Wednesday, May 2, 2018

Second Circuit Opinion in NonTax Case on Willfulness and Willful Blindness (5/2/18)

In United States v. Henry, ___ F.3d ___, 2018 U.S. App. LEXIS 10620 (2d Cir. 2018), here, Henry was convicted by jury of "one count of conspiracy to violate and one count of violating, attempting to violate, and aiding and abetting the violation of the Arms Export Control Act ("AECA"), 22 U.S.C. §§ 2778(b)(2), (c)."  The Court explains the AECA (footnotes omitted and "cleaned up" per the explanation here):
The AECA, in relevant part, authorizes the President in furtherance of world peace and the security and foreign policy of the United States—to compile the United States Munitions List ("USML"), which is to be comprised of goods and services that he designates as defense articles and defense services.The AECA also authorizes the President "to promulgate regulations for the import and export of such articles and services." Any good or service placed on the USML cannot be imported or exported except by license, and the statute imposes criminal penalties on violators. The President has in turn delegated the authority to compile the USML and to grant or deny applications for export licenses to the Secretary of State. 
As promulgated pursuant to this authority, the USML sets forth twenty categories of defense articles. For each category, it enumerates a list of specific defense-related materials subject to regulation under the AECA.26 The ablative materials and microwave amplifiers that Henry exported or attempted to export are among the defense articles enumerated in the USML.
WILLFULNESS

Criminal violation of the AECA required that the defendant act "knowingly and willfully."  At trial, the court gave the jury the following instruction:
The fourth and final element that the government must prove, is that the defendant acted knowingly and willfully. A person acts knowingly if he acts intentionally and voluntarily and not because of ignorance, mistake, accident, or carelessness. Willfully means to act with knowledge that one's conduct is unlawful and with the intent to do something that the law forbids. That is to say, with a bad purpose, either to disobey or disregard the law. The defendant's conduct was not willful if it was due to negligence, inadvertence, or mistake. However, it is not necessary for the government to prove that the defendant knew the precise terms of the statute or regulatory provision he is charged with violating—that is, the government is not required to prove that the defendant knew the existence or details of the Arms Export Control Act or the related regulations. All that is required is that the government prove that the defendant acted with the intent to disobey or disregard the law.
The defendant urged on appeal that this instruction incorrectly stated the law.  The Court rejected the argument as follows (footnotes omitted and cleaned up):
We consider the question of willfulness in light of United States v. Bryan. In Bryan, the Supreme Court approved the following definition of willfulness: a person acts willfully if he acts intentionally and purposely with the intent to do something the law forbids, that is, with the bad purpose to disobey or disregard the law. The Court further held that a person who acts willfully need not be aware of the specific law that his conduct may be violating. Rather, knowledge that the conduct is unlawful is all that is required." Knowledge of the specific law that one is violating has been required only where a highly technical statute"—such as a provision of the Internal Revenue Code—prohibits apparently innocent conduct. 
The District Court's instruction correctly and clearly stated the definition of willfulness in the circumstances presented. It noted, pursuant to Bryan, that willfulness requires only that the defendant know that what he was doing was illegal, and not that he know that his conduct was prohibited under a specific AECA provision or related regulation. 
* * * * 
Moreover, the heightened definition of willfulness applicable to "highly technical statutes" does not apply here. The cases on which defendant relies—Ratzlaf v. United States and Cheek v. United States—concern tax and financial regulation statutes so complicated and non-intuitive that one might violate them without actually understanding that his conduct was illegal. 
These cases are exceptions to the hoary principle that ignorance of the law is not a valid defense, and the AECA is not such an exception. Regardless of whether Henry was aware of the items contained in the United States Munitions List, or of the specific provisions of the AECA that he was alleged to have violated, neither the list nor the statute is unclear. Where it is proven beyond a reasonable doubt that a defendant is generally aware of export license requirements for military-grade materials, there is no risk of criminalizing otherwise innocent conduct on a mere technicality. Unsurprisingly, no other court to have considered the AECA's willfulness requirement has applied the rule of those exceptional cases to this statute. 
* * * The statute's willfulness requirement eliminates any genuine risk of holding a person criminally responsible for conduct which he could not reasonably understand to be proscribed. 
We conclude that the AECA's willfulness provision requires only that a jury find that the defendant violated a known legal duty and not that he knew specifically of the USML or of any other provision of the AECA that imposed that duty. The District Court's willfulness instruction was therefore not erroneous.
CONSCIOUS AVOIDANCE [WILLFUL BLINDNESS]

