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United States v. Sheeran

decided: January 24, 1983.


On Appeal From The United States District Court For The District Of Delaware.

Weis and Becker, Circuit Judges, and Cahn,*fn* District Judge.

Author: Becker


BECKER, Circuit Judge.

Francis Sheeran, president of a union local, appeals from a judgment of sentence following his conviction by a jury. Sheeran was found guilty of conspiring to participate in the affairs of an enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(d) (1976); participating in the affairs of an enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(c) (1976);*fn1 receiving illegal benefits (two counts), in violation of the Taft-Hartley Act, 29 U.S.C. § 186(b) (1) & (d) (1976); and committing mail fraud (seven counts), in violation of 18 U.S.C. § 1341 (1976).*fn2 This Court has jurisdiction under 28 U.S.C. § 1291 (1976) (amended 1982).

Appellant was tried on an indictment that named as co-defendants Eugene Boffa, Sr., Robert Boffa, Sr., Louis Kalmar, Chandler Lemon, David Mishler, and Robert Rispo. These men all were connected, in one form or another, with the business of labor leasing: they furnished labor -- in this case, truck drivers -- to various employers who did not wish to hire their own workers or to negotiate contract terms with the workers' collective-bargaining representative. The indictment charged the defendants with engaging in a series of labor-racketeering schemes allegedly effected mainly by switching the labor-leasing contracts at various industrial plants from companies controlled by the co-defendants to other companies that were ostensibly independent but that in fact were also controlled by appellant's co-defendants (principally the Boffas) while covering up this control. According to the indictment, the switches resulted in a loss of wages and benefits to the employees of the co-defendants' labor-leasing companies when the contracts under which they worked were terminated so that the co-defendants could obtain new, more favorable leasing contracts involving their other labor-leasing companies. The co-defendants also allegedly made payoffs to appellant, the president of Teamsters' Union Local 326, in Wilmington, Delaware, whose members were employees of the labor-leasing companies in question, thus obtaining appellant's cooperation and acquiescence in the scheme and avoiding difficulties with the union.

On the basis of these factual allegations, the indictment charged the defendants with: (1) defrauding the employees of several labor-leasing companies of their right to economic benefits guaranteed by section 7 of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 157 (1976); (2) defrauding the employees of their contractual right to wages and benefits; (3) defrauding the employees of their right to the loyal, faithful and honest services of appellant, in his capacity as president of their union, Teamsters' Local 326; (4) making payoffs to appellant in exchange for assurances of labor peace and assistance in obtaining contracts; and (5) obstructing justice by supplying altered documents to a grand jury.

Appellant's case was severed from that of the co-defendants,*fn3 who were tried first and convicted.*fn4 The co-defendants then appealed, and their convictions were affirmed in part and vacated in part in an opinion filed on August 25, 1982, United States v. Boffa, 688 F.2d 919 (3rd. Cir. 1982), cert. denied, 460 U.S. 1022, 103 S. Ct. 1272, 75 L. Ed. 2d 494 (1983). Because Boffa's holding requires that we vacate appellant's sentence and remand for further consideration, we take up first the impact of Boffa on this case.


Boffa involved a number of challenges to the indictment and to the sufficiency of the evidence, although we devoted most of our attention to the contention of appellant's co-defendants that Congress did not intend to impose criminal penalties on those who commit unfair labor practices by violating the rights guaranteed under section 7 of the NLRA. We agreed with the co-defendants' argument and held that the mail-fraud statute, 18 U.S.C. § 1341, does not apply to schemes to defraud people of rights derived exclusively from section 7. We noted that rights created by section 7 are part of a comprehensive federal labor policy that vests administrative and punitive powers exclusively in the NLRB. See Boffa, supra, 688 F.2d at 925-31.

In contrast, we also held in Boffa that Congress did intend the mail-fraud statute to encompass the counts of the indictment alleging that the co-defendants had defrauded the employees of the labor-leasing companies of both their rights under an existing contract and the loyal and faithful services of their union representative. See id. at 930-31. By definition, the right to benefits under an existing contract is rooted in contract law, and the right to the loyal and faithful service of a union representative derives from the duty imposed on such a representative by section 501 of the Labor Management Reporting and Disclosure Act, 29 U.S.C. § 501(a) (1976). Unlike section 7, neither contract law nor section 501 is part of a self-contained and exclusive remedial scheme.

Having found that the Government's mail-fraud theories were only partially valid, and unable to tell whether the jury had considered the invalid theory in reaching its verdict, we reversed the mail-fraud convictions as well as those RICO convictions that depended on mail fraud for their predicate acts of racketeering and remanded for a new trial on the valid mail-fraud theories. We affirmed the remaining RICO convictions.*fn5

Appellant's conviction was based on the same indictment that was considered in Boffa. Because we are bound by the Boffa decision, see United States Court of Appeals for the Third Circuit, Internal Operating Procedures ch. VIII, § C; see also United States v. American Bag & Paper Corp., 609 F.2d 1066, 1067 n.3 (3d Cir. 1979) (determination by prior panel is law of the case and binds future panels), we are obliged to reverse appellant's mail-fraud convictions (counts 5-11) and remand for a new trial based on the two valid theories of mail fraud. Appellant's RICO convictions (counts 1 and 2), however, are predicated on at least two acts of racketeering that are independent of the mail-fraud offenses:*fn6 by special verdict, the jury found that appellant had committed numerous predicate racketeering acts involving violations of section 302 of the Taft-Hartley Act, 29 U.S.C. § 186 (1976 & Supp. V 1981).

Although, in view of the foregoing, we see no warrant for reversing appellant's RICO convictions, we do think it appropriate to remand for resentencing. While appellant's sentence and the judgment of forfeiture could have been premised on the numerous predicate racketeering acts that remain unaffected by our resolution of the mail-fraud issue, we note that we vacated the sentences imposed on Eugene Boffa for RICO convictions because the "district court may have considered the mail fraud predicate acts in sentencing. . . ." See Boffa, supra, 688 F.2d at 939. We also vacated the judgments of forfeiture against defendants Eugene Boffa and Louis Kalmar to permit the district court to determine whether disposition of the appeal "in any way affects [the district court's] prior forfeiture order." Id. Like the Boffa court, we cannot be sure whether the district court sentenced appellant on the basis of the mail-fraud predicate acts or whether the disposition of this appeal would in any way affect that court's judgment of forfeiture. We ...

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