Opinion
02 Cr. 241 (DAB)
December 17, 2003
MEMORANDUM ORDER
Defendant Lawrence Kwan ("Kwan") moves for a Judgment of Acquittal pursuant to Federal Rule of Criminal Procedure 29.
On March 6, 2002, the Government filed a one-count Indictment, charging Defendant with violating 18 U.S.C. § 2314, which criminalizes the interstate transportation of stolen property. At the close of the Government's case-in-chief during the four-day trial, Defendant moved for a judgment of acquittal pursuant to Rule 29(a); the Court denied the Motion at that time. (Trans. at 193-95.) The jury returned a verdict of guilty on September 26, 2003, and Defendant subsequently renewed his Motion pursuant to Rules 29 and 33. (Trans. at 514-16.) Defendant has submitted moving papers to which the Government has responded.
Immediately after the verdict was rendered, Defendant indicated his intention to make motions under Rules 29 (Motion for a Judgment of Acquittal) and 33 (New Trial). (Trans. at 515.) The Court established a briefing schedule for initiating and responsive papers. (Trans. at 516.) While Kwan extensively addresses the substance of Rule 29 in his papers, he does not argue nor cite any case law concerning a Motion for a New Trial pursuant to Rule 33. The Government's response similarly focuses on Rule 29 while omitting any discussion of Rule 33. Despite this lack of argument, as explicated later in Part II.2, infra, the Court discusses the merits of a motion for a new trial pursuant to Rule 33 in Part II, infra.
BACKGROUND
Resolving all facts and inferences in the Government's favor, United States v. Masotto, 73 F.3d 1233, 1241 (2d Cir. 1996), the Court determines that a reasonable jury could have found the following facts. In March 2001, Defendant Kwan was employed at Pacific Delight, which is a New York City tour operator, specializing in tour packages to the Far East. (Trans. at 32; Gov. Exhs. 21, 22, 24-27 (all Exhibits listing the corporate address for Pacific Delight as 205 East 42nd Street, New York, New York).) Pacific Delight controls over eighty percent of the market in China tour packages. (Trans. at 28-31.)
See discussion infra at Part I.I.
Kwan had been working at Pacific Delight for over twenty-eight years and had in that time become its Senior Vice President. (Trans. at 32, 297.) Sometime in late 2000 or early 2001, Kwan was contacted by a corporate recruiter regarding a high-level position at another tour operator; Kwan expressed interest and eventually met with Barry Kaplan, who was then an executive at a rival tour operator, Far Wide. (Trans. at 209-211, 332-335.) They discussed Kwan's potential as a senior executive at a Far Wide subsidiary, Pacific Bestours which, like Pacific Delight, does business in the Far East. (Trans. at 201-03, 210-12, 332-34, 339-41.) After a series of interviews, Kwan signed an employment contract in early 2001 to join Pacific Bestours as its Chief Operating Officer. (Trans. at 209, 215, 333-335.) He gave notice to Pacific Delight on March 16, 2001 and left the company the same day. (Trans. at 33, 49, 338-39.)
Soon thereafter, Sophia Luk ("Luk"), the daughter of Pacific Delight's President Francis Luk and an executive at the company, discovered that someone had apparently destroyed all the files and information on Kwan's laptop and had removed the Microsoft Word and Excel programs. (Trans. at 52.) This proprietary information included hotel contact lists, hotel rate sheets, travel consortium contact lists, travel consortium rate sheets, and cruise operator rate sheets. (Trans. at 49-51; Gov. Exhs. 9-18, 43.) Luk asked Kwan if he had taken any of the company's confidential files or information with him; Kwan denied doing so. (Trans. at 50.)
Luk contacted law enforcement officials, who began an investigation that ultimately culminated in Defendant's arrest. (Trans. at 50, 52, 90.) Under law enforcement direction, Luk tape-recorded several conversations with Kwan, in which Kwan repeatedly told Luk that he did not have any of the documents for which she was looking. (Gov. Exhs. 29, 30, 31.) However, the Government, in the execution of a lawful search warrant, found copies of these very same documents in electronic form, on floppy disks and on paper in Defendant's desk at his new office in New Jersey. (Trans. at 171; Gov. Exh. 43.)
See United States v. Kwan, 02 Cr. 241 (DAB), 2003 WL 21180401, at *4-5 (S.D.N.Y. May 20, 2003) (holding that the search of the Defendant's office was constitutional).
