United States v. Joseph Shayota

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 19, 2019
• Docket: 17-10270
• Status: Unpublished

Opinion

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS FILED FOR THE NINTH CIRCUIT AUG 19 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS UNITED STATES OF AMERICA, No. 17-10270

Plaintiff-Appellee, D.C. No. 5:15-cr-00264-LHK-1 v.

JOSEPH SHAYOTA, MEMORANDUM*

Defendant-Appellant.

UNITED STATES OF AMERICA, No. 17-10271

Plaintiff-Appellee, D.C. No. 5:15-cr-00264-LHK-2 v.

ADRIANA SHAYOTA,

Appeal from the United States District Court for the Northern District of California Lucy H. Koh, District Judge, Presiding

Argued and Submitted February 14, 2019 San Francisco, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: SCHROEDER, O’SCANNLAIN, and RAWLINSON, Circuit Judges.

Based on their involvement in a scheme to manufacture and to distribute large

quantities of counterfeit 5-Hour Energy, Joseph and Adriana Shayota were convicted

at trial of conspiracy to traffic in counterfeit goods, see 18 U.S.C. § 2320(a), and

conspiracy to commit copyright infringement and to introduce misbranded food into

interstate commerce, see 17 U.S.C. § 506, 18 U.S.C. § 2319, and 21 U.S.C. §§ 331

and 333. On appeal, the Shayotas challenge their convictions on numerous grounds.2

Because the facts are known to the parties, we repeat them only as necessary to

explain our decision.

I

The Shayotas jointly raise four challenges to their convictions.

A

First, they argue that the court abused its discretion by admitting the former

testimony of two co-conspirators, Walid Jamil and Leslie Roman, who were deposed

during a civil suit brought by the manufacturer of 5-Hour Energy against the Shayotas

for copyright and trademark infringement. Because Jamil and Roman invoked their

2 The “unavailability” issue under the Confrontation Clause is treated in an opinion issued concurrently with this memorandum disposition. See United States v. Shayota, Nos. 17-10270 & 17-10271, – F.3d – (9th Cir. 2019). 2 Fifth Amendment privilege against self-incrimination and refused to testify during the

Shayotas’ subsequent criminal trial, the government offered portions of their

deposition testimony into evidence under Federal Rule of Evidence 804. Such rule

permits the use of former testimony by a witness who has validly invoked a

testimonial privilege so long as the party against whom the testimony is offered had

“an opportunity and similar motive to develop it” by cross-examination. See id. The

Shayotas argue that admitting the depositions was error because they claim that they

did not have a “similar motive” to develop the testimony.

“Similar motive does not mean identical motive.” United States v. McFall, 558

F.3d 951, 963 (9th Cir. 2009) (internal quotation marks omitted). Rather, the key

inquiry is whether the party’s “fundamental objective” was the same in both

proceedings. Id. Because the Shayotas faced increased penalties in the civil suit for

willful trademark infringement under the Lanham Act, one of their fundamental

objectives in the civil suit was to demonstrate lack of knowledge and lack of intent to

infringe on 5-Hour Energy’s registered trademarks. Similarly, in the criminal trial,

the Shayotas shared the fundamental objective of casting doubt on the government's

proof regarding their knowledge of the re-labeling conspiracy. The Shayotas’ motives

in both proceedings were therefore sufficiently similar under Rule 804(b). The district

court did not abuse its discretion as to the “similar motive” issue.

3 B

The Shayotas next contend that the court abused its discretion by excluding

extrinsic evidence of a prior tax fraud investigation involving Jamil under Federal

Rule of Evidence 608(b). But the district court offered a second basis for its ruling,

explaining that “Rule 403 . . . provides an independent ground for excluding the

evidence.” The Shayotas failed to appeal the court’s alternative ruling, and such

ruling was not an abuse of discretion: the Shayotas had the opportunity to read aloud

to the jury a stipulation regarding Jamil’s tax fraud investigation, or to read into the

record portions of his deposition testimony in which he was cross-examined on such

investigation. Any additional extrinsic evidence would have been needlessly

cumulative and a waste of time. See Fed. R. Evid. 403.

C

The Shayotas also challenge the admission of portions of their redacted

depositions, arguing that such redactions were insufficient under Gray v. Maryland,

523 U.S. 185 (1998), and that admission of the testimony therefore violated Bruton

v. United States, 391 U.S. 123 (1968). But neither Joseph nor Adriana objected to the

redactions at trial. Indeed, the Shayotas and the government conferred about such

redactions and filed a joint statement with the court averring that they had “resolved

any areas of disagreement” regarding the depositions. Consequently, under the

4 invited error doctrine, the Shayotas have waived their rights to challenge such

redactions on appeal. See United States v. Perez, 116 F.3d 840, 845 (9th Cir. 1997)

(en banc) (“If the defendant has both invited the error, and relinquished a known right,

then the error is waived and therefore unreviewable.”); United States v.

