Unpublished Disposition, 878 F.2d 387 (9th Cir. 1987)

MEMORANDUM^*** 

Following a jury trial, Linda Rodriguez and Anthony Tortorich appeal their convictions for conspiracy and trafficking in counterfeit goods. The defendants contend that there is insufficient evidence to sustain their convictions. In addition, Rodriguez claims that the district court erred in denying her motion for a continuance, in replacing an original juror with an alternate, and in failing to give certain jury instructions. We affirm.

BACKGROUND

Between February 1986 and June 1987 the FBI conducted an undercover investigation in Las Vegas, Nevada, targeting traffickers in counterfeit watches. The FBI operated out of an existing jewelry store, G.T. Watch and Jewelry, Inc. (GT). During the investigation, government informant Gary Peacock became acquainted with Tortorich. The two men occasionally discussed counterfeit goods. Peacock expressed an interest in meeting a woman Tortorich knew who dealt in counterfeit watches.

On May 20, 1986, Tortorich brought Rodriguez to the GT store and introduced her to Peacock and FBI Special Agent Rick Baken. Without any discussion of why the defendants were at the store, Rodriguez began removing watches from a folder she carried. She had both genuine and counterfeit watches, referring to them as "real" or "phony." During the discussions, Tortorich indicated that he would not receive a commission for any watches sold by Rodriguez. Rodriguez, however, stated that Tortorich would probably get a free watch out of the deal.

Baken later phoned Rodriguez and ordered 105 counterfeit watches. On June 5, Rodriguez delivered 131 counterfeit watches to the GT store and received $3616. On June 16, Rodriguez took a second order from Baken at the GT store. On June 26, she delivered 147 counterfeit watches and received $3925.

On May 20, 1987, a federal grand jury returned a three count indictment against Tortorich and Rodriguez. The defendants were charged with one count of conspiracy to traffic in counterfeit goods and two counts of trafficking in counterfeit goods. The defendants pleaded not guilty to all three counts. Following two continuances, trial was set for December 14, 1987.

During the four day trial the jury saw videotapes and heard tape recordings of meetings and phone calls between the defendants and Baken and Peacock. Both Baken and Peacock testified about their contacts with the defendants. The jury found both defendants guilty on all counts. The defendants timely appealed. We have jurisdiction under 28 U.S.C. § 1291 (1982).

DISCUSSION

There is sufficient evidence to support a conviction if, "after reviewing 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." Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original). Tortorich and Rodriguez contend that there was insufficient evidence to convict them of conspiracy or trafficking in counterfeit goods.

"The essential elements of conspiracy consist of 'an agreement to accomplish an illegal objective, coupled with one or more overt acts in furtherance of the illegal purpose and the requisite intent necessary to commit the underlying substantive offense.' " United States v. Reese, 775 F.2d 1066, 1071 (9th Cir. 1985) (quoting United States v. Becker, 720 F.2d 1033, 1035 (9th Cir. 1983)). Although the criminal scheme may be inferred from circumstantial evidence, United States v. Friedman, 593 F.2d 109, 115 (9th Cir. 1979), the prosecution must show that each defendant had knowledge of the conspiracy's illegal objective and agreed to pursue that objective as a common one, United States v. Krasovich, 819 F.2d 253, 255 (9th Cir. 1987).

Tortorich contends that the government failed to show a common goal between himself and Rodriguez. He argues that the evidence does not establish that he conspired with Rodriguez to traffic in counterfeit watches.¹  The evidence, however, indicates that Tortorich was aware of the illegal objective: to sell counterfeit watches. The government argues that his introduction of Rodriguez to Baken and Peacock at the May 20 meeting was an act in furtherance of that objective. The government argues that Rodriguez's actions at that meeting and her two subsequent deliveries of watches constituted acts in furtherance of the conspiracy. The government contends that the agreement between Tortorich and Rodriguez, whereby Tortorich supplied Rodriguez with willing buyers for her watches, can be inferred from the evidence.

The evidence presented in this case would allow a rational trier of fact to conclude that Tortorich and Rodriguez agreed to traffic in counterfeit watches. We conclude that there is sufficient evidence to sustain the defendants' conspiracy convictions.

18 U.S.C. § 2320(a) provides that " [w]hoever intentionally traffics or attempts to traffic in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services shall" be subject to criminal sanctions. A 'counterfeit mark" is defined as:

(A) a spurious mark--

(i) that is used in connection with trafficking in goods or services;

(ii) that is identical with, or substantially indistinguishable from, a mark registered for those goods or services on the principal register in the United States Patent and Trademark Office and in use, whether or not the defendant knew such mark was so registered; and

(iii) the use of which is likely to cause confusion, to cause mistake, or to deceive....

