295 F.3d 425
Wayne A. SMITH, Ard-zln-wiw, Petitioner,v.John ASHCROFT, Attorney General of the United States; Kevin Rooney, acting Commissioner of the Immigration and Naturalization Service; Louis D. Crocetti, Jr., as Baltimore, Maryland District Director of the Immigration and Naturalization Service; U.S. Immigration & Naturalization Service, Respondents.
No. 01-2004.
United States Court of Appeals, Fourth Circuit.
Argued May 6, 2002.
Decided July 1, 2002.

ARGUED: Raj Sanjeet Singh, Raj S. Singh C.P.A., P.C., Rockville, Maryland, for Petitioner. Papu Sandhu, Senior Litigation, Office of Immigration Litigation, Civil Division, United States Department of Justice, Washington, DC, for Respondents. ON BRIEF: Robert D. McCallum, Jr., Assistant Attorney General, Emily Anne Radford, Assistant Director, Office of Immigration Litigation, Civil Division, United States Department of Justice, Washington, DC, for Respondents.
Before NIEMEYER and GREGORY, Circuit Judges, and C. Arlen BEAM, Senior Circuit Judge of the United States Court of Appeals for the Eighth Circuit, sitting by designation.
Affirmed by published opinion. Senior Judge BEAM wrote the opinion, in which Judge NIEMEYER and Judge GREGORY joined.
OPINION
BEAM, Senior Circuit Judge.

1
Wayne Ancil Smith, a citizen of Trinidad, contends that he was denied procedural due process in violation of the Fifth Amendment in the course of his deportation proceedings in 1998. We disagree and affirm the district court's dismissal of his 28 U.S.C. § 2241 habeas corpus petition.

I.

2
Smith entered the United States in 1967 as the dependent of a diplomatic visa holder, and became a lawful permanent resident in 1974. This was his status in March 1992 when he entered a plea of guilty to felony drug charges. Based on that conviction, in March 1996, pursuant to the Immigration and Naturalization Act, 8 U.S.C. § 1101 et seq. (the Act), the INS issued an order to show cause why he should not be deported as an alien convicted of a law relating to a controlled substance and as an alien convicted of an aggravated felony.

3
In the administrative deportation proceedings, Smith applied for a waiver of deportation under the former section 212(c) of the Act, 8 U.S.C. § 1182(c). This section granted the Attorney General broad discretion to admit aliens who would otherwise be excludable, and had been interpreted by the Board of Immigration Appeals (BIA) as authorizing any permanent resident alien with seven consecutive years of lawful domicile to apply for a discretionary waiver of deportation. See INS v. St. Cyr, 533 U.S. 289, 294-95, 121 S.Ct. 2271, 150 L.Ed.2d 347 (2001). The immigration judge denied the request, reasoning that amendments to the Act pursuant to the newly enacted Antiterrorism and Effective Death Penalty Act (AEDPA) precluded section 212(c) waivers for drug offenders. The immigration judge ordered Smith deported in April 1997.

4
Smith timely appealed the immigration judge's ruling to the BIA, which denied the appeal on August 24, 1998. Like the immigration judge, the BIA also concluded that application of AEDPA's amendments to section 212(c) precluded Smith from presenting his case for or obtaining, on the merits, a discretionary waiver. On November 9, 1998, Smith challenged the BIA's adjudication by filing a petition for writ of habeas corpus in the United States District Court for the District of Maryland. The district court ruled that it did not have jurisdiction over an "appeal" of a BIA adjudication and transferred the case to this Circuit pursuant to 28 U.S.C. § 1631. This court denied a stay of deportation and granted the government's motion to dismiss for lack of jurisdiction. Smith was deported on December 7, 1998.

5
Smith illegally reentered the United States through Detroit in January 1999, and returned to his home in Maryland. He remained there undiscovered until he was pulled over for a traffic stop a few years later. The government immediately moved to reinstate the deportation order under 8 U.S.C. § 1231(a)(5), and Smith was ordered removed without a hearing on March 16, 2001. On July 9, 2001, Smith challenged this ruling by filing a habeas petition with the district court. The district court dismissed the petition without elaboration, but stayed removal for sixty days. On October 3, 2001, this court denied Smith's motion for stay of removal and Smith was deported to Trinidad on December 13, 2001. Smith has timely appealed the dismissal of the habeas petition.

II.

6
We first address the issue of jurisdiction. The government argues that we have no jurisdiction because Smith is not currently "in custody," but instead has been deported and is out of the country. However, Smith needed only to be "in custody" at the time the petition was filed to avoid a jurisdictional challenge based on the "in custody" requirements of the habeas statute. Chong v. INS, 264 F.3d 378, 382-83 (3d Cir.2001) (citing Carafas v. LaVallee, 391 U.S. 234, 238, 88 S.Ct. 1556, 20 L.Ed.2d 554 (1968)). In Carafas, the Supreme Court held that where the petitioner was in custody at the time the petition was filed, his release from prison before the petition for certiorari was filed did not moot the case because petitioner could still suffer "serious disabilities because of the law's complexities and not because of his fault, if his claim that he has been illegally convicted is meritorious." Carafas, 391 U, 88 S.Ct. 1556.S. at 239; cf. Spencer v. Kemna, 523 U.S. 1, 7, 118 S.Ct. 978, 140 L.Ed.2d 43 (1998) (petitioner who was incarcerated at the time the petition was filed satisfies "in custody" requirement of 28 U.S.C. § 2254).

7
Smith was in custody at the time the petition was filed, and though Smith is no longer in the United States, he is unmistakably affected by the legal implications of our decision. If he prevails, there is a possibility he can beneficially unravel his untoward immigration status. Thus, because Smith was in custody at the time he filed the petition, we have not lost jurisdiction over this appeal.

8
In St. Cyr, prior to ruling on whether AEDPA retroactively applied to bar discretionary section 212(c) relief, the Supreme Court addressed the initial question of habeas jurisdiction. The government had argued that the jurisdiction-stripping provisions of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA) left no judicial forum available. The Court reasoned that because Congress did not make a plain statement revoking habeas jurisdiction and because there was no other available forum to adjudicate the purely legal question at issue, habeas jurisdiction was appropriate in the district court. 533 U.S. at 314, 121 S.Ct. 2271. The Court also determined that construing the IIRIRA provisions to preclude court review of a "pure question of law" would lead to "substantial constitutional questions." Id. at 300, 121 S.Ct. 2271. Therefore, habeas jurisdiction was made available to the petitioner. Id. at 314, 121 S.Ct. 2271.

9
Although this case is in a somewhat different procedural posture than St. Cyr, its principles are applicable here. As in St. Cyr, the Act bars direct judicial consideration of Smith's claim. Smith contends that his Fifth Amendment right to due process was violated by the 1998 deportation proceedings because he was not given court review of the BIA ruling that he was not entitled to discretionary relief. The Act currently prohibits direct judicial review of this claim because it implicates the validity of a prior order of removal. The Act, 8 U.S.C. § 1231(a)(5), provides in pertinent part: "[i]f ... an alien has reentered... after having been removed ... the prior order of removal is reinstated from its original date and is not subject to being reopened or reviewed."1 This section precludes direct, non-habeas judicial review of any irregularities associated with the 1998 deportation order. Thus, if we do not find habeas jurisdiction, Smith, like the petitioner in St. Cyr, is left without an available forum for adjudication of this purely legal question. To construe the Act to preclude all review of this claim would raise constitutional concerns similar to those expressed by the St. Cyr Court.

10
The government argues that Smith's claim is distinguishable from St. Cyr because Smith was afforded a full opportunity to litigate this claim in the prior proceeding. However, that is not quite correct. As the government admits in its brief, the procedure for appealing the August 1998 BIA decision was not entirely clear at the time. Smith filed a petition for habeas corpus with the district court, which the district court construed as a petition for direct review and transferred to this court. This court dismissed for lack of jurisdiction, likely because the IIRIRA, which had become effective in April 1997, precluded judicial review for denials of discretionary relief and for aliens removable because they have committed a criminal offense. See 8 U.S.C. § 1252(a)(2)(B) & (C).

