Opinion
CASE NO. 00-434-CR-GOLD/SIMONTON
March 22, 2002
ORDER GRANTING JUDGEMENT OF ACQUITTAL
I. BACKGROUND.
The Defendant, Herbert Pierre-Louis, has moved for Judgment of Acquittal, pursuant to Fed.R.Crim.P. 29, on his two-count conviction for violation of Title 18, United States Code, Section 1 030(a)(5) of the Computer Fraud and Abuse Act ("CFAA"). Under the CFAA, it is a federal crime for anyone to knowingly cause the transmission of a program or code, i.e., a computer virus, with the intention of causing damage to a protected computer. The Defendant's motion raises two essential questions First, can the Government meet its statutory burden to prove "damage" [i.e. loss of at least $5,000 in value] beyond a reasonable doubt by inclusion of "lost profits?" Second, whether the Government's evidence of "lost profits," based on a "daily average" calculation, is sufficient to prove the requisite jurisdictional amount beyond a reasonable doubt?
The Defendant argues that the Government's evidence did not allow a permissible inference that the Defendant was guilty of the crimes charged. Other than as addressed in this Order, the Court concludes, applying the applicable legal standard, that the motion is without merit as to the remaining elements of each count.
Based on the Court's ruling that the rule of lenity should apply, I do not reach the second question. If I did, I would enter judgment of acquittal based on the fact that the Government's evidence as to an annual average of "lost profits" did not establish the amount of lost profit beyond a reasonable doubt for each site.
II. FACTS.
The essential facts are not in dispute. The jury found that Defendant Pierre-Louis sent a computer virus ("the ProComm Virus") that damaged computers at two sites, one in New York and, the other in Minnesota, owned and operated by his then-employer, Purity Wholesale Grocers, Inc. ("Purity"). At trial, the Government introduced evidence regarding, among other things, the "financial harm" suffered by Purity as a result of the ProComm Virus. The amount of "financial harm" was an essentialv jurisdictional element in the case. Under the CFAA, the Government had to prove that the damage to each site resulted in a "loss" of at least $5,000 in value during any one-year period to one or more individuals.The evidence of Purity's loss fell into one of four categories: (a) the value of the damaged computer hardware at each site; (b) the costs associated with repairing computer terminals at the affected sites (i.e. labor and travel costs); (c) salary payments to Purity employees who did not participate in the repairs, but were otherwise unable to work due to the virus; and (d) Purity's estimated "lost profits" during a two-day work stoppage caused by the virus. Purity's representative, Mr. Tarr, who was Vice President for Operations, arrived at a "lost profit" figure for each site using an average daily business volume and average daily profit. Using this approach, he testified that the lost profit for Purity's New York site was more than $6,400.00, and the lost profit for the Minnesota site was more than $24,000.00.
The jury was instructed as to the essential elements of the 18 U.S.C. § 1030 (a)(5)(A) [D.E. #87, page 7]. In response to a special interrogatory, the jury found that the damage, that is, the amount of loss, to each site would not total the requisite $5,000.00 without including "lost profits."
The jury was instructed that the Defendant could only be found guilty if all the following facts were proven beyond a reasonable doubt: (1) that the Defendant knowingly caused the transmission of a program, code, command, or information to a computer without authorization; (2) that as a result of the transmission, the Defendant intentionally and without authorization impaired the integrity or availability of data, a program, a system, or information; (3) that the impairment of the data, program, system, or information resulted in losses to one or more individuals totaling at least $5,000 in value at any time during the one-year period beginning on June 18, 1998, up to and including June 17, 1999; and (4) that the computer in which the impairment occurred was used in interstate or foreign commerce or communication (emphasis added). The Court concludes there is no basis for a judgment of acquittal as to grounds one, two and four. The sole basis turns on ground three.
