Precedential Opinions of Note
Third Circuit Holds Smartphones Qualify as Computers for Sentencing Enhancement
Background
The defendant was convicted of, among other things, possessing child pornography, on the basis of images found to be on his smartphone. The District Court sentenced him and applied a two-level sentencing enhancement for using a computer in the commission of the offence, pursuant to U.S.S.G. § 2G2.2(b)(6). The defendant challenged the application of the enhancement on appeal, arguing that the device in question was an iPhone, not a computer.
Holding
The defendant was convicted of, among other things, possessing child pornography, on the basis of images found to be on his smartphone. The District Court sentenced him and applied a two-level sentencing enhancement for using a computer in the commission of the offence, pursuant to U.S.S.G. § 2G2.2(b)(6). The defendant challenged the application of the enhancement on appeal, arguing that the device in question was an iPhone, not a computer.
Key Quote
“We thus hold that smartphones trigger the computer enhancement. Two other circuits have gone further, holding that even basic cellphones count. See United States v. Kramer, [CA8, 2011]; United States v. Mathis, [CA11, 2014] (adopting Kramer’s reasoning) . . . . Because [defendant’s] phone was an iPhone, we need not decide whether to go so far.” (Slip Op. at 7.)
Identity-Theft Victims Count Under the Multiple-Victim Enhancement, Even When Unharmed
Background
A jury convicted the defendants of mail fraud and identity theft charges for their involvement in a scheme that involved using stolen identities to sign up for new smartphone promotions. While the defendants used over 200 individuals’ stolen information in the scheme, none of those individuals suffered any pecuniary loss. At sentencing, the District Court applied a two-level enhancement to the mail-fraud Guideline based on the number of victims. The defendants appealed on a number of grounds, including the sentencing enhancement, arguing that, under the Third Circuit’s decision in United States v. Kennedy (CA3, 2009), identity theft victims must suffer a loss to count as victims for purposes of the Guidelines.
Holding
The Third Circuit affirmed the defendants’ sentence, holding that Kennedy’s rule was abrogated by United States v. Nasir (CA3, 2021) and intervening amendments to the Guideline. The Court held that, under the amended Guidelines and current Third Circuit jurisprudence, “victim” included victims of identity theft, regardless of pecuniary harm.
Key Quote
“[W]e independently hold that ‘victim’ is not ambiguous as to whether it includes victims of identity theft.” (Slip Op. at 8.)
Court Vacates Sentence for Tax Fraud Convictions
Background
The defendant, the owner of a Philadelphia restaurant, pleaded guilty to tax evasion charges related to a long-running scheme to under-report employees’ earnings and employment taxes. The Government maintained that employees learned of the scheme during onboarding and were asked to participate in keeping some of their income off the books. At sentencing, the District Court applied a sentencing enhancement for encouraging persons “other than or in addition to co-conspirators” to violate the tax laws. The defendant challenged his sentence, arguing that the employees were uncharged co-conspirators.
Holding
The Court of Appeals vacated the sentence, holding that the sentencing enhancement did not apply. The Court reasoned that the Government’s proof demonstrated that the employees were knowing participants in the conspiracy. Such proof was therefore incompatible with the Government’s position at sentencing that the employees were persons other than co-conspirators.
Key Quote
“The Government paints a picture of this case that is incompatible with holding that it proved by a preponderance of the evidence that the employees did not know of [defendant’s] Klein conspiracy and did not intend both to join it and accomplish its illegal objects.” (Slip Op. at 15.)
Court Clarifies Authority to Vacate Sentence Due to Guideline Amended During Appeal
Background
The defendant was sentenced after trial for money laundering and drug trafficking convictions. The defendant had no criminal history and was given a sentence within the then-applicable Guidelines range. During the pendency of her appeal, amended Guidelines went into effect, including a provision providing for a two-level reduction for offenders with zero criminal history points. That Guideline, U.S.S.G. § 4C1.1(a)(1), was expressly retroactive. The defendant asked the Court of Appeals to vacate her sentence and remand for resentencing under the new Guideline. The Government opposed, arguing that the Court of Appeals lacked authority for such a remand, and that the only proper mechanism was for the defendant to make a motion for a reduction in sentence to the District Court.
Holding
The Third Circuit rejected the Government’s argument and vacated the sentence. The Court held that the general appellate authority conveyed by 28 U.S.C. § 2106 gave it broad discretion to vacate or modify any order that was lawfully before it for review if “just under the circumstances.” Because there was no question that the defendant qualified for the amended, retroactive Guideline reduction, the Court exercised its discretion to remand for resentencing.
