Monday, January 21, 2013

More on Conscious Avoidance (1/21/13)

Caveat to readers -- the initial version of this blog cited the Ramsey case as a new opinion.  It was not a new opinion but from 1986.  I picked the case up from Judge Holmes decision in Fiore which I discussed in  Tax Court Applies Willful Blindness to Find Civil Fraud by Clear and Convincing Evidence (1/19/13), here.  I was just moving too incautiously to pick up the case as an earlier decision rather than a recent one.  My apologies to readers; however, I have gone back through my discussion and I think the points remain good despite the age of the case. 

I return to the conscious avoidance issue today because of an exceptional opinion by Judge Easterbrook of the Seventh Circuit in a nontax case, United States v.Ramsey, 785 F.2d 184 (7th Cir. 1986), which Judge Holmes cited in his opinion in Fiore.  Conscious avoidance is also called willful blindness, willful ignorance, deliberate ignorance and various similar formulations.  I generally prefer conscious avoidance.  (For all blog entries on the subject, click  on the label "Conscious Avoidance" at the end of this blog.)  Before getting to Judge Easterbrook's opinion, however, I want to draw the parallel between conscious avoidance, at least as sometimes articulated, and the defraud conspiracy.

Readers will recall that, in an exceptional recent opinion, the Second Circuit questioned the validity of the expansive interpretation of the defraud conspiracy (in a tax iteration, referred to as a Klein conspiracy) to criminalize conduct that did not involve a defraud element as the word defraud has been traditionally applied and consistently applied in other criminal statutes.  In essence, the Court suggested that the expansion,  which was done solely by the judiciary -- and in particular, the Supreme Court -- and not  by Congress in the language it used might be an impermissible common law, nonstatutory crime through interpretation.  For my blogs on this, see Coplan #1 - Panel Questions Validity of Klein Conspiracy (12/1/12), here, and Further on the Second Circuit Detour on the Interpretation of the Defraud / Klein Conspiracy (12/18/12), here.

Focusing on the conscious avoidance issue in the context of federal tax crimes where the general mens rea requirement is willfulness -- a term that can have various meanings depending upon context but which in the tax crime area is interpreted to mean intentional violation of a known legal duty.  It is a specific intent crime.  Ignorance of the law is a defense.  Further, even if one knew the law, ignorance of the facts that would invoke the known legal consequences would not be willfulness as defined.  Here is a flavor for what the Supreme Court has said somewhat expansively (Bryan v. United States, 524 U.S. 184, 194 (1998))
In certain cases involving willful violations of the tax laws, we have concluded that the jury must find that the defendant was aware of the specific provision of the tax code that he was charged with violating.  See, e.g., Cheek v. United States, 498 U.S. 192 (1991).
The Supreme Court just got carried away in Bryan in saying that willfulness in tax crimes required knowledge of the specific tax section violated.  E.g., United States v. Mousavi, 604 F.3d 1084, 1092 (9th Cir. 2010); United States v. Patridge, 507 F.3d 1092, 1094 (7th Cir. 2007), cert. den. 552 U.S. 1228 (2008) ("Knowledge of the law's demands does not depend on knowing the citation any more than ability to watch a program on TV depends on knowing the frequency on which the signal is broadcast.").  But the general concept that a tax crime requires knowledge of the law's command  and an intent to violate the known law is irrefutable and a bedrock of the criminal tax provisions.

At least it is bedrock until we get to  the concept of conscious avoidance.  Then, some sloppy thinking comes into the discussion, just as it has with the defraud conspiracy (as noted by the Second Circuit in Coplan).  I have noted before that the conscious avoidance concept is used to refer to two different conditions.  First, the concept of conscious avoidance is used to permit an inference from conscious avoidance that the required level of mens rea has been met -- knowledge of facts in many crimes, but specific intent to violate a known legal duty in tax crimes.  That is a proposition entirely consistent with the requirement that the trier-of-fact find such knowledge  or willfulness beyond a reasonable doubt.  Second, the concept of conscious avoidance may be employed as a substitute for the statutorily required knowledge or willfulness -- in other words, like the expansive interpretation of the defraud conspiracy, to create a crime which the statute does not compel.  E.g., Recent Case Note, Copyright Law - Willful Blindness -- Second Circuit Holds that Willful Blindness is Knowledge in Digital Millenium Copyright Act Safe Harbor Provision - Viacom International, Inc. v. YouTube, Inc. 676 F.3d 19(2d Cir. 2012), 126 Harv. L. Rev. 645 (2012), here (opening with the following statement: "'Willful blindness' has long served as a substitute for the mens rea of knowledge in criminal law..." (emphasis supplied)). In this sense, where Congress has mandated that the crime requires specific intent, conscious avoidance expands the crime beyond the statutory language.  Thus expanded, the concept suffers the same infirmity as does the defraud conspiracy noted by the Second Circuit in Coplan.  The key difference is that the Supreme Court created the judicial expansion for the defraud conspiracy, whereas the lower courts created the expansion for conscious avoidance.