Luk testified that the documents in question are crucial to a tour operator like Pacific Delight, which uses the contract rates to price its tour packages. As Luk noted, the exact rates are required not only in setting current and future prices but also for negotiating each year with various hotels. (Trans. SI-55.) She further described the labor-intensive way in which Pacific Delight created and maintained these lists. For example, the production and maintenance of the hotel rate sheets required an employee to
travel over there [to China where]. . . she would first go to the hotel, she would visit the different levels of rooms, inspect the rooms, inspect the bathrooms, the meeting facilities, the restaurants inside the hotel, the lobby area and she would take a look at what kind of business was in the hotel.
So all those variables. You have to go there and see the hotel, sit in the lobby, meet with the people and then get down to negotiating a price for every meal, every breakfast, every coffee, cocktails in all the restaurants and the different classes of rooms and the terms of them.
(Trans. at 54.)
In addition to taking the hotel rate sheets, Kwan also had taken cruise operator rate sheets, which he himself had written and maintained; these sheets were used to negotiate future cruise rates and set tour prices in a similar fashion to the hotel rate sheets. (Trans. at 83-85, 254, 315-317; Gov. Exh. 43.) Other stolen documents included papers listing contact people at various hotels throughout the Far East — many of which were hotels with whom Pacific Delight had built strong working relationships. (Trans. at 82; Gov. Exh. 43.) All the documents in question were produced by company employees for exclusive intra-company use, and such information was guarded from dissemination to the general public or other competitors. (Trans. at 60, 62-63, 79, 81-82, 154.)
Kwan during cross-examination also acknowledged that it was pure "common sense" that such important company information was kept confidential and not disclosed to outside parties or competitors. (Trans. at 351.) Moreover, despite Kwan's testimony to the contrary, the jury could have given credence to the testimony of Lillian Mui, an employee of Pacific Delight, who claimed that it was Kwan himself who had first informed her of the company's confidentiality policy and the need for strict oversight over the various confidential documents. (Trans. at 154, 311, 316, 323).
DISCUSSION
I. Motion for a Judgment of Acquittal
1. Standard of Review
Rule 29 "authorizes a federal court to enter a judgment of acquittal if the evidence is insufficient to support a conviction." Reyes, 302 F.3d at 50.
The rule states in pertinent part:
(c)(2) Ruling on the Motion. If the jury has returned a guilty verdict, the court may set aside the verdict and enter an acquittal.
(3) No Prior Motion Required. A defendant is not required to move for a judgment of acquittal before the court submits the case to the jury as a prerequisite for making such a motion after jury discharge.
Fed.R. Grim. P. 29.
When making a determination pursuant to Rule 29, "a district court will grant a motion to enter a judgment of acquittal on grounds of insufficient evidence if it concludes that no rational trier of fact could have found the defendant guilty beyond a reasonable doubt." United States v. Jackson, 335 F.3d 170, 180 (2d Cir. 2003). In so doing, a court "must determine whether upon the evidence, giving full play to the right of the jury to determine credibility, weigh the evidence, and draw justifiable inferences of fact, a reasonable mind might fairly conclude guilt beyond a reasonable doubt." United States v. Autuori, 212 F.3d 105, 114 (2d Cir. 2000) (citations omitted) (internal quotations omitted).
A defendant who challenges the evidence as insufficient to sustain a conviction "bears a heavy burden." United States v. Finley, 245 F.3d 199, 202 (2d Cir. 2001). The government need not negate every theory of innocence, see Autuori, 212 F.3d at 114 (citingUnited States v. Rosenthal, 9 F.3d 1016, 1024 (2d Cir. 1993)), and all the evidence must be viewed by the Court in the light most favorable to the Government. See United States v. Guadaana, 183 F.3d 122, 129 (2d Cir. 1999) (citation omitted). Additionally, not only must all reasonable inferences be drawn in the Government's favor, Autuori, 212 F.3d at 114 (citing United States v. Puzzo, 928 F.2d 1356, 1361 (2d Cir. 1991)), but so must all issues of credibility as well. United States v. Abelis, 146 F.3d 73, 80 (2d Cir. 1998) (citations omitted).