Key Quote
“We hold, therefore, that when a defendant such as Martinez is entitled to seek the benefit of a retroactive Guidelines provision by filing a motion [for a reduced sentence] under § 3582(c)(2), our Court may, on direct appeal, exercise its discretion under § 2106 to vacate the defendant’s sentence and remand for resentencing in light of the retroactive Guidelines provision.” (Slip Op. at 6-7.)
Divided Panel Holds Driveway Was Not Curtilage Subject to the Fourth Amendment
Background
A police officer followed the defendant’s car, from which he could smell marijuana. The defendant parked in his driveway, and the officer followed. The officer searched the defendant’s car in the driveway, without a warrant, and recovered a firearm that the defendant could not lawfully possess. The defendant unsuccessfully moved to suppress the search and pleaded guilty. He renewed his challenge to the search on appeal, arguing that the driveway was part of the “curtilage” of his home — the part of his property that enjoys the same Fourth Amendment protection as his house.
Holding
The majority affirmed the search and the defendant’s conviction. It first held that, under controlling Supreme Court precedent, the Court of Appeals reviews curtilage rulings de novo. It then held that, under these facts, the portion of the driveway the officer entered was not part of the curtilage of the defendant’s home.
Key Quote
“Whether we take a holistic view of curtilage, check off the Dunn factors, or reason from curtilage’s purpose, the result is the same: The officer did not invade [defendant’s] curtilage and so did not need a warrant or applicable exception to the warrant requirement.” (Slip Op. at 15.)
Dissent
Judge Ambro dissented, arguing that the majority’s view limited curtilage to “only the most obvious extensions of the home,” when curtilage should “include[] any part of one’s property that is physically and psychologically linked to the home.” (Dissent at 1.) Because Judge Ambro concluded that the driveway in question “was so linked,” (id.) he would have found the warrantless search unlawful and reversed the District Court.
Third Circuit Reaffirms That Sentencing Courts Must Provide Defendants Adequate Notice
Background
The defendant, a native of the Dominican Republic, was convicted of drug distribution and removed from the United States in 2017. He subsequently returned to this country and was arrested on drug charges in 2023. The defendant pleaded guilty and was sentenced in 2024. During that proceeding, the District Court relied extensively on both the defendant’s pre-sentence investigation report and the transcript from his 2017 sentencing. The defendant challenged his sentence on appeal, arguing that the District Court had not given his counsel notice that the Court intended to rely on these older materials at sentencing.
Holding
The Third Circuit affirmed the sentence while agreeing with the defendant that the lack of notice was an error. The Court reaffirmed its rule that, under Federal Rule of Criminal Procedure 32, sentencing judges must give the parties notice before the hearing of all materials on which they intend to rely at sentencing, as well as the purpose for which they intend to use them. However, the District Court’s error here was not plain error because the defendant could not show the lack of notice prejudiced him.
Key Quote
“The District Court relied on information from another proceeding—the 2017 sentencing. . . . By failing to give [defendant] and his counsel advance notice of its reliance on the 2017 materials, the Court contravened Rule 32(i)(1)(C)’s mandate to ‘allow the parties’ attorneys to comment on . . . matters relating to an appropriate sentence.’” (Slip Op. at 9-10.)
Third Circuit Sides with Majority in Circuit Split, Rules that Due Process Principles for Sentencing Also Apply to Motions for Sentence Reduction
Background
The defendant pleaded guilty to one count of wire fraud after a years-long embezzlement scheme in which he stole millions from the family-owned business that employed him. At sentencing, the president of the business submitted victim-impact materials documenting how the fraud had ultimately driven the company out of business and ruined his family’s finances. The defendant was sentenced and subsequently moved for a reduced sentence under amended Guidelines that implemented a two-level reduction for offenders with zero criminal-history points. The District Court denied the motion, relying on the victim-impact submissions from sentencing to find that the defendant had caused “substantial financial hardship,” which disqualified the defendant under the new Guideline. The defendant argued the trial court violated his due process rights by relying on the victim-impact evidence without an opportunity to challenge it.
Holding
The Court affirmed the District Court’s ruling. It first recognized a circuit split on whether due process principles that control the finding of facts at sentencing also apply to motions for sentence reduction. It held that the same principles do apply to such motions, joining the majority of circuits to address the question. It concluded, however, that the District Court had not violated the defendant’s due process right here because the information on which it relied — victim-impact testimony from the original sentencing — was not new at the motion-for-reduction stage.
Key Quote
“In sum, we hold that [U.S.S.G.] § 6A1.3(a)’s requirements— ‘sufficient indicia of reliability to support [the] probable accuracy’ of information underlying a district court’s decision and ‘an adequate opportunity to present information to the court’—apply to [18 U.S.C.] § 3582(c)(2) proceedings. The defendants must be ‘given notice of and an opportunity to contest new information relied on by the district court.’” (Slip Op. at 11.)