Moreover, to get into the weeds on this issue, it appears that the concept of conscious avoidance was developed to address avoidance of facts in crimes where the standard is "knowledge" (or its equivalent) and not "willfulness" when willfulness is used to mean specific intent to violate a known legal duty.  Knowledge crimes merely require knowledge of the facts that the law defines as a crime.  For example, I drive a car that I know has drugs in it.  I am guilty of a crime of knowledge even if I did not know that the law defined the knowledge of those facts as a crime.  If the required mens rea in this example were that I also know that the facts constituted a crime, then lack of knowledge of the crime would be a defense (or, actually, if ignorance were properly in play, the Government would have to prove lack of knowledge of the crime).  And, the Supreme Court has specifically so held as a general proposition.  Ratzlaf v. United States, 510 U.S. 135, 137 (1994).

But, as I noted in discussing the civil case of Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. ___, 131 S. Ct. 2060 (2011), here, in that civil patent infringement case, the Supreme Court adopted a willful blindness (same as conscious avoidance) standard to meet the test that the defendant's conscious avoidance of the facts that the law defined as infringement.  The Court drew on the criminal law for the concept, but made some startling statements.  I quote the relevant part of the syllabus (don't tell my law professors or law students; emphasis supplied):
2. Deliberate indifference to a known risk that a patent exists does not satisfy the knowledge  required by §271(b).   Nevertheless, the Federal Circuit’s judgment must be affirmed because the evidence in this case was plainly  sufficient to  support a finding of Pentalpha’s knowledge under the doctrine of willful blindness.  Pp. 10–16.  
(a) The doctrine of willful blindness is well established in criminal law.  Many criminal statutes require proof that a defendant acted knowingly or  willfully, and courts  applying the doctrine have held that defendants cannot escape the reach of these statutes by deliberately shielding themselves  from clear evidence of critical facts that are strongly suggested by the circumstances.  The traditional rationale for the doctrine is that defendants who behave in this manner are just as culpable as those who have actual knowledge.  This Court endorsed a concept similar to willful blindness over  a century ago in Spurr v. United States, 174 U. S. 728, 735, and every Federal Court of Appeals but one has fully embraced willful blindness.  Given the doctrine's long history and wide acceptance in the Federal Judiciary,there is no reason why the doctrine should not apply in civil lawsuits for induced patent infringement under §271(b).  Pp. 10–13.  
(b) Although the Courts of Appeals articulate the doctrine of willful blindness in slightly different ways,  all agree on two basic requirements.  First, the defendant must subjectively believe that there is a high probability that a fact exists.  Second, the defendant must  take deliberate actions to avoid learning of that fact.  These requirements give willful blindness an appropriately limited scope that surpasses recklessness and negligence.  Pp. 13–14. 
I guess that we could dismiss the case as a civil case where mens rea and related scienter concepts are perhaps not the same as in criminal cases.  But the Supreme Court purported to interpret and import the criminal concepts into the civil context.  Still,the Supreme Court only dealt with knowledge and deliberate ignorance of facts.  The willfulness standard for tax crimes requires specific knowledge of the legal duty and an intent to violate it.  At least in this sense, conscious avoidance cannot be a substitute for that element, but can only serve to permit an inference that the defendant was not ignorant.

