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US Court of Appeals Click icon to view Opinion:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,
                                                     Nos. 96-10208
Plaintiff-Appellant-Cross-Appellee,
                                                          96-10249
v.
                                                     D.C. No.
NICK NEWLAND,
                                                     CR-91-00446-RMB
Defendant-Appellee-
                                                     OPINION
Cross-Appellant.


Appeals from the United States District Court
for the District of Arizona
Richard M. Bilby, District Judge, Presiding


Argued and Submitted
April 14, 1997--San Francisco, California


Filed June 19, 1997

Before: Dorothy W. Nelson, Ferdinand F. Fernandez,
Circuit Judges, and Donald W. Molloy,* District Judge.


Opinion by Judge D.W. Nelson

_________________________________________________________________

SUMMARY

The summary, which does not constitute a part of the opinion of the court,
is copyrighted C 1994 by Barclays Law Publishers.
_________________________________________________________________


Criminal Law and Procedure/Sentencing

The court of appeals affirmed a judgment of conviction in
part and reversed in part. The court held that in determining
the base offense level for a person convicted of participating
_________________________________________________________________
*The Honorable Donald W. Molloy, United States District Judge for the
District of Montana, sitting by designation.


                               7113


in a drug conspiracy, the district court must consider drug
quantities imported and possessed by co-conspirators.


Appellant Nick Newland assisted the Guzman drug-
smuggling organization in various ways. He was convicted of
conspiracy, importation of cocaine, possession of marijuana
and cocaine with intent to distribute, money laundering, and
aiding and abetting. The district court sentenced him to con-
current prison terms on both the money laundering and drug
convictions.


The court of appeals reversed Newland's convictions for
the substantive drug offenses, holding that as an aider and
abettor, he could not be held liable for the subsequent acts of
his co-conspirators.


On remand, the district court determined that it could not
consider the drug quantities imported or possessed by the
Guzman organization due to the court of appeals' decision.
On that ground, the court sentenced Newland to the manda-
tory minimum on the conspiracy counts. The court also deter-
mined that Newland was a career offender and sentenced him
accordingly to concurrent sentences on the money laundering
convictions. Both sides appealed.


Newland contended that the district court erred in sentenc-
ing him as a career offender based on his conviction for par-
ticipating in a drug-related conspiracy. He also asserted that
even if his conspiracy conviction could support his status as
a career offender, his conviction for money laundering did not
because it was not based on a controlled-substance offense.
The government contended that the district court was required
to consider the amount of drugs imported and possessed by
Newland's co-conspirators in setting Newland's base offense
level.


[1] A defendant may be classified as a career offender if the
"instant" offense of conviction is a felony that is either a


                               7114


crime of violence or a controlled substance offense. [2] The
Sentencing Commission has authority to include conspiracy
within the definition of "controlled substance offense."


[3] Newland was sentenced on two offenses, one of which
qualified as a "controlled substance offense. " The Guidelines
mandated that one offense level be calculated for both. New-
land's money laundering conviction determined a unitary
offense level that encompassed both of his "instant" offenses:
money laundering and drug conspiracy.


[4] To accept Newland's logic would have subverted the
purpose behind the career offender provisions. Repeat drug
offenders like him would be spared a harsher sentence simply
because they had engaged in more criminal conduct. The
Guidelines should not be strained to reach such an unreason-
able result.


[5] To determine the base offense level for conspiracy to
possess drugs, a court must determine the quantity of drugs
involved in the commission of the crime. The court derives
the quantity of drugs from the defendant's "relevant conduct,"
which includes all acts aided and abetted by the defendant.
Newland was found to have aided and abetted the drug con-
spiracy by laundering illicit proceeds. The district court
should have considered the quantity of drugs that was
imported or possessed as a direct result of Newland's money
laundering.


[6] Relevant conduct includes all reasonably foreseeable
acts and omissions of others in furtherance of a "jointly
undertaken criminal activity," which is defined as a plan,
scheme, endeavor, or enterprise undertaken by the defendant
in concert with others, whether or not charged as a conspir-
acy.


[7] The district court had to consider the quantity of drugs
linked to Newland's involvement in the Guzman organization


                               7115


even though the court of appeals reversed his convictions on
the substantive drug offenses. [8] The district court's consid-
eration of the quantities involved in the substantive offenses
remained circumscribed. A defendant is responsible for
amounts of drugs involved in transactions by others if the
court finds that the acts were in furtherance of the jointly
undertaken criminal activity that the defendant agreed to
undertake and that the acts were reasonably foreseeable in
connection with that criminal activity. On remand, the court
could not simply rely on the total amount involved in the con-
spiracy, but was to undertake an individualized evaluation of
the amount for which Newland was accountable.