11
Subsequently, this court held in Bowrin v. INS, 194 F.3d 483, 489 (4th Cir.1999) (per curiam), that the district court had habeas juristo review questions of law relating to the administrative denial of 212(c) relief. Obviously, then, Smith's petition for habeas consideration, filed prior to Bowrin in 1998, simply fell between the judicial cracks. Thus, we disagree with the government's argument that St. Cyr's jurisdictional ruling is distinguishable from this case. Accordingly, the district court had habeas jurisdiction over Smith's claim.2

12
Smith argues that the Due Process Clause of the Fifth Amendment was violated in 1998 by the lack of meaningful review of the immigration judge's refusal to grant him section 212(c) relief and suspend deportation. In order to advance a due process claim, Smith must first establish that he had a property or liberty interest at stake. Stewart v. Bailey, 7 F.3d 384, 392 (4th Cir.1993); Jamil v. Secretary, Dep't of Defense, 910 F.2d 1203, 1209 (4th Cir.1990). Smith cannot meet this initial burden, because he has no property or liberty interest in the "right" to discretionary section 212(c) relief.

13
In order for a statute to create a vested liberty or property interest giving rise to procedural due process protection, it must confer more than a mere expectation (even one supported by consistent government practice) of a benefit. Mallette v. Arlington County Employees' Supplemental Ret. Sys. II, 91 F.3d 630, 635 (4th Cir.1996). There must be entitlement to the benefit as directed by statute, and the statute must "`act to limit meaningfully the discretion of the decision-makers.'" Id. (quoting Board of Pardons v. Allen, 482 U.S. 369, 382, 107 S.Ct. 2415, 96 L.Ed.2d 303 (1987) (O'Connor, J. dissenting)).

14
On many occasions this circuit has held that discretionary statutory "rights" do not create liberty or property interests protected by the Due Process Clause. For instance, the discretionary right to suspension of deportation does not give rise to a liberty or property interest protected by the Due Process Clause. Appiah v. INS, 202 F.3d 704, 709 (4th Cir.), cert. denied, 531 U.S. 857, 121 S.Ct. 140, 148 L.Ed.2d 92 (2000). In Appiah, petitioners were challenging the constitutionality of IIRIRA's new "stop time" provisions,3 and the case was before this court on direct judicial review under the Act. The court held that because suspension of deportation is discretionary, it does not create a liberty or property interest protected by the Due Process Clause. Id. "This is true even where the state `frequently' has granted the relief sought." Id.See, e.g., Ashki v. INS, 233 F.3d 913, 921 (6th Cir.2000) (discretionary right to suspension of deportation is not an interest protected by the Due Process Clause); Tefel v. Reno, 180 F.3d 1286, 1301 (11th Cir.1999) (same).

15
Similarly, this circuit held that because the Army had discretion to discharge enlisted personnel, a service member had no property interest in continued employment with the Army. Guerra v. Scruggs, 942 F.2d 270, 278 (4th Cir.1991). On the other hand, in Mallette, the court noted that under the county disability retirement ordinance, once an employee had met particularized eligibility standards, the Retirement System's Board did not have discretion to deny the employee benefits. Mallette, 91 F.3d at 635. Thus, the county employees who met the requirements had a claim of entitlement in disability retirement benefits protected by due process. Id. at 636.

16
Former section 212(c) did not in any way limit the discretion of the Attorney General to admit otherwise deportable aliens. This statute in no way created an entitlement to a waiver of deportation, as it "grant[ed] the Attorney General broad discretion to admit excludable aliens." St. Cyr, 533 U.S. at 294-95, 121 S.Ct. 2271 (emphasis added). The Act likewise did not limit whatsoever the Attorney General's discretion to waive deportability. Accordingly, Smith had no protected liberty or property interest in discretionary 212(c) relief, a circumstance fatal to his due process claim.

17
Smith cites United States v. Mendoza-Lopez, 481 U.S. 828, 107 S.Ct. 2148, 95 L.Ed.2d 772 (1987), for the proposition that, without regard to liberty or property interests, his due process rights were violated in 1998 by a lack of meaningful review in a judicial forum. We disagree with this contention. In Mendoza-Lopez, the question before the court was whether a defendant who was being criminally prosecuted for illegally reentering after lawful deportation could collaterally attack the prior deportation order. The Court concluded that since lawful deportation was a material element of the statutory offense, due process required, in this limited situation, a pretrial review of whether the prior deportation order was lawful. Id. at 837-38, 107 S.Ct. 2148. This was especially true when "defects in an administrative proceeding foreclose judicial review of that proceeding." Id. at 838, 107 S.Ct. 2148.

18
Thus, while the Mendoza-Lopez Court admittedly espoused judicial review of administrative actions, the Court reasoned that review is essential when the outcome of the administrative proceeding is used as an element for criminal conviction. Id. at 839, 107 S.Ct. 2148. It is an overly expansive, and in fact, an incorrect, reading of Mendoza-Lopez to suggest that the Constitution requires "meaningful review" of any and all administrative procedures.4

III.

19
For the foregoing reasons, we hold that, while the district court did have jurisdiction over Smith's habeas corpus petition, because Smith has no liberty or property interest in a discretionary waiver of deportability, the petition must be denied on the merits.

20

AFFIRMED.

Notes:

1
 In his brief and at argument, Smith purported to challenge the constitutionality of 8 U.S.C. § 1231(a)(5). However, this claim was not advanced in the habeas petition or in briefing to the district court. We therefore decline to take up the issue on appeal

2
 Smith alternatively argues that we treat this as a petition for direct review pursuant to 8 U.S.C. § 1252(a). Although we would have jurisdiction to review the order of reinstatement,Velasquez-Gabriel v. Crocetti, 263 F.3d 102, 105 (4th Cir.2001), we do not have jurisdiction under section 1252(a) to inquire into the prior order of deportation, according to the terms of section 1231(a)(5). Ojeda-Terrazas v. Ashcroft, 290 F.3d 292, 294-95 (5th Cir.2002) As we understand the claim Smith is making in this appeal, a petition for direct review under section 1252(a) would not provide the relief he seeks. We therefore decline to treat it as such.

3
 Prior to enactment of the IIRIRA, one of the conditions an alien had to establish to be considered for a suspension of deportation was that the alien be continuously physically present in the United States for at least seven years immediately preceding the date of application for suspension of deportationSee 8 U.S.C. § 1254(a) (1994). Prior to the IIRIRA, the time spent in deportation proceedings counted toward the continuous seven-year requirement. Id. The IIRIRA changed this by providing that "any period of continuous residence or continuous physical presence in the United States shall be deemed to end when the alien is served a notice to appear." 8 U.S.C. § 1229b(d)(1). Thus, the initiation of deportation proceedings effectively "stops the clock," and an alien can no longer continue to accrue years for the physical presence requirement after proceedings have begun. Appiah, 202 F.3d at 707.

4
 The parties also advance arguments concerning the retroactive application ofSt. Cyr's holding that AEDPA does not bar section 212(c) relief for aliens who pled guilty prior to its enactment, and cite both Bousley v. United States, 523 U.S. 614, 118 S.Ct. 1604, 140 L.Ed.2d 828 (1998), and Harper v. Virginia Dep't of Taxation, 509 U.S. 86, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993). However, because we find that Smith has no meritorious constitutional claim, we need not decide the issue.


                  NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                             File Name: 12a0318n.06

                                             No. 10-2003                                      FILED
                                                                                Mar 23, 2012
                            UNITED STATES COURT OF APPEALS
                                                                                LEONARD GREEN, Clerk
                                 FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,                                  )
                                                           )
          Plaintiff-Appellee,                              )
                                                           )
v.                                                         )   On Appeal from the United States
                                                           )   District Court for the Western
ANTHONY G. MERLO,                                          )   District of Michigan
                                                           )
          Defendant-Appellant.                             )

Before:          MERRITT, BOGGS, and CLAY, Circuit Judges.

                 BOGGS, Circuit Judge. Anthony Merlo claims that the government violated his plea

agreement by using information he provided while cooperating with the government against him at

sentencing and in regard to restitution. Merlo requests that this court remand his case for

resentencing before a different judge. We affirm the district court’s sentence and order of restitution.

                                                   I

          In 2004, the Internal Revenue Service received a tip that individuals were buying policies

with the Security Trust Insurance Company (STIC) that might be fraudulent tax shelters designed

to divert corporate income. STIC sold “loss-of-income” (LOI) insurance, which allowed corporate

officers to purchase a policy that would cover loss of income from, for example, a slowdown in

business or an act of God. The company’s promotional materials advertised that the premium would

be available for loan after one year, if the company had not made any claims on its policy. STIC
No. 10-2003
United States v. Merlo

was, in fact, a fraudulent tax shelter. The company’s scheme was to charge an excessively high

premium for its policies and, in exchange for a percentage of the premium, make the premium

payment available to be “loaned” immediately back to the payor, with the understanding that the

“loan” needn’t ever be repaid. The money “loaned” back to the payor was thus sheltered from

taxation—premiums paid for business insurance are tax-deductible as a cost of doing business. See

I.R.C §§ 62; 162 (allowing a deduction “all the ordinary and necessary expenses paid or incurred .

