HEINZ G. DALL, PETITIONER V. UNITED STATES OF AMERICA No. 90-6225 In The Supreme Court Of The United States October Term, 1990 On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Eighth Circuit Brief For The United States In Opposition OPINIONS BELOW The decision of the court of appeals (Pet. App. A1-A4) is reported at 918 F.2d 52. The decision of the district court is unreported. JURISDICTION The judgment of the court of appeals was entered on September 5, 1990. A petition for rehearing was denied on October 3, 1990. The petition for a writ of certiorari was filed on November 6, 1990. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTIONS PRESENTED 1. Whether, in sentencing petitioner for conspiring to violate the customs laws and federal food and drug laws, the district court correctly considered petitioner's importation of unlawfully adulterated and misbranded drugs to be "contrary to law" under 18 U.S.C. 545. 2. Whether the district court correctly calculated petitioner's base offense level for smuggling by applying the alternative measure of the loss suggested by Application Note 2 of Sentencing Guideline Section 2T3.1. STATEMENT 1. Petitioner was indicted on one count of conspiring to smuggle misbranded and adulterated animal drugs into the United States, and to import misbranded and adulterated animal drugs into the United States contrary to law, in violation of 18 U.S.C. 371; nine counts of knowingly importing animal drugs into the United States contrary to law, in violation of 18 U.S.C. 545; three counts of introducing misbranded and adulterated animal drugs into interstate commerce in violation of 21 U.S.C. 331 and 333(a)(2); and one count of creating and using a false document in violation of 18 U.S.C. 1001. Gov't C.A. App. 41-55. Pursuant to an agreement, petitioner pleaded guilty to the conspiracy count, and to one count of violating 18 U.S.C. 545. In sentencing petitioner, the court treated the offenses as closely related counts, and applied Sentencing Guideline Section 2T3.1 to determine the base level offense. That Guideline governs offenses involving the evasion of import duties or restrictions, and instructs that an offender's base offense level should be determined by calculating the amount of the duty evaded on the smuggled goods and treating that amount as a "tax loss" for purposes of applying the base-offense-level table for tax offenses (Section 2T4.1). The application notes to the Guideline, however, observe that an alternative measure of loss may be required when the duties evaded do not adequately reflect the harm inflicted by the offense. Application Note 2 to Section 2T3.1 states: Particular attention should be given to those items for which entry is prohibited, limited, or restricted. Especially when such items are harmful or protective quotas are in effect, the duties evaded on such items may not adequately reflect the harm to society or protected industries resulting from their importation. In such instances, the court should impose a sentence above the guideline. A sentence based upon an alternative measure of the "duty" evaded, such as the increase in market value due to importation, or 25 percent of the items' fair market value in the United States if the increase in market value due to importation is not readily ascertainable, might be considered. The court concluded that petitioner's offenses warranted use of an alternative measure of loss. It noted that since the smuggled goods would have been confiscated at the border, there was no practicable way to estimate the duties evaded. In light of the facts of the case, the court determined that 25 percent of the smuggled goods' fair market value would provide a better measure of the harm. In arriving at the fair market value of the smuggled goods, the court included $1,353,793 worth of drugs imported in 1983-1984 on which petitioner had paid duty, but had still imported illegally because the drugs were adulterated and misbranded. The court, however, reduced the fair market value of the smuggled goods by the amount of duty that petitioner claimed he had paid. Gov't C.A. App. 283-285. Applying the alternative measure of loss, petitioner's base offense level was 15. /1/ The court increased the offense level by two levels, under Guideline Section 3B1.1(c), because petitioner was an organizer, leader, manager, or supervisor of the conspiracy, and decreased it by two levels to reflect petitioner's acceptance of responsibility, under Guideline Section 3E1.1. Finally, the court increased the offense level by two levels, under Guideline Section 3C1.1, because it found that petitioner had obstructed justice. The net offense level was 17, producing a sentencing range of 24 to 30 months. The court sentenced petitioner to 24 months' imprisonment on each count to run concurrently, to be followed by three years of supervised release, and fined petitioner $40,000. Accordingly, the term of imprisonment was at the bottom of the sentencing range, and the fine was below the minimum established by the Sentencing Guidelines. 2. The court of appeals affirmed in a per curiam opinion. Initially, the court rejected petitioner's contention that there was insufficient evidence to consider the $1,353,793 worth of drugs that petitioner imported into the United States from 1983 to 1984 to be part of the conspiracy for purposes of calculating the base offense level. The court noted that the transactions were described in portions of the indictment covered by petitioner's guilty plea. The court also observed that while petitioner had paid duty in importing the drugs, they were still imported "contrary to law" because they were adulterated. See 18 U.S.C. 545. Consequently, the court concluded, they were properly considered in determining the base offense level. Pet. App. A2-A3. Next, the court rejected petitioner's contention that there was insufficient evidence to support the district court's use of an alternative measure of loss under Application Note 2 to Sentencing Guideline Section 2T3.1 in determining his base offense level. The court held that petitioner's "offense fell within the situation described in