Now, that is the point I have made in several blogs, and perhaps readers are tired of the repetition.  So, I will turn to Judge Easterbrook's opinion discussing conscious avoidance in a criminal case.  The defendants were convicted of knowing misrepresentations in interstate commerce.  The conviction merely required that the defendants know the objective facts, and not that the defendants know that the objective facts constituted the crime for which they were convicted.  The trial judge gave a conscious avoidance instructions, often referred to as an "ostrich" instruction because of the myth that the ostrich hides from bad facts.  So the issue was not whether ignorance of the law was an excuse (as it is for tax crimes) but whether ignorance of the facts was an excuse (as it is in those areas of the law where the defendant must know the facts that the law describes as a crime).  With that context, here are some key quotes as he reasons to his conclusion (most case citations omitted for easier comprehension of the steps in his reasoning:
An ostrich instruction informs the jury that actual knowledge and deliberate avoidance of knowledge are the same thing. When someone knows enough to put him on inquiry, he knows much. If a person with a lurking suspicion goes on as before and avoids further knowledge, this may support an inference that he has deduced the truth and is simply trying to avoid giving the appearance (and incurring the consequences) of knowledge. Alternatively the evidence could support an inference of criminal recklessness, which is the legal equivalent of knowledge. When a mistaken assertion is very likely to mislead and to cause damage, and the defendant knows of this risk yet could have avoided the harm at no (or trivial) cost by checking up on facts within his reach, we call the omission to investigate criminal recklessness. An ostrich instruction points the jury in the right direction without dwelling on the fine details of recklessness. Every court of appeals has approved one or another version of an ostrich instruction. 
Note that criminal recklessness in the context of a knowledge  of the facts standard is not the same as such conduct in a willfulness standard requiring specific intent to violated a known legal duty.  But, I guess that begs the point as to whether the Courts are willing, through  an ostrich instruction, to say that recklessness does meet the specific intent standard or, alternatively, just permits the inference.  Let's continue.
We have held that instruction 4.05 from the 1965 pattern jury instructions is a permissible charge. These decisions reject every plausible challenge to instruction 4.05 and many implausible challenges. It is far too late for a panel of this court to hold, as the defendants request, that the giving of the instruction is reversible error.  
There is nonetheless an undercurrent of dissatisfaction with the instruction. We called it "somewhat opaque" in Burns, supra, 683 F.2d at 1061. Last year we suggested several preferable formulations in Josefik, supra, 753 F.2d at 589. The problem with instruction 4.05 is that however useful the idea of inferring knowledge from studied ignorance may seem to judges, it is an unusual concept for a lay juror. Most jurors encounter the arcane language of instructions infrequently -- maybe only once in a lifetime -- and it is therefore important to give them instructions that do not require scholastic glossators to impart meaning. See United States v. Burke, 781 F.2d 1234 (7th Cir. 1985).  
The curt sentence "No person can intentionally avoid knowledge by closing his or her eyes to facts which should prompt him or her to investigate" does not fully convey to the jury the central point -- that a person who has enough knowledge to prompt an investigation and then avoids further knowledge really does "know" all that the law requires. This sentence also does not help the jury to understand that it takes a fairly large amount of knowledge to prompt further investigation for the purpose of this instruction; to permit an inference of knowledge from just a little suspicion is to relieve the prosecution of its burden of showing every element of the case beyond a reasonable doubt. Other circuits therefore have required more complete explanations of this principle (see the cases cited at slip op. page 7). We said in Josefik that "small differences in the wording of instructions will rarely have such impact on the jury as to warrant reversal" (753 F.2d at 589), a principle fortified by Fed. R. Crim. P. 52(a) and 28 U.S.C. § 2111. But federal courts should be able to do better than continuously repeat an instruction that is opaque and unhelpful to jurors. There are goals higher than seeing "not reversible error" in an appellate opinion. 
Judge Easterbrook then discusses alternative available instructions and offers his own succinct instruction (boldface supplied):
A simple, but sufficient, instruction would be: "You may infer knowledge from a combination of suspicion and indifference to the truth. If you find that a person had a strong suspicion that things were not what they seemed or that someone had withheld some important facts, yet shut his eyes for fear of what he would learn, you may conclude that he acted knowingly, as I have used that word." See Perkins & Boyce, Criminal Law 401 (3d ed. 1984). Either this brief instruction or the longer one  [*191]  from Devitt & Blackmar would tell the jury the purpose of drawing the inference and the factual basis necessary to support it.   Everyone would gain from substituting a more complete explanation for the opaque sentence found in an outdated set of jury instructions. The giving of instruction 4.05 may not be reversible error, but it is certainly not a good idea. Instruction 6.04 from the pattern instructions now in effect, plus a separate ostrich instruction is appropriate, is much the better combination. We do not require the giving of any particular instruction or combination, but we commend these new possibilities to the good judgment of the district judges.
Our 1980 pattern instructions omit any ostrich charge, which suggests that as a rule the subject should be left to argument by counsel rather than formal instructions from the judge. But instructions sometimes may be provident, and the defendants' pleas of gullibility made it appropriate to give an ostrich instruction in this case.
Note that Judge Easterbrook's simple formulation gets it right.  It does not tell the jury that conscious avoidance is a substitute for the statutory knowledge standard but simply permits an inference that the defendant has the required knowledge.  But even Judge Easterbrook in his other analyses does not clarify that distinction.

