Argued: March 20, 2018
from the United States District Court for the Western
District of North Carolina, at Charlotte. Frank D. Whitney,
Chief District Judge. (3:16-cr-00211-FDW-DCK-1)
B. Carpenter, FEDERAL DEFENDERS OF WESTERN NORTH CAROLINA,
INC., Asheville, North Carolina, for Appellant.
Elizabeth Ray, OFFICE OF THE UNITED STATES ATTORNEY,
Asheville, North Carolina, for Appellee.
Anthony Martinez, Federal Public Defender, FEDERAL DEFENDERS
OF WESTERN NORTH CAROLINA, INC., Charlotte, North Carolina,
Andrew Murray, United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Charlotte, North Carolina, for Appellee.
GREGORY, Chief Judge, WILKINSON, and AGEE, Circuit Judges.
GREGORY, CHIEF JUDGE:
Steele was convicted of postal theft in violation of 18
U.S.C. § 1709. Relying on the victim's unsupported
estimate of its replacement costs, the district court ordered
Steele to pay $52, 990 in restitution. Because fair market
value is the appropriate measure of value for restitution and
the Government failed to sufficiently demonstrate the
victim's loss, we vacate the restitution order and
January 2015, the U.S. Postal Service hired Steele as a mail
handler assistant at its Processing and Distribution Center
in Charlotte, North Carolina. As a part of his duties, Steele
processed bulk mail en route to its ultimate destination.
Around June 2015, Steele began stealing video game discs sent
by GameFly, a video game rental service that ships its
merchandise to customers through the mail.
September 2015, a GameFly Loss Prevention Manager contacted
the U.S. Postal Service Office of Inspector General to report
a significant loss of GameFly video games intended for the
Charlotte Processing and Distribution Center. On December 20,
2015, federal agents interviewed Steele after they observed
him leaving the Processing and Distribution Center and
placing numerous GameFly discs in his personal vehicle.
During the interview Steele admitted to the thefts, and the
next day he submitted his resignation.
August 2016, a federal grand jury returned an indictment for
Steele, charging him with one count of postal theft in
violation of 18 U.S.C. § 1709. Steele pleaded guilty
without a written plea agreement.
U.S. Probation Office prepared a Presentence Investigation
Report (PSR) based in part on a Victim Impact Statement from
GameFly. In the statement, GameFly reported that it lost 1,
390 video game discs during the relevant timeframe and that
100 were recovered from Steele's home and vehicle.
GameFly estimated that the lost video game discs cost $40
each and thus calculated the value of the 1, 290
unaccounted-for games at $51, 600. GameFly further noted that
for each of the 1, 390 games that went missing, it incurred
an additional $1 cost to mail its customers replacement
games. The PSR therefore recommended that Steele pay $52, 990
in restitution-$51, 600 for the lost games themselves plus
$1, 390 in mailing costs.
to sentencing, Steele objected to the PSR's loss
calculation and restitution amount, but the district court
overruled his objections. J.A. 183, 202. At sentencing,
Steele argued that there was insufficient evidence to support
the $40-per-game estimate. The Government responded that
GameFly's estimate was based on the average cost of
replacing a game. The Government then called as a witness
Chad Caviness, an agent with the U.S. Postal Service Office
of the Inspector General. Caviness testified that (1) agents
recovered 341 discs from Steele's vehicle and residence,
J.A. 46; (2) Steele sold newer games for $30 and older games
for $20-25, J.A. 42; (3) he had no documentation from GameFly
that detailed the value of each game it lost, J.A. 52; and
(4) when GameFly reported an estimated average replacement
cost for the games, the agents "just took
[GameFly's] word for it." J.A. 49.
Caviness's testimony, Steele renewed his objection to the
recommended restitution amount. Steel argued that
GameFly's loss calculation should instead be based on the
fair market value of the game discs because the vast majority
of the games he stole were used and valued at substantially
less than $40. Steele presented his own research- trade-in
receipts and reports from a video game price charting
website-to support his argument. However, the district court
disagreed and instead reasoned that the fair market value of
the games was "not relevant" to GameFly's
actual victimization. J.A. 76. The district court then
accepted GameFly's unsupported estimate of its
replacement costs, ordered restitution in the amount of $52,
990, and imposed a three-month term of imprisonment. J.A. 76,
89, 173. Steele timely appealed, challenging the restitution
review the district court's restitution order for abuse
of discretion. United Statesv. Ocasio, 750
F.3d 399, 412 (4th Cir. 2014). "A district court abuses
its discretion when it (1) acts arbitrarily, as if neither by
rule nor discretion, (2) fails to adequately take into
account judicially recognized factors constraining its
exercise of discretion, or (3) rests its decision on
erroneous factual or legal premises." Unit ...