The trial court gave the following conscious avoidance instruction (bold-face supplied by JAT):
In determining whether the defendant acted knowingly and willfully, you may consider whether the defendant deliberately closed his eyes to what would otherwise have been obvious to him. If you find beyond a reasonable doubt that the defendant acted with a conscious purpose to avoid learning the truth that exporting the ablative material without a license was unlawful, then this element may be satisfied. However, guilty knowledge may not be established by demonstrating that the defendant was merely negligent, foolish, or mistaken. 
If you find that the defendant was aware of a high probability that exporting the ablative materials without a license was unlawful and that the defendant acted with deliberate disregard of that fact, you may find that the defendant acted knowingly and willfully. However, if you find that the defendant actually believed that exporting the ablative material without a license was lawful, he may not be convicted. It is entirely up to you whether you find that the defendant deliberately closed his eyes and any inferences to be drawn from the evidence on this issue.
The Court of Appeals discussed the conscious avoidance instruction generally as follows (footnotes omitted, cleaned up and bold face supplied by JAT):
A conscious avoidance charge may only be given (i) when a defendant asserts the lack of some specific aspect of knowledge required for conviction, and (ii) the appropriate factual predicate for the charge exists, i.e., the evidence is such that a rational juror may reach the conclusion beyond a reasonable doubt that the defendant was aware of a high probability of the fact in dispute and consciously avoided confirming that fact. The conscious avoidance charge must communicate two points: (1) that a jury may infer knowledge of the existence of a particular fact if the defendant is aware of a high probability of its existence, (2) unless the defendant actually believes that it does not exist.
The Court of Appeals then moved to Henry's specific claim about improper instruction (cleaned up and bold face by JAT):
Henry's principal defense at trial was that he was not aware of the AECA's export license requirements. He repeatedly testified that he had not seen or read notices of the export license restrictions that were contained in his correspondence with Krayden and Amplifier. His father testified in support of this argument, noting that he often corresponded with Krayden using his son's name and email address so that, in effect, he was the only one who was made aware of the licensing requirements. The testimony of Henry and his father attempted to build a factual predicate in support of an ignorance defense. Accordingly, a conscious avoidance charge was entirely appropriate. 
* * * * 
In defining the concept of conscious avoidance, the District Court made it clear that the jury could find that Henry acted knowingly if it found that he consciously avoided learning that the export of ablative materials without a license was unlawful. The District Court also properly explained to the jury that although a finding of conscious avoidance may be a substitute for actual knowledge, it cannot substitute for the finding of the element of "willfulness" necessary to prove the crimes charged. It did so by emphasizing that mere negligence or recklessness, coupled with conscious avoidance, was not enough to convict. It also did so by properly instructing the jury on the separate concept of "willfulness" and by properly explaining that in order to find that defendant acted willfully, the jury had to find both that defendant acted with knowledge that his conduct was unlawful and with the intent to do something that the law forbids.
* * * 
We thus hold, in agreement with four of our sister circuits, that the District Court's willfulness instruction was not erroneous, because the AECA does not require that a defendant have known specifically of the USML or of any other provision of the Act. We also hold that a conscious avoidance instruction was appropriate in Henry's case and that the instruction given by the District Court was correct because that charge made clear to the jury that it was still required to find that the defendant acted willfully.
JAT Comments:

1.  The Court of Appeals distinguishes the AECA element "knowingly and willfully" from the usual Title 26 tax crimes element of willfully which, under Cheek, requires intentional violation of a known legal duty.  As the Court noted in Bryan, willfulness is a word of many meanings, with the tax and Cheek definition being the strictest.  Where used elsewhere in the criminal code, it may mean something less strict, as the Court of Appeals observes here.

2.  I hope regular readers of the blog will understand why I bold-faced the words in the quote.  My point is that the willful blindness instruction should not permit the jury to substitute willful blindness for knowledge or willfulness.  Rather, a defendant's conduct suggesting willful blindness is basically circumstance evidence of the ultimate intent required by the element of the crime.  The jury "may infer" or "could find" the required element by considering conduct of willful blindness.