The Second Circuit has repeatedly articulated that a court must "be careful to avoid usurping the role of the jury when confronted with a motion for acquittal," Jackson, 335 F.3d at 180, as Rule 29 does not permit a substitution of a court's "own determinations of credibility or relative weight of the evidence for that of the jury."Autuori, 212 F.3d at 114; Guadaana, 183 F.3d at 129. This is of particular importance because "it is the task of the jury, not the court, to choose among competing inferences that can be drawn from the evidence." Jackson, 335 F.3d at 180 (citing United States v. Martinez, 54 F.3d 1040, 1043 (2d Cir. 1995)). Additionally, the jury's verdict may rest entirely on circumstantial evidence, id., 335 F.3d at 180 (citing Martinez, 54 F.3d at 1043), and a reviewing court must view the evidence in its totality rather than in isolation. Autuori, 212 F.3d at 114.
Ultimately, then, a court "must uphold the jury's verdict if [it finds] that `any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.'" Id. (quoting Jackson v. Virginia. 443 U.S. 307, 319 (1979)). Indeed, a court should grant a motion for acquittal under Rule 29(c) only "if the evidence that the defendant committed the crime alleged was nonexistent or . . . meager." Jackson, 335 F.3d at 180 (citation omitted). 2. Elements
Defendant was convicted under 18 U.S.C. § 2314 whose elements are: (i) that the goods, wares, merchandise, securities or money were stolen or converted; (ii) that the defendant transported, transmitted or transferred the property in interstate or foreign commerce; (iii) that at the time of the transportation or transmission, the defendant knew the property was stolen or converted; (iv) that the value of the property was $5,000 or more. See Leonard B. Sand et al., 3 Modern Federal Jury Instructions (Criminal). Instruction 54-22 (2003).
The statute reads in pertinent part:
Whoever transports, transmits, or transfers in interstate or foreign commerce any goods, wares, merchandise, securities, or money, of the value of $5,000 or more, knowing the same to have been stolen, converted, or taken by fraud . . . shall be fined under this title or imprisoned. . . .18 U.S.C. § 2314.
Kwan first argues that the Government failed to prove that the property stolen constitutes "goods, wares, [or] merchandise" and second that the value of the stolen property exceeded the statutory minimum of $5,000. Def. Letter of Oct. 3, 2003 at 1. 3. "Goods, wares, or merchandise"
In construing § 2314, the Second Circuit has recognized that Congress intended "goods, wares, [or] merchandise" to have ""a general and comprehensive designation of such personal property or chattels as are ordinarily a subject of commerce.'" In re Vericker, 446 F.2d 244, 248 (2d Cir. 1971) (citation omitted). As such, "under some circumstances mere papers may constitute goods, wares, or merchandise."Id. (internal quotations omitted); see also United States v. Bottone, 365 F.2d 389, 393 (2d Cir. 1966) (holding that papers describing chemical formulae constituted goods, wares, or merchandise).
Second Circuit case law makes clear that the intrinsic commercial aspect of an object or thing is key to determining whether it is an article "ordinarily a subject of commerce" and hence constitutes "goods, wares, [or] merchandise" under § 2314. In Bottone, the appellate court affirmed a conviction in which the defendant was charged with transporting microorganisms used in the production of several drugs as well as the instructions for the drug's manufacture. 365 F.2d at 391. The record demonstrated that the "lack of patent protection in certain foreign countries created a market for stolen cultures and secret processes and furnished a substantial incentive for theft to disloyal employees and persons willing to do business with them." Id. The thieves in Bottone found a number of interested parties willing to pay large sums, which corroborated the existence of an active black market for such goods. Id. at 393.
The Bottone court held that these microorganisms and the instructions for their manufacture constituted "goods, wares, [or] merchandise" under § 2314, relying on United States v. Seagraves, 265 F.2d 876, 880 (3d Cir. 1959). In Seagraves, the Third Circuit found geophysical maps to constitute "goods, wares, [or] merchandise" because "[t]here was evidence that maps of the type here involved are frequently sold."
In In re Vericker, the Government was seeking to enforce a civil contempt order because an individual who had been granted transactional immunity under § 2314 refused before a Grand Jury to answer questions regarding the theft of FBI documents. The Second Circuit vacated the civil contempt judgment.