My only other comment is that confusion reigns in this area and many judges are troubled by the instruction.  Finally, I do add the following from the most recent draft of my Federal Tax Crimes book (footnotes omitted):
Judge Posner addressed the problems with the instruction as follows [United States v. Giovanetti, 919 F.2d 1223, 1228-1229 (7th Cir. 1990) (some citations omitted)]:
The most powerful criticism of the ostrich instruction is, precisely, that its tendency is to allow juries to convict upon a finding of negligence for crimes that require intent.  The criticism can be deflected by thinking carefully about just what it is that real ostriches do (or at least are popularly supposed to do).  They do not just fail to follow through on their suspicions of bad things.  They are not merely careless birds.  They bury their heads in the sand so that they will not see or hear bad things. They deliberately avoid acquiring unpleasant knowledge.  The ostrich instruction is designed for cases in which there is evidence that the defendant, knowing or strongly suspecting that he is involved in shady dealings, takes steps to make sure that he does not acquire full or exact knowledge of the nature and extent of those dealings.  A deliberate effort to avoid guilty knowledge is all the guilty knowledge the law requires. “To know, and to want not to know because one suspects, may be, if not the same state of mind, the same degree of fault.”  A good example of a case in which the ostrich instruction was properly given is United States v. Diaz, 864 F.2d 544, 550 (7th Cir. 1988).  The defendant, a drug trafficker, sought “to insulate himself from the actual drug transaction so that he could deny knowledge of it,” which he did sometimes by absenting himself from the scene of the actual delivery and sometimes by pretending to be fussing under the hood of his car. 
The critical question so far as Janis's guilt or innocence was concerned is simple (to pose, not necessarily to answer): what did Janis know?  Did he know that he was renting his house for use as a wire-room, or did he believe that he was renting his house to the Orlando crew for some private purpose of theirs unconnected with gambling?  (Even criminals have private lives.)  The ostrich instruction did not advance this inquiry; it confused it, by pointing the jury to circumstances of deliberate avoidance of knowledge that did not exist.   As we said in United States v. Bigelow, 914 F.2d 966, 971 (7th Cir. 1990), when the facts require the jury to make a “binary choice” between “actual knowledge” and “complete innocence,” the ostrich instruction should not be given. 
The true intermediate case between a clearly proper giving of the ostrich instruction because the defendant did physical acts to insulate himself from knowledge, as in Diaz, and the clearly improper giving of the instruction because the only issue is the defendant's actual knowledge or complete ignorance, is the case of purely psychological avoidance.  Josefik was such a case.  “It is inconceivable that Josefik did not believe that the scotch was stolen, and in context all the challenged instruction [the ostrich instruction] meant is that he could not get off the hook simply by resolutely refusing to find out for sure whether it was stolen.”  In other words, the deliberate effort to avoid guilty knowledge that we said is all the guilty knowledge the law requires can be a mental, as well as a physical, effort -- a cutting off of one's normal curiosity by an effort of will.  There is no evidence of either sort of effort here. 
My comment is as follows:
In view of the Pomponio-Cheek insistence upon violation of a known duty, the question not yet definitively resolved is whether the intentional disregard instruction is appropriate in a tax case requiring willfulness?  Most trial courts avoid confronting the conceptual issue by constraining the concept with a reminder to the jury that the Government must in all events prove that the defendant intentionally violated a known legal duty.  As suggested in the Fifth Circuit’s pattern jury instruction, conduct not rising to the level of willful blindness even if extremely careless, is not criminalized.  Conceptually, depending upon the degree of carelessness, it may only be a hair’s difference between criminalized willful blindness and careless disregard for the truth.
Finally, can criminal recklessness which Judge Easterbrook says meets the knowledge standard for certain crimes meet the requirement that, in a tax crime, a defendant specifically intend to violate a known legal duty.  I am troubled by that, which is the point of this  blog.

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