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United States v. Stephens

January 31, 2008

UNITED STATES OF AMERICA, PLAINTIFF-APPELLANT,
v.
WAYNE STEPHENS, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 02 CR 661-Matthew F. Kennelly, Judge.

The opinion of the court was delivered by: Kanne, Circuit Judge

ARGUED MAY 24, 2007

Before POSNER, KANNE, and ROVNER, Circuit Judges.

This is the second time this court has considered the case of defendant Wayne Stephens. Stephens, a Yale-educated corporate executive in New York, was convicted of three counts of wire fraud and was sentenced to 21 months' imprisonment. We previously affirmed the conviction against a sufficiency-ofthe-evidence challenge. United States v. Stephens, 421 F.3d 503 (7th Cir. 2005) ("Stephens I"). In that opinion, this court also concluded that a prima facie Batson violation existed under step one of the three-part Batson test. See Batson v. Kentucky, 476 U.S. 79 (1986). The case was remanded to the district court for further proceedings to be conducted pursuant to steps two and three of the Batson test. The district court determined on remand that the government had exercised its peremptory challenges to exclude prospective minority jurors in violation of the Constitution, and granted Stephens a new trial. The government appeals. We conclude there was no Batson violation and therefore reverse. The convictions are reinstated and affirmed, and the case is returned to the district court for resentencing pursuant to United States v. Paladino, 401 F.3d 471 (7th Cir. 2005).

I. HISTORY

Stephens, an African American, was an in-house manager overseeing computer and technology support at the New York City office of Accenture. Accenture is the largest consulting firm in the world, with 158,000 employees in 49 countries. See Wikipedia, Accenture, http:// en.wikipedia.org/wiki/Accenture (last visited Dec. 10, 2007). Accenture, like many large companies, required its employees to submit a time and expense report. Accenture used a computerized program, "ARTES," as its time and expense reporting program in 2000. The ARTES system had a feature that allowed an employee to manually add money to, or deduct money from, his paycheck. Apparently, the "add to/deduct from" feature was designed for expenses that were not addressed in other parts of the ARTES program.

Stephens used the "add to" feature to add amounts to his paycheck. From April through August 2000, he added approximately $68,000 to his paychecks. Accenture did not become aware that Stephens was increasing his paycheck until August 2000, when its internal auditors identified a $22,980 "add to" request made by Stephens. Accenture fired Stephens and reported his conduct to the government.

To convict Stephens of wire fraud, the government was required to prove beyond a reasonable doubt that: "(1) there was a scheme to defraud; (2) wires were used in furtherance [of] the scheme; and (3) Stephens participated in the scheme with the intent to defraud." Stephens I, 421 F.3d at 507 (citing United States v. Owens, 301 F.3d 521, 528 (7th Cir. 2002)). It was undisputed that Stephens took the money from Accenture through the "add to" function in ARTES. It was also undisputed that Accenture transferred the money to Stephens via wire transfers from Accenture's bank in Chicago, Illinois, to Stephens's personal bank account in New Jersey. Consequently, the trial centered around whether there had been a scheme to defraud Accenture and whether Stephens had participated in that scheme.

The government presented evidence at trial that Stephens had engaged in a scheme because he disguised his "add to" requests so that Accenture would not identify them. This included Stephens's failure to submit copies of his ARTES reports to his supervisor and Accenture's accounting department, as required by Accenture procedure. Evidence was also presented that Stephens had submitted his reports for review in the period that he worked at Accenture before he began to use the "add to" feature to take money from Accenture.

On the intent issue, the government provided evidence of Accenture's personnel policies, Stephens's training on those policies, and his prior compliance with those policies before he began taking money via the "add to" function. The government also provided evidence that Stephens used the money to subsidize a lifestyle beyond his means for himself and his family. Thus, the government argued that Stephens knew that he should not take money from Accenture but did so anyway out of greed.

The government also presented evidence about how Stephens structured his "add to" requests. The first "add to" request was for $7,800 and Stephens also had a legitimate expense of $78 during that pay period. The government argued that this demonstrated his criminal intent because Stephens could claim a decimal error if challenged by Accenture. However, Accenture did not challenge the $7,800 request. After the original $7,800 success, Stephens began to increase his requests until the final $22,980 request that Accenture uncovered in August 2000.