Tax Preparer’s Intent to Evade Tax Is Sufficient To Toll IRS Limitations Period, Even If Taxpayer Unaware
Background
The petitioner challenged an IRS determination of deficiency and assessment of back taxes and penalties for tax returns she filed over twenty years ago. The parties agreed that the taxes were underpaid because the petitioner’s tax preparer had intentionally underreported them without her knowledge. The petitioner maintained that the IRS was barred by the three-year statute of limitations for the assessment of tax. The Tax Court found an exception to the limitations period applied because the preparer submitted false or fraudulent returns “with the intent to evade tax.” The petitioner challenged the Tax Court’s ruling, arguing that the statute required the taxpayer to be the one with the intent to evade.
Holding
The Third Circuit affirmed the Tax Court. It ruled that the text of the statute was agnostic as to who possesses the intent to evade, and that Congress knows how to expressly limit provisions to refer to taxpayers when that is its intent. It therefore held that taxpayer intent is not required for the “intent to evade” provision of the statute of limitations to apply.
Key Quote
“We understand [petitioner’s] frustration with the IRS’s decision to assess tax beyond the statute of limitations due to the wrongdoing of someone other than her. But we are bound by the statute. And because the statute is agnostic about who must intend to evade tax, we hold that taxpayer intent is not required.” (Slip Op. at 3.)
Court Describes Permissible ‘Off-Mission’ Questions For Traffic Stops
Background
Police officers pulled over the defendant, who was driving a car with illegally tinted windows. During the stop, the defendant was fidgeting and extremely nervous. Before returning to the patrol car to run the defendant’s license, one of the officers complimented the defendant on his Rolex watch and asked about he did for a living. The officers thereafter searched the defendant and his vehicle and recovered drugs and a gun. The defendant moved to suppress the search, arguing that the questions about the watch and his occupation unlawfully extended the stop beyond what was necessary for the tinted-windows ticket.
Holding
The Court upheld the search. Recognizing that the line between innocuous conversation and unlawful extension of a stop can be a difficult one, the Court sought to provide comprehensive guidance to law enforcement. It described four categories of questioning during a traffic stop: mere small talk, traffic infraction-related inquiries, officer safety-related inquiries, and off-mission inquiries. It held that only the last of these offends the Fourth Amendment. The Court concluded that the questions here about the watch and the defendant’s occupation, under the circumstances, were attempts to put a nervous the defendant at ease and reasonably related to officer safety.
Key Quote
“While this Court has not explicitly advanced a framework for categorizing police questions during a routine traffic stop, we have implicitly recognized that roadside questioning can be placed into the four categories discussed below, three of which pass constitutional muster, and the fourth of which, if not supported by reasonable suspicion that the driver has committed a crime independent of the traffic violation, violates the Fourth Amendment.” (Slip Op. at 13.)
Third Circuit Applies Proper Materiality Standard to Revive Securities-Fraud Suit
Background
The defendant, a publicly-traded reinsurance company, was sued by a class of shareholders for securities fraud. Plaintiffs maintained that the defendant intentionally omitted material information from public securities filings that rendered its opinions about its risk exposure misleading. The District Court granted summary judgment to the defendant, finding that the omitted information was not material as a matter of law. The trial court, relying on the Third Circuit’s decision in City of Warren Police & Fire Retirement System v. Prudential Financial, Inc. (CA3 2023), ruled that, in order to be material, omitted information that informs an opinion based on “complex assumptions and considerations” must “totally eclipse the balance of the numerous other considerations used” to reach the opinion.
Holding
The Third Circuit reversed, ruling that the District Court had misapplied its precedent. The Court clarified that the Prudential case was an example of applying the always context- and fact-dependent materiality analysis to the record in that case, and did not create a heightened standard or per se rule in any case involving insurance reserves. It emphasized that “[t]he omission of known contradictory data is not per se immaterial just because a statement of opinion was informed by multiple considerations.” (Slip. Op. at 24). Instead, the materiality of withheld information is dependent on the context of all of the evidence and the importance of the information to the opinion at issue. The Court concluded the financial performance information at issue in this case went to the core of the defendant’s exposure to risk, and consequently, there was at least a genuine dispute as to whether the information was material that precluded summary judgment.
Key Quote
“Whether withheld information is material depends on its relative importance to the challenged opinion. Proving the materiality of one piece of data may therefore be difficult if the opinion was ‘based on a variety of complex assumptions and considerations.’ But materiality is an issue that ‘always depends on context,’ and we conclude that the District Court misapplied this context-sensitive framework by holding [Plaintiffs] to a higher standard of materiality than the law requires.” (Slip Op. at 4 (citations omitted).)