3.  The Court does state without nuance (cleaned up):
The [Bryan] Court further held that a person who acts willfully need not be aware of the specific law that his conduct may be violating. Rather, knowledge that the conduct is unlawful is all that is required. Knowledge of the specific law that one is violating has been required only where a highly technical statute—such as a provision of the Internal Revenue Code—prohibits apparently innocent conduct.
As I noted in the latest iteration of my now discontinued Federal Tax Crimes Book (footnotes omitted):
You will recall that, in Bryan, the Supreme Court said that that standard required in tax cases that the Government prove the defendant was “aware of the specific provision of the tax code that he was charged with violating.”  Did the  Supreme Court really mean that?  The answer is no, at least according to the Ninth Circuit in a recent case (an answer that must be the right one).  In discussing the cases upon which Bryan relied for the statement (Cheek and Ratzlaf), the Ninth Circuit said: 
Neither of these cases, however, required the government to prove the defendant's knowledge of a specific provision of law. In Cheek, the Supreme Court held that “willfulness,” as used in the criminal provisions of the tax code, required the government to prove that the defendant knew of the legal duty to file an income tax return and to treat his wages as income. But the Court noted that the “jury would be free to consider any admissible evidence from any source” showing that the defendant was aware of this duty.  While Cheek listed “awareness of the relevant provisions of the Code or regulations” as one source of such evidence, it did not identify it as the exclusive source. Similarly, Ratzlaf held that the government could not carry its burden to prove the "willfulness" requirement in a prosecution for illegal structuring of financial transactions merely by proving that the defendant knew of the bank's duty to report cash transactions of more than $ 10,000. Nevertheless, the government did not have to prove that the defendant was aware of the provision of the federal statute that made it illegal to structure his cash deposits to avoid triggering the bank's reporting obligation. It was sufficient if a jury could reasonably conclude that the “defendant knew of his duty to refrain from structuring," a conclusion which could be based on "reasonable inferences from the evidence of defendant's conduct.” Similarly, prior to Cheek and Ratzlaf, we indicated that "willfulness" under a complex anti-exportation statute required proof of "a voluntary, intentional violation of a known legal duty," but we considered this standard satisfied where the government proved “that the defendant [knew] that his conduct . . . is violative of the law.” These cases make clear that even in the context of “highly technical statutes that presented the danger of ensnaring individuals engaged in apparently innocent conduct,” the term “willfulness” requires the government to prove that the defendant was aware of the legal duty at issue, but not that the defendant was aware of a specific statutory or regulatory provision. 
The Seventh Circuit said it more pungently in responding to an argument that knowledge of the Code section is required for “willfulness”: 
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.
4.  Now for a frolic and detour from the subject of this blog.  In the excerpt above from the Henry case, the Second Circuit noted:  "These cases are exceptions to the hoary principle that ignorance of the law is not a valid defense, and the AECA is not such an exception."  The use of the word hoary caught my eye because I am in the process of writing an article on deference to agency interpretations.  That is a current topic because perhaps one of the alleged litmus tests in vetting judges in the Trump administration is to have potential nominees express concern for Chevron deference and Auer deference (and Skidmore deference might not be too far under the radar screen).  Administrative law and Chevron fans will know that Chevron's first step is to determine if the word is clear or plain or unambiguous.  If so, then that plain, etc., meaning applies regardless of the agency interpretation by regulation.  (In the jargon, there is no Chevron space for the agency to operate because there is no ambiguity to interpret.)  So, I wondered whether the Second Circuit's use of the word hoary is equally plain or clear or unambiguous using the Chevron analogy.  Here are some dictionary definitions I found:
Merriam Webster, here:
1 : gray or white with or as if with age bowed his hoary head
2 : extremely old : ancient hoary legends
JAT Note: I am assuming that Merriam Webster is an American definition.  The second definition seems to be what the Second Circuit meant, because the principle goes way back in Anglo-American jurisprudence.
The American Heritage Dictionary of the English Language, here:
1. Gray or white with or as if with age.
2. Covered with grayish hair or pubescence: hoary leaves.
3. So old as to inspire veneration; ancient.
JAT Note:  I think paragraph 3 is how the Second Circuit meant it,  Perhaps veneration is not the right word, though.
The Cambridge English Dictionary for the American definition, here, however is a bit different:
old-fashioned very old and familiar and therefore not interesting or funny:
He told a few hoary old jokes and nobody laughed.
JAT Note:  pay attention to the second conjunctive and adding to old-fashioned and familiar an additional element of either "not interesting or funny."  I don't think that is the way the Second Circuit used the word.  Certainly, it did not mean it to be funny, but I think it did mean it to be interesting to the discussion.
The Oxford English Dictionary, here says (listed under North American English):
1 Greyish white.
‘hoary cobwebs’
1.1 (of a person) old and having grey or white hair.
‘a hoary old fellow with a face of white stubble’
1.2 attributive Used in names of animals and plants covered with whitish fur or short hairs, e.g. hoary bat, hoary cress.
2 Overused and unoriginal; trite.
‘the hoary old adage often used by Fleet Street editors’
JAT Note:  I think paragraph 2 is how the Second Circuit used it.  I am not sure what the trite means, but am sure the Second Circuit did  not  mean it that way.
So, under the Chevron analogy, the word can be made plain, clear or unambiguous by context.  Here, I do think the Second Circuit's meaning is unambiguous.

Addendum 5/4/18 1:00 pm
This blog entry was included in the Texas Blog Today Top Ten Blogs, here.

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