe, “conspiracy requires proof of
an agreement to commit a crime other than the crime that
consists of the sale itself,”41 and “the government must show
that the buyer and seller had an agreement to further
distribute the drug in question.”42 Distribution is a different
crime from conspiracy to distribute. For the seller to be
conspiring with the buyer to redistribute, there has to be an
agreement, not just surmise or knowledge, between the seller
37
Id. at 1125.
38
See id. at 1123. The distance from Helena, Montana, where Moe
lived, to Spokane, Washington, where she drove monthly to purchase the
methamphetamine from her supplier, is approximately 300 miles one way.
39
Id. at 1124 (quoting United States v. Parker, 554 F.3d 230, 234 (2d
Cir. 2009)).
40
83 A.3d 326, 333, 339–40 (Conn. 2014).
41
18 F.3d 814, 819 (9th Cir. 1994) (internal quotation marks omitted);
Moe, 781 F.3d at 1124.
42
Lennick, 18 F.3d at 819 n.4; Moe, 781 F.3d at 1124–25.
UNITED STATES V. LOVELAND 13
and buyer for the buyer to redistribute.43 The agreement is an
element of the crime, and has to be proved.44
Of course, like any element, the agreement may be proved
by direct evidence or circumstantial evidence.45 And the
agreement can be explicit or tacit.46 But the agreement has to
be there. A relationship of mere seller and buyer, with the
seller having no stake in what the buyer does with the goods,
shows the absence of a conspiracy, because it is missing the
element of an agreement for redistribution.47 As the Seventh
Circuit explained in United States v. Brown, “We discuss
buyer-seller relationships at such length because they do not
qualify as conspiracies.”48
We have mentioned extension of credit or taking the
goods on consignment as evidence of an agreement to resell,
because of the “shared stake” the seller and buyer have in
43
Lennick, 18 F.3d at 819.
44
See Moe, 781 F.3d at 1124.
45
See Moe, 781 F.3d at 1125; Lennick, 18 F.3d at 818.
46
See Direct Sales Co. v. United States, 319 U.S. 703, 714 (1943);
United States v. Melchor-Lopez, 627 F.2d 886, 891 (9th Cir. 1980).
47
See Allan, 83 A.3d at 335 (“[A] mere buyer-seller relationship lacks
an essential element necessary to form a conspiracy.”); see also United
States v. Ramirez, 714 F.3d 1134, 1140 (9th Cir. 2013) (“And the
government presented no evidence indicating that Ramirez had any kind
of involvement in Bejaran’s drug sales.”).
48
726 F.3d 993, 1001 (7th Cir. 2013).
14 UNITED STATES V. LOVELAND
resale.49 Like any wholesaler giving credit, the drug buyer
may be unable to pay his wholesaler if he cannot resell his
inventory. Credit and consignment were absent, though, in
this cash-on-the-barrelhead case. And we have mentioned the
seller’s assistance with the resale as strong evidence of an
agreement to redistribute.50 That was also absent here. And
there was also no evidence here of high pressure sales by
Sanchez,51 which might support an agreement to redistribute.
Loveland called Sanchez; Sanchez did not call Loveland.
Sanchez offered no incentives for redistribution.52 As we
held in Moe, there is no bright-line rule, and the decision
whether the evidence would allow any reasonable juror to
conclude beyond a reasonable doubt that there was an
agreement for the redistribution must necessarily be context
dependent and “holistic”—that is, a judgment about the
totality of the circumstances.53 The totality of the
circumstances here do not suggest an agreement. Rather, the
quantities and repeated sales to Loveland would support an
inference that the Sanchez group knew that it was probably
selling drugs to a reseller. But under Ramirez, that is not
49
See Moe, 781 F.3d at 1125; United States v. Mincoff, 574 F.3d 1186,
1193–94 (9th Cir. 2009); see also Brown, 726 F.3d at 999 (in consignment
sales “the buyer and seller have enmeshed their interests”).
50
See United States v. Lapier, 796 F.3d 1090, 1095 (9th Cir. 2015);
United States v. Webster, 623 F.3d 901, 907 (9th Cir. 2010).
51
See Direct Sales, 319 U.S. at 711.
52
Cf. Webster, 623 F.3d at 907.
53
Moe, 781 F.3d at 1124–25.
UNITED STATES V. LOVELAND 15
sufficient evidence to prove that the Sanchez group agreed
with Loveland that he was to redistribute drugs.54
We are unable to see how in this case any reasonable
juror could conclude beyond a reasonable doubt that the
Sanchez group had an agreement, even tacit, with Loveland,
for Loveland to resell the methamphetamine. Though the
Sanchez group might assume that Loveland was reselling the
methamphetamine that he bought from them, he could have
flushed it down the toilet for all they cared, since they already
had his money.55 As for future sales, they had no hold on
him. Loveland was free to shop elsewhere. Their stake in his
enterprise was no different from a big-box store’s stake in a
convenience store’s financial success from the resale of
individually packaged peanuts purchased by the carton from
the big-box store. The big-box store ordinarily has no
agreement with the convenience store owner regarding his
resales. As the Seventh Circuit said in United States v.
Colon, “Every seller to a distributor has a stake in the
distributor’s activities; a person who buys for resale will not
enrich his seller if his resale business dries up.”56 However,
we share the Seventh Circuit’s skepticism that “‘regular’
purchases on ‘standard’ terms can transform a customer into
a co-conspirator.”57
54
See United States v. Ramirez, 714 F.3d 1134, 1140 (9th Cir. 2013).
55
See United States v. Brock, 789 F.3d 60, 65 (2d Cir. 2015) (finding
that the fact the seller had no interest in what the buyer did with the drugs
he purchased and that he viewed the buyer only as a customer vitiated the
inference of an agreement to redistribute).
56
549 F.3d 565, 568 (7th Cir. 2008).
57
Id. at 567.
16 UNITED STATES V. LOVELAND
There was no evidence of an agreement, so the evidence
was insufficient to support Loveland’s conspiracy conviction.
Therefore, we REVERSE the judgment and VACATE
Loveland’s conviction and sentence.