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Commonwealth v. Henry

Supreme Judicial Court of Massachusetts, Essex

August 8, 2016

COMMONWEALTH
v.
KIM HENRY.

          Heard Date: February 10, 2016.

         Complaint received and sworn to in the Salem Division of the District Court Department on November 7, 2013. A proceeding to determine restitution was had before Michael C. Lauranzano, J.

         The Supreme Judicial Court granted an application for direct appellate review.

          Rebecca Kiley, Committee for Public Counsel Services, for the defendant.

          Kenneth E. Steinfield, Assistant District Attorney, for the Commonwealth.

          Matthew R. Segal & Jessie J. Rossman, for the American Civil Liberties Union Foundation of Massachusetts, amicus curiae, submitted a brief.

          Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & Hines, JJ.

          GANTS, C.J.

         This case presents two issues on appeal: first, whether a defendant's ability to pay should be considered by a judge in deciding whether to order restitution as a condition of probation and in deciding the amount of any such restitution; and second, where goods are stolen from a retail store, whether the amount of the victim's actual economic loss for purposes of restitution is the replacement value or the retail sales value of the stolen goods. As to the first issue, we hold that in determining whether to impose restitution and the amount of any such restitution, a judge must consider a defendant's ability to pay, and may not impose a longer period of probation or extend the length of probation because of a defendant's limited ability to pay restitution. As to the second issue, we hold that, in cases of retail theft, the amount of actual economic loss for purposes of restitution is the replacement value of the stolen goods unless the Commonwealth proves by a preponderance of the evidence that the stolen goods would otherwise have been sold, in which case the retail sales value is the better measure of actual loss.[1]

         Background.

         The defendant was employed as a cashier at a Walmart department store in Salem. A Walmart video camera captured the defendant "free-bagging" items; that is, with certain customers, she placed some store items into bags without scanning the items at the cash register, so that these customers received these items without paying for them. As a result, in November, 2013, a complaint issued in the Salem Division of the District Court Department alleging that the defendant stole the property of Walmart having a value of more than $250 pursuant to a single larcenous scheme on various dates between July 20 and September 4, 2013, in violation of G. L. c. 266, § 30 (1). In April, 2014, the defendant admitted to facts sufficient to warrant a finding of guilty, and the judge continued her case without a finding for eighteen months, with restitution to be determined at a later date.[2] The defendant was placed on administrative probation for eighteen months, with a special condition that she have no contact with Walmart.

         At a restitution hearing in September, 2014, the defendant stipulated that the loss to Walmart was $5, 256.10, and a judge (who was not the plea judge) ordered that restitution in that amount be paid. However, in October, 2014, the defendant filed a motion to revise and revoke the order of restitution, which was allowed, and a new restitution hearing was held in November, 2014, before yet another judge. At this evidentiary hearing, the Commonwealth offered testimony from Ronald Capistran, the loss protection manager at the Salem Walmart, who calculated that the retail sales price of the items stolen totaled $5, 256.10. He estimated that the "markup" on most of the items sold in the store was "somewhere between [seven per cent] and probably [fifteen per cent]" but, in a rare case, "it could be [fifty]" per cent. The defendant testified that she was "discharged" from Walmart in September, 2013, after working there as a cashier for nearly twelve years. She received unemployment benefits for approximately three months following her termination, but was found ineligible for such benefits after a department of unemployment assistance hearing and was ordered to reimburse the Commonwealth for the benefits she had received. At the time of the restitution hearing, she had been unable to find employment and had no income or government assistance of any kind. She had been evicted from her apartment and was staying with someone, but not paying rent. She testified that she "free-bagged" the items only for friends, and received only fifty dollars once for having done so.

         The prosecutor argued that restitution should be based on the retail sales value of the items stolen because the theft was at the point of sale, and Walmart was deprived of the value of the goods that should have been paid by the customer. The prosecutor also argued that the amount of restitution should not be reduced based on the defendant's inability to pay because the defendant "by her actions created her inability to pay in that she was fired from a job by stealing." The defendant argued that the actual loss to Walmart is the replacement cost of the stolen goods, not their retail price, because Walmart is not entitled to recover in restitution for its lost profits. The defendant also argued that she should not be ordered to pay restitution because she was financially unable to pay, noting that, if ordered to pay "any figure remotely near" the amount of restitution sought, she will be in violation of her probation because of her inability to pay. The judge declared that the loss is measured by the retail loss and ordered that restitution in the amount of $5, 256 be paid during the period of probation at a rate to be determined by the probation department.[3] The defendant timely appealed from this order, and we allowed the defendant's application for direct appellate review.

         Discussion.