. . in carrying on any trade or business”); see also Humana, Inc. v. Comm’r, 881 F.2d 247, 255–56

(6th Cir. 1989) (defining whether insurance shifts risk, as loss-of-income insurance does, as the test

of whether an insurance premium is deductible under § 162).

       A grand jury investigation revealed that STIC was operated by Peter Peggs, Robert Larsen,

and Anthony Merlo; Craig Stone was its marketer. On October 3, 2007, the grand jury indicted

Peggs, Stone, and Larsen on one count each of conspiracy to defraud the United States (Count One).

Peggs and Larsen were additionally each charged with two counts of tax evasion.

       A superseding indictment was filed on March 6, 2008. This indictment added Merlo and

another co-defendant to Count One. After initially pleading not guilty, Merlo changed his plea to

guilty pursuant to a plea agreement.

                                                  II

       Merlo’s plea agreement, filed May 7, 2009, contained a six-page statement of facts describing

Merlo’s criminal activities. It stated that the Assistant United States Attorney and the Tax Division

                                                -2-
No. 10-2003
United States v. Merlo

of the United States Department of Justice, who entered into the plea agreement with Merlo, would

inform the sentencing court of the “full nature and extent” of Merlo’s actions and conduct relating

to the case. The agreement stated that the actual sentence was within the discretion of the district

court, that there was no agreement as to what Merlo’s sentence would be, and that “no promises or

representations ha[d] been made to the [d]efendant as to that sentence” the court would impose. The

government did, however, promise, that, in exchange for Merlo’s guilty plea and full cooperation,

it agreed not to use “new information” Merlo provided to the government against him at sentencing.

It stated that such information “may be revealed to the Court but may not be used against Defendant

in determining Defendant’s sentence range, choosing a sentence within the range, or departing from

the range.” Therefore, any information provided by Merlo to the government after the plea

agreement, if provided in cooperation with the plea agreement, could not be used by the government

or the court to determine Merlo’s sentence. The government could, however, disclose the

information to the court.

       On October 15, 2009, the probation officer issued a Presentence Investigation Report (PSR)

for Merlo. The PSR calculated Merlo’s base offense level as 26. Two levels were added because

his conduct was intended to encourage persons other than his co-conspirators to violate internal

revenue law or impede the computation or assessment of revenue. Three levels were added because

Merlo played a managerial or supervisory role in STIC. This resulted in an adjusted offense level

of 31. From this, three levels were subtracted for acceptance of responsibility and a timely plea of

guilty. Merlo’s total offense level was calculated as 28. His criminal history category was I.

                                               -3-
No. 10-2003
United States v. Merlo

Therefore, his guideline range was 78 to 97 months of imprisonment. His statutory maximum,

however, was 60 months of imprisonment. 18 U.S.C. § 371.

       In response to the PSR, the government sent two letters that addressed its use of additional

information Merlo had provided during his cooperation with the government. The first, dated

December 11, 2009, stated in relevant part:

       Please note that some of the information contained in this letter was obtained from
       Mr. Merlo during proffer sessions or after he reached his plea agreement with the
       Government. This information was provided as part of Mr. Merlo’s agreement to
       cooperate against others. As specified by the plea agreement, this information is
       governed by U.S.S.G. § 1B1.8. Further, . . . the parties stipulated that “[s]uch
       information may be revealed to the Court but may not be used against Defendant in
       determining Defendant’s sentence range, choosing a sentence within the range, or
       departing from the range.” Accordingly, we will not use this information against Mr.
       Merlo within these parameters.

(emphasis added). The government noted that it would not use the information Merlo provided

during proffer sessions to attempt to influence the court to make an upward departure, and that the

government believed that such use would be illegal under U.S.S.G. § 1B1.8. However, the

government did state that if Merlo attempted to secure a downward departure, the government could

use the information “to resist a downward departure and the [c]ourt can use it to deny [a downward

departure].”

       In a second letter, sent January 11, 2009, the government retracted its statement that, should

Merlo attempt to secure a downward departure, the government could use information gathered from

Merlo during his cooperation with the government against him. The government changed its

position because Merlo’s counsel objected, arguing that the plea-agreement statement that “such

                                               -4-
No. 10-2003
United States v. Merlo

information . . . may not be used against Defendant in . . . departing from the range” included a

downward departure from the range. The government stated that this was “a reasonable alternate

interpretation of an ambiguous provision,” and that they “agreed to revise our position and accept

Merlo’s interpretation.” The letter stated that the court could use the information in such an

instance, as stated in U.S.S.G. § 1B1.8, but that the government would not do so.1

       On April 12, 2010, before Merlo’s sentencing hearing, the government filed a motion asking

the court to consider granting a downward departure based on U.S.S.G. § 5K1.1. The government

requested that the court grant Merlo a downward departure to a level of 24, which would give Merlo

a guideline range of 51 to 63 months of imprisonment.

       At the sentencing hearing, held April 19, 2010, the court stated that it granted the

government’s motion for a downward departure, but only to the extent of a level 27, not level 24 as

the government had requested. At level 27, Merlo’s guideline range was 70 to 87 months of

imprisonment. His statutory maximum sentence was 60 months.

       1
        Section 1B1.8 states:
       (a) Where a defendant agrees to cooperate with the government by providing information
       concerning unlawful activities of others, and as part of that cooperation agreement the
       government agrees that self-incriminating information provided pursuant to the agreement
       will not be used against the defendant, then such information shall not be used in
       determining the applicable guideline range, except to the extent provided in the agreement.

       (b)The provisions of subsection (a) shall not be used to restrict the use of information:
               (1) known to the government prior to entering into the cooperation agreement;
               ...
               (5) in determining whether, or to what extent, a downward departure from the
               guidelines is warranted pursuant to a government motion under 5K1.1.

                                                  -5-
No. 10-2003
United States v. Merlo

       In its statement at sentencing, the government argued that Merlo should receive a sentence

of 51 to 60 months of imprisonment and pay “significant restitution.” The government’s primary

thrust in its argument was that Merlo knew that the actions he took at STIC was fraudulent when he

took them. In support of this point, the government pointed to facts from Merlo’s PSR; an email

exchange admitted into evidence at the trial of his co-defendants that showed Merlo arranging for

a client’s payment to go through an offshore entity to make the payment look like attorney’s fee; and

Merlo’s inclusion in emails stating that a client would borrow back the premium he had paid in the

same year that he paid it. The government also produced an email, not admitted at the trial of his

co-defendants, that showed Merlo telling a prospective client that a retroactive loss-of-income

insurance policy was available to help his company, in the government’s words, to shelter money

the prospective client made that year. The government also pointed to an “array or circumstantial

evidence,” that tended to show Merlo’s knowledge about the fraud. This evidence included Merlo’s

handwritten notes, and Merlo’s leadership positions within STIC, including having an ownership

interest and participating in frequent meetings with STIC’s owners Peggs and Larsen. Finally, the

government stated that Merlo came to the authorities not because he had a change of heart, but

because Stone and Larsen had cut him out of the conspiracy.

       Merlo did not object at any point during the government’s lengthy statement.

       Deeming Merlo’s offense “un-American” and “unpatriotic,” the court sentenced Merlo to 51

months of imprisonment, followed by one year of supervised release. The judge waived a fine and

reserved judgment on the issue of restitution. The court asked whether there were any legal

                                                -6-
No. 10-2003
United States v. Merlo

objections to the sentence or any reasons that had not already been argued why the sentence should

not be imposed. There were no objections to the sentence.

       As requested by the court at sentencing, the government and Merlo both submitted briefs on

restitution. The parties stipulated that STIC clients had paid $915,728.40 for LOI insurance between

1996 and 2000, and that this amount represented money that should have been taxed as corporate

income. The government argued that Merlo was not only vicariously liable, but that the evidence

proved that Merlo was also directly responsible for the tax losses. The government submitted

“voluminous documentation” to support its position. The government requested restitution in the

amount of $944,398.

       An evidentiary hearing on restitution was held on July 2, 2010. At the outset of the hearing,

the judge stated that the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A, required that the

full amount of loss be subject to restitution. The court stated that restitution is not limited to loss

from overt acts that supported defendant’s conviction, that the court has discretion to order

restitution for losses from any conduct that was part of the larger conspiracy, and that joint-and-

several liability is appropriate among co-conspirators. United States v. Elson, 577 F.3d 713 (6th Cir.