18 U.S.C. § 2320(d) (1) (Supp. V 1987).

Rodriguez contends that she cannot be convicted of violating section 2320 because she did not knowingly use a counterfeit mark. Rodriguez, however, continually referred to the counterfeit watches by their trademark names. In fact, Rodriguez distinguished between a "real Rolex" and the "phony Rolexes." She also stated that she could not sell them at work and had to be quiet about selling them. These facts support a conclusion that Rodriguez knew the watches had counterfeit trademarks.

Rodriguez next argues that the counterfeit watches were easily distinguishable from the genuine articles. Representatives from the trademark manufacturers testified at trial as to the similarities between the counterfeit and genuine watches. The jury was allowed to compare these watches. Section 2320's civil counterpart, the Lanham Act, 15 U.S.C. § 1051-1127 (1982 & Supp. V 1987), uses identical language regarding the likelihood that the counterfeit mark will deceive or cause confusion or mistake. 15 U.S.C. § 1114(1) (a) (1982) (section 1114 provides a civil remedy for trademark infringement). Case law has made clear that it need not be the direct purchasers of the counterfeit goods who are confused: post-sale confusion among others as to the source of the product is actionable under the Lanham Act. See Levi Strauss & Co. v. Blue Bell, Inc., 632 F.2d 817, 821-22 (9th Cir. 1980).

Courts considering the "confusion" element in section 2320 have similarly rejected the argument that liability turns on whether the direct purchaser was confused. See United States v. Gantos, 817 F.2d 41, 43 (8th Cir.), cert. denied, 108 S. Ct. 175 (1987); United States v. Infurnari, 647 F. Supp. 57, 59-60 (W.D.N.Y. 1986); United States v. Gonzalez, 630 F. Supp. 894, 896 (S.D. Fla. 1986). Furthermore, courts have stressed that section 2320 is "not just designed for the protection of consumers. [It is] likewise fashioned for the protection of trademarks themselves and for the prevention of the cheapening and dilution of the genuine product." Id.; see also Gantos, 817 F.2d at 43; Infurnari, 647 F. Supp. at 59.

Rodriguez further contends that using a trademark on a replica product is not a violation of the Lanham Act and therefore it should not violate section 2320. Rodriguez, however, misconstrues the cases cited. See Mattel, Inc. v. Azrak-Hamway Int'l, Inc., 724 F.2d 357 (2d Cir. 1983) (per curiam); Smith v. Chanel, Inc., 402 F.2d 562 (9th Cir. 1968); Societe Comptoir De L'Industrie Cotonniere Etablissements Boussac v. Alexander's Dep't Stores, Inc., 299 F.2d 33 (2d Cir. 1962). These cases actually hold that a competitor may "use another's registered trademark to describe aspects of one's own goods, even to indicate that one's product is a legitimate copy of another's product." Mattel, 724 F.2d at 361; see also Smith, 402 F.2d at 563; Societe, 299 F.2d at 36.

The watches sold by Rodriguez did not use the trademark names in the manner described in the foregoing cases. The trademark names and logos appeared on the product itself, suggesting that the counterfeit watches were in fact genuine products. We conclude that Rodriguez was properly convicted of violating section 2320.

Tortorich can be held responsible for Rodriguez's sales because the sales were acts in furtherance of the conspiracy between himself and Rodriguez. " [A] party to an unlawful conspiracy may be held responsible for substantive offenses committed by his co-conspirators in furtherance of the unlawful project, even if the party himself did not participate directly in the commission of the substantive offense." United States v. Crespo de Llano, 838 F.2d 1006, 1019 (9th Cir. 1988), modifying 830 F.2d 1532 (9th Cir. 1987). Tortorich was properly convicted of trafficking in counterfeit goods.

Rodriguez contends that the district court abused its discretion in denying her motion for a continuance to allow recently substituted counsel to prepare for trial. Denial of a motion for a continuance is reversed only for a clear abuse of discretion, United States v. Gonzalez, 800 F.2d 895, 898 (9th Cir. 1986), and "the defendant must show that the denial resulted in actual prejudice to his defense," id; see also United States v. Polizzi, 801 F.2d 1543, 1559 (9th Cir. 1986).

We conclude that the district court did not abuse its discretion in denying the motion for a continuance. Rodriguez had many months to find a suitable attorney. She waited until five days before trial to substitute counsel. She did not articulate why her appointed counsel was inadequate. The district court allowed the substitution expressly on the grounds that new counsel would be ready to proceed. Furthermore, Rodriguez has not demonstrated any prejudice resulting from the denial of her motion.

