United States v. Douglas Way ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 21 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 18-10427
Plaintiff-Appellee, D.C. No.
1:14-cr-00101-DAD-BAM-1
v.
DOUGLAS JASON WAY, AKA Jason MEMORANDUM*
Way,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of California
Dale A. Drozd, District Judge, Presiding
Argued and Submitted November 13, 2019
San Francisco, California
Before: W. FLETCHER and BADE, Circuit Judges, and MOSKOWITZ,** District
Judge.
A jury convicted Defendant-Appellant Douglas Jason Way (“Way”) of
seven charges: (1) conspiracy to manufacture, distribute, and/or possess with intent
to distribute a controlled substance analogue, 21 U.S.C. § 841(a)(1);
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Barry Ted Moskowitz, United States District Judge for
the Southern District of California, sitting by designation.
(2) manufacture of a controlled substance analogue, § 841(a)(1); (3) distribution of
a controlled substance analogue, § 841(a)(1); (4) attempted possession with intent
to distribute for human consumption a controlled substance analogue, § 841(a)(1);
(5) conspiracy to possess a listed chemical with reasonable cause to believe that it
would be used to manufacture a controlled substance analogue, § 841(c)(2);
(6) conspiracy to defraud and/or to commit offenses against the United States, 18
U.S.C. § 371; and (7) introduction into interstate commerce of misbranded drugs,
21 U.S.C. § 331(a).
Way’s first five convictions are under the Controlled Substances Act
(“CSA”). The Controlled Substances Analogue Enforcement Act (“Analogue
Act”) treats a controlled substance “analogue”—one that is substantially similar to
a controlled substance but not scheduled itself—as though it were a Schedule I
controlled substance. 21 U.S.C. §§ 802(32)(A), 813. A jury convicted Way of the
CSA charges under the theory that the synthetic cannabinoid 5-F-UR-144 was an
analogue of JWH-018, which is a scheduled controlled substance, 21 C.F.R.
§ 1308.11(g)(3). Way challenges his convictions, raising fourteen reasons why we
should reverse. We hold none of them to be meritorious and affirm.
1. The district court appropriately denied Way’s motion to dismiss counts of
the Second Superseding Indictment (“Indictment”) for duplicitous and disjunctive
pleading. The district court’s denial of a motion to dismiss an indictment is
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reviewed de novo. United States v. Marguet-Pillado, 560 F.3d 1078, 1081 (9th
Cir. 2009). Its findings of fact are reviewed for clear error. Id. To pass
constitutional muster, an indictment must give the defendant fair notice of the
charges against him and protection against double jeopardy. Hamling v. United
States, 418 U.S. 87, 117 (1974) (citing Hagner v. United States, 285 U.S. 427
(1932); United States v. Debrow, 346 U.S. 374 (1953)). An indictment is
“generally sufficient” if it “set[s] forth the offense in the words of the statute
itself,” if that phrasing includes all elements of the offense. Id.
Counts 1, 2, 3, 5, 11, and 12 of the Indictment tracked the statutory language
and set forth the essential elements of the charged offenses, and also provided fair
notice and protection against double jeopardy. The use of “and/or,” “or,” and “one
or more” in the charging language in Counts 1, 2, 3, 5, 11 (renumbered as Count 6
in the verdict form), and 12 (renumbered as Count 7 in the verdict form) is not
fatal, because these counts gave Way clear notice of the charges against him. See
United States v. Zavala, 839 F.2d 523, 526 (9th Cir. 1988); United States v. Alsop,
479 F.2d 65, 66 (9th Cir. 1973). Taken in context, it is clear that the majority of
grand jurors found probable cause as to all of the allegations in the charges. While
use of “or” or “one or more” in an indictment is ill-advised and can result in
insufficient notice to the defendant, see United States v. Aguila-Montes de Oca,
655 F.3d 915, 967–70 (9th Cir. 2011) (en banc) (Berzon, J., concurring), abrogated
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by Descamps v. United States, 570 U.S. 254 (2013), we see no such problem here.