2009); United States v. Bogart, 576 F.3d 565 (6th Cir. 2009); United States v. Collins, 209 F.3d 1

(1st Cir. 1999).      The sentencing judge found that the government had established by a

preponderance of the evidence that the tax losses resulting from the conduct of the co-conspirators

were reasonably foreseeable and were therefore subject to restitution. The judge noted that Merlo’s

handwritten notes, submitted by the government and a product of Merlo’s cooperation with the

                                                 -7-
No. 10-2003
United States v. Merlo

government, were a “clear indication of his direct involvement” and that “Mr. Merlo by his words

and his actions, by his own records has tied himself very tightly to the conspiracy.”

       The sentencing judge then issued a modified judgment, requiring Merlo to pay $944,397 in

restitution to the Internal Revenue Service.

       On appeal, Merlo challenges his sentence and restitution. He argues that the government

violated the plea agreement by using information against him at sentencing that he had provided

during cooperation.

                                                 III

       Merlo argues that he cooperated extensively with the government in accordance with his plea

agreement, providing 8,000 pages of documents, notes, and his financial and tax records. He argues

that the government violated the plea agreement by providing the information to the court, by urging

the court not to grant more of a downward departure than the government had recommended, and

by ordering restitution for all the frauds committed by Merlo’s co-defendants.

       Violation of a plea agreement entitles a defendant to vacation of his sentence and

resentencing before a different judge. Santobello v. New York, 404 U.S. 257, 263 (1971). The

interpretation of a plea agreement is a question of law that this court reviews de novo. United States

v. Moncivais, 492 F.3d 652, 662 (6th Cir. 2007). Prosecutors are “held to meticulous standards of

performance” and the court “will thus construe ambiguities in a plea agreement . . . against the

government.” Ibid. (citing United States v. Vaval, 404 F.3d 144, 152–53 (2d. Cir. 2005) and United

States v. Saxena, 229 F.3d 1, 6 (1st Cir. 2000)) (internal quotation marks and brackets omitted).

                                                -8-
No. 10-2003
United States v. Merlo

        However, if an error is not preserved, the reviewing court’s ability to remedy the error is

“strictly circumscribed.” Puckett v. United States, 556 U.S. 129, 134 (2009). When a defendant fails

to object to the government allegedly violating his plea agreement, we must review the alleged

violation for plain error alone. United States v. Barnes, 278 F.3d 644, 646 (6th Cir. 2002). Merlo

concedes that he did not object to the government’s or the court’s use of the documents in question.2

        “Plain error” means that reversal requires (1) error, (2) that was plain, (3) that affected the

defendant’s substantial rights, and (4) that “seriously affected the fairness, integrity, or public

reputation of the judicial proceedings.” Swanberg, 370 F.3d at 627 (internal quotation marks

omitted).3 This is a high standard—a defendant will not be able to show the requisite prejudice if

he has, “obtained the benefits contemplated by the deal anyway (e.g., the sentence that the prosecutor

       2
         Merlo argues that, while he did not object to the use of the documents, he did object to the
conclusions drawn by the government—that Merlo was deeply and directly involved in the
conspiracy—and that this objection should suffice to preserve error. Merlo’s argument fails. See,
e.g., United States v. Swanberg, 370 F.3d 622, 627 (6th Cir. 2004) (holding that plain-error review
applied when defendant generally objected to a sentencing enhancement but did not specifically
argue that the government had breached the plea agreement).
       3
         This circuit has held that any breach of a plea agreement is itself plain error. Barnes, 278
F.3d at 648 (“[B]ecause violations of the plea agreements on the part of the government serve not
only to violate the constitutional rights of the defendant, but directly involve the honor of the
government, public confidence in the fair administration of justice, and the effective administration
of justice in a federal scheme of government, . . . the Government’s breach constituted plain error.”)
(quoting United States v. McQueen, 108 F.3d 64, 66 (4th Cir. 1997) (citation and internal quotation
marks omitted)). However, the Supreme Court has clearly decreed that all four steps apply in cases
of the government’s breach of a plea agreement. Puckett, 556 U.S. at 140. A plea breach, the Court
reasoned, “does not necessarily render a criminal trial fundamentally unfair . . . and the difficulty of
assessing the effect of the error is no greater with respect to plea breaches at sentencing than with
respect to other procedural errors at sentencing, which are routinely subject to harmlessness review.”
Id. at 141 (citations omitted) (internal quotation marks omitted).

                                                 -9-
No. 10-2003
United States v. Merlo

promised to request) or because he likely would not have obtained those benefits in any event . . .

.” Puckett, 556 U.S. at 141–42.

       The relevant portion of Merlo’s plea agreement read as follows:

       In exchange for Defendant’s agreement to cooperate with the government, as outlined
       above, the government agrees, pursuant to the protections of United States
       Sentencing Guidelines . . . §1B1.8, not to use new information that Defendant
       provides (pursuant to this agreement) about Defendant’s own criminal conduct
       against Defendant at sentencing in this case. Such information may be revealed to
       the Court but may not be used against Defendant in determining Defendant’s
       sentence range, choosing a sentence within the range, or departing from the range.
       . . . There will be no restrictions on the use of information: (1) previously known to
       law enforcement agencies; (2) revealed to law enforcement agencies by, or
       discoverable through, an independent source, or (3) in a prosecution for perjury.

(emphasis added).

       By the plain terms of the plea agreement, in order to prove that the government violated the

plea agreement, Merlo must prove that the government used new information provided pursuant to

the agreement against him at sentencing, and that the information was used in order to determine his

sentencing range, his sentence within a range, or in departing from the range. Merlo cannot show

that the government did so.

       Merlo argues that the sentencing judge relied on new information provided by Merlo to the

government as part of his cooperation pursuant to the plea agreement. Merlo argues that the emails

about retroactive loss-of-income insurance policies, the handwritten notes, and other documents

provided by the government in response to the PSR fall into this category. He alleges that in its brief

regarding restitution, the government sought to hold Merlo responsible for tax losses attributed to

                                                - 10 -
No. 10-2003
United States v. Merlo

clients of other members of the conspiracy, that the court relied on the government’s allegations, and

that these allegations influenced the amount of restitution Merlo was ordered to pay.

        The government, however, argues that the documents Merlo objects to were actually

provided to a grand jury in response to a subpoena, not to the government as part of Merlo’s

cooperation. Because of this fact, the government argues that the documents were not “new” under

the terms of the plea agreement. In support of its argument, the government points to its motion for

a downward departure filed prior to sentencing. In this motion, the government referenced the over-

8,000 pages of documents that Merlo provided to the government. It stated that “some of these

documents were produced under compulsion in response to a grand jury subpoena . . . others were

not.” The motion also specifically stated that “Merlo produced his notes . . . in response to a

subpoena.”

        The only documents that appear to have been reviewed by the court in determining Merlo’s

sentence and restitution are Merlo’s handwritten notes and one email not admitted as a trial exhibit.

These are considered in turn.

        During the sentencing and restitution hearing, the judge mentioned having read through

Merlo’s handwritten notes, and said that Merlo’s “fingerprints in his own handwriting are all over

this whole thing.” Merlo’s counsel also mentioned Merlo’s notes (notably not objecting to their use

as a violation of the plea agreement), but only to say that they portrayed Merlo as being more heavily

involved with the conspiracy than he in fact was. The government referenced the notes during its

rebuttal, when it stated that “the notes reflect . . . [that Merlo] was involved in the discussions of the

                                                  - 11 -
No. 10-2003
United States v. Merlo

paid claim that the [c]ourt has heard testimony of.” The sentencing judge mentioned Merlo’s notes,

stating that they showed his “direct involvement” with the conspiracy.

       However, these documents were not “new.” The motion for a downward departure

specifically stated that “Merlo produced his notes . . . in response to a subpoena.” Merlo has failed

to demonstrate that the government committed error, let alone plain error, in allowing the court to

be influenced by Merlo’s notes in its sentencing and restitution decisions. Also, it is not clear that

the notes were used to determine his sentencing range, his sentence within a range, or in departing

from the range. Thus, even if it were plain error for the court to be provided with the handwritten

notes, which Merlo has not demonstrated, he has not shown that he would not have received the

below-maximum sentence of 51 months of imprisonment without the notes. Ample evidence still

existed to prove to the court that Merlo knew that his actions were fraudulent—his leadership

position within STIC, for example, or the voluminous amounts of material he produced pursuant to

the subpoena, including the emails introduced at sentencing that incriminated him. There is simply

no evidence, other than Merlo’s own bald assertion, that the government breached the plea bargain

with regard to Merlo’s notes, or that, if they did, the breach significantly affected Merlo’s rights.