_________________________________________________________________

COUNSEL

James D. Whitney, Assistant United States Attorney, Tucson,
Arizona, for the plaintiff-appellant-cross-appellee.


Jeffrey D. Bartolino, Tucson, Arizona, for the defendant-
appellee-cross-appellant.


_________________________________________________________________

OPINION

NELSON, Circuit Judge:

Nick Newland appeals the sentence imposed upon his jury
conviction of two counts of conspiracy and three counts of
money laundering. Newland contends that the district court
erred in applying S 4B1.1, the career offender provision of the
United States Sentencing Guidelines. The government also
appeals the sentence and contends that the district court erred
because it refused to consider drug quantities imported and
possessed by Newland's coconspirators when it determined
Newland's base offense level for conspiracy. We have juris-


                               7116


diction pursuant to 28 U.S.C. S 1291, and we affirm in part
and reverse in part.


FACTUAL AND PROCEDURAL BACKGROUND

In 1988, the government uncovered evidence of a criminal
organization (the "Guzman organization") that imported large
quantities of cocaine and marijuana from Mexico to Arizona.
Nick Newland assisted the organization in various ways. For
example, Newland purchased a Tucson warehouse that was
later used to store contraband that had been imported by the
Guzman organization. On March 24, 1993, a federal grand
jury charged Newland with (1) conspiracy to import cocaine
and importation of cocaine in violation of 21 U.S.C.S 952(a)
and 18 U.S.C. S 2; (2) conspiracy to possess with intent to
distribute, and possession with intent to distribute, marijuana
and cocaine in violation of 21 U.S.C. SS 841(a)(1) and 846,
and 18 U.S.C. S 2; and (3) three counts of money laundering
and aiding and abetting in violation of 18 U.S.C.S 1956(a)(1)
(A), (a)(1)(B)(i) and 18 U.S.C. S 2. On June 8, 1993, a jury
convicted Newland on all counts. On October 18, 1993, the
district court sentenced Newland to concurrent terms of 324
months on the drug offenses and 240 months on the money

laundering offenses.

This court reversed Newland's substantive drug offense
convictions. We explained that "as an aider and abettor [New-
land] cannot be held liable under a Pinkerton theory for the
subsequent acts of his coconspirators." United States v. New-
land, No. 93-10593 (9th Cir. July 14, 1995). We affirmed
Newland's money laundering convictions and his convictions
of conspiracy to import cocaine and conspiracy to possess
with intent to distribute marijuana and cocaine, and remanded
to the district court for resentencing.


The district court resentenced Newland on April 12, 1996.
The court determined that it could not consider the drug quan-
tities imported or possessed by the Guzman organization


                               7117


because the Ninth Circuit had concluded that Newland could
not be held liable under Pinkerton for the substantive acts of
the conspiracy. Accordingly, the court sentenced Newland to
the mandatory minimum (60 months) on the conspiracy
counts. The court determined that Newland laundered
$180,968.65 and assigned him an offense level of 24 on the
money laundering counts. The sentencing court also deter-
mined that Newland was a career offender and assigned him
a criminal history category of six. See U.S.S.G. S 4B1.1.
These determinations produced a sentencing range of 100 to
125 months, and the court imposed a sentence of 105 months
on the money laundering counts, to run concurrently with
Newland's 60-month sentence on his conspiracy counts. New-
land and the government both appeal from this sentence.


DISCUSSION

We review the district court's interpretation and application
of the Sentencing Guidelines de novo. United States v. Shr-
estha, 86 F.3d 935, 938 (9th Cir. 1996).


I. Conspiracy as a "controlled substance offense"

[1] A defendant may be classified as a career offender if,
inter alia, "the instant offense of conviction is a felony that
is either a crime of violence or a controlled substance
offense." U.S.S.G. S 4B1.1.1 The Sentencing Commission has
determined that "[t]he terms `crime of violence' and `con-
trolled substance offense' include the offense[ ] of . . . con-
spiring . . . to commit such offenses." U.S.S.G.S 4B1.2,
comment. (n.1). Newland argues that the Commission lacks
the authority to define conspiracy as a "controlled substance
_________________________________________________________________
1 The district court apparently sentenced Newland under the 1987 ver-
sion of the Guidelines. For the purposes of this appeal, there is no mean-
ingful distinction between the 1987 version and the 1995 version, the latter
of which were in effect at the time of Newland's sentencing. Therefore,
all references herein are to the 1995 version of the Guidelines.