The Indictment clearly gave Way notice of the charges and was sufficient for him
to raise the bar of double jeopardy.
2. The district court did not err when it did not order further discovery into
internal Drug Enforcement Agency (“DEA”) decisionmaking. Discovery rulings
are reviewed for abuse of discretion. United States v. Soto-Zuniga, 837 F.3d 992,
998 (9th Cir. 2016). The government must turn over to the defendant items that
are “within the government’s possession, custody, or control” and if they are
“material to preparing the defense.” Fed. R. Crim. P. 16(a)(1)(E)–(E)(i). First,
based on the testimony of Dr. Terrence Boos, there was substantial evidence that
the items Way sought were not in the government’s possession. Second, Way did
not establish materiality because the Analogue Act cases require the jury to decide
whether a substance is a controlled substance analogue based on the expert
testimony presented at trial. DEA’s internal decisions to treat the substances at
issue as analogues would thus not help Way prepare a defense. See United States
v. Hernandez-Meza, 720 F.3d 760, 768 (9th Cir. 2013). The district court acted
within its discretion when it affirmed the magistrate judge’s denial of Way’s
discovery request on this ground.
3 & 4. The district court did not err in not allowing testimony about DEA’s
internal processes for controlled substance analogue determinations. Evidentiary
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rulings are reviewed for abuse of discretion. Gen. Elec. Co. v. Joiner, 522 U.S.
136, 141 (1997). District judges receive substantial deference in their evidentiary
rulings. Sprint/United Mgmt. Co. v. Mendelsohn, 552 U.S. 379, 384 (2008). The
district court ruled that since the jury would decide what was a controlled
substance analogue, any internal DEA disagreement as to whether 5-F-UR-144
was an analogue was irrelevant. We agree with the district court.
5. The district court did not err in denying Way’s motion to prevent the
government from calling DEA scientists as rebuttal witnesses. This evidentiary
ruling is reviewed for abuse of discretion. Gen. Elec. Co., 522 U.S. at 141–42.
Way argues the government was judicially estopped from calling these witnesses
after the government stated it would “not rely[] at trial on the expert opinion of
DEA.”
A court has discretion to invoke judicial estoppel based on the test set forth
in United States v. Ibrahim, 522 F.3d 1003, 1009 (9th Cir. 2008). All of the
Ibrahim factors weigh heavily against invoking judicial estoppel here. The
government’s statements were not “clearly inconsistent” with its decision to call
DEA experts as rebuttal witnesses, the government did not appear to have
“successfully persuaded” the magistrate judge that it would not call such witnesses,
and the government did not “derive an unfair advantage or impose an unfair
detriment” because Way’s counsel was on notice of this possibility. See id. The
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district court did not abuse its discretion.
6 & 7. The district court committed harmless error by failing to conduct a
Daubert hearing or make any reliability findings on the record about the
government’s expert witnesses. This evidentiary ruling is reviewed for abuse of
discretion. Gen. Elec. Co., 522 U.S. at 141–42. District courts must admit only
relevant and reliable expert testimony. Fed. R. Evid. 702; Daubert v. Merrell Dow
Pharm., Inc., 509 U.S. 579, 589 (1993). A Daubert hearing is not necessary,
Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457, 463–64 (9th Cir. 2014) (en
banc), but the court must make some explicit finding that an expert witness is
qualified, see United States v. Flores, 901 F.3d 1150, 1165 (9th Cir. 2018). In so
doing, the court should expressly analyze the Daubert factors to some extent on the
record. See id. The district court failed to hold a Daubert hearing or make explicit
findings that the government’s experts’ testimony was based on reliable science.
But this error was harmless because the record clearly demonstrates that the
admitted expert testimony was relevant and based on reliable scientific
methodology given the experts’ academic and professional experience and the
nature of their testimony. See United States v. Ruvalcaba-Garcia, 923 F.3d 1183,
1190–91 (9th Cir. 2019) (per curiam). Accordingly, the district court did not abuse
its discretion in admitting the government’s expert testimony.