Therefore, his argument fails.

         Similarly, Merlo’s argument that the government’s use of an email not admitted at

sentencing was a violation of the plea agreement and thus merits reversal, also must fail. Merlo has

not proved that any of the documents the court discussed during sentencing or the restitution hearing

were provided to the government specifically as part of his cooperation with the government, rather

than, or distinct from, his response to the subpoena. Merlo, therefore, has again not made out a plain

                                                - 12 -
No. 10-2003
United States v. Merlo

violation of his plea agreement. Further, there is no evidence that suggests that Merlo would have

received a different sentence if that single email had not been presented to the court. Thus, Merlo’s

argument must fail.

                                                 IV

       For the foregoing reasons, we AFFIRM the judgment of the district court.

                                               - 13 -


18‐3189
Benjamin Tagger v. Strauss Grp. Ltd.

                         UNITED STATES COURT OF APPEALS
                             FOR THE SECOND CIRCUIT
                               ____________________

                                        August Term, 2019

(Argued: January 8, 2020                                       Decided: February 27, 2020)

                                        Docket No. 18‐3189

                                       ____________________

BENJAMIN TAGGER,

                                        Plaintiff‐Appellant,

                       v.

STRAUSS GROUP LTD.,

                                        Defendant‐Appellee,

SABRA DIPPING CO., LLC,

                                        Defendant.

                                       ____________________

Before: KEARSE, CALABRESI, and POOLER, Circuit Judges.

       Appeal from United States District Court for the Eastern District of New

York (Cogan, J.) dismissing the complaint for lack of subject matter jurisdiction.
We hold that 28 U.S.C. § 1332(a)(2) does not confer diversity jurisdiction where a

permanent resident alien sues a non‐resident alien, and that the 1951 Treaty of

Friendship, Commerce and Navigation (“FCN Treaty”) between the United

States and Israel does not otherwise confer federal jurisdiction in this lawsuit.

      Affirmed.

                              ____________________

                          BENJAMIN TAGGER, pro se, Brooklyn, NY.

                          SILVIA OSTROWER, JOSEPH J. SALTARELLI, Hunton
                          Andrews Kurth LLP, New York, NY, for Defendant‐
                          Appellee.

PER CURIAM:

      Appeal from United States District Court for the Eastern District of New

York (Cogan, J.) dismissing the complaint for lack of subject matter jurisdiction.

We hold that 28 U.S.C. § 1332(a)(2) does not confer diversity jurisdiction where a

permanent resident alien sues a non‐resident alien, and that the 1951 Treaty of

Friendship, Commerce and Navigation (“FCN Treaty”) between the United

States and Israel does not otherwise confer federal jurisdiction in this lawsuit.

      Appellant Benjamin Tagger, pro se, sued the Strauss Group Limited

(“Strauss”) for various common law contract and tort claims, alleging that
                                         2
Strauss falsely brought legal action against him in Israel which caused him to be

prohibited from leaving Israel. Tagger premised federal jurisdiction on diversity

of citizenship pursuant to 28 U.S.C. § 1332(a). Although a citizen of Israel, Tagger

lives in Brooklyn as a lawful permanent resident, and Strauss is an Israeli

corporation with its headquarters there. Strauss moved to dismiss the complaint

for, inter alia, lack of subject matter jurisdiction and under forum non

conveniens. The district court granted the motion to dismiss, reasoning that

Tagger’s permanent resident status did not authorize him to be considered a

citizen of New York for diversity purposes when the defendant was also an alien,

and that Israeli courts were a more appropriate forum in which to litigate the

case.

        We review factual findings in dismissals for lack of subject matter

jurisdiction for clear error and legal conclusions de novo. Makarova v. United

States, 201 F.3d 110, 113 (2d Cir. 2000). Under 28 U.S.C. § 1332, federal courts

have jurisdiction to hear cases between diverse parties “where the matter in

controversy exceeds the sum or value of $75,000[.]” 28 U.S.C. § 1332(a). Section

1332 requires “complete diversity,” meaning that “all plaintiffs must be citizens

of states diverse from those of all defendants.” Pa. Pub. Sch. Emps.’ Retirement Sys.
                                          3
v. Morgan Stanley & Co., Inc., 772 F.3d 111, 118 (2d Cir. 2014). Diverse parties

consist of citizens of different states or “citizens of a State and citizens or subjects

of a foreign state[.]” 28 U.S.C. § 1332(a)(2). Generally, “[a]n individual’s

citizenship, within the meaning of the diversity statute, is determined by his

domicile[.]” Van Buskirk v. United Grp. of Cos., Inc., 935 F.3d 49, 53 (2d Cir. 2019)

(internal quotation marks omitted). Here, it is undisputed that Strauss, an Israeli

corporation with its headquarters in Petach Tivka, is a foreign party for the

purposes of diversity. See 28 U.S.C. § 1332(c)(1). The issue then is whether

Tagger, an Israeli citizen and permanent resident in the United States domiciled

in New York, is a “citizen” of New York for diversity purposes.

      We conclude that Tagger is an alien for the purposes of diversity

jurisdiction. As the district court discussed, section 1332 was amended in 1988 to

state that “an alien admitted to the United States for permanent residence shall

be deemed a citizen of the State in which such alien is domiciled” (the “deeming

clause”). Pub. L. No. 100‐702, § 203(a), 102 Stat. 4642, 4646 (1988). This created

disagreement in the federal courts with respect to whether permanent resident

aliens, like Tagger, would be considered aliens when suing other aliens. Compare

Singh v. Daimler‐Benz AG, 9 F.3d 303, 306–12 (3d Cir. 1993) with Saadeh v. Farouki,
                                           4
107 F.3d 52, 60‐61 (D.C. Cir. 1997). But in 2011, section 1332 was amended as a

part of the Federal Courts Jurisdiction and Venue Clarification Act to remove the

“deeming clause” and to amend section 1332(a)(2) to state that jurisdiction

existed in suits between “citizens of a State and citizens or subjects of a foreign

state, except that the district courts shall not have original jurisdiction under this

subsection of an action between citizens of a State and citizens or subjects of a

foreign state who are lawfully admitted for permanent residence in the United

States and are domiciled in the same State.” Pub. L. No. 112‐63, § 101, 125 Stat.

758 (2011); see also H. Rep. No. 112‐10, at 7 (2011), reprinted in 2011 U.S.C.C.A.N.

576, 580 (noting that as amended, the section “would provide that the district

courts shall not have diversity of citizenship jurisdiction under paragraph

1332(a)(2) of a claim between a citizen of a state and a citizen or subject of a

foreign state admitted to the United States for permanent residence and

domiciled in the same state”). The legislative history of this amendment shows

that Congress intended to address the constitutional problems posed by the

deeming clause. See U.S. Const. art. III, § 2, cl. 1 (extending judicial power to

controversies “between Citizens of different States . . . and between a State, or the

Citizens thereof, and foreign States, Citizens or Subjects”). The House Report
                                          5
accompanying the 2011 bill stated that the amendment was intended to ensure

that permanent resident aliens “would no longer be deemed to be U.S. citizens

for purposes of diversity jurisdiction, thereby avoiding the possibly anomalous

results” with respect to the 1988 language. H.R. Rep. No. 112‐10, at *7 (2011),

reprinted in 2011 U.S.C.C.A.N. 576 (Leg. Hist.).

      Accordingly, because federal courts do not have diversity jurisdiction over

lawsuits between two foreign parties, we conclude that section 1332(a)(2) does

not give the district court jurisdiction over a suit by a permanent resident against

a non‐resident alien. Under section 1332, both Tagger and Strauss are considered

aliens and therefore are not diverse. See Univ. Licensing Corp. v. Paola del Lungo

S.p.A., 293 F.3d 579, 581 (2d Cir. 2002).

      Tagger does not challenge the district court’s interpretation of section 1332,

but rather argues that the 1951 Treaty of Friendship, Commerce and Navigation

(“FCN Treaty”) between the United States and Israel provides him with

jurisdiction under its “access to courts” provisions. This argument is meritless.

The treaty provides that “[n]ationals [of either the United States and Israel] . . .

shall be accorded national treatment and most‐favored‐nation treatment with

respect to access to the courts of justice and to administrative tribunals and
                                            6
agencies within the territories of the other Party, in all degrees of jurisdiction,

both in pursuit and in defense of their rights.” Treaty of Friendship, Commerce

and Navigation, Israel‐U.S., art. V(1), Aug. 23, 1951, 5 U.S.T. 550.