III. Replacement of Original Juror with an Alternate

Rodriguez contends that the district court abused its discretion in replacing one of the original jurors with an alternate during the course of the trial. Fed. R. Crim. P. 24(c) provides that alternate jurors may replace jurors who become unable to perform their duties. The substitution decision is committed to the discretion of the district court. United States v. Jones, 534 F.2d 1344, 1346 (9th Cir.), cert. denied, 429 U.S. 840 (1976).

On the fourth day of trial the district court replaced an original juror with an alternate after being informed that the original juror had been in an accident. The juror was already half an hour late and the court did not know how much longer the juror would be delayed. We conclude that the court did not abuse its discretion in replacing the juror with an alternate. See United States v. Corsino, 812 F.2d 26, 33 (1st Cir. 1987).

IV. District Court's Refusal to Give Requested Jury Instructions

The failure to give instructions regarding the defendant's theory of the case is reversible error if the theory is legally sound and evidence in the case makes it applicable. United States v. Escobar De Bright, 742 F.2d 1196, 1198 (9th Cir. 1984).

Rodriguez contends that the district court erred in refusing to give a jury instruction regarding the defense of entrapment by estoppel. "Entrapment by estoppel applies when an official tells the defendant that certain conduct is legal and the defendant believes the official." United States v. Hsieh Hui Mei Chen, 754 F.2d 817, 825 (9th Cir.), cert. denied, 471 U.S. 1139 (1985). Furthermore, "the defendant must show that he relied on the false information and that his reliance was reasonable." United States v. Tallmadge, 829 F.2d 767, 774 (9th Cir. 1987).

Rodriguez's remarks at the May 20 meeting clearly indicate that she already knew the illegal nature of selling counterfeit watches. We conclude that the district court did not commit reversible error in failing to give an entrapment by estoppel instruction. Rodriguez knew the nature of her actions and she neither relied upon nor was misled by anything Baken said. See Hsieh Hui Mei Chen, 754 F.2d at 825 (failure to give entrapment instruction proper because official did not state the conduct was legal and the defendant knew her actions were unlawful).

Rodriguez contends that the district court erred in failing to give an instruction regarding the procuring agent defense. The underlying theory of the defense is that one who acts solely as a procuring agent for the buyer is a principal in the purchase rather than the sale of the contraband, and can incur no greater liability than the purchaser. See People v. Roche, 45 N.Y.2d 78, 82, 379 N.E.2d 208, 211, 407 N.Y.S.2d 682, 685, cert. denied, 439 U.S. 958 (1978). Rodriguez relies mainly on the New York state courts' development of the defense, as it has not been widely considered in this circuit. The agency defense, however, is not available to Rodriguez. The New York Court of Appeals has held that:

[i]t goes without saying that, in order to fall within its sweep, the agent must have no direct interest in the contraband being sold. His function must be performed without any profit motive. If he is in fact interested in the outcome, either by ownership of the property or by an agency relationship with the seller, he fails, by definition, to be an agent for the purchaser.

Id. at 85, 379 N.E.2d at 212, 407 N.Y.S.2d at 686 (citations omitted). See also People v. Argibay, 45 N.Y.2d 45, 53-54, 379 N.E.2d 191, 194-95, 407 N.Y.S.2d 664, 668, cert. denied, 439 U.S. 930 (1978). Rodriguez did more than simply procure watches for Baken and Peacock. She had a substantial profit motive. She told Baken and Peacock at their first meeting that " [t]hat's what we're here for, to make money."

We conclude that Rodriguez clearly acted on her own behalf in selling watches to Baken and Peacock, and not as their procuring agent. The evidence demonstrates that she was not entitled to an instruction on this defense.

CONCLUSION

The judgment of the district court is AFFIRMED.

FERGUSON, Circuit Judge, dissenting in part:

I concur in most of the majority opinion. However, I do not believe that the Government offered sufficient evidence to show there was an agreement between Tortorich and Rodriguez to traffic in counterfeit watches. Therefore, I dissent from the majority's affirmance of the conspiracy convictions.