Employee Violations of Workplace Computer-Use Policies Do Not Constitute Computer Fraud
Background
Plaintiff sued the defendants, its former employees, alleging civil claims under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030. When one employee had been out sick and urgently needed one of her passwords to solve a work-related problem, she gave her colleague her credentials to access her computer and a document in which she had recorded the relevant password. The defendants agreed this was a violation of company policy. Plaintiff alleged that this conduct amounted to accessing a computer system to which the defendants either lacked authorization or in excess of the bounds of their authorization. The District Court rejected that argument and granted summary judgment to the defendants.
Holding
The Court affirmed. It noted that CFAA includes both civil and criminal penalties, and the definitions of “authorization” under the statute apply to both. Adopting Plaintiff’s argument, therefore, would cause every violation of workplace computer policies to be a federal felony. Instead, the Court held that an employer’s permission or approval for an employee to be admitted to, or enter, a computer is “authorization” for purposes of CFAA. Because there was no question the defendants were authorized to enter the computer systems they used, they did not exceed their authorization under CFAA.
Key Quote
“[A]n employee is authorized to access a computer when his employer approves or sanctions his admission to that computer.” (Slip Op. at 20 (internal quotation omitted).)
Defendant, Not Counsel, Decides Whether to Concede Elements of Offense
Background
The defendant was charged with unlawful possession of a firearm due to his prior felony convictions. Before trial, his counsel wanted to stipulate that his client knew about his prior conviction. The defendant disagreed, and the trial court refused to accept the stipulation without the defendant’s consent. At trial, the Government therefore introduced evidence to prove the defendant’s prior conviction and his knowledge thereof. After conviction, the defendant appealed, arguing that the District Court should have accepted the stipulation and erred in permitting the prior-conviction evidence.
Holding
The Court affirmed. It held that decisions about whether to concede or contest elements of an offense belong to the defendant, and are not the kind of strategic decision a defense attorney can make unilaterally. The lower court was therefore right to both reject the stipulation and permit the Government to introduce evidence of the defendant’s prior conviction.
Key Quote
“We hold that the accused decides whether to concede elements of the charged offense that are substantive or relate to the accused’s criminal behavior. And even if the accused’s decision stands in stark contrast to counsel’s professional judgment, the Sixth Amendment requires that counsel honor the decision.” (Slip Op. at 2.)
Third Circuit Prohibits Double-Counting When Calculating Restitution
Background
The defendant pleaded guilty to stealing guns from federal licensees and related crimes. The District Court ordered restitution, which included the value of the stolen guns as well as the lost sales of those guns.
Holding
The Court vacated the restitution order. It held, and the Government conceded, that the award should not have included lost income.
Key Quote
“The restitution award covered two things: first, the full retail value of the stolen guns—not just what the stores paid for them, but what they would have earned by selling them; and second, a week’s worth of lost income for each store, since the thefts forced them to shut down for a week. But during the week they had to close, each store would likely have sold some of the same guns for which they were already getting reimbursed. Those lost sales were double counted.” (Slip Op. at 5.)
Non-Precedential Opinions of Note
United States v. Gritman (April 21, 2025), No. 24-1351
https://www2.ca3.uscourts.gov/opinarch/241351np.pdf
The District Court varied above the Sentencing Guidelines range in imposing sentence on the efendant, noting the “sophistication” of his conduct. The Third Circuit vacated and remanded because the sentencing judge did not adequately explain why application of the Guidelines’ “sophisticated means” enhancement — which would have resulted in a lower sentence — would not have been enough.
United States ex rel. Collado v. Bracco USA, Inc. (May 1, 2025), No. 24-1668
https://www2.ca3.uscourts.gov/opinarch/241668np.pdf
The Court affirmed dismissal of a False Claims Act suit because the complaint only alleged facts that “could plausibly have either a legal or illegal explanation,” and therefore failed to state a fraud claim with particularity under Federal Rule of Civil Procedure 9(b). (Slip. Op. at 6.)
United States v. Weigand (June 2, 2025), Nos. 23-2159, 23-2171
https://www2.ca3.uscourts.gov/opinarch/232159np.pdf
The defendant challenged his fraud sentence, arguing that the Third Circuit’s decision in United States v. Banks (CA3 2022) changed the Government’s burden to prove financial loss. The Court rejected that argument, holding that once “the Government sufficiently made a prima facie showing of loss, [defendant] bore the burden of providing the District Court with evidence that the loss calculation was incomplete or accurate.” (Slip. Op. at 11.)