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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 therefore will remand for resentencing and for reconsideration of the judgment of forfeiture. We note that the Government, in response to our requests for comments concerning the effect of Boffa on this appeal, agreed that this disposition would be appropriate.


This disposition does not end the matter, however, for appellant has raised a number of claims of trial error that would, if successful, require us to grant a new trial rather than simply remand for resentencing on the remaining counts. Insofar as some of the same arguments were rejected in Boffa,*fn7 we must reject them here.*fn8 Appellant, however, has advanced a number of arguments that are peculiar to his case, and we now turn to these claims.


Appellant contends that he should be granted a new trial because the district court erroneously admitted into evidence the prejudicial testimony of Government witnesses Robert DeWan and Travis Dumas. DeWan, an alleged co-conspirator, operated Countrywide Personnel ("CWP") of California, the company to which the defendants switched Crown Zellerbach's labor-leasing contract. DeWan testified that, during the course of the conspiracy, he had issued checks drawn on the account of CWP of California, at Eugene Boffa's direction, to pay for the lease of a car by Leroy Noones, a union official in Oakland, California. Dumas, a Florida union representative, testified that, during the course of the conspiracy, Robert Boffa had offered him various benefits through CWP of Miami, another labor-leasing company controlled by the Boffas and involved in the scheme, in exchange for his assistance in obtaining labor-leasing contracts with companies whose employees were represented by Dumas' union.*fn9

The district court ruled DeWan's testimony admissible to show Eugene Boffa's control over CWP of California as well as the conspirators' intent and mode of operation; when the evidence was received, the court gave a cautionary instruction appropriately limiting the jury's consideration of the evidence.*fn10 The court also made a finding pursuant to Fed. R. Evid. 403 that the probative value of the evidence was not substantially outweighed by the danger of unfair prejudice.

Similarly, the court found that Dumas' testimony was "highly relevant for the purpose of showing . . . Robert Boffa's control over the operations of Countrywide Personnel of Miami . . . [and also for showing] intent, mode or plan of operation and absence of mistake or accident." The district court gave a similar cautionary instruction*fn11 and again found expressly that the probative value of Dumas' testimony was not substantially outweighed by the danger of unfair prejudice.

In both instances, then, the challenged testimony was offered only to show that co-defendants (and co-conspirators) Eugene and Robert Boffa exercised control over the labor-leasing companies to which the contracts were switched and to reveal the Boffas' intent as well as the nature of their scheme or plan. Proof of these elements was essential to the establishment of the fraud against the leasing companies' employees -- the fraud which formed the basis of the mail-fraud counts. The evidence also was probative of the substantive RICO and RICO-conspiracy charges for which mail fraud constituted a predicate offense.

Appellant concedes these points but argues that the Government's proof of control was sufficiently strong that the challenged evidence need not have been introduced at all. The probative value of this evidence, he contends, was marginal and was outweighed by the unfair prejudice of speculative inferences. To support this conclusion, appellant points out that he never had dealt with Robert Boffa and that neither Dumas nor DeWan testified about any dealings with appellant or about his responsibility for the crimes charged. Moreover, appellant asserts, the establishment of the Boffas' pattern or plan was not probative of the crimes with which appellant himself was charged; nor was the Boffas' intent an issue in appellant's own trial. The testimony, submits appellant, thus was minimally relevant, while its prejudicial impact was enormous, inviting an inference that appellant must have been bribed by the Boffas, as other union officials had been bribed by them.

We believe that the district court acted properly in admitting the challenged evidence. First, the evidence was probative of the crimes charged in the indictment. At the heart of the indictment was the charge that the co-defendants, in derogation of the economic rights of their companies' employees (who ended up with lower wages and lesser benefits), fraudulently switched labor-leasing contracts at various plants from companies controlled by the co-defendants to other companies that ostensibly were independent but that in fact were also controlled by the co-defendants. The Government thus was required to establish that the co-defendants actually controlled the various transferee companies. Testimony that Eugene Boffa directed DeWan to issue checks on the account of CWP of California to pay bribes to a union official, and evidence that Robert Boffa offered to pay similar bribes to a union official through CWP of Miami, evinced the Boffas' control over those companies. Moreover, the conspiracy charged in the indictment also embraced the bribing of union representatives to obtain their cooperation in the labor-leasing-company switches. Evidence that Eugene Boffa, Robert DeWan, and Robert Boffa offered such bribes to various union representatives was relevant to show the conspirators' intent and the nature of their scheme or plan.

