Lagos v. United States

From Ballotpedia
Jump to: navigation, search

Supreme Court of the United States
Lagos v. United States
Term: 2017
Important Dates
Argument: April 18, 2018
Decided: May 29, 2018
Outcome
Fifth Circuit reversed
Vote
9 - 0 to reverse
Majority
Chief Justice John G. Roberts • Anthony Kennedy • Clarence Thomas • Ruth Bader Ginsburg • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan • Neil Gorsuch


Lagos v. United States is a case argued during the October 2017 term of the U.S. Supreme Court. Argument in the case was held on April 18, 2018. The case came on a writ of certiorari to the United States Court of Appeals for the 5th Circuit.

HIGHLIGHTS
  • The case: Sergio Fernando Lagos pleaded guilty to wire fraud of General Electric Capital Corporation (GECC). The district court ordered Lagos to pay GECC restitution under the Mandatory Victims Restitution Act (MVRA), including restitution to cover the legal and expert costs GECC incurred during its investigation of the fraud. Lagos challenged that order, arguing that the MVRA was not intended to cover consequential damages like the fees the district court had awarded. On appeal, the United States Court of Appeals for the 5th Circuit upheld the restitution order.
  • The issue: Does the MVRA include restitution for fees incurred "for the victim's own purposes and unprompted by any official government action?[1]
  • The outcome: The Supreme Court unanimously reversed the Fifth Circuit.[2]


    • You can review the lower court's opinion here.[3]

    Background

    Legal question

    This was a case about restitution requirements under the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3663A(b)(4). "The MVRA instructs a sentencing court to order restitution for a victim’s actual loss directly and proximately caused by the defendant’s offense of conviction. This includes lost income and necessary child care, transportation, and other expenses incurred during participation in the investigation or prosecution of the offense or attendance at proceedings related to the offense.”[3][4] The issue in this case was whether the MVRA requires restitution for the "legal, expert, and consulting fees" a company incurs as a result of the fraud, as well as the direct losses it incurs.

    Case background

    Sergio Fernando Lagos pleaded guilty to one count of conspiracy to commit wire fraud and five counts of wire fraud. The victim of Lagos' wire fraud was General Electric Capital Corporation (GECC). Following Lagos' plea, the district court ordered Lagos to pay GECC restitution under the MVRA. The restitution order included the fees GECC had incurred as a result of investigating Lagos' fraud, including legal fees, witness fees, and consulting fees, as well as legal fees GECC incurred "from the bankruptcy proceedings caused by the fraud." Citing an earlier Fifth Circuit case, United States v. Schinnell, Lagos challenged the restitution order, arguing that those types of costs were not authorized under the MVRA.[3]

    Panel opinion

    On appeal, the United States Court of Appeals for the 5th Circuit upheld the restitution order, ruling that it was bound by an earlier Fifth Circuit case, United States v. Phillips, to uphold the inclusion of consequential damages in a restitution order:

    “ According to Lagos, the forensic expert fees, legal fees, and consulting fees incurred by GECC should not have been included because they are 'consequential damages.' His reliance on United States v. Schinnell, 80 F.3d

    1064, 1070 (5th Cir. 1996), however, is misplaced because the basis for the restitution award in that case was the Victim and Witness Protection Act ('VWPA'), 18 U.S.C. § 3663(b)(1), not § 3663A(b)(4) and the MVRA.

    In our Circuit, the scope of restitution under subsection 3663A(b)(4) is controlled by United States v. Phillips, 477 F.3d 215 (5th Cir. 2007). In upholding an award of restitution to the University of Texas imposed on a computer hacker, this Court in Phillips cited § 3663A(b)(4), which authorizes restitution of expenses incurred while participating in the investigation or prosecution of the offense. 477 F.3d at 224. It concluded that the University of Texas 'was a victim, and it collaborated with the investigation and incurred costs to notify other victims of [the hacker’s] data theft in order to determine whether they had suffered further damage.' Id. As the Court explained, while 'consequential damages' are not properly recoverable under Schinnell, that case did not involve the application of § 3663A(b)(4). Id. In distinguishing Schinnell, this Court gave a broad reading to § 3663A(b)(4), allowing not only the cost of the investigation but also the cost of contacting those whose information was compromised to be included in the restitution award.[3][5]

    		”

    Moreover, the court continued, "In unpublished decisions following Phillips, this Court has upheld restitution awards that encompassed attorneys’ fees and other expenses stemming from the investigation and prosecution of the offense." Lagos' wire fraud "caused GECC to employ forensic experts to secure and preserve electronic data as well as lawyers and consultants to investigate the full extent and magnitude of the fraud and to provide legal advice relating to the fraud. Fees incurred by GECC during the investigation of the fraud were necessary and compensable in the restitution award."[3]

    The court acknowledged that the United States Court of Appeals for the District of Columbia Circuit had interpreted the MVRA more narrowly. Concurring with the court's ruling that it was bound by Phillips to uphold the restitution award, Judge Stephen Higginson wrote that he believed the D.C. Circuit's narrower interpretation was correct.[3]

    Lagos appealed to the United States Supreme Court.

    Petitioner's challenge

    The petitioner, Lagos, challenged the holding of the United States Court of Appeals for the 5th Circuit. Lagos argued that the Fifth Circuit erred in concluding that restitution for the fees GECC incurred in the course of investigation Lagos' fraud was authorized by the MVRA.[3]

    Certiorari granted

    On June 15, 2017, the petitioner initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the United States Court of Appeals for the 5th Circuit. The U.S. Supreme Court granted the petitioner's request for certiorari on January 12, 2018. Argument in the case was held on April 18, 2018.[1]

    Question presented

    Question presented:

    "Whether Section 3663A(b )( 4) covers costs that were 'neither required nor requested' by the government, including costs incurred for the victim's own purposes and unprompted by any official government action."[1]

    Audio

    • Audio of oral argument:[6]



    Transcript

    • Transcript of oral argument:[7]

    Outcome

    Decision

    A unanimous court reversed the ruling of the Fifth Circuit, holding that a victim's costs for a private investigation are not covered by the MVRA.[2]

    Opinion of the court

    Justice Stephen Breyer wrote the opinion for a unanimous court. In this case, he wrote, "we ask whether the scope of the words 'investigation' and 'proceedings' is limited to government investigations and criminal proceedings, or whether it includes private investigations and civil or bankruptcy litigation. We conclude that those words are limited to government investigations and criminal proceedings." He concluded that the language of the statue favored a more limited reading of covered costs, not the broad reading the Fifth Circuit applied. Rather than comprehensively covering all costs, he wrote, the MVRA "specifically lists the kinds of losses and expenses that it covers." In sum, he ruled, the MVRA "does not cover the costs of a private investigation that the victim chooses on its own to conduct."[2]

    Text of the opinion


    See also

    Footnotes

    1. ↑ 1.0 1.1 1.2 Supreme Court of the United States, "Lagos v. United States Question Presented," January 12, 2018
    2. ↑ 2.0 2.1 2.2 United States Supreme Court, "Lagos v. United States Opinion," May 29, 2018
    3. ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 United States Court of Appeals for the 5th Circuit, "Lagos v. United States Opinion," March 17, 2017
    4. ↑ Internal citations and quotations omitted.
    5. ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    6. ↑ Supreme Court of the United States, Lagos v. United States, argued April 18, 2018
    7. ↑ Supreme Court of the United States, Lagos v. United States, argued April 18, 2018
    Retrieved from "https://ballotpedia.org/wiki/index.php?title=Lagos_v._United_States&oldid=8891744"