                               7118


offense," and that Newland's classification as a career
offender was erroneous insofar as such classification was
based upon Newland's instant conviction for participation in
the drug-related conspiracy.


[2] We rejected this precise argument in United States v.
Heim, 15 F.3d 830, 832 (9th Cir. 1994), where we upheld the
Sentencing Commission's authority pursuant to 28 U.S.C.
S 994(a)(2) to include conspiracy within the definition of
"controlled substance offense." See also United States v.
O'Brien, 52 F.3d 277, 279 (9th Cir.), cert. denied, 116 S. Ct.
231 (1995). Thus, in this circuit, Newland's argument fails.
Our decision is in accord with the weight of authority in the
circuit courts. Only the D.C. Circuit and the Fifth Circuit have
rejected the Sentencing Commission's inclusion of conspiracy
within the definition of "controlled substance offense." See
United States v. Bellazerius, 24 F.3d 698, 702 (5th Cir. 1994);
United States v. Price, 990 F.2d 1367, 1369-70 (D.C. Cir.
1993). Every other circuit has rejected Price and has found
that the Application Notes to U.S.S.G. S 4B1.2 were properly
implemented pursuant to the Commission's broad mandate
under 28 U.S.C. S 994(a), (h) (1994). See United States v.
Piper, 35 F.3d 611, 616-18 (1st Cir. 1994); United States v.

Jackson, 60 F.3d 128, 131-32 (2d Cir.), cert. denied, 116 S.
Ct. 487 (1995); United States v. Hightower, 25 F.3d 182, 186-
87 (3d Cir. 1994); United States v. Kennedy, 32 F.3d 876,
888-90 (4th Cir. 1994); United States v. Williams, 53 F.3d
769, 772 (6th Cir. 1995), cert. denied, 116 S. Ct. 928 (1996);
United States v. Damerville, 27 F.3d 254, 257 (7th Cir. 1994);
United States v. Mendoza-Figueroa, 65 F.3d 691, 693 (8th
Cir. 1995), cert. denied, 116 S. Ct. 939 (1996); United States
v. Heim, 15 F.3d 830, 832 (9th Cir. 1994); United States v.
Allen, 24 F.3d 1180, 1185-87 (10th Cir. 1994); United States
v. Weir, 51 F.3d 1031, 1031-32 (11th Cir. 1995), cert. denied,
116 S. Ct. 928 (1996).


                               7119


II. Application of the career offender provision where
the sentence is controlled by a money laundering offense


Newland argues that even if his conspiracy conviction
could trigger the career offender provision, his money laun-
dering conviction does not trigger S 4B1.1 because it is not a
controlled substance offense. Therefore, argues Newland, the
use of his money laundering conviction to calculate the
offense guideline precludes reliance on the career offender
provision.


[3] Newland's attempt to rewrite the Guidelines is unavail-
ing. The career offender provision is applicable where "the
instant offense of conviction is a felony that is . . . a controlled
substance offense." U.S.S.G. S 4B1.1. Newland is being sen-
tenced on two instant offenses, one of which qualifies as a
"controlled substance offense." The grouping provisions of
the Guidelines mandate that one offense level be calculated
for both of these offenses. See U.S.S.G.S 3D1.3(a) ("[T]he
offense level applicable to a Group is the offense level . . . for
the most serious of the counts comprising the Group, i.e., the
highest offense level of the counts in the Group."). Newland's
money laundering conviction determined a unitary offense
level that encompasses both of Newland's "instant" offenses:
money laundering and drug conspiracy. Applying the career
offender provision to this base offense level thereby executes
Congress's intent to punish more severely those who repeat-
edly engage in drug crimes. See 28 U.S.C.S 994(h) (1994)

("The Commission shall assure that the guidelines specify a
sentence to a term of imprisonment at or near the maximum
term authorized" for career criminals.).


[4] To accept Newland's logic would be to subvert the pur-
pose behind the career offender provision. Newland wants to
avoid the provision because he has committed an additional
crime that, by fortuity, is grouped with his drug offense and
carries a marginally greater base offense level. Repeat drug
offenders like Newland would be spared a harsher sentence


                               7120


simply because they had engaged in more criminal conduct.
The Guidelines should not be strained to reach such an unrea-
sonable result. Accordingly, we affirm the district court's
decision to invoke the career criminal provision in this case.