      We have previously commented that these types of “access” provisions of

international commercial treaties were “intended to guarantee treaty nationals

equal treatment with respect to procedural matters like filing fees, the

employment of lawyers, legal aid, security for costs and judgment, and so forth.”

Blanco v. United States, 775 F.2d 53, 62 (2d Cir. 1985). The terms “national

treatment” and “most‐favored‐nation treatment” also do not offer Tagger any

relief. The Supreme Court has stated that “national treatment” means nothing

more than offering foreign nationals “equal treatment” with domestic nationals.

See Sumitomo Shoji Am., Inc. v. Avagliano, 457 U.S. 176, 188 n.18 (1982). Similarly,

“most‐favored‐nation treatment means treatment no less favorable than that

accorded to nationals or companies of any third country.” Id. Therefore, the

access provision of the Israel‐U.S. FCN Treaty does not offer Tagger any more

substantive rights than any U.S. citizen would be entitled. Tagger is still required

to show that there is complete diversity between the parties, just like any U.S.

citizen would. Because there is no complete diversity, the district court properly
                                           7
determined that it lacked subject matter jurisdiction. See Pa. Pub. Sch. Emps.’

Retirement Sys., 772 F.3d at 118.

                                    CONCLUSION

      For the reasons discussed above, we hold that section 1332(a)(2) does not

give the district court jurisdiction over a suit by a permanent resident alien

against a non‐resident alien, and that the Israel‐U.S. FCN Treaty does not

otherwise confer federal jurisdiction to Tagger’s claims. Accordingly, the

judgment of the district court is hereby AFFIRMED.

                                         8


UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

MELBIN JAVIER OCHOA, et al.,
Plaintiffs,
V. Civil Case No. 12-2072 (RJL)
DAVID NUYEN, et al.,
Defendants. F I L E D
APR 2 9 2020
MEMORANDUM OPINION Clerk, U.S. District & Bankruptcy

Courts for the District of Columbla
April 2F, 4020 [Dkt. #64, #66, #67]

Plaintiffs Melbin Javier Ochoa and Cesar Gaytan Rodriguez (“plaintiffs”) filed this
suit alleging violations of the Fair Labor Standards Act and the D.C. Minimum Wage Act
Revision Act by defendants David Nuyen, USA Home Champion Realty, Inc., Opmax
Management, LLC, and Opmax, LLC (“defendants”). After defendants defaulted, I
referred this case to a magistrate judge to calculate plaintiffs’ damages and recommend an
award. On September 20, 2016, Magistrate Judge Robinson issued a Report and
Recommendation (“2016 R & R’’) recommending that plaintiffs receive a default judgment
award of $149,069.75, to which both plaintiffs and defendants filed objections. Upon
consideration of Magistrate Judge Robinson’s 2016 R & R, the parties’ briefing, and the
applicable case law and legal standards, the Court ADOPTS IN PART the 2016 Report and

Recommendation [Dkt. #64], ADOPTS Plaintiffs’ Objections to the Report and
Recommendation [Dkt. #66], and OVERRULES Defendants’ Objections to the Report and
Recommendation [Dkt. #67].
BACKGROUND

Plaintiffs Melbin Javier Ochoa and Cesar Gaytan Rodriguez filed this suit on
December 31, 2012, alleging violations of the Fair Labor Standards Act of 1938, as
amended, 29 U.S.C. §§ 201 et seg., and the D.C. Minimum Wage Act Revision Act of
1992, D.C. Code §§ 32-1001 et seqg., against defendants David Nuyen, USA Home
Champion Realty, Inc., Opmax Management, LLC, and Opmax, LLC. See Compl. [Dkt.
#1]. Plaintiffs performed property maintenance and related work at defendants’ residential
rental properties in Washington, D.C. for several years until 2013. /d. 92. Plaintiffs allege
that they were never paid overtime wages despite routinely working 66 to 72 hours per
week. Id. §§ 28, 31. When they were each terminated in January 2013 after filing their
complaint, plaintiffs filed an Amended Complaint on February 5, 2013, adding two causes
of action for unlawful retaliation. See First Am. Compl. J] 61-64, 71-76 [Dkt. #4].

Defendants were served with a copy of plaintiffs’ Amended Complaint on April 27,
2013 but failed to file an answer or otherwise respond. See Summons [Dkt. #7, #8, #9,
#10]; see also Greenberg Aff. J 2 [Dkt. #11]. The Clerk of Court entered a default against
defendants USA Home Champion Realty, Inc., Opmax Management, LLC, and Opmax,
LLC on June 3, 20 13, see Clerk’s Entry of Default [Dkt. #12], and against defendant Nuyen
the following day, see Clerk’s Entry of Default [Dkt. #14].

On September 4, 2013, the Court referred this action to Magistrate Judge Deborah

A. Robinson to calculate plaintiffs’ damages and make a recommendation. See Order [Dkt.

2
#16]. On August 22, 2014, Magistrate Judge Robinson, having rejected defendants’
attempt to participate in the hearing, held an ex parte damages hearing. See 8/22/2014
Min. Entry. On February 13, 2015, Magistrate Judge Robinson issued a Report and
Recommendation recommending that default judgment be entered for plaintiffs in the
amount of $149,069.75. See Report and Recommendation (“2015 R & R”) at 1 [Dkt. #37].
In a ruling on July 6, 2015, I rejected Magistrate Judge Robinson’s Report and
Recommendation and granted defendants’ Motion for Reconsideration because defendants
had made numerous attempts to voice their objections to plaintiffs’ damages calculation
but were denied the opportunity to participate in the damages hearing. See Mem. Order at
2 [Dkt. #39]. I ordered that Magistrate Judge Robinson “hold a de novo hearing on
damages, in which both parties may participate,” and “issue a revised recommendation.”
Id. at 5.

The de novo damages hearing was held from December 3, 2015 to December 9,
2015. See 12/9/2015 Min. Entry. Consistent with his prior testimony, plaintiff Ochoa
testified under oath that he worked approximately 66 hours each week for 159 weeks but
was not paid a “half time” premium for each hour worked in excess of 40 hours. See
12/9/2015 Min. Entry; 2016 R & R at 2,4; 2015 R & Rat 8. Plaintiff Rodriguez similarly
testified under oath that he worked approximately 72 hours each week for 160 weeks but
was also not paid a “half time” premium. See 12/9/2015 Min. Entry; 2016 R & R at 2, 4;
2015 R & R at 9. The defense presented one witness, Sung Dang, who was the building
contractor responsible for paying plaintiffs Ochoa and Rodriguez biweekly. He claimed

that the amounts he paid them varied based on the work completed. Tr. 56:22—23, 59:18-

3
20 [Dkt. #61]. He testified that he sometimes paid Ochoa “around $400 or $500,” but other
times he paid Ochoa between $800 and $900. Tr. 57:22—58:1. He also testified that he
sometimes paid Rodriguez “around $700 every two weeks” but on occasion paid Rodriguez
up to $1100. Tr. 60:13-23. While the defense attempted to introduce notes purportedly
containing payment records created by Dang, Magistrate Judge Robinson ruled that the
notes were inadmissible because they did not fit within the business records exception to
the hearsay rule, because they were untimely submitted to the court, and because they were
subject to spoliation by counsel’s notations. See Tr. 51:19-—52:7.

On September 20, 2016, Magistrate Judge Robinson issued a new Report and
Recommendation recommending that default judgment be entered for plaintiffs in the
amount of $149,069.75, the same amount recommended in 2015. See 2016 R & R at 6.
Defendants objected to the new R & R, arguing Magistrate Judge Robinson erred by
refusing to credit Dang’s testimony, by excluding payment records kept by Dang, and by
overlooking defendant’s argument that any failure to make overtime payments was not
willful but in good faith. Defs.’ Objs. to R & R [Dkt. #67]. Plaintiffs objected to Magistrate
Judge Robinson’s new R & R on the limited basis that the 2015 R& R’s damages
calculation “does not encompass any of the time and [attorney’s] fees Plaintiffs incurred
after the Court issued the 2015 Report and Recommendation.” Pls.’ Objs. to R & R at 2
[Dkt. #66].