III. APPLICABLE LEGAL STANDARDS
In considering a motion for the entry of judgment of acquittal under Federal Rule of Criminal Procedure 29(c), a district court should apply the same standard used in reviewing the sufficiency of the evidence to sustain a conviction. See United States v. Sellers, 871 F.2d 1019, 1020 (11th Cir. 1989). The district court must view the evidence in the light most favorable to the government. See id. ( citing Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942), superceded by rule on other rounds, Bourjaily v. United States, 483 U.S. 171, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987)). The court must resolve any conflicts in the evidence in favor of the government, see United States v. Taylor, 972 F.2d 1247, 1250 (11th Cir. 1992), and must accept all reasonable inferences that tend to support the government's case. See United States v. Burns, 597 F.2d 939, 941 (5th Cir. 1979). The court must ascertain whether a reasonable jury could have found the defendant guilty beyond a reasonable doubt. See Sellers, 871 F.2d at 1021 ( citing United States v. O'Keefe, 825 F.2d 314, 319 (11th Cir. 1987)). "'It is not necessary for the evidence to exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt, provided a reasonable trier of fact could find that the evidence establishes guilt beyond a reasonable doubt.'" Sellers, 871 F.2d at 1021 (quoting United States v. Bell, 678 F.2d 547, 549 (5th Cir. Unit B 1982) (en banc),aff'd on other grounds, 462 U.S. 356, 103 S.Ct. 2398, 76 L.Ed.2d 638 (1983)). A jury is free to choose among reasonable constructions of the evidence. See Sellers, 871 F.2d at 1021. The court must accept all of the jury's "reasonable inferences and credibility determinations." See id. (citing United States v. Sanchez, 722 F.2d 1501, 1505 (11th Cir. 1984)). But, at the same time, the Court must affirm the conviction only if "any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319 (1979). Where, as here, the jury has made a reasonable construction of the evidence which places into issue the Government's proof of an essential element of the crime, a judgment of acquittal is warranted.
IV. LAW APPLIED.
As enacted at the time of the trial, 18 U.S.C. § 1030(e)(8)(A) defined the term "damage" to mean "any impairment to the integrity or availability of data, a program, a system, or information that causes loss aggregating at least $5,000 in value during any one-year period to one or more individuals. No definition of loss was provided by the statute at the time of the offense and verdict. As agreed to by the parties, no judicial decision has directly interpreted the word "loss" to include "lost profits." As amended on October 26, 2001, subsequent to the verdict in this case, the United States Congress has amended the statute to added the concept of "consequential damages" so that "loss" is to include "any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service." See 18 U.S.C. § 1030(e)(11) (effective October 26, 2001), USA Patriot Act, P.L. 107-56, Laws of the 107th Congress-1st Session, Sections 814(d)(8) and (11).
The amended act revised the definition of "damage" and, for the first time, defined the term "loss." As noted below, the act in effect at the time of indictment and jury verdict defined "damage" to mean any impairment to the integrity or availability of data, a program, a system, or informaticn that causes loss aggregating at least $5,000 in value during any 1-year period to one or more individuals." 18 U.S.C. § 1 030(e)(8(A). Subsequent thereto, the act was amended to define "damage" to mean "any impairment to the integrity or availability of data, a program, a system or information." 18 U.S.C. § 1030 (c)(8) (effective October 26, 2001). The term "loss" was separately defined to mean "any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment and restoring the data, program, system, or information to is condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service." 18 U.S.C. § 1030 (e) (1 1) (effective October 26, 2001).
The Defendant argues that 18 U.S.C. § 1030(e)(8)(A) is ambiguous and that the rule of lenity dictates that the ambiguity be resolved in his favor given the absence of a clear and definite legislative directive. See United States v. Wichester, 916 F.2d 601, 607 (11th Cir. 1990)("The rule rests on the fear that expansive judicial interpretations will create penalties not originally intended by the legislature. It is an outgrowth of our reluctance to increase or multiply punishments absent a clear and definite legislative directive").
The rule of lenity, however, is not a doctrine of first resort whenever a criminal defendant identifies a potential ambiguity in a statute, and the rule "is not invoked by a grammatical possibility." Caron v. United States, 524 U.S. 308, 316, 118 S.Ct. 2007, 2012, 141 L.Ed.2d 303 (1998); United States v. Maldonado-Ramirez, 216 F.3d 940, 943 (1 1th Cir. 2000)(same). lnstead, the rule of lenity applies only when "the traditional canons of statutory construction" fail to resolve an ambiguity. United States v. Shabani, 513 U.S. 10, 17, 115 S.Ct. 382, 386, 130 L.Ed.2d 225 (1994). It is invoked when, after considering the structure and purpose of a criminal statute, "we are left with nothing more than a guess as to what Congress intended." United States v. Shugart, 176 F.3d 1373, 1376 (11th Cir. 1999) (citation omitted). The ultimate question is whether there is a "grievous ambiguity" sufficient to require application of the rule of lenity. Id. See also United States v. Sepulveda, 115 F.3d 882, 887 n. 11 (11th Cir. 1997) (rule of lenity "has no application where the fair meaning of the statute is clear.")
