Thomas N. MOORE, Petitioner-Appellee, v. UNITED STATES of America, Respondent-Appellant.
No. 88-1347
United States Court of Appeals, Seventh Circuit
January 9, 1989
Rehearing and Rehearing En Banc Denied February 22, 1989.
865 F.2d 149
Argued Oct. 28, 1988.
This case is different from Wade v. Goldschmidt, 673 F.2d 182 (7th Cir.1982), which involved a non-profit group organized to support construction of a bridge. There is nothing in Wade to suggest an immediate threat to the plaintiff group if the bridge were not built. In this respect, I do not agree that a statutory challenge under the arbitrary and capricious standard to the actions of a federal agency (as in Wade) bears much resemblance to the constitutional challenge under the rational relationship test in the case before us.
The majority argues that the Union members would not be “forced” to work with PVC even if the City loses in this suit. There seems to me no basis for this assertion; the Union‘s bargaining power may well be inadequate to prevent the use of PVC in the jobs they work if it were legalized.
By the same token, it is entirely reasonable to conclude that the Union‘s ability to preclude the use of PVC will be impaired and impeded if the City loses this lawsuit. The majority claims that the Union‘s capacity to “contract freely” will not be affected by the outcome of this action. That the Union will have to rely on a bargaining power of unknown strength instead of on the clear-cut provisions of the Building Code seems to me as a practical matter to impair its ability to protect its interest. By losing the protection of the Building Code section the Union loses its first and probably strongest line of defense.
Despite the strength of its position on the “direct interest” and “impairment of interest” prongs of its intervention argument, the Union falls short on the “adequacy of representation” prong. There is no doubt some