III. Relevant conduct

In its appeal, the government contends that the district court
was required to consider the amount of drugs imported and
possessed by Newland's coconspirators when it calculated
Newland's base offense level for conspiracy. The district
court believed that it was precluded from considering this sum
because of our previous holding that as a mere aider and
abettor of the drug conspiracy, Newland could not be liable
under Pinkerton for the subsequent acts of his coconspirators.
See Pinkerton v. United States, 328 U.S. 640, 647 (1946). The
district court interpreted this holding to mean that Newland's
offense level could not be based upon the drug quantities
associated with his coconspirators' acts.


[5] In order to determine the base offense level for conspir-
acy to possess drugs, a sentencing court must determine the
quantity of drugs involved in the commission of the crime.
See U.S.S.G. S 2D1.1(c). The court derives the quantity of
drugs from the defendant's "relevant conduct. " Relevant con-
duct includes all acts "aided [and] abetted " by the defendant,
U.S.S.G. S 1B1.3(a)(1)(A). Thus, the sentencing court must
consider drug quantities, the importation or possession of
which Newland aided and abetted directly. Although New-
land's participation in the criminal enterprise does not invoke
Pinkerton liability, Newland was found to have aided and
abetted the drug conspiracy by laundering its illicit proceeds.
Accordingly, the district court should have considered the
quantity of drugs that was imported or possessed as a direct
result of Newland's acts of money laundering.


[6] Relevant conduct also includes "all reasonably foresee-
able acts and omissions of others in furtherance of[a] jointly


                               7121


undertaken criminal activity." U.S.S.G. S 1B1.3(a)(1)(B). A
"jointly undertaken criminal activity" is defined as "a criminal
plan, scheme, endeavor, or enterprise undertaken by the
defendant in concert with others, whether or not charged as a
conspiracy." Id. The Sentencing Commission provides this
further instruction: "[T]he defendant is accountable for all
quantities of contraband with which he was directly involved
and, in the case of a jointly undertaken criminal activity, all
reasonably foreseeable quantities of contraband that were
within the scope of the criminal activity that he jointly
undertook." U.S.S.G. S 1B1.3, comment. (n.2).


[7] The district court must consider the quantity of drugs
linked to Newland's involvement in the Guzman organization
even though we reversed his convictions on the substantive
drug offenses. The Supreme Court recently held that "a sen-
tencing court may consider conduct of which a defendant has
been acquitted." United States v. Watts, 117 S. Ct. 633, 636
(1997). The Court relied upon the sentencing court's tradi-
tional "discretion to consider various kinds of information,"
id. at 635, as well as the commentary to U.S.S.G. S 1B1.3,
which explains that "[c]onduct that is not formally charged or
is not an element of the offense of conviction may enter into
the determination of the applicable guideline sentencing
range." U.S.S.G. S 1B1.3, comment. (backg'd.). Watts
directly overruled United States v. Brady, 928 F.2d 844, 851-
52 (9th Cir. 1991), which had held that a sentencing court
may not consider facts that the jury necessarily rejected in a
judgment of acquittal. See United States v. Sherpa, 110 F.3d
656, 662 (9th Cir. 1996) ("To the extent there was any doubt

about Brady's lack of viability after Koon, there is none
now.").


We recognize that Watts is not on all fours with the instant
case. Watts permits a sentencing court to consider conduct
underlying a charge of which a defendant was acquitted by a
jury. Watts does not speak directly to whether a sentencing
court may consider conduct underlying a reversed conviction.


                               7122


We have indicated previously that a sentence cannot be based
upon such conduct. See United States v. Carpenter's Goldfish
Farm, 998 F.2d 692, 695 (9th Cir. 1993) ("When a defendant
has been found by a court to be erroneously convicted of a
crime, the alleged crime may not then be considered by the
sentencing court . . . ."). We do not believe that this distinc-
tion survives Watts. If "[c]onduct that is not formally charged
. . . may enter into the determination of the applicable guide-
line sentencing range," U.S.S.G. S 1B1.3, comment.
(backg'd.), then conduct that could not be formally charged as
a matter of law also should enter into that determination. We
hold, therefore, that Carpenter's Goldfish Farm is overruled
by Watts to the extent that it prohibits a sentencing court from
considering conduct involved in a reversed conviction.2 On
remand, the district court must consider the substantive drug
offenses committed by the Guzman organization when deter-
mining the base offense level for Newland's conspiracy con-