         A judge may order a defendant to pay restitution to the victim as a condition of probation provided that the "[r]estitution is limited to economic losses caused by the defendant's conduct and documented by the victim." Commonwealth v. Mclntyre, 436 Mass. 829, 833-834 (2002). See Commonwealth v. Nawn, 394 Mass. 1, 6 (1985) ("There is no question that restitution is an appropriate consideration in a criminal sentencing"). "The procedure used to determine the amount of restitution or reparation must be reasonable and fair." Id. at 6-7. The prosecution should disclose prior to the hearing the amount of restitution it seeks. Id. at 7, citing People v. Gallagher, 55 Mich.App. 613, 620 (1974) . Where the defendant does not stipulate to the amount, the judge should conduct an evidentiary hearing at which "the Commonwealth bears the burden of proving by a preponderance of the evidence the amount of the victim's losses." Nawn, 394 Mass. at 7-8. At such a hearing, the victim may testify regarding the amount of the loss, and the defendant may cross-examine the victim, with such cross-examination limited to the issue of restitution. Id. at 8. The defendant may rebut the victim's estimate of the amount of loss with expert testimony or other evidence. Id. at 7.

         1. Ability to pay.

         In deciding whether to order restitution and, if so ordered, the amount, the judge should "consider whether the defendant is financially able to pay the amount ordered." Nawn, 394 Mass. at 7, citing Model Sentencing and Corrections Act § 3-601(d), 10 U.L.A. 322 (Supp. 1984), and ABA Standards Relating to Probation § 3.2(d) (1970). "The amount of restitution is not merely the measure of the value of the goods and money stolen from the victim by the defendant; . . . the judge must also decide the amount that the defendant is able to pay and how such payment is to be made." Nawn, supra at 8-9.

         In practice, this means that, at the close of the evidentiary hearing, the judge must make two findings in deciding whether to order restitution as a condition of probation and, where ordered, the amount of restitution to be paid during the period of probation. First, the judge must determine the amount of the victim's actual economic loss causally connected to the defendant's crime. See Mclntyre, 436 Mass. at 834. The Commonwealth bears the burden of proof as to this finding. See Nawn, 394 Mass. at 7-8. The order of restitution may not exceed this amount. See Commonwealth v. Rotonda, 434 Mass. 211, 221 (2001). Second, the judge must determine the amount the defendant is able to pay. See Nawn, supra at 8-9. Where a defendant claims that he or she is unable to pay the full amount of the victim's economic loss, the defendant bears the burden of proving an inability to pay. See Commonwealth v. Porter, 462 Mass. 724, 732-733 (2012) (defendant bears burden of persuasion regarding indigency, in part because "[a] criminal defendant is the party in possession of all material facts regarding her own wealth and is asserting a negative"). Cf. United States v. Fuentes, 107 F.3d 1515, 1532 (11th Cir. 1997) (regarding restitution, "the defendant must establish her financial resources and needs by a preponderance of the evidence").

         We require a judge to consider the defendant's ability to pay when setting the restitution amount because a judge may order restitution in a criminal case only as a condition of probation, and therefore the collection of restitution is enforced by the threat or imposition of a criminal sanction for violation of a probation condition. See Commonwealth v. Denehy, 466 Mass. 723, 737 (2014); Commonwealth v. Goodwin, 458 Mass. 11, 15 (2010). Cf. G. L. c. 258B, § 3 (u) (victim shall be informed of "right to pursue a civil action for damages relating to the crime, regardless of whether the court has ordered the defendant to make restitution to the victim"). A defendant can be found in violation of a probationary condition only where the violation was wilful, and the failure to make a restitution payment that the probationer is unable to pay is not a wilful violation of probation. See Commonwealth v. Canadyan, 458 Mass. 574, 579 (2010) ("where there was no evidence of wilful noncompliance, a finding of violation of the condition of wearing an operable [global positioning system (GPS)] monitoring device was unwarranted, and is akin to punishing the defendant for being homeless"); Commonwealth v. Gomes, 407 Mass. 206, 212- 213 (1990) (imposition of default costs permitted only when default is wilful). Cf. Bearden v. Georgia, 461 U.S. 660, 669 n.10 (1983) ("Numerous decisions by state and federal courts have recognized that basic fairness forbids the revocation of probation when the probationer is without fault in his failure to pay the fine" [footnote omitted]).

         To allow a judge to impose a restitution amount that the defendant cannot afford to pay simply dooms the defendant to noncompliance. Such noncompliance may trigger a notice of probation violation even though a probationer cannot be found in violation for failing to pay a restitution amount that the probationer cannot reasonably afford to pay. See Canadyan, supra; Gomes, supra. Not only would a notice of violation under such circumstances waste the time of the court, but it imposes upon the blameless probationer the risk of an arrest on a probation warrant, of payment of a warrant fee, of being held in custody pending a hearing, and of probation revocation if the judge were to fail to recognize that inability to pay is a defense to the alleged violation. See ...


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