FBI documents "showing that individuals are or may have been engaging in criminal activity or what procedures are used by the FBI in tracking them down" were not found to be covered by § 2314's "goods, wares, [or] merchandise" clause. Vericker, 446 F.2d at 248. Judge Friendly based this determination on the fact that there was no evidence that such documents are "ordinarily bought or sold in commerce, and the Government has not come forward or proffered any evidence to that effect." Id. at 248. The Vericker Court distinguished Seagraves andBottone by noting that "[g]eophysical maps are an ordinary subject of sale by geologists . . . and secret manufacturing procedures are an ordinary subject of sale or, more frequently, of license."Id. In both those cases, there had been affirmative evidence presented to the jury of the stolen property's saleability, i.e., whether or not it was able to be bought, sold, or traded. In Vericker, Judge Friendly explicitly noted that the Government had the burden to prove the existence of a market for the FBI documents to establish that § 2314 was applicable.
Other circuits which have examined when documents fall within § 2314's scope have come to similar conclusions. The Sixth Circuit affirmed a conviction under § 2314 for the interstate transportation of stolen chemical formulae:
there is an established market, even among competitors, of chemical formulae and formulations. While there is, in addition, a commerce in finished products or components, it is not uncommon, according to the testimony, for chemical manufacturers to exchange formulae and formulations by outright sale or through licensing agreements. Significantly, these formulae are treated as assets, in the same manner as machinery, equipment or accounts receivable.
United States v. Greenwald, 479 F.2d 320, 321 (6th Cir. 1973).
The Sixth Circuit found that "given an established, viable, albeit limited, market in chemical formulations, and the wrongful appropriation of original documents" by the defendant, "the normal, ordinary and logical import of the statutory language dictates the conclusion that the documents here are "goods wares or merchandise' within the meaning of the Act." Id. at 322.
Similarly, the Ninth Circuit in United States v. Weinstein, 834 F.2d 1454 (9th Cir. 1987), determined that blank airline tickets, filled in by the defendant and given to his friends for use, were in fact "goods, wares, [or] merchandise." Noting that other circuits required that "goods, wares, [or] merchandise" be "limited to property ordinarily a subject of commerce," the court found that "if the property has value and can be sold, even on a thieves market," then it constitutes "goods, wares, [or] merchandise." Id. at 1463 (internal quotes omitted) (citation omitted).
From the relevant case law, it appears that articles covered by § 2314 fall into two categories. The first category is articles that have intrinsic saleability. This includes items such as the plane tickets inWeinstein-objects so clearly part of a commercial transaction that they obviously qualify as "goods, wares, [or] merchandise" under the statute. Cf. United States v. Ricciardi, 357 F.2d 91, 95 (2d Cir. 1966)("Jurors are not to be presumed ignorant of what everybody else knows. And they are allowed to act upon matters within their general knowledge, without any testimony on those matters.") (internal quotations omitted) (citation omitted); United States v. Tin Yat Chin, 275 F. Supp.2d 382, 384 (E.D.N.Y. 2003) (noting that a juror may bring "a fund of ordinary experience" to the jury room and may rely upon it) (citing Bibbins v. Dalsheim, 21 F.3d 13, 17 (2d Cir. 1994)).
The second category is comprised of those articles not plainly or obviously saleable, for which a market must be affirmatively proven at trial by the Government. This category includes the chemical formulae inBottone and Greenwald, the geophysical maps inSeagraves and Lester, and the FBI files inVericker — each an article not clearly bought and sold in commerce. In all these cases but Vericker, the Government at trial established through testimony and other evidence the existence of a market, legal or otherwise, for the stolen property, and the convictions were sustained. In Vericker, on the other hand, no market was proven, and the court vacated the civil contempt judgment.
Accordingly, the Court finds that in the absence of a readily obvious market, for an article to be ordinarily a subject of commerce sufficient to constitute "goods, wares, [or] merchandise" under § 2314, a market for the article must be established by the Government. See United States v. Caparros, 85 Cr. 990 (JFK), 1987 WL 8653, at *4 (S.D.N.Y. March 25, 1987)("When read together Bottone and In re Vericker stand for the proposition that documents are covered by § 2314 provided there is a market for the material, be it either a legitimate market, or a black market."); see also L. Sand, 3 Modern Federal Jury Instructions, Comment to Instruction 54-23 ("Thus items may be in the nature of tangible personal property but fail to constitute "goods, wares, [or] merchandise' because they are not bought and sold.") (citingVericker).
Defendant argues that the Government has failed to prove that the documents in question are ordinarily a subject of commerce. He notes the lack of testimony from either Government or Defense witnesses of a market in the proprietary information. Defendant rests his Rule 29 motion on the fact that the Government "failed to proffer any evidence that the information depicting the rates charged by Pacific Delight suppliers to Pacific Delight is information ordinarily bought or sold in commerce." Def. Letter of Oct. 3, 2003, at 4.