Reyes-Alvarado, 963 F.2d 1184, 1187 (9th Cir. 1992) (“[A] defendant who elicits a

statement that may be violative of Bruton may not later claim error based on the

admission of that statement.”).

D

Finally, the Shayotas argue that the district court erred by giving a deliberate

ignorance jury instruction. An instruction on deliberate ignorance is appropriate

where a defendant claims to have no positive knowledge of illegal activity, but the

evidence shows that she deliberately chose to avoid learning of the illicit nature of her

acts. United States v. Jewell, 532 F.2d 697, 703–04 (9th Cir. 1976) (en banc). The

Shayotas claim that the instruction was given in error because there was no evidence

that they were deliberately ignorant. But the record belies their assertion. Despite

their exposure to numerous suspicious aspects of the scheme, the Shayotas continued

to participate, selling the counterfeit 5-Hour Energy to distributors and retailers

around the country. The district court’s instruction was proper. See United States v.

5 Ramos-Atondo, 732 F.3d 1113, 1120 (9th Cir. 2013); United States v. Nicholson, 677

F.2d 706, 711 (9th Cir. 1982).

II

Adriana Shayota raises two additional challenges to her convictions.

First, she argues that insufficient evidence supported her convictions because

she claims that the government failed to prove that she knowingly participated in the

conspiracies. We are not persuaded.

Adriana was exposed to the scheme from its inception. Because she owned

Baja Exporting and handled its finances, she processed and paid invoices for 5-Hour

Energy even after Baja terminated its relationship with the manufacturer. Such

invoices included payments for “trucking labels, supplies, ink for rest of

orders”—items that would have been useful in creating and distributing Baja’s own

counterfeit version of the drink. Adriana also admitted that she prepared a spreadsheet

for Jamil that reflected payments for “equipment” and that she occasionally dealt in

cash for 5-Hour Energy deliveries. Finally, after Adriana discovered that 5-Hour

Energy’s manufacturer was suing the Shayotas’ associates for copyright infringement

relating to the counterfeit 5-Hour Energy sales, Adriana transferred $2 million from

Baja’s account to a separate account over which Adriana had signatory authority.

6 Adriana claims that there are innocent explanations for much of this evidence,

but the jury was not required to credit her version of events over the testimony of

other credible witnesses that tended to support her guilt. Adriana’s extensive

involvement in the company, her handling of invoices and spreadsheets that listed ink

and equipment, and the suspicious timing of her $2 million transfer together support

an inference that Adriana was aware that Baja was trading in counterfeit goods and

demonstrate her consciousness of guilt. Viewing the evidence in the light most

favorable to the jury’s verdict, a reasonable juror could have concluded that Adriana

conspired to traffic in counterfeit goods and to commit criminal copyright

infringement. See United States v. Ortega, 203 F.3d 675, 683 (9th Cir. 2000) (“A

conspiracy may be proven by circumstantial evidence.”); United States v. Grasso, 724

F.3d 1077, 1086 (9th Cir. 2013) (A defendant’s connection to the conspiracy need

only be “slight.”).

B

Finally, Adriana argues that her trial counsel was ineffective by failing to

interview and to call an exculpatory witness—attorney Gregory Vega—with whom

Adriana consulted before she made the $2 million transfer. According to Adriana,

Vega would have testified that he advised Adriana that she could lawfully transfer

money out of Baja’s account in the absence of an asset freeze or a court order

7 prohibiting distributions from the account. Because the government relied on the $2

million transfer as evidence of Adriana’s consciousness of guilt, she argues that the

absence of Vega’s testimony was prejudicial: without it, she says, the jury was left

with the impression that she had an illicit purpose for transferring the funds.

Adriana’s ineffective-assistance-of-counsel claim fails because the failure to

call Vega as a witness was not prejudicial. See Strickland v. Washington, 466 U.S.

668, 693, 697 (1984). Vega’s testimony merely established that Adriana knew she

was not committing a crime by transferring funds out of Baja’s account. But such

testimony has no bearing on Adriana’s motivation for transferring the funds. Even if

the testimony had been offered, the jury still could have concluded that she transferred

the funds in an effort to drain the account of the illicit fruits of the conspiracy. The

absence of Vega’s testimony therefore does not create a “reasonable probability that,

but for counsel’s unprofessional errors, the result of the proceeding would have been

different.” Id. at 694.

AFFIRMED.

8 FILED United States v. Shayota, Case Nos. 17-10270 and 17-10271 AUG 19 2019 Rawlinson, Circuit Judge, concurring: MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS I concur in the result.