Stephens testified on his own behalf and stated that he believed that it was appropriate to obtain money via the "add to" function. He argued that he believed that this was an appropriate cash advance and he always intended to repay the money to Accenture at some point in the future. Stephens testified that he believed that cash advances were proper based on information another employee had told him.

The government cross-examined Stephens. It questioned him about alleged dishonest statements made by him on his resume concerning his educational background at Yale University. The government also sought to impeach him with prior acts, including his personal use of car rentals at his last company. The government also obtained concessions from Stephens that he did not obtain prior approval from anyone at Accenture for the alleged cash advances and did not sign a loan document or provide collateral to secure the advances. This allowed the government to argue that common sense dictated that Stephens knew that Accenture did not allow this type of advance to an employee.

The jury returned a guilty verdict on all three counts. Stephens's motion for a judgment of acquittal challenged the sufficiency of the evidence on the issue of whether the government had demonstrated that Stephens had engaged in a fraudulent scheme. More than two months after trial, and before ruling on the judgment of acquittal motion or sentencing Stephens, the district court issued a sua sponte minute order raising the Batson issue. The district court stated that the government had used all of its peremptory challenges to strike minority jurors. The court further explained that it had been concerned about the government's exercise of its peremptory challenges during voir dire but assumed that the defendant would object. The district court explained that it concluded at the time that Stephens had a strategic reason for his failure to object.

Nevertheless, after reconsidering its original evaluation of Stephens's failure to object, the district court concluded that there was no valid reason for the defendant's failure. Consequently, the district court stated that it was correcting its prior decision not to question the government during voir dire. The court required the government to provide non-discriminatory explanations for its exercise of its peremptory challenges.

The government responded by arguing that the district court lacked the authority to raise the Batson issue sua sponte at that stage in the proceedings. The government also provided a variety of non-discriminatory explanations for its challenges. The district court then issued a second minute order agreeing with the government's position that the court did not have authority to raise the Batson issue sua sponte at that stage in the proceedings and consequently vacated the original order. United States v. Stephens, No. 02 CR 661, 2003 WL 21439862 (N.D. Ill. June 20, 2003) (unpublished order). The district court was clear to note that the vacating of its original order did not change its view that a prima facie case of a Batson violation existed and, consequently, the district court advised Stephens that he should raise the issue in a post-conviction challenge pursuant to 28 U.S.C. § 2255. Id. at *5. The court also noted that because it had vacated its original order, it no longer had the ability to perform steps two and three of the Batson analysis.

Stephens then appealed to this court, resulting in our Stephens I decision. That decision rejected Stephens's challenge to the sufficiency of the evidence for his wire-fraud convictions. Stephens I, 421 F.3d at 507-09. As for the Batson issue, the government dropped its objection to Stephens's failure to raise a timely Batson claim. Consequently, the Batson claim was considered on the merits.

A divided panel held that Stephens had set forth a prima facie case of a Batson violation pursuant to step one of the three-part Batson test. The case was remanded to the district court to conduct additional proceedings pursuant to steps two and three. Id. at 518.

On remand, the government provided its non-discriminatory explanations for its peremptory challenges. It also provided its original contemporaneous notes from voir dire to support the proffered explanations. The district court recognized that the government had provided non-discriminatory explanations for its peremptory challenges. These explanations were, however, dismissed as pretextual, and the district court concluded that the government had used its peremptory challenges to eliminate minority jurors in violation of Batson. United States v. Stephens, No. 02 CR 661, 2006 WL 1663447 (N.D. Ill. June 9, 2006) (unpublished order).

II. ANALYSIS*fn1

The Constitution prohibits the use of peremptory challenges to intentionally discriminate against jurors on the basis of protected characteristics such as race, national origin, and gender. J.E.B. v. Alabama ex rel. T.B., 511 U.S. 127, 146 (1994); Batson, 476 U.S. at 99. The parties, the jurors, and society as a whole have a right to be free from intentional discrimination in the use of peremptory challenges. "Although a defendant has no right to a 'petit jury composed in whole or in part of persons of [the defendant's] own race,' he or she does have the right to be tried by a jury whose members are selected by nondiscrimina-tory criteria." Powers v. Ohio, 499 U.S. 400, 404 (1991) (quoting Strauder v. West Virginia, 100 U.S. 303, 305 (1879)). Additionally, "discriminatory use of peremptory challenges harms the excluded jurors and the community at large" because it denies those citizens the opportunity to participate as jurors in the justice system. Id. at 406.