The Government focuses rather on the confidential nature of the information Kwan took from Pacific Delight to his new company. It argues that case law has read the "goods, wares, [or] merchandise" designation to be quite broad in application and that § 2314 essentially encompasses all property save for that which is purely intellectual and intangible and items unrelated to commercial activities. Thus, the Government submits, the confidential proprietary documents are clearly related to commerce and are accordingly covered by § 2314.
Defendant's contention that the Government has failed to prove that there is a market for these stolen documents has merit. The Court does not agree with the Government's argument that the phrase "goods, wares, [or] merchandise" essentially encompasses anything and everything related to commerce. Second Circuit precedent instead distinctly mandates that the phrase applies only to objects "ordinarily a subject of commerce," that is, those things that are bought and sold in the marketplace. Applying this to the facts at issue in the instant case, the Court concludes that, unlike the plane tickets in Weinstein, no market for the stolen documents has been established. A reasonable juror lacks common knowledge whether there is a market for these types of documents.
In his briefing papers, Kwan cites the testimony of various witnesses at trial, which casts doubt on the utility of the information that Kwan stole. Def. Letter of Oct. 3, 2003 at 3 (citing the testimony of John Wolley, Barry Kaplan and Peter Tan). Indeed, both Government and Defense witnesses indicated that just knowing these rates would have not have necessarily translated into lower rates for a competitor. See, e.g., Trans. at 165 (testimony of John Wolley who, when asked "[w]ould you give a tour operator a lower rate because he told you about a competitor's rate?," answered "that wouldn't be the first thing you would do no."). Indeed, what has paramount importance in determining rates is "generally the volume that the tour operator can commit" rather than knowledge of competitor's rates. (Trans. at 164.) Kwan seems to suggest that these documents had no real utility, and were, by extension, not saleable. While not dispositive of the issue of market, this evidence does tend to bolster the argument that a document without productive use does not have a market and does not constitute an article ordinarily a subject of commerce.
The proprietary rate lists and other information can only constitute "goods, wares, [or] merchandise" if there is some evidence that a market for them exists. The Government produced no witness or other evidence that established the existence of a market, legal or otherwise, in which these confidential corporate documents are bought, sold, or traded. The Government in its papers notably makes no mention of having proved a market in this case. Indeed, in a letter to the Court dated August 26, 2003, seeking permission to proffer expert testimony (which the Government did not do at trial), the Government stated that "valuing intangible assets such as contracts and rate information is also `beyond the ken of the average juror' in that these materials are not readily available in the marketplace and have not been sold on prior occasions." Gov. Letter of Aug. 26, 2003 at 5 (emphasis added). Quite simply, the record is devoid of any evidence from which a reasonable juror could infer the existence of a market for the stolen documents at issue here.
The fact that this Court on the record before it at the time stated in a May 20, 2003, Memorandum and Order ("May 20 Order") that
it is apparent to the Court that proprietary business information such as pricing and the contents of vendor contracts are indeed ordinarily a subject of commerce. Indeed, such proprietary information is the lifeblood of the travel industry, and the primary means by which these companies compete in the marketplace.
Kwan, 02 Cr. 241, 2003 WL 21180401, at *4. is not relevant at this stage of the proceedings. On a similar motion to dismiss the indictment in United States v. Caparros, Judge Keenan denied it, holding that the "Court declines to dismiss the 2314 counts because the Government should be allowed to prove the existence of a market for stolen corporate documents describing corporate strategies and costs" and demonstrate the documents at issue were indeed "goods, wares, [or] merchandise" under the statute. 1987 WL 8653 at *4. Further at trial, the Court put the Government on notice of its concern whether this element, among others, had been met. In particular, at the end of all the evidence but before the Charging Conference or Summations, the Court made clear that it did not necessarily see sufficient evidence that the Government had carried its burden regarding whether the documents were "goods, wares, [or] merchandise" or had a value of $5,000 or above. (Trans. at 392-398.) In response to the Court's inquiry, the Government filed a letter brief the following day. The letter, however, failed to address the "market" issue at all, instead relying on the erroneous assumption that the designation "goods, wares, [or] merchandise" encompassed anything related to commercial activity.
