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United States v. Egan Marine Corp.

United States Court of Appeals, Seventh Circuit

December 12, 2016

United States of America, Plaintiff-Appellee,
v.
Egan Marine Corporation and Dennis Michael Egan, Defendants-Appellants.

          Argued December 5, 2016

         Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 10 CR 33 - James B. Zagel, Judge.

          Before Easterbrook and ROVNER, Circuit Judges, and Shadid, District Judge [*]

          Easterbrook, Circuit Judge.

         Barge EMC-423 exploded on January 19, 2005, while under way between Joliet and Chicago with a cargo of clarified slurry oil. The blast threw deckhand Alex Oliva into the water; he did not survive. Contending that Dennis Egan, master of the tug Lisa E that had been pushing the barge, had told Oliva to warm a pump using a propane torch, the United States obtained an indictment charging Egan and the tug's owner (Egan Marine Corp.) with violating 18 U.S.C. §1115, which penalizes maritime negligence that results in death, plus other statutes that penalize the negligent discharge of oil into navigable waters.

         After a bench trial, Judge Zagel found that the prosecution had established, beyond a reasonable doubt, that Egan gave the order to Oliva, that the torch caused the explosion, that Oliva died as a result, and that the barge released oil as a further result. That such an order, if given, was negligence (or worse) no one doubted; open flames on oil carriers are forbidden by Coast Guard regulations and normal prudence. The court sentenced Egan to six months' imprisonment, a year's supervised release, and restitution of almost $6.75 million. Egan Marine was placed on probation for three years and ordered to pay the same restitution, for which it and Egan are jointly and severally liable.

         The criminal prosecution was the second trial of these allegations. Two years before the grand jury returned its indictment, the United States had filed a civil suit against Egan Marine seeking damages on the same theory: that Egan directed Oliva to warm the pump using a torch, whose flame caused an explosion, a death, and an oil spill. That case, too, went to a bench trial. And Judge Leinenweber, who heard the evidence, determined that the United States had not proved its claim. 2011 U.S. Dist. Lexis 138087 (N.D. 111. Oct. 13, 2011) at ""11 ("the Government did not prove, by a preponderance of the evidence, that Alex Oliva was using a propane torch on the cargo pump of the EMC 423 at the time of the incident"). The United States did not appeal from that adverse decision but instead pressed forward with this criminal prosecution.

         Egan and Egan Marine sought the benefit of issue preclusion (collateral estoppel), arguing that the United States should not be allowed to contend that they are guilty beyond a reasonable doubt after Judge Leinenweber found that the proof did not show culpability even by a preponderance of the evidence. But Judge Zagel rejected this contention.

         The Supreme Court has said that the outcome of a civil case has preclusive force in a criminal prosecution. See Yates v. United States, 354 U.S. 298, 335-36 (1957). (Burks v. United States, 437 U.S. 1 (1978), overruled a different portion of Yates relating to double jeopardy; Burks did not question the portion of Yates dealing with preclusion.) If the United States cannot prove a factual claim on the preponderance standard, it cannot logically show the same thing beyond a reasonable doubt. The prosecutor maintains that this statement in Yates was dictum, but we do not think that characterization appropriate. It was integral to the Court's rationale-for although the Justices proceeded to conclude that the civil suit did not block the Yates prosecution under ordinary principles of preclusion, it would not have undertaken that exercise had the Court believed issue preclusion categorically inapplicable to the civil-criminal sequence.

         United States v. Weems, 49 F.3d 528 (9th Cir. 1995), and United States v. Rogers, 960 F.2d 1501 (10th Cir. 1992), both took Yates at face value and held that a criminal prosecution can be blocked by the preclusive effect of a decision in a civil case. No court of appeals has held otherwise. But the United States maintains, and Judge Zagel concluded, that our decision in United States v. Alexander, 743 F.2d 472 (7th Cir. 1984), means that preclusion is unavailable notwithstanding Yates.

         Alexander held that the outcome of an administrative proceeding cannot be invoked to block the resolution of a criminal indictment. The opinion observed that many administrative systems are designed to be informal and expeditious, and that when the agency loses an administrative adjudication it may not be entitled to judicial review. 743 F.2d at 477. Making the administrative process reliable enough to justify preclusive effect in a criminal prosecution might require a substantial investment of prosecutorial resources-if that were even possible under the statute in question. The United States' alternative might be to forego the administrative proceeding, which could have bad consequences of its own.

         When using these considerations of public policy to decide whether to give preclusive effect to administrative adjudications, Alexander drew on Standefer v. United States, 447 U.S. 10 (1980), which had concluded that it would be unwise to apply nonmutual preclusion from one criminal prosecution to another. Standefer and Niederberger had been charged with joint criminal activity. Niederberger was tried first and acquitted; Standefer maintained that he was entitled to the benefit of that adjudication, because it takes two to tango. The Court held not, observing (447 U.S. at 21-23) that nonmutual preclusion (that is, using the result in A's case to determine the result in B's) is designed largely to reduce litigation costs in civil suits, while the criminal process has different and more important goals. The Justices added that acquittals in criminal prosecutions are unreasoned and cannot be reviewed (given the Double Jeopardy Clause); they may reflect compromise or misunderstanding rather than a determination of contested facts. That's why inconsistent verdicts within a single criminal prosecution do not work in a defendant's favor. See, e.g., Bravo-Fernandez v. United States, No. 15-537 (U.S. Nov. 29, 2016).

         Standefer did not cast doubt on Yates. The considerations that led the Court to abjure nonmutual preclusion in the criminal-criminal sequence do not pertain to mutual preclusion in the civil-criminal sequence. Many a civil decision is fully explained (as Judge Leinenweber's was), and all are reviewable on appeal. The Supreme Court understands mutual preclusion not just as a judicial work-saving device but as a matter of right for the litigants involved. See, e.g., Federated Department Stores, Inc. v. Moitie, 452 U.S. 394 (1981).

         This is so even when one of the litigants is the United States. See, e.g., Montana v. United States,440 U.S. 147 (1979); United States v. Stauffer Chemical Co.,464 U.S. 165 (1984). The prosecutor's brief in our case tells us that allowing Judge Leinenweber's decision to foreclose the criminal charges would cause the United States either to pour extra resources into civil suits, disrupting its litigation strategy, or to forego or postpone such suits pending the outcome of criminal cases. Similar arguments were made by the Solicitor General in Montana and Stauffer Chemical, where the United States maintained that the outcome of a poorly litigated civil case (perhaps pursued by a single Assistant United States Attorney in some remote outpost) should not be allowed to block a new suit that has the Department of Justice's full attention and may be designed to serve a vital public goal. But the Justices had none of this. They concluded that ordinary rules of preclusion apply to the United States and that the Department of Justice must navigate around established legal rules, rather than the rules giving way ...


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