Defendants facing large restitution figures should take note: Two recent appellate decisions offer new paths to challenging restitution. The recent Law360 article by Jillian Berman and Cindy Kuang explores avenues available to the defense. 

In Ellingburg v. United States, the Supreme Court unanimously held that restitution imposed under the Mandatory Victims Restitution Act is criminal punishment for purposes of the Ex Post Facto Clause––removing a doctrinal foundation on which courts have long rejected constitutional challenges to restitution.  Just ten days after Ellingburg, in another restitution case, the Third Circuit held in United States v. Abrams that victims’ attorneys’ fees do not constitute compensable loss under the MVRA––taking direct aim at the Second Circuit’s contrary holding in United States v. Afriyie.

In Ellingburg v. United States, the Supreme Court unanimously held that restitution imposed under the Mandatory Victims Restitution Act is criminal punishment for purposes of the Ex Post Facto Clause––removing a doctrinal foundation on which courts have long rejected constitutional challenges to restitution.  Just ten days after Ellingburg, in another restitution case, the Third Circuit held in United States v. Abrams that victims’ attorneys’ fees do not constitute compensable loss under the MVRA––taking direct aim at the Second Circuit’s contrary holding in United States v. Afriyie.

Ellingburg has opened the door to Apprendi challenges to restitution that courts previously foreclosed.  Under Apprendi v. New Jersey, any fact that increases punishment––which, after Ellingburg, includes restitution––beyond a statutory maximum must be found by a jury beyond a reasonable doubt. Yet the MVRA continues to permit judges to determine restitution amounts under a mere preponderance standard, without any jury involvement.  The tension that Ellingburg creates is on display in United States v. Javice, where the district court ordered defendants to pay hundreds of millions of dollars in restitution (including over $115 million in attorneys’ fees) based on judicial factfinding at sentencing.

Meanwhile, the Third Circuit’s reasoning in Abrams that MVRA restitution excludes victims’ attorneys’ fees is straightforward: the costs enumerated in the MVRA’s residual clause are modest, attendance-related expenses, and it would be anomalous for Congress to have smuggled into that same provision a category of liability that can run into the tens of millions of dollars.  Abrams creates a circuit split with the Second Circuit’s decision in Afriyie.  In addition, Javice––where the attorneys’ fees at issue were the defendants’ own, borne by JPMorgan only because of a Delaware indemnification ruling––may soon present an opportunity for the Second Circuit to evaluate its position.

Together, Ellingburg and Abrams provide defense practitioners with arguments to challenge restitution orders that would previously have been foreclosed.  The Apprendi argument is no longer blocked by the characterization of restitution as remedial; and the attorneys’ fees question is now unsettled across jurisdictions.  For defendants facing large restitution figures, these developments warrant close attention at both the trial and appellate levels.