The Government chose not to put on a rebuttal case or move to reopen its case-in-chief to rectify any potential issues regarding "goods, wares, [or] merchandise" (or the value question). The Court finds that the designation "goods, wares, [or] merchandise" does not apply to the documents here.
The Court respects the great deference which our system of justice has traditionally and rightfully accorded to a jury's verdict, and is cognizant of the unusual and extraordinary circumstances that must exist to overturn a jury's decision. The Court believes, however, that this is such a case. After having scrutinized the record for any evidence that a market for these documents exists, the Court can find nothing. On this point, there are no inferences that can be made since there are no facts from which to make them. Thus, knowing that a verdict can only be overturned "if the evidence that the defendant committed the crime alleged was nonexistent or . . . meager," Jackson, 335 F.3d at 180, the Court finds that the evidence of a market at this trial is nonexistent. Therefore, a conviction under § 2314 cannot lie in these circumstances. 4. Value
The Court acknowledges that the standard jury instructions given on this element — and given in this case — were of minimal assistance to the jury on this point:
The first thing you must determine is whether the property described in the [I]ndictment constitutes goods, wares or merchandise. "Goods, wares or merchandise" means personal property which has some sort of tangible existence and which is ordinarily a subject of commerce.
Trans. at 485; see also, L. Sand, 3 Modern Federal Jury Instructions, Instruction 54-23.
While the Court fully appreciates that the Government may choose under which statutes to charge and try a defendant, the Court notes that the Economic Espionage Act of 1996 makes it a crime to "convert a trade secret, that is related to or included in a product that is produced for or placed in interstate commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will injure any owner of that trade secret." 18 U.S.C. § 1832. This may be accomplished by knowingly "without authorization copy[ing], duplicat[ing] . . . download[ing], upload[ing] . . . or convey[ing] such information." Id.
The Court turns next to Defendant's claims that the Government proffered no evidence at trial that the value of the stolen documents met the statutory minimum of $5,000. 18 U.S.C. § 2311 defines "value" as used in § 2314 as "the face, par, or market value, whichever is greatest, and the aggregate value of all goods, wares, and merchandise, securities, and money referred to in a single indictment shall constitute the value thereof." The statute does not set forth, however, how a jury should calculate value if no market value exists or is not readily ascertainable.
The $5,000 threshold exists only "to avoid overtaxing the Department of Justice." United States v. Schaffer, 266 F.2d 435, 440 (2d Cir. 1959); see also H.R. Rep. No. 73-1462, at 2 (1934) (noting that "[i]t is believed that it would place too great a burden on the Department of Justice to ask it to undertake to apprehend and prosecute every person violating the substantive provisions of such a law without regard to the amount of property involved.").
The idea of "market value" is obviously predicated on the existence of a "market." As the Court has already held, the Government failed to prove that there is a market for the documents at issue in this case. This does not, however, preclude the ability of the Government to prove this element, as the Court discusses in the following analysis.
The Court is not aware of any Second Circuit cases that expressly endorse a methodology for a valuation calculation, and neither party has cited any governing case law. Other circuit courts have endorsed a broad valuation standard "where an exceptional type of goods that has no market value is the subject matter of the indictment, any reasonable method may be employed to ascribe an equivalent monetary value to the items."United States v. Steaora, 849 F.2d 291, 292 (8th Cir. 1988) (citing United States v. Lester, 282 F.2d 750, 755 (3d Cir. 1960), cert. denied, 364 U.S. 937, 81 S.Ct. 385, 5 L.Ed.2d 368 (1961)). Such methods have included, the cost of production, Stegora, 849 F.2d at 292 (citation omitted); United States v. Drebin, 579 F.2d 1316, 1328 (9th Cir. 1977), cert. denied, 436 U.S. 904, 98 S.Ct. 2232, 56 L.Ed.2d 401 (1978), and the value of the goods in a thieves market, Stegora, 849 F.2d at 292 (citation omitted).
The Government in its papers argues that the Second Circuit has adopted this broad standard towards valuation by citing United States v. Trupin, 117 F.3d 678 (2d Cir. 1997). Gov. Letter of Oct. 16, 2003 at 6. Trupin, however, concerned how a judge may value goods stolen under § 2315 for purposes of the Sentencing Guidelines.