viction. Cf. United States v. Diaz-Rosas, 13 F.3d 1305, 1308
(9th Cir. 1994) ("[A] defendant who is guilty of conspiracy to
possess and distribute cocaine [but not of the underlying
offenses] may properly be held accountable for any cocaine
possessed or distributed by coconspirators, so long as that
cocaine was foreseeable to him.").
_________________________________________________________________
2 Arguably, the factual holding of Carpenter's Goldfish Farm--and not
its sweeping dicta--survives Watts. In Carpenter's Goldfish Farm, the
defendant previously had been convicted of violating the Lacey Act, 16
U.S.C. SS 3372, 3373(d)(2), and the Migratory Bird Treaty Act, 16 U.S.C.
SS 703, 707(a). We reversed the Lacey Act conviction. See United States
v. Carpenter, 933 F.2d 748 (9th Cir. 1991). On remand, the district court
sentenced Carpenter under U.S.S.G. S 2Q2.1, which applies only to the
felony portion of the Migratory Bird Treaty Act, 16 U.S.C. S 707(b). We
reversed this sentence because it was imposed pursuant to a guideline pro-

vision that, on its face, no longer applied to Carpenter's crime. Thus, the
direct holding of Carpenter's Goldfish Farm is that a defendant's base
offense level cannot be calculated under a particular Chapter 2 guideline
provision unless the defendant has been convicted of an offense covered
by that provision. This precept is not disturbed by either Watts or our hold-
ing today.


                               7123


[8] We pause to emphasize that the sentencing court's con-
sideration of the quantities involved in these substantive
offenses remains circumscribed by U.S.S.G. S 1B1.3. Under
that guideline, "a defendant is only responsible for amounts
of drugs involved in transactions by others if the court finds
that the acts were in furtherance of the jointly undertaken
criminal activity that the defendant agreed to undertake and
that the acts were reasonably foreseeable in connection with
that criminal activity." 1 Practice Under the Federal Sentenc-
ing Guidelines 1-29 (Phylis Skloot Bamberger & David J.
Gottlieb eds., 3d ed. 1996). On remand, the sentencing court
may not rely simply upon the total amount involved in the
drug conspiracy, but must undertake an individualized evalua-
tion of the amount for which Newland is accountable under
the Guidelines. See United States v. Petty, 992 F.2d 887, 891
(9th Cir. 1993); United States v. Navarro, 979 F.2d 786, 788
(9th Cir. 1992).3


In sum, the district court must consider drug quantities
imported or possessed by the Guzman organization when cal-
culating Newland's base offense level for conspiracy. We
remand to the district court for resentencing so that it may
_________________________________________________________________
3 Our prior determination that Pinkerton liability does not lie against
Newland does not foreclose the conclusion that Newland should have
"reasonably foresee[n]" the quantities imported and possessed by others
"in furtherance of the jointly undertaken criminal activity." While the
inquiries demanded by Pinkerton and U.S.S.G. S 1B1.3(a)(1)(B) are simi-
lar, see United States v. Rodriguez, 67 F.3d 1312, 1324 (7th Cir. 1995),
cert. denied, 116 S. Ct. 1582 (1996), the standards of proof are not. Crimi-
nal liability under Pinkerton must be proved beyond a reasonable doubt,
while relevant conduct generally must be proved by a preponderance of
the evidence. See United States v. Watts, 117 S. Ct. 633, 638 (1997) ("[A]
jury's verdict of acquittal does not prevent the sentencing court from con-

sidering conduct underlying the acquitted charge, so long as that conduct
has been proved by a preponderance of the evidence."); United States v.
Bracy, 67 F.3d 1421, 1434 (9th Cir. 1995); see also U.S.S.G. S 1B1.3,
comment. (n.1) ("The principles and limits of sentencing accountability
under this guideline are not always the same as the principles and limits
of criminal liability.").


                               7124


determine the amount of drugs involved in transactions that
were either (1) aided and abetted directly by Newland, or (2)
in furtherance of the jointly undertaken criminal activity that
Newland agreed to undertake and that were reasonably fore-
seeable in connection with that criminal activity.


AFFIRMED in part, REVERSED in part, and
REMANDED for resentencing.


                               7125







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