Disparate impact is not sufficient to cause the constitutional violation; "discriminatory intent or purpose is required to show a violation." Hernandez v. New York, 500 U.S. 352, 360 (1991) (citing Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 264-65 (1977) and Washington v. Davis, 426 U.S. 229, 239 (1976)). "Discriminatory purpose implies more than intent as volition or intent as awareness of consequences. It implies that the decisionmaker selected a particular course of action at least in part 'because of,' not merely 'in spite of,' its adverse effects upon an identifiable group." Id. (alterations and quotations omitted); see also McCleskey v. Kemp, 481 U.S. 279, 297-99 (1987); Pers. Adm'r of Massachusetts v. Feeney, 442 U.S. 256, 279 (1979).

We determine whether discriminatory intent influenced the exercise of a peremptory challenge through the three-part Batson test. Miller-El v. Cockrell, 537 U.S. 322, 328-29 (2003) ("Miller-El I") (citing Batson, 476 U.S. at 96-98). The components are: first, the challenging party makes a prima facie showing that a peremptory challenge has been exercised on the basis of an impermissible characteristic such as race, national origin or gender; second, the opposing party offers its non-discriminatory reasons for striking the juror; and third, the trial court determines, based on the parties' submissions, whether the moving party has met his burden of proving purposeful discrimination. Id.

" '[T]he ultimate burden of persuasion . . . rests with, and never shifts from, the opponent of the strike.' " Rice v. Collins, 546 U.S. 333, 338 (2006) (quoting Purkett v. Elem, 514 U.S. 765, 768 (1995) (per curiam)). In this case, the burden of persuasion has always rested with the defendant, Stephens.

This court determined the existence of a prima facie case pursuant to step one in Stephens I and therefore we turn to steps two and three. The second step places an affirmative requirement on the striking party to bring forth a non-discriminatory explanation for its peremptory challenge; a mere denial or assertion that the party has acted in good faith is not sufficient. Batson, 476 U.S. at 98. Although the exercise of peremptory challenges is often based on instinct, the exercising party must "state his reasons as best he can and stand or fall on the plausibility of the reasons he gives. A Batson challenge does not call for a mere exercise in thinking up any rational basis." Miller-El v. Dretke, 545 U.S. 231, 252 (2005) ("Miller-El II"). Justifications based on racial or gender stereotypes-such as claiming a juror of a specific race is not suited to serve as a juror or, if selected as a juror, will be more likely to be partial to a party of the same race-do not satisfy the non-discriminatory requirement of step two. Batson, 476 U.S. at 97-98.

"The second step . . . does not demand an explanation that is persuasive, or even plausible," but instead the explanation only needs to be non-discriminatory. Purkett, 514 U.S. at 767-68. A permissible explanation can appear foolish, unwise, or even unbelievable, because the only question at stage two is whether the party has provided a non-discriminatory explanation. Coulter v. McCann, 484 F.3d 459, 465 (7th Cir. 2007); see also Miller-El II,545 U.S. at 267 (Breyer, J., concurring); Purkett, 514 U.S. at 768. Only during Batson's third step does the persuasiveness of the justification become relevant. Purkett, 514 U.S. at 768; Aki-Khuam v. Davis, 339 F.3d 521, 527 (7th Cir. 2003). " '[T]o say that a trial judge may choose to disbelieve a silly or superstitious reason at step three is quite different from saying that a trial judge must terminate the inquiry at step two when the race-neutral reason is silly or superstitious." Aki-Khuam, 339 F.3d at 527 (quoting Purkett, 514 U.S. at 768). Terminating at step two because of a silly, race-neutral reason " 'violates the principle that the ultimate burden of persuasion regarding racial motivation rests with, and never shifts from, the opponent of the strike.' " Id. (quoting Purkett, 514 U.S. at 768).