STANDARD OF REVIEW
Upon a plaintiff's request, Rule 55(b) of the Federal Rules of Civil Procedure

authorizes the court to enter against a defendant a default judgment for the amount claimed

4
and costs. Fed. R. Civ. P. 55(b). While a “default establishes a defendant’s liability, the
court is required to make an independent determination of the sum to be awarded unless
the amount of damages is certain.” Int’! Painters & Allied Trades Indus. Pension Fund v.
R.W. Amrine Drywall Co., 239 F. Supp. 2d 26, 30 (D.D.C. 2002). A plaintiff who moves
for default judgment must prove his entitlement to the requested damages. Jd. The court
may conduct a hearing regarding the scope of damages, Fed. R. Civ. P. 55(b)(2), and may
also rely on sufficiently detailed affidavits and evidence, see Flynn v. Mastro Masonry
Contractors, 237 F. Supp. 2d 66, 69 (D.D.C. 2002).

When a party objects to a magistrate judge’s recommended disposition, the Court
reviews de novo the portions of the recommendation to which the parties objected. Fed.
R. Civ. P. 72(b)(3); LCvR 72.3(c). The Court may “accept, reject, or modify the
recommended disposition” and may “receive further evidence,” as necessary. Fed. R. Civ.
P. 72(b)(3).

ANALYSIS

Magistrate Judge Robinson recommended that the Court order damages in the
amount of $149,069.75.! She found that plaintiffs testified reliably regarding the number
of overtime hours each of them worked and that defendants “made no attempt to impeach
their testimony during cross-examination.” 2016 R & R at 4. I agree. Where a full

documentary record of plaintiffs’ hours worked is unavailable, the Court may “rely[] on

' This damages figure would award plaintiff Ochoa $20,670 in overtime wages, an equal amount in
liquidated damages, $12,800 in lost wages, and $12,800 in mental and emotional distress damages; it would
award plaintiff Rodriguez $25,600 in overtime wages, an equal amount in liquidated damages, $9,600 in
lost wages, and $9,600 in mental and emotional distress damages; and it would award attorney’s fees and
costs totaling $11,729.75.
affidavits, documentation, or an evidentiary hearing” to make a finding regarding the
amount to be awarded as damages. Ventura v. L.A. Howard Constr. Co., 134 F. Supp. 3d
99, 104 (D.D.C. 2015). Plaintiff Ochoa testified under oath that he worked approximately
66 hours each week for 159 weeks without overtime pay, and plaintiff Rodriguez similarly
testified under oath that he worked approximately 72 hours each week for 160 weeks
without overtime pay. See 2015 R & R at 8-9. Because FLSA puts the burden on the
employer to maintain records of hours worked and wages paid, where the employer has
failed to do so, the Court may accept plaintiffs’ detailed approximations “as a matter of
just and reasonable inference.” Arias v. U.S. Serv. Indus., Inc., 80 F.3d 509, 512 (D.C. Cir.
1996).

Defendants object to Magistrate Judge Robinson’s failure to credit Dang’s
testimony that plaintiffs were paid differing amounts every two weeks based on their skill
level and job performances. Dang, the defense’s sole witness, testified that he paid Ochoa
and Rodriguez varied amounts biweekly—from $400 or $500 to $800 or $900 for Ochoa,
and from $700 to $1100 for Rodriguez—based on the work completed. Tr. 56:22-23,
57:22-58:1, 59:18-20, 60:13-23. As noted, however, the burden is on “the employer to
come forward with evidence of the precise amount of work performed.” Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680, 687-88 (1946). “Ifthe employer fails to produce such
evidence, the court may then award damages to the employee, even though the result be
only approximate.” Jd. I find that Dang’s uncorroborated testimony is not sufficient to
overcome plaintiffs’ detailed testimony supporting their estimates of the amount of

uncompensated work they performed. See Arias, 80 F.3d at 512. Dang’s testimony makes

6
little sense in light of plaintiffs’ testimony that they were consistently paid a $10/hour
wage. To say the least, it certainly does not constitute evidence of the “precise amount of
work performed,” which an employer is required to produce to rebut reasonable inferences
of the employees’ uncompensated work. See Anderson, 328 U.S. at 687.

Defendant Nuyen also objects to Magistrate Judge Robinson’s exclusion of Dang’s
notes as inadmissible hearsay, as not timely submitted, and as improperly altered.
Magistrate Judge Robinson held Dang’s notes, offered as Exhibit A, to be inadmissible
under the business records exception to the hearsay rule because these records “were not
maintained in the regular course of business, but were created and located under
exceptional circumstances.” 2016 R & R at 5. Alternatively, Magistrate Judge Robinson
held the documents inadmissible “due to spoliation by defense counsel” because the
defense counsel had notated the margins “to more easily identify when the document
referenced [p]laintiffs by name.” Jd. at 6. She further noted “defense counsel’s failure to
comply with the Court’s scheduling order with respect to the submission of exhibits.” Jd.
at 5.

Any of Magistrate Judge Robinson’s three alternative grounds for excluding Dang’s
notes would be sufficient. A record is admissible under the business records exception
only if: (1) “the record was made at or near the time by — or from information transmitted
by — someone with knowledge;” (2) “the record was kept in the course of a regularly
conducted activity of a business;” (3) “making the record was a regular practice of that
activity;” (4) “all these conditions are shown by the testimony of the custodian or another

qualified witness;” and (5) “the opponent does not show that the source of information or

7
the method or circumstances of preparation indicate a lack of trustworthiness.” Fed. R.
Evid. 803(6). Cleanly, Dang’s notes fail at least two of these requirements. Dang testified
that records regarding the commissions paid to the two plaintiffs in 2011 and 2012 were
“prepared around 2013.” Tr. 18:6—9, 19:17. The records were therefore not “made at or
near the time” the events occurred. See Fed. R: Evid. 803(6). Also, while claiming that he
did keep records regarding the two plaintiffs, Dang testified that he “normally do[es]n’t
keep any records” and that these records were “found accidentally.” Tr. 12:5-7.
Accordingly, the records were also not created and kept as “a regular practice of” a business
activity. See Fed. R. Evid. 803(6).

It is also undisputed that Dang’s payment records were altered by defendants’
counsel in preparation for litigation. See Tr. 37:15—38:17, 46:20-22, 49:15-50:14. This
fact alone renders the records inadmissible. See Fed. R. Evid. 803(6) (evidence is
inadmissible if “the source of information or the method or circumstances of preparation
indicate a lack of trustworthiness”); Zhi Chen v. Dist. of Columbia, 839 F. Supp. 2d 7, 12
(D.D.C. 2011). For all of these reasons, I conclude Magistrate Judge Robinson properly
excluded Dang’s notes. I therefore adopt Magistrate Judge Robinson’s overtime wages
calculations.

Finally, Defendant Nuyen objects to Magistrate Judge Robinson’s decision to apply
a three-year statute of limitations and award liquidated damages based on a finding that
defendants had not acted in good faith. Under FLSA, the statute of limitations is two years
if the violation was in good faith but three years if the violation was willful. 29 U.S.C.

§ 255(a). Similarly, under FLSA, any employer who violates section 207 of FLSA is liable
8
for unpaid overtime compensation as well as liquidated damages, though the court in its
sound discretion may award reduced liquidated damages based on a showing by the
employer that the violation was in good faith. See id. §§ 216(b), 260. The burden is on
the employer to show that it acted in good faith. See Arias, 80 F.3d at 512. A good faith
defense “depends on an affirmative showing of a genuine attempt to ascertain what the law
requires, not simply on a demonstration of the absence of bad faith.” Dove v. Coupe, 759
F.2d 167, 175-76 (D.C. Cir. 1985). Defendants have produced no evidence that they relied
on legal advice or other guidance in failing to pay overtime wages as FLSA requires. I
thus reject defendants’ objection and adopt Magistrate Judge Robinson’s liquidated
damages calculation and application of a three-year statute of limitations.

Magistrate Judge Robinson found that her initial damages calculation still applied,
2016 R & R at 6, and thus recommended that the Court award damages to plaintiff Ochoa
in the amount of $66,940, which includes $20,670 in overtime pay, $20,670 in liquidated
damages, $12,800 in lost wages, and $12,800 in mental and emotional distress. 2015
R & R at 8-9. She recommended that the Court award damages to plaintiff Rodriguez in
the amount of $70,400, which includes $25,600 in overtime pay, $25,600 in liquidated
damages, $9,600 in lost wages, and $9,600 in mental and emotional distress. Jd. at 9-10.
Finally, she recommended that default judgment also include reasonable attorney’s fees
and costs in the amount of $11,729.75, for a total damages award of $149,069.75. Id. at
10.