8. Way appeals the district court’s denial of his motion to strike reference to
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XLR111 as an analogue from the Indictment and to dismiss prosecution of Way
relating to it for the DEA’s alleged failure to comply with the Administrative
Procedure Act, 5 U.S.C. § 552(a)(1)(D). This issue is reviewed de novo. Marguet-
Pillado, 560 F.3d at 1081. The Analogue Act sets forth two requirements for a
substance to be a controlled substance analogue: it must be “substantially similar”
in both (1) chemical structure and (2) pharmacological effect to a Schedule I or II
controlled substance. 21 U.S.C. § 802(32)(A). Way argues that the DEA engaged
in interpretive rulemaking, without complying with the Administrative Procedure
Act, through (1) the process by which it determines substantial similarity of
chemical structure and (2) its opinion that XLR11 is substantially similar in
chemical structure to JWH-018.
An interpretive rule is an “interpretation[] of general applicability
formulated and adopted by the agency,” 5 U.S.C. § 552(a)(1)(D), which “advise[s]
the public of the agency’s construction of the statutes and rules which it
administers,” Perez v. Mortg. Bankers Ass’n, 575 U.S. 92, 96 (2015) (quoting
Shalala v. Guernsey Mem’l Hosp., 514 U.S. 87, 99 (1995)). DEA opinions on
controlled substance analogues are not interpretive rulemaking because the
factfinder at trial, rather than the DEA, makes these determinations based on the
1
The Indictment referred to the substance as XLR11, whereas the verdict form
referenced 5-F-UR-144. Based on the record, the parties appeared to treat these
substances interchangeably due to their marginal differences.
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language of the Analogue Act and the expert testimony presented at trial.
9. The district court did not err in excluding evidence of Way’s compliance
with state law governing the substances in this case. This evidentiary ruling is
reviewed for abuse of discretion. Gen. Elec. Co., 522 U.S. at 141–42. A district
court may exclude irrelevant evidence and any relevant evidence whose probative
value is substantially outweighed by its potential to confuse the issues. Fed. R.
Evid. 402, 403. The district court found evidence of state law compliance
irrelevant to a case involving only federal law charges. We agree that the
defendant’s efforts to comply with state law are irrelevant to charges of violating
federal law.
10. The prosecutor erred in her rebuttal closing argument, but Way’s
substantial rights were not affected. In her rebuttal closing argument, the
prosecutor, in arguing that there was circumstantial evidence that Way knew his
products contained analogues of a controlled substance, said:
Circumstantial evidence from which you are entitled to infer the
defendant knew what he was doing and knew that the 5-F-UR-144 was
a controlled substance analogue also includes knowledge that a
substance is subject to seizure by law enforcement. Which is the subject
of the attempted possession count, the 12 kilos of 5-F-UR-144 that was
seized here by Fresno County Sheriffs.
And there’s a lot of evidence of seizures in this case. A lot of evidence.
There were seizures to Up In Smoke in January of 2013. . . .
You heard from Rachel Templeman that these seizures kept escalating
and they didn’t get their product back. Knowledge that their product is
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subject to seizure by law enforcement is strong circumstantial evidence
that the defendant knew that 5-F-UR-144 was a controlled substance
analogue.
This short statement in a rather long rebuttal argument was misleading because not
all of the seizures were for violations of federal law.
But, because the error was harmless, Way does not prevail on this issue. See
Fed. R. Crim. P. 52(a). The trial record reveals overwhelming evidence of Way’s
knowledge of analogue status, such that his substantial rights were not affected by
the government’s remarks. See McFadden v. United States, ___ U.S. ___, 135
S. Ct. 2298, 2303–04, 2307 (2015) (setting forth the ways to prove knowledge
under the CSA and Analogue Act and remanding for harmless error analysis).
