United States v. Shayota, 5:15-cr-00264

Background

Federal grand jury returned a three-count indictment (later superseded to a two-count Superseding Information) charging defendants with a conspiracy to traffic in counterfeit goods and related offenses concerning counterfeit 5-Hour ENERGY product packaging.
Government filed a Rule 404(b) notice identifying five prior "schemes" (Equal/Splenda/Uncle Ben’s; Truvia; Monster/Mars; Welch’s/Mott’s; Pillsbury) it intended to introduce to prove knowledge, intent, preparation, plan, and absence of mistake.
Several defendants admitted involvement in some schemes; others disputed involvement or characterized the conduct as legitimate "gray market" diversion rather than illegal acts.
Defendants moved to exclude the 404(b) evidence, arguing inadequate notice, impermissible propensity use, insufficiency of proof, and unfair prejudice under Rule 403.
Court evaluated adequacy of notice, the four Lozano factors (materiality, remoteness, sufficiency, similarity), conducted a Rule 403 balancing, and considered a limiting instruction.
Ruling: Court denied motions to exclude as to Joseph & Adriana Shayota, Walid Jamil, and Mario Ramirez; granted Camilo Ramirez’s motion as to the Equal scheme only; excluded settlement/civil judgment evidence the Government elected not to introduce; ordered a limiting instruction if prior-scheme evidence is admitted.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Adequacy of Rule 404(b) notice	Government: provided general nature and specific purposes (knowledge, intent, plan, absence of mistake) in pretrial notice and reply briefs	Defendants: notice insufficient; Government must identify specific purposes per Curtin/Merriweather	Notice found sufficient under Rule 404(b); Court exercises discretion to find notice adequate
Admissibility under Lozano factors (materiality & remoteness)	Government: prior schemes show skill, preparation, and intent relevant to elements of charged offenses	Defendants: prior acts were lawful/common business practice (diversion) and thus irrelevant or prejudicial	Materiality and remoteness satisfied for all five schemes; evidence relevant to knowledge/intent and not too remote
Sufficiency / similarity of prior-act evidence	Government: depositions/documents show defendants participated in schemes, some involving counterfeit packaging similar to charged offense	Defendants: evidence insufficient to tie certain defendants (notably Camilo) to prior schemes; others argue acts lacked similarity (no counterfeiting)	Sufficiency found for most defendants and schemes; Camilo Ramirez: insufficient evidence linking him to Equal scheme — 404(b) evidence excluded for Camilo as to that scheme; similarity satisfied (especially for Equal/Truvia involving counterfeit packaging)
Rule 403 prejudice vs. probative value and limiting instruction	Government: probative value high to rebut mistake/accident; limited risk of prejudice and can be mitigated by defendant evidence	Defendants: prior-schemes evidence will unfairly prejudice jury who may view diversion as illegal	Probative value substantially outweighs unfair prejudice; motions denied for Jamil, Mario, Joseph/Adriana; Court requires limiting instruction restricting use to knowledge/intent/preparation/absence of mistake

Key Cases Cited

United States v. Lozano, 623 F.3d 1055 (9th Cir.) (sets forth four-factor 404(b) test)
United States v. Curtin, 489 F.3d 935 (9th Cir.) (discusses conducting Rule 403 balancing in 404(b) analysis)
Huddleston v. United States, 485 U.S. 681 (U.S.) (standard for sufficiency of evidence for admission of other-act evidence)
United States v. Vega, 188 F.3d 1150 (9th Cir.) (Rule 404(b) notice purpose and scope)
United States v. Erickson, 75 F.3d 470 (9th Cir.) (notice satisfied where government proffered evidence before trial and no prejudice)
United States v. Bailleaux, 685 F.2d 1105 (9th Cir.) (when similarity matters for proving identity, modus operandi, or absence of mistake)