It is not necessary to resort to the "rule of lenity" if the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case. To establish ambiguity, the Defendant first argues that there is a conflict between 18 U.S.C. § 1030 (a)(5)(A), which states the substantive crime, and 18 U.S.C. § 1030 (e)(8)(A), which defines "damage." The apparent conflict argued is that the phrase "to a protected computer" modifies the word "damage" in 18 U.S.C. § 1030 (a)(5)(A), such that damage must be limited to the "protected computer," as compared to the entity or individual(s) involved, as specified with respect to reference to "loss" in 18 U.S.C. § 1030 (e)(8)(a). This Court has previously found an ambiguity due to the dangling participle ("to a protected computer"), but based on legislative history, concluded that damage is to be measured as it affects individuals and not a single computer. See In re America Online, Inc. Version 5.0 Software Litigation, 168 F. Supp.2d 1359, 1372-1374 (S.D. Fla. 2001 ) (setting forth analysis). See also Shurgard Storage Centers, Inc. v. Safeguard Self Storage, Inc., 199 F. Supp.2d 1121, 1128 (W.D. Wash. 2000) (citing S.Rep. No. 104-357 at 3, 4, and 5, which details that "protected computer" is a term used to identify the scope of the statute, and not a modifying phrase on the issue of damages). Accordingly, there is insufficient basis to invoke the rule of lenity on that ground alone.
The next question is whether 18 U.S.C. § 1030 (e)(8)(A) itself is ambiguous as to the meaning of loss. A court must assume that Congress used the words in a statute as they are commonly and ordinarily understood, and if the statutory language is clear, no further inquiry is necessary. In examining the pertnent statutory language, a court cannot look at a word or term in isolation; it must look at the entire statutory context and scheme. See Federal Reserve Bank of Atlanta v. Thomas, 220 F.3d 1235, 1239 (11th Cir. 2000) (citations omitted). If the statutory language is ambiguous, a court may examine extrinsic materials, including legislative history, to determine Congressional intent. See id.; see also Dowling v. United States, 473 U.S. 207, 213, 105 S.Ct. 3127, 3131, 87 L.Ed.2d 152 (1985) ("[W]hen assessing the reach of a federal criminal statute, we must pay close heed to the language, legislative history, and purpose in order to strictly determine the scope of the conduct the enactment forbids. . . ."); Iraola CIA. S.A. v. Kimberly-Clark Corp., J.N., 232 F.3d 854, 857 (11th Cir. 2000) (discussing statutory interpretation).
Applying these standards, the Court finds ambiguity under traditional canons of statutory interpretation for criminal purposes. The statute itself makes a distinction between the type of damages involved for criminal and civil purposes. For civil damages under subsection 1030(g), damages as defined in subsection (e)(8)(A), are limited to "economic damages." No definition of "economic damages" is provided. The Government argues that, by implication, economic damages must be included in "loss" under subsection (e)(8)(A), but, considering the structure of the statute, the Court finds an ambiguity in that regard. The implication can be read contrary to the Government's position, namely, that the omission of reference to "economic damages" in subsection (e)(8)(A) suggests its intended "exclusion" under that section for criminal purposes. SeeIn re Old Naples Securities, Inc., 233 F.3d 1296, 1306 (11th Cir. 2000) (citing authorities in that regard).
Subsection 1030(g)'s purpose is to prevent recoveries for non-economic damages. See In Re Doubleclick Privacy Litigation, 154 F. Supp.2d 497, 523 n. 33 (S.D.N.Y. 2001) (Section 1036(g) bars recovery for claims involving "invasion of privacy," "trespass to personal property," "misappropriation" and "emotional distress").
When interpreting a statute, we look first to the plain meaning of its language, see United States v. Gonzales, 520 U.S. 1, 4-6, 117 S.Ct. 1032, 1034-35, 137 L.Ed.2d 132 (1997), and "[w]here Congress includes particular language in one section of a statute but omits it in another section of the same act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion,"see Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 300, 78 L.Ed.2d 17 (1983) (quoting United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir. 1972) (per curiam)). In this regard, subsection (e)(8)(A), being the definition section, refers to loss without reference to economic damages. The only reference to economic damage is with regard to civil matters. The structure of subsection (e)(8)(A) supports that economic loss was not included for criminal purposes because the focus of the definition of damage under (e)(8)(A) is on "impairment" which results in "loss," and the word "impairment" is directly linked to "the integrity or availability of data, a program, a system, or information" rather than to consequential loss resulting from such impairment.
The legislative history does not directly support that "lost profit" or "lost revenue" was included in the term "loss." Rather, the focus of discussion was that loss would not be limited only to the cost or repair but would include other remedial costs such as lost computer time and the cost of reprogramming or restoring data to its original condition. S.Rep. 99-432, 1986 U.S.C.C.A.N. 2479 at 2488-2489. The limited case law on the question tends to support that position. Other courts, which have considered related issues, have limited the term "loss" to target remedial expenses borne by victims based on the facts and circumstances of each case. See United States v. Morris, 928 F.2d 504, (2nd Cir. 1991 ) (limiting calculation of "damage" to the costs necessary to repair the physical damage caused by the viral computer "worm"); United States v. Middleton, 231 F.3d 1207, 1213 (9th Cir. 2000) (upheld jury instruction that jury may consider any loss found to be a natural and foreseeable result of any damage that it found occurred, and further instruction that, in determining the amount of loss, jury may consider what measures were reasonably necessary to restore the data, program, system, or information that you find was damaged or what measures were reasonably necessary to resecure the data, program, system, or information from further damage); In Re Doubleclick Inc. Privacy Litigation, 154 F. Supp.2d 4971 521 (S.D.N.Y. 2001)("S.Rep. No 104-357 seems to make clear that Congress intended the term 'loss' to target remedial expenses borne by victims that could not properly be considered direct damage caused by a computer hacker").
In Middleton, the defendant was arrested and charged with a violation of 18 U.S.C. § 1030 (a)(5)(A).] See Id. at 1209. The defendant filed a motion for acquittal, arguing that the government failed to prove at least $5,000 in damages. See id. At trial, the district court instructed the jury on "damage" under 18 U.S.C. § 1030 (e)(8)(A), and allowed jurors to consider "what measures were reasonably necessary to restore the data, program, system, or information that you find was damaged or what measures were reasonably necessary to resecure the data, program, system, or information from further damage." Id. at 1213 (emphasis added). On appeal, the defendant argued that the district court's instruction might lead the jury to believe that it could consider the cost of "creating a better or more secure system." Id. Upon review, the Ninth Circuit noted that the district court's instruction "logically exciudeldi any costs that the jury believed were excessive, as well as any costs that would merely create an improved computer system unrelated to preventing further damage resulting from Defendant's conduct." Id.
Given that the term "loss" within the statutory context is "grievously ambiguous," the rule of lenity applies "as an outgrowth of our reluctance to increase or multiply punishments absent a clear and definite legislative directive." United States v. Winchester, 916 F.2d 601-607. See also Dowling v. United States, 473 U.S. 207, 228 (1985) (invoking the "time honored interpretive guideline" that "ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity"); Bifulco v. United States, 447 U.S. 381, 387 (1980)("This policy of lenity means that the Court will not interpret a federal criminal statute so as to increase the penalty that it places on an individual when such an interpretation can be based on no more than a guess as to what Congress intended."). The fact that Congress has amended the CFAA to now include consequential damages (including "lost profits") adds weight to applying the rule of lenity here in that it suggest that the former statute was more limited in scope. See United States v. McKelvey, 203 F.3d 66 (1st Cir. 2000) (construing statute against the government where statutory ambiguity existed on an element of a criminal offense at the time of the crime and where subsequent legislation broadened statute's coverage); United States v. McKie, 112 F.3d 626 (3rd Cir. 1997)(same); United States v. Childress, 104 F.3d 47 (4th Cir. I 996)(same). The Court rejects the government's position that the subsequent legislation served to only clarify, or technically amend, earlier enactments; rather it unequivocally broadened that statute's coverage. Nothing about the subsequent amendment expressly and unequivocally declares Congress' intention to only clarify the terms of the former statute. See Dowling, 473 U.S. at 228 n. 18 and 229 (rejecting the notion that Congress acts "implicitly" and confirming that ambiguities in a prior criminal statute inure to the benefit of defendant). Rather, this is a criminal statute which carries with it special rules of construction. It is a fundamental rule of criminal statutory construction that statutes are to be strictly construed and should not be interpreted to extend criminal liability beyond that which Congress has plainly and unmistakenly proscribed. Otherwise, the accused lacks fair notice of criminal liability when it is based on some unforeseeable judicial construction of the statute. Thus, the ambiguity in the criminal statue must be resolved in favor of lenity for the accused.
WHEREFORE, for the reasons stated in this Order, it is hereby ORDERED, that the Defendant's motion for judgment of acquittal is GRANTED, and the charges in the Indictment against the Defendant are hereby dismissed.
ORDERED this 22nd day of March, 2002.