Defendant principally argues that the Government failed at trial to establish under any method that the jurisdictional value had been met. He argues that the documents at issue have no value to a competitor since no testimony or evidence indicated that knowledge of a competitor's rates would aid negotiations for the individual in possession. He further maintains that the potential for lost revenue is likewise unavailing since the Government proffered no evidence at trial to demonstrate an actual loss by Pacific Delight. Finally, Defendant claims that the cost of production valuation is unavailing since there is no evidence to show that Pacific Delight had shouldered the costs of flying, housing, and transporting the employees who made the list, such that a cost of production valuation could establish the jurisdictional threshold.
The Government argues that it has met its burden in that a reasonable jury could have found the jurisdictional threshold met because 1) the value of the files to Defendant easily surpassed $5,000; 2) a new entrant in the Far East market would have undoubtedly paid at least $5,000 for the information contained in the documents; 3) the value of the documents to Pacific Delight also met the threshold since testimony established that the papers significantly contributed to the company's success; 4) the costs of production, including the salaries of the various employees who worked on the creation and maintenance of the documents, easily surpassed the jurisdictional threshold.
In examining the record in the light most favorable to the Government, the Court finds that a reasonable jury could have inferred from the testimony at trial sufficient evidence to value the documents at $5,000 or more.
The most persuasive argument in the Government's favor is the cost of production. Defendant is in error when he claims that there was no evidence to demonstrate value under this method. First, the Government established that Pacific Delight employed a worker who devoted a substantial amount of time to the creation of many of the documents which Kwan stole.
Irene Chan ("Chan"), as director of tour product development for Pacific Delight, (Trans. at 59), negotiates, compiles, and maintains the information on the hotel contract rates. (Trans. at 53, 54, 59.) An employee in Pacific Delight's Los Angeles office, Chan regularly updates and supplements this information and is charged with the preparation of various documents including the hotel contact sheets and the hotel rate sheets. (Trans. at 59, 248, 257, 309, 319.) Defendant's witness Lucy Eng, a former long-time employee of Pacific Delight, noted that Irene Chan worked on many of the documents in question and disseminated them to those who needed to use them within the company. (Trans. at 248, 257.) Moreover, Kwan testified that he and Chan often went to China to negotiate with vendors, including hotels, hoteliers, and others; he went several times a year every year between 1980 and 2001. (Trans. at 299.) Kwan also told the jury that he created some of the documents himself, such as the cruise operator rate sheets and the travel consortium contact lists. (Trans. at 315-17, 320.)
From this undisputed testimony, the jury could infer that Chan and Kwan collectively spent a large amount of time in compiling, drafting, and revising these documents and that a significant portion of two employees' jobs were devoted to the production of these documents. That Kwan himself was paid approximately $130,000 in 2001, (Trans. at 32), lends credence to a further inference that the salary costs required to produce these documents easily surpassed the jurisdictional amount of $5,000.
If only 3.85% of Kwan's time (or 1.97 weeks) per year was spent on these documents, the $5,000 threshold has been met. This calculation does not even take Chan's salary into consideration.
Thus, this Court thus finds that a reasonable jury could have found that the documents were worth in excess of $5,000. However, since this Court has held that there is insufficient evidence to prove that the documents constituted "goods, wares, [or] merchandise" under the statute, Defendant's Motion for a Judgment of Acquittal is GRANTED. II. Conditional Ruling on a Motion for a New Trial
Since Government has met its burden on valuation through a cost of production method, the Court need not consider the applicability of the other proposed valuation methods.
Having granted Defendant's Motion for a Judgment of Acquittal pursuant to Rule 29, the Court must now determine whether to grant a Motion for a New Trial conditionally. Rule 29(d)(1) requires that:
This provision was added to the Federal Rules of Criminal Procedure in 1986 and was designed to preserve judicial economy so that "the appeals court can review [the judgment of acquittal and the new trial decisions] in a single consolidated appeal." See United States v. Kellington, 217 F.3d 1084, 1094-95 (9th Cir. 2000) (internal quotations omitted) (citation omitted).
[i]f the court enters a judgment of acquittal after a guilty verdict, the court must also conditionally determine whether any motion for a new trial should be granted if the judgment of acquittal is later vacated or reversed. The Court must specify the reasons for that determination.
"According to its terms," as the Ninth Circuit has noted, "a district court errs if it fails to make a conditional ruling on a motion for new trial when it grants a judgment of acquittal." United States v. Kellinqton, 217 F.3d at 1096.