"The first two Batson steps govern the production of evidence . . . . 'It is not until the third step that the persuasiveness of the justification becomes relevant-the step in which the trial court determines whether the opponent of the strike has carried his burden of proving purposeful discrimination.' " Johnson v. California, 545 U.S. 162, 171 (2005) (quoting Purkett, 514 U.S. at 768). "The relevant question during the third step of the Batson inquiry is whether a strike was racially motivated. It follows that Batson and its progeny direct trial judges to assess the honesty-not the accuracy-of a proffered race-neutral explanation." Lamon v. Boatwright, 467 F.3d 1097, 1101 (7th Cir. 2006); see also Purkett, 514 U.S. at 769; Hernandez, 500 U.S. at 365; United States v. George, 363 F.3d 666, 674 (7th Cir. 2004).

"The third step requires the court to weigh the evidence and determine whether the [proffered] nondiscriminatory reason for the strike is credible or if the [party op- posing the strike] has shown purposeful discrimination." Coulter, 484 F.3d at 465. Consequently, the district court must evaluate the credibility of the race-neutral explanation provided in step two. "Credibility can be measured by, among other factors, the [offering party's] demeanor; by how reasonable, or how improbable, the explanations are; and by whether the proffered rationale has some basis in accepted trial strategy." Miller-El I, 537 U.S. at 339.

In addition, the district court may also consider whether the justification for the exercise of the peremptory challenge corresponds to a valid challenge for cause. "While the reason offered . . . for a peremptory strike need not rise to the level of a challenge for cause, the fact that it corresponds to a valid for-cause challenge will demonstrate its race-neutral character." Hernandez, 500 U.S. at 362-63 (citing Batson, 476 U.S. at 97).

Credibility may also be evaluated by considering the offering party's consistency in applying its non-discriminatory justification. " '[I]f a [party's] proffered reason for striking [a prospective juror of one race or gender] applies just as well to an otherwise-similar [juror of a different race or gender] who is permitted to serve, that is evidence tending to prove purposeful discrimination to be considered at Batson'sthird step.' " Coulter, 484 F.3d at 465 (quoting Miller-El II, 545 U.S. at 241). When making a side-by-side comparison of included and excluded jurors, the district court should be mindful that "[p]icking jurors is a complex and multifaceted process. Individual factors or characteristics often do not provide the 'silver bullet' that will mean acceptance or rejection of any potential juror. Rather, it is a combination of factors that will determine whether a party believes a juror will be favorable to their side." Pruitt v. McAdory, 337 F.3d 921, 930-31 (7th Cir. 2003). The district court should also be mindful that when making a side-by-side comparison, the compared jurors do not have to be "exactly identical" because "potential jurors are not products of a set of cookie cutters." Miller-El II, 545 U.S. at 247 n.6.

A further factor that may be considered in determining the credibility of the explanation is whether the non-discriminatory justification offered in step two results in disparate impact on prospective jurors of one race or gender. " '[A]n invidious discriminatory purpose may often be inferred from the totality of the relevant facts, including the fact, if it is true, that the [classification] bears more heavily on one race than another.' " Hernandez, 500 U.S. at 363 (quoting Washington, 426 U.S. at 242).

Traditionally, we review the district court's finding of intentional discrimination under a deferential standard of review. " 'A finding of intentional discrimination is a finding of fact' entitled to appropriate deference by a reviewing court." Batson, 476 U.S. at 98 n.21 (quoting Anderson v. Bessemer City, 470 U.S. 564, 573 (1985)); see also Rice, 546 U.S. at 338 ("On direct appeal in federal court, the credibility findings a trial court makes in a Batson inquiry are reviewed for clear error.") (citing Hernandez, 500 U.S. at 364-66); United States v. Evans, 192 F.3d 698, 700 (7th Cir. 1999) ("The trial court's determination about the ultimate question of discriminatory intent is a finding of fact, which will be overturned only if clearly erroneous."); United States v. Roberts, 163 F.3d 998, 999 (7th Cir. 1998). Under this deferential standard, we will not reverse the district court's decision "simply because we 'would have decided the case differently.' " Easley v. Cromartie, 532 U.S. 234, 242 (2001) (quoting Anderson, 470 U.S. at 564), and instead will reverse only " 'if, after reviewing the evidence, we are left with a definite and firm conviction that a mistake has been committed,' " United States v. Mendoza, 457 F.3d 726, 729 (7th Cir. 2006) (quoting United States v. Arocho, 305 F.3d 627, 641 (7th Cir. 2002)). Determining that "two permissi- ble views of the evidence exist" is not sufficient for a reversal. United States v. Marty, 450 F.3d 687, 690 (7th Cir. 2006).