Contrary to appellant's contention, such evidence does not become irrelevant merely because it is not probative of appellant's own personal involvement. It is well established that acts in furtherance of a conspiracy, committed by co-conspirators not on trial, are admissible against a defendant even though that defendant did not participate in those particular acts. See, e.g., United States v. Wolfson, 634 F.2d 1217, 1219-20 (9th Cir. 1980); United States v. Davis, 623 F.2d 188, 191-92 (1st Cir. 1980); United States v. Salazar, 485 F.2d 1272, 1276 (2d Cir. 1973), cert. denied, 415 U.S. 985, 39 L. Ed. 2d 882, 94 S. Ct. 1579 (1974); United States v. Cole, 365 F.2d 57, 61 (7th Cir. 1966), cert. denied, 385 U.S. 1024, 87 S. Ct. 741, 17 L. Ed. 2d 672 (1967). Similarly, evidence showing the existence of a conspiracy, its mode of operation, and the other conspirators' participation is admissible at the trial of a severed co-conspirator who was not involved in such conduct. See United States v. Etley, 574 F.2d 850, 852-53 (5th Cir.) (appellants tried separately from co-conspirator whose acts had been introduced), cert. denied, 439 U.S. 967, 58 L. Ed. 2d 427, 99 S. Ct. 458 (1978); cf. Pinkerton v. United States, 328 U.S. 640, 646-47, 90 L. Ed. 1489, 66 S. Ct. 1180 (1946) (motive or intent may be proved by acts or declarations of only some of the conspirators in furtherance of common objective, and all members are responsible even if only one member actually committed the act).

It may well be that the Government had sufficient evidence to prove the Boffas' control of the leasing companies without having to introduce the testimony of DeWan and Dumas, but we cannot say that the Government should have been foreclosed from presenting the strongest possible case, at least in the absence of a concession by the defendant.*fn12 Moreover, the district court twice gave a cautionary instruction regarding the limited use of the evidence, first when that evidence was admitted and again in the charge to the jury. Under the circumstances, the evidence was appropriately "fenced in," and the district court acted well within its discretion in concluding under Fed. R. Evid. 403 that the probative value of the challenged evidence exceeded its prejudicial effect.*fn13 Finally, the overwhelming evidence against appellant would make any putative error harmless at most*fn14 and insufficient on this record to justify our granting a new trial.*fn15


Appellant also alleges that he was deprived of a fair trial because the Government introduced evidence, through the testimony of Charles Allen, that appellant's co-defendants had already been convicted of the same crimes.*fn16 Allen, however, stated merely that he had testified in two trials that had resulted in guilty verdicts; he did not identify the convicted parties. Moreover, even if Allen had testified that the co-defendants had been convicted at a previous jury trial in which he testified, the admission of his testimony would not be grounds for reversal. The entire subject of Allen's testimony at the prior trial was first introduced when defense counsel sought to impeach Allen's credibility by showing that he had testified at trials (including one involving appellant) that had resulted in acquittals, the intended implication being that the jury should not find Allen credible because juries in other cases in which he had testified had acquitted the defendants. The district court thus properly found that appellant had "opened the door" and that the Government therefore should be allowed to attempt to rehabilitate Allen by eliciting evidence that he testified in previous trials resulting in convictions. The district court's cautionary instructions also preclude us from finding any reversible error.


Appellant also contends that the district court erred in failing to instruct the jury regarding appellant's own "theory of defense." In particular, he argues that his receipt of the free monthly use of an automobile over a three-month period constituted a single, rather than a multiple, violation of Taft-Hartley (and thus only a single predicate offense under RICO, which requires at least two predicate acts) and that the jury should have been so charged.*fn17

We reject this contention for several reasons. First, Boffa addressed and rejected a similar argument by appellant's co-defendants. 688 F.2d at 934-36. Although appellant would have us distinguish this case by focusing on his receipt, rather than on the co-defendant's delivery, of the automobile, appellant's own testimony at trial established that he had made monthly car-lease payments, and Boffa specifically held that each monthly payment for the free use of an automobile by appellant was a separate "thing of value" and therefore could constitute a separate Taft-Hartley offense. Id. at 934. Second, the jury found by special verdict that appellant had received the free use of three separate automobiles over different periods of time. Thus even under appellant's theory that "the free use of the automobile for the entire period" constitutes a single offense, the evidence still would have established at least three separate offenses.*fn18 The district court did not err in refusing to charge in accordance with appellant's theory with respect to the car payments; nor are the convictions on the multiple Taft-Hartley counts infirm.*fn19


Finally, appellant argues that he must be granted a new trial on the remaining counts because of prejudicial "spillover effect." In other words, appellant asserts that his Taft-Hartley and RICO convictions should be overturned because: (1) the mail-fraud convictions must be reversed in light of Boffa ; (2) the bulk of the evidence presented at trial related to mail fraud; (3) the jury's decision on the Taft-Hartley counts was influenced by the unfavorable impression of appellant that the jurors formed from the mail-fraud evidence; and (4) the evidence unrelated to mail fraud was insufficient to support appellant's Taft-Hartley and RICO convictions. In a related "spillover" argument, appellant asserts that the district court's errors in dealing with multiplicity in connection with the car payments require us to reduce the number of racketeering acts charged from thirty-five to four and that "the prejudice of Mr. Sheeran being charged with so many Racketeering Acts is obvious." We have rejected the premise of this latter contention in part II.C.; hence, the argument falls of its own weight. The principal "spillover" argument is equally without merit, and we reject it.


We will reverse appellant's mail-fraud convictions (counts 5-11) and remand those counts for a new trial. We will affirm appellant's RICO convictions (counts 1 and 2) and Taft-Hartley convictions (counts 3 and 4). We will vacate appellant's sentence on the RICO and Taft-Hartley convictions and remand for resentencing and reconsideration of the judgment of forfeiture.

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