1. Standard of Review
In determining the merits of granting a motion for a new trial, a district court has broad discretion. See United States v. Ferouson, 246 F.3d 129, 133 (2d Cir. 2001) (citation omitted). Consonant with this wide discretion, the court may weigh "the evidence and credibility of witnesses," although the court must "not wholly usurp the jury's role." Autuori, 212 F.3d at 120 (citation omitted).
The ultimate issue before a court on such a motion is "whether letting a guilty verdict stand would be a manifest injustice."Ferguson, 246 F.3d at 134. The Second Circuit has indicated that manifest injustice
cannot be found simply on the basis of the trial judge's determination that certain testimony is untruthful, unless the judge is prepared to answer "no" to the following question: "Am I satisfied that competent, satisfactory and sufficient evidence in this record supports the jury's finding that this defendant is guilty beyond a reasonable doubt?"Sanchez, 969 F.2d at 1414.
In answering this question, the judge must examine the totality of evidence in the case. Id. "All the facts and circumstances must be taken into account," and an "objective evaluation is required."Id. Furthermore, there must be a real concern that an innocent person may have been convicted." Id. Finally, a district court has less discretion to grant a new trial under Rule 29 than it does under Rule 33. Ferguson, 246 F.3d at 134. 2. Manifest Injustice
After the verdict, Defendant made his intentions clear to file motions under Rules 29 and 33. As noted earlier, neither Defendant nor the Government raised any arguments concerning Rule 33.
Courts have found "manifest injustice" and granted new trials when newly discovered evidence strongly suggested that another man had in fact committed the crime and told another inmate about it long after the jury had convicted the defendant in the case. See United States v. Camacho, 188 F. Supp.2d 429 (S.D.N.Y. 2002). In Alvarez v. United States. 808 F. Supp. 1066 (S.D.N.Y. 1992) the court granted a new trial when newly discovered evidence uncovered lies and conflicting testimony of informant and government agents at other trials. Motions have also been granted in cases where an improper jury instruction "allowed a jury to convict [defendant] on an impermissible ground," United States v. Hoffer, 680 F. Supp. 673, 679 (S.D.N.Y. 1988) (granting a new trial partly on the basis of an improper jury instruction which also seemed to confuse the jury), where the Government withheld vital and potentially exonerating impeachment material, United States v. Bravo, 808 F. Supp. 311 (S.D.N.Y. 1992), and where the Government introduced at trial "highly prejudicial and inflammatory evidence and arguments in front of the jury" under a theory which ultimately proved irrelevant and unsupported by the record. United States, v. Cassese, ___ F. Supp.2d ___, 2003 WL 22674262 at *12 (S.D.N.Y. Nov. 13, 2003).
None of these factors exist here and Defendant has claimed none. Here the Government has failed to address, much less sustain, its burden on one of the elements needed to establish a violation of the statute. Should the Court of Appeals disagree with this Court's analysis and ruling regarding the deficiency in the Government's proof on this element of the offense, the evidentiary problem seen by this Court would be overruled.
Courts in similar circumstances have granted a judgment of acquittal motion while denying the new trial motion. In United States v. Coriaty, 2001 WL 1910843 (S.D.N.Y. 2001), the district court granted in part a motion for a judgment of acquittal, holding that under the Second Circuit's case law, there was simply no evidence to sustain a conviction on one element of a securities fraud charge. Id. at *6-7. However, given that the district court's ruling was purely legal in nature — regarding the sufficiency of evidence rather than the credibility of a witness or improper jury instructions — the motion for a new trial was conditionally denied pursuant to Rule 29(d). Indeed, were the Second Circuit, the court in Coriaty reasoned, to find the evidence sufficient, the defendant would not be entitled to a new trial as he "suffered no unfairness or prejudice at trial" and "failed to demonstrate that a miscarriage of justice [had] occurred with respect to any aspect of the case." Id. at *8. Here too, the granting of Kwan's Motion for a Judgment of Acquittal turns solely on the law, i.e. what the Government must prove to make these documents "goods, wares, [or] merchandise." There have been no allegations, nor does Defendant make any, that any bases for granting a new trial exist here. Accordingly, the Court conditionally DENIES the Motion for a New Trial under Rule 29.
The Court deems the Rule 33 Motion essentially to have been abandoned and declines to exercise its wider discretion to grant a new trial under that Rule.
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant's Motion for a Judgment of Acquittal pursuant to Rule 29 and conditionally DENIES a Motion for a New Trial.SO ORDERED.