Way gave a sworn statement to the U.S. Attorney’s Office, in which he highlighted
his familiarity with “spice,” the street term for synthetic cannabis, and the
“counterculture industry.” He explained his extensive experience with smoke
shops, which comprised his company’s customer base, and showed he was aware
of the likely illegal products such stores carry. He admitted familiarity with
marijuana and agreed that his company’s 5-F-UR-144 products looked similar to it.
Other circumstantial evidence of Way’s knowledge included his unusually high
compensation, his admission that it was possible his customers were smoking his
products, a series of unusual business practices, and his role as the “executive
leader” of the company. The circumstantial evidence also showed that Way
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participated in business practices designed to evade law enforcement detection and
that he knew of the unlawful nature of his company’s products. See McFadden,
135 S. Ct. at 2304 n.1. The government’s error in rebuttal closing argument was
harmless. See United States v. Vargas-Rios, 607 F.2d 831, 838 (9th Cir. 1979).
11. The district court did not err in denying Way’s Rule 29 motion for
acquittal for insufficiency of evidence. A district court’s denial of a motion for
judgment of acquittal is reviewed de novo. United States v. Wanland, 830 F.3d
947, 952 (9th Cir. 2016). Way argues that, with respect to the CSA charges, the
government failed to establish (1) that Way had the requisite knowledge under the
CSA and (2) that 5-F-UR-144 was substantially similar in pharmacological effect
to JWH-018. But the evidence at trial (1) established knowledge and (2) included
considerable expert testimony by government witnesses about the pharmacological
similarity of the substances. We hold that, by “viewing the evidence in the light
most favorable to the prosecution, any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt.” United States v.
Gonzalez, 528 F.3d 1207, 1211 (9th Cir. 2008).
12. The district court did not err in denying Way’s Rule 33 motion for a
new trial. A district court’s denial of a motion for a new trial is reviewed for abuse
of discretion. United States v. King, 660 F.3d 1071, 1076 (9th Cir. 2011). The
interest of justice did not require a new trial, since no “serious miscarriage of
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justice may have occurred.” United States v. Kellington, 217 F.3d 1084, 1096 (9th
Cir. 2000); Fed. R. Crim. P. 33(a). A new trial was not warranted because,
contrary to Way’s position, the government’s expert testimony was admissible and
the evidence of state law compliance was properly excluded. The district court did
not abuse its discretion.
13. The district court did not err in denying Way’s motion for acquittal
based on unconstitutional vagueness. This issue is reviewed de novo. United
States v. Weitzenhoff, 35 F.3d 1275, 1289 (9th Cir. 1993). The Analogue Act is not
unconstitutionally vague as applied to 5-F-UR-144 and JWH-018. A criminal law
is “void-for-vagueness” if it fails to “define the criminal offense with sufficient
definiteness that ordinary people can understand what conduct is prohibited and in
a manner that does not encourage arbitrary and discriminatory enforcement.”
Beckles v. United States, ___ U.S. ___, 137 S. Ct. 886, 892 (2017) (quoting
Kolender v. Lawson, 461 U.S. 352, 357 (1983)). In McFadden v. United States,
the Supreme Court found the Analogue Act to be an “unambiguous statute.” 135
S. Ct. at 2307. The Court reasoned that even if the Analogue Act were ambiguous,
the statute’s scienter requirement “alleviate[s] vagueness concerns.” Id. (quoting
Gonzales v. Carhart, 550 U.S. 124, 149, 150 (2007)). McFadden forecloses Way’s
argument that the Analogue Act is unconstitutionally vague. Accordingly, the
district court did not err in not setting aside the verdict.
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14. Way argues that the errors as to Counts 1, 2, 3, and 5 affected the jury’s
evaluation of his credibility and therefore should result in vacating the conviction
on Counts 6 and 7 (originally Counts 11 and 12 in the Indictment). Because we
find no error, we reject Way’s argument to vacate the conviction on Counts 6 and
7.
AFFIRMED.
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