Plaintiffs object to Magistrate Judge Robinson’s recommendation only on the basis

that it does not encompass attorney’s fees incurred since her original recommendation in

9
2015. As they note, plaintiffs are entitled to attorney’s fees for their attorney’s additional
work after the 2015 Report & Recommendation was issued. Indeed, under FLSA, an award
of attorney’s fees to the prevailing party is mandatory. Driscoll v. George Washington
Univ., 55 F. Supp. 3d 106, 112 (D.D.C. 2014). An award of attorney’s fees should
compensate the prevailing party for all the hours reasonably expended on a successful
litigation, including those spent preparing an appeal or litigating the case on remand. See
Perkins v. Standard Oil Co. of Cal., 399 U.S. 222, 223 (1970); Westmoreland v. CBS, Inc.,
770 F.2d 1168, 1179 (D.C. Cir. 1985).

Plaintiffs seek attorney’s fees for an additional 84.6 hours spent by their attorney
Jason Friedman on this matter since the 2015 R & R’s issuance, resulting in an additional
$27,105 in fees. Pls.’ Objs. toR & R at 2. Once a plaintiff has shown he is entitled to
attorney’s fees, the district court must “determine what fee is reasonable.” Hensley v.
Eckerhart, 461 U.S. 424, 433 (1983). The proper amount of attorney’s fees is calculated
“by multiplying the number of hours reasonably expended on the litigation times a
reasonable hourly rate.” Blum v. Stenson, 465 U.S. 886, 888 (1984). A party seeking
attorney’s fees must affirmatively demonstrate, through documentary evidence and
detailed affidavits, the amount of time expended on the matter and the appropriateness of
the attorneys’ hourly rates. See Ventura, 134 F. Supp. 3d at 103, 105-06. As such, I must
evaluate the attorneys’ hourly rates and the amount of time expended to determine whether
they are reasonable.

Attorneys’ rates are reasonable if they are “in line with those prevailing in the

community for similar services by lawyers of reasonably comparable skill, experience, and

10
reputation.” Covington v. Dist. of Columbia, 57 F.3d 1101, 1109 (D.C. Cir. 1995) (quoting
Blum, 465 U.S. at 896 n.11). Our Circuit Court allows that attorney’s fees be calculated
pursuant to the Laffey Matrix employed in Salazar v. District of Columbia, 123 F. Supp.
2d 8 (D.D.C. 2000). See Covington, 57 F.3d at 1109. With their objection, plaintiffs filed
a declaration from their attorney detailing his billing rates and his legal services provided
in this matter, see Pls.’ Objs. to R & R, Ex. 1, Decl. of Jason D. Friedman (“Friedman
Decl.”) [Dkt. #66-1], as well as a copy of the billing statement that reflects all professional
time expended and costs incurred, see Pls.’ Objs. to R & R, Ex. 2, Invoice [Dkt. #66-2].
According to this declaration, attorney Jason D. Friedman billed an additional 84.6 hours
at a rate of $325.00 per hour after the 2015 R & R, see Friedman Decl. 7§ 1, 5, for
performing and briefing detailed damage calculations, preparing for and attending multiple
hearings, and briefing plaintiffs’ objection to the R & R, see Invoice at 1-3. Plaintiff's
counsel’s billing rate of $325.00 is consistent with the Laffey Matrix and is reasonable
given counsel’s risk in handling this case on a contingency fee basis, the overall amount of
damages, and the level of skill required. Plaintiff's counsel’s declaration and the attached
invoice also provide sufficient detail to enable the Court to “make an independent
determination whether or not the hours claimed are justified.” Nat’l Ass’n of Concerned
Veterans v. Sec’y of Def, 675 F.2d 1319, 1327 (D.C. Cir. 1982) (per curiam). Having
independently reviewed plaintiff's counsel’s claimed hours, I find that none of these tasks
were “duplicative, excessive, or otherwise unnecessary.” Ventura v. Bebo Foods, Inc., 738
F. Supp. 2d 8, 34 (D.D.C. 2010). Upon reviewing the parties’ briefing, the Court is satisfied

that attorney Jason Friedman expended a reasonable amount of time on this litigation

1]
considering the specific circumstances of this case and charged a reasonable billing rate
consistent with the Laffey Matrix. Accordingly, I adopt plaintiffs’ objections to the 2016
Report & Recommendation and award plaintiffs an additional $27,105 in attorney’s fees,
CONCLUSION

Upon consideration of Magistrate Judge Robinson’s R & R, the parties’ briefing,
and the applicable case law and legal standards, the Court adopts Magistrate Judge
Robinson’s Report and Recommendation awarding plaintiffs $149,069.75, except to the
extent the Court awards plaintiffs an additional $27,105 in attorney’s fees incurred after
the issuance of the February 2015 Report and Recommendation. An appropriate Order

will issue with this Memorandum Opinion.

RICHARD $rle#ON
United States District Judge

12


137 Ga. App. 308 (1976)
223 S.E.2d 500
JOHNSON
v.
THE STATE.
51664.
Court of Appeals of Georgia.
Submitted January 13, 1976.
Decided January 19, 1976.
Roberts, Roberts & Rainwater, Guy V. Roberts, Jr., for appellant.
D. E. Turk, District Attorney, for appellee.
CLARK, Judge.
Defendant was charged with murder in connection with the shooting death of Wallace Gant. He was tried before a jury and found guilty of the lesser offense of voluntary manslaughter. Appeal is brought from the denial of defendant's amended motion for a new trial. Held:
1. Error is asserted upon the general grounds. The victim's wife testified that defendant provoked a fight with the deceased. The two men fought for a few minutes before separating. Defendant then pulled a gun from his coat pocket and shot the deceased, who had no weapon in his possession. The doctor who performed the autopsy stated the victim died as a result of two gunshot wounds, one inflicted through the chest and the other through the back. Defendant testified that the deceased provoked the fight and that after they separated from their struggle, the adversary advanced toward him with his hands in his pockets. Defendant claimed his personal disparity in age, physique, and health contrasted with the opponent's youth, size and physical attributes caused him to fear that the latter had a weapon in his pocket and that he shot in self-defense.
"After the verdict, the testimony is construed in its most favorable light to the prevailing party, which in this case is the State, for every presumption and inference is in favor of the verdict." Wren v. State, 57 Ga. App. 641, 644 (196 SE 146); Green v. State, 123 Ga. App. 286, 287 (180 SE2d 564). The state's evidence was more than sufficient to authorize the jury's conclusion that defendant was guilty of voluntary manslaughter. Defendant's enumeration of error upon the general grounds is therefore without merit.
*309 2. Defendant's remaining enumeration contends that the trial judge improperly limited and impaired his right to cross examine the victim's wife. Defense counsel had been conducting a lengthy examination of this witness and had questioned her several times concerning the deceased's position at the time the second shot was fired. The witness had, in each instance, given a complete answer and, additionally, a demonstration of the position of the body. Upon further questioning on this subject, the district attorney offered an objection which the court sustained.
Pursuing personalized provincial picturesque pleading, defendant's attorney orates that "Court appointed counsel for appellant is just as big a country Cracker as the District Attorney and can with impunity respectfully submit to this honorable Court that appellant did not get a fair shake in his trial." (Brief, p. 6). The three city Crackers[1] comprising this judicial Division disagree; our view of the trial transcript discloses his client received a fair trial with no legal error.
It is, of course, true that the right to a thorough and sifting cross examination may not be abridged. Code § 38-1705; Ralph v. State, 124 Ga. 81 (52 SE 298). But the permissible scope of cross examination is not unlimited. Geiger v. State, 129 Ga. App. 488, 496 (4) (199 SE2d 861). "The scope of the cross examination rests largely within the discretion of the trial judge, to control this right within reasonable bounds, and his discretion will not be controlled by a reviewing court unless it is abused. [Cits.]" Sullivan v. State, 222 Ga. 691, 693 (152 SE2d 382). It has been held that the exclusion of unnecessarily repetitious *310 questions which have been previously propounded and answered does not constitute an abuse of discretion. Sims v. State, 177 Ga. 266 (170 SE 58); Watson v. State, 192 Ga. 679 (16 SE2d 426); Jones v. State, 135 Ga. App. 893, 897 (5) (219 SE2d 585). Accordingly, we find no error in the trial judge's ruling.
Judgment affirmed. Bell, C. J., and Stolz, J., concur.
NOTES
[1]  For generations Georgians have proudly borne this chauvinistic cognomen. Historians disagree as to its origin. Some attribute it to the custom of wagoners cracking their whips. Others assert it to be a corruption of a Scottish word designating a certain class of independent yeomanry. It may be derived from the Scottish word "craker"  a boaster. A fourth version contends it is a shortened form of corncracker, cracked corn having been a favorite food.