The gravamen of criminal conspiracy is an agreement to effectuate a criminal design. United States v. Melchor-Lopez, 627 F.2d 886, 890 (9th Cir. 1980). Thus, a conspiracy requires proof of preconcert and connivance not necessarily inherent in the mere joint activity common to aiding and abetting. United States v. Arrington, 719 F.2d 701, 705 (4th Cir. 1983), cert. denied, 465 U.S. 1028 (1984) (quoting United States v. Peterson, 524 F.2d 167, 174 (4th Cir. 1975), cert. denied, 423 U.S. 1088 (1976)). While the majority correctly points out that the agreement to engage in criminal activity need not be explicit but may be inferred from circumstantial evidence, it is also true that the government "must do more than pile inference upon inference upon which to base a conspiracy charge." United States v. Williams-Hendricks, 805 F.2d 496, 502 (5th Cir. 1986). Moreover, an inference of an agreement may be drawn only if the evidence demonstrates "a concert of action, all the parties working together understandingly, with a single design for the accomplishment of a common purpose." Melchor-Lopez, 627 F.2d at 890; United States v. Monroe, 552 F.2d 860, 862-63 (9th Cir.), cert. denied, 431 U.S. 972 (1977).

As to the evidence adduced concerning the existence of a Rodriguez-Tortorich agreement to traffic in counterfeit goods, informant Peacock testified at trial that Tortorich told him he could introduce him to a source of counterfeit watches. He also stated that Tortorich accompanied Rodriguez to the jewelry store for the first meeting with Peacock and Special Agent Baken regarding the sale of counterfeit watches. The videotape of this first meeting offered as evidence at trial revealed that Rodriguez told the agents that Tortorich " [would] probably get a watch" for bringing her together with the prospective buyers.

The videotape also showed that only Rodriguez possessed the counterfeit watches when Rodriguez and Tortorich met with the agents, and that only Rodriguez made any representation regarding the watches. At one point during the meeting, in response to a question concerning whether he had a financial stake in the potential watch sales, Tortorich responded, "No, I'm not in this." Later, when asked whether he had advised Rodriguez to be careful while engaging in the criminal transactions, Tortorich stated that Rodriguez was an old friend whom he was not going to coach and asserted "I introduce you [Rodriguez and Baken]; do whatever you want." Conspicuously absent from the Government's case at trial was any evidence of further dealings between Tortorich and Baken, Peacock, or Rodriguez after the meeting in the jewelry store.

The majority concludes that this evidence, viewed in the light most favorable to the Government, provides a sufficient basis from which to infer an agreement between Tortorich and Rodriguez to traffic in counterfeit goods. I disagree.

Taken together, this evidence fails to evince the requisite concert of action and joint activity necessary to infer an agreement to commit a crime. Although Tortorich accompanied Rodriguez to the jewelry store, Tortorich explicitly disavowed any interest in the transactions between Rodriguez and the Government agents. Indeed, Rodriguez and Tortorich's conduct throughout the entire sting operation strongly suggests that Rodriguez had sole authority and exclusive control over the counterfeiting operation. Moreover, notwithstanding the Government's implications, the mere fact that Rodriguez stated that she would probably give Tortorich a free watch for introducing her to Baken and Peacock does not, without more, provide a basis from which to infer an agreement to traffic in counterfeit goods. On the contrary, in the absence of evidence indicating similar dealings or arrangements between Tortorich and Rodriguez, such a statement tends to corroborate the absence of an agreement, since taken at her word, Rodriguez was not certain as to whether she intended to give something of value to Tortorich for introducing her to the buyers.¹ 

Simply put, the Government failed to show that Tortorich and Rodriguez entered into a criminal partnership. At most, the evidence proves that Tortorich merely introduced a willing buyer of counterfeit goods to a potential seller of such goods. Neither this court, nor any other court, has held that such evidence, standing alone, is sufficient to establish the existence of an agreement between a "facilitator" (i.e. an individual who introduces a buyer to a seller) and a seller.²  Indeed, the Second Circuit has explicitly held that such evidence, without more, provides an insufficient basis to sustain a conspiracy conviction. See United States v. Tyler, 758 F.2d 66, 69 (2d Cir. 1985) (evidence that defendant helped a willing buyer locate a willing seller, standing alone, is insufficient to establish agreement between defendant and seller); United States v. Hysohion, 448 F.2d 343, 347 (2d Cir. 1971) ("The fact that Rimbaud told Everett, a willing buyer, how to make contact with a willing seller does not necessarily imply that there was an agreement between that seller and Rimbaud.").

By relying upon tenuous, unsupported inferences to sustain the verdict in this case, the majority has failed to take heed of the cautionary note sounded in Melchor-Lopez: "While direct evidence of an agreement is clearly not essential, this evidentiary principle does not reduce the government's burden of proof through other means as to the substantive elements of the offense." 627 F.2d at 891. The Government clearly failed to meet its burden regarding the existence of an agreement--an essential element of the crime of conspiracy. Since no rational juror could have concluded beyond a reasonable doubt that Tortorich and Rodriguez agreed to traffic in counterfeit goods, the conspiracy convictions should be reversed.