note two, and his 24 month sentence is reasonable." Pet. App. A3. ARGUMENT 1. Petitioner renews his contention (Pet. 4-5; Pet. Add.) that the district court erred in considering the $1,353,793 worth of drugs he imported from 1983 to 1984 in determining his base offense level under the Sentencing Guidelines. /2/ There is no merit to that contention. Petitioner submits that it was improper to consider the 1983-1984 importations for sentencing purposes because those importations did not violate the smuggling statute applicable to this case, 18 U.S.C. 545. But petitioner's plea of guilty forecloses his current claim that 18 U.S.C. 545 was not violated by his conduct. The 1983-1984 importations were alleged in the indictment, and by pleading guilty to those charges, petitioner acknowledged that those importations had violated the law. "By entering a plea of guilty, the accused is not simply stating that he did the discrete acts described in the indictment; he is admitting guilt of a substantive crime." United States v. Broce, 488 U.S. 563, 570 (1989); North Carolina v. Alford, 400 U.S. 25 (1970). Petitioner could have litigated the issue of whether those importations constituted an offense, but elected not to. Instead, he entered a guilty plea that is reflected in his sentence through a two-level reduction for acceptance of responsibility. Having admitted his crimes and accepted the benefits of entering a plea -- after meticulous compliance by the district court with the requirements of Fed. R. Crim. P. 11 -- petitioner cannot now protest his innocence. /3/ It was, therefore, perfectly proper for the district court to consider the 1983-1984 importations in imposing sentence. /4/ Petitioner's claim also does not warrant review because there is no conflict with any other court, and the court of appeals' holding that his 1983-1984 importations violated 18 U.S.C. 545 is correct. Section 545 prohibits the knowing and fraudulent importation of any merchandise "contrary to law." Petitioner's drugs, when imported, were adulterated within the meaning of the food and drug laws. Pet. App. A3. It was consequently unlawful for him to import them, notwithstanding that petitioner paid a duty to the Customs Service. /5/ 2. Petitioner also renews his factbound contention (Pet. 5-6) that the district court erred in calculating his offense level by applying the alternative measure of loss articulated in Application Note 2 to Guideline Section 2T3.1. Petitioner urges (Pet. 6) that the preconditions for departing from the dollar value of the duty under the application note were not met because there was no smuggling, evaded duty, harmful items, or quotas in effect with respect to the 1983-1984 shipments. But the Application Note also recommends that the court consider an alternative measure of loss when the smuggled items are "prohibited, limited, or restricted" -- a description that readily applies to petitioner's importations of misbranded or adulterated drugs. Moreover, contrary to petitioner's submission, there was an ample basis to support the court's conclusion that petitioner's unlawful importation of drugs posed a heightened threat of harm to society. /6/ Accordingly, the court correctly turned to a market-value approach in calibrating the degree of severity of petitioner's offense. /7/ CONCLUSION The petition for writ of certiorari should be denied. Respectfully submitted. KENNETH W. STARR Solicitor General STUART M. GERSON Assistant Attorney General ANTHONY J. STEINMEYER SHARON I. KURN Attorneys JANUARY 1991 /1/ Petitioner urged a different method of calculating loss, which would have excluded the drugs on which duty had been paid, and arrived at a base offense level of 14. Gov't C.A. App. 175. /2/ Petitioner refers to these importations as the "U.S. port" items or importations. Pet. 3, 5. /3/ Before accepting petitioner's plea, the court conducted an extensive coloquy with petitioner to establish his understanding of the consequences of his plea, and the ensuing sentencing proceedings. Gov't C.A. App. 81-108. The court also heard from petitioner and the government to establish the factual basis for the guilty plea. Id. at 108-130. /4/ Petitioner asserts (Pet. 3) that he attempted to qualify his guilty plea to exclude the 1983-1984 importations, but was somehow prevented from doing so because of his counsel's ineffectiveness. The courts below have not considered that claim. A claim of ineffective assistance is properly raised on a motion under 28 U.S.C. 2255, not in a direct appeal (and certainly not in a certiorari petition as an initial matter). Petitioner has filed such a motion. /5/ Petitioner's reliance (Pet. 4-5) on One Lot Emerald Cut Stones v. United States, 409 U.S. 232 (1972) (per curiam), is misplaced. That case considered the double jeopardy implications of an acquittal (under 18 U.S.C. 545) for a subsequent civil forfeiture action based on the same importations (under 19 U.S.C. 1497). To the extent he contends that Emerald Stones is inconsistent with his conviction under Section 545, his claim is not only meritless, but also barred by his guilty plea. /6/ The drugs that petitioner smuggled into the country and imported contrary to law were "new animal drugs," 21 U.S.C. 321(w), and as such, were required to be found safe and effective by the Food and Drug Administration prior to marketing. Because they were marketed without FDA approval, these drugs were adulterated, under the statute. 21 U.S.C. 360b(a) and 351(a)(5). The drugs were also misbranded within the meaning of the statute, because they did not bear adequate directions for use, did not identify the name and place of business of the product's manufacturer or distributor, and contained terms in the labels and labeling that were in a foreign language and, thus, were not in such terms as to render it likely to be read and understood by the ordinary individual under customary conditions of purchase and use. 21 U.S.C. 352(b), (c), and (f)(1). /7/ Petitioner speculates (Pet. 5) about the court of appeals' reasons for initially deciding not to publish its decision, but omits to mention that the opinion is now published.