But deference is due only when a district court properly performs its task in the first instance. "A district court by definition abuses its discretion when it makes an error of law." Koon v. United States, 518 U.S. 81, 100 (1996) (citing Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990)); cf. United States v. Robinson, 435 F.3d 699, 701 (7th Cir. 2006) ("When a judge does not properly calculate a guidelines sentence, our review for reasonableness is forestalled."); Hobley v. Burge, 433 F.3d 946, 949 (7th Cir. 2006). Additionally, we cannot defer to a district court decision that ignores material portions of the record without explanation. "[W]henever a district judge is required to make a discretionary ruling that is subject to appellate review, we have to satisfy ourselves, before we can conclude that the judge did not abuse his discretion, that he exercised his discretion, that is, that he considered the factors relevant to that exercise." United States v. Cunningham, 429 F.3d 673, 679 (7th Cir. 2005). Our deference depends on "the district court's account of the facts [being] plausible in light of the record viewed in its entirety." Bowles v. Quantum Chem. Co., 266 F.3d 622, 630 (7th Cir. 2001) (citations omitted). When deferring to the district court, "reasonable doubts should be resolved in favor of the district judge's ruling." Cook v. City of Chicago, 192 F.3d 693, 697 (7th Cir. 1999). But our exercise of deference requires the district court's "greater immersion in the case." Id.

Here, we are unable to defer to the district court's decision finding intentional discrimination by the government. The decision of the district court incorrectly recounts much of the record and fails to note material portions. Because the district court did not factor in material portions of the record, it misapplied the Batson three-part test. As a result of its misapplication of the Batson test, no deference is due to the district court's decision finding intentional discrimination. We note that even under a clearly erroneous standard of review, the district court's result would not pass muster. The district court did not perform its task in accordance with Batson; it failed to consider the entire record and misapplied the three-part test. In making an error of law, the district court abused its discretion. Koon, 518 U.S. at 100.

Facing this situation, we are presented with two options. One option would be to vacate the original decision and remand to the district court with instructions to perform its task in the manner it should have carried out originally. We see no value in ordering another remand for additional proceedings. Viewing the record now in its entirety presents only one plausible conclusion-that there is no Batson violation in this case. A second proceeding in the district court would be a redundant exercise. As such, our course is to reverse the district court. See Loyd v. Phillips Bros., Inc., 25 F.3d 518, 524 (7th Cir. 1994) ("We have the entire trial record before us and, having reviewed it thoroughly, we confidently conclude that Phillips did not carry its burden, and thus there is no need to remand this case . . ."). As in Loyd v. Phillips Brothers, Inc., we have the entire record before us, and have reviewed it thoroughly. We confidently conclude that Stephens did not carry his burden of persuasion, as required by Batson's third step. Thus, remand would be futile as there is only one plausible conclusion based on the entire record-that there was no Batson violation. See also Pervaiz v. Gonzales, 405 F.3d 488, 491 (7th Cir. 2005) (stating that remand would be futile if it was clear that petitioner's claim would necessarily fail).

The district court's central error was its failure to take into account the government's non-discriminatory ex- planations for its peremptory challenges. The district court presented the government's explanation as one in which the government was looking to exclusively excuse potential jurors who lacked white-collar experience and a college education, without a consideration of any other factors.

Although white-collar experience and a college education were important for the government, the record demonstrates that the government never relied on these two factors alone. By the district court's overemphasis of these two characteristics-to the exclusion of other significant points-the court turned white-collar experience and a college education into a simple "litmus test" and ascribed that test to the government, despite the fact that those two factors were not used in that fashion by the government. By transforming a lack of white-collar experience and college education into a "litmus test," the district court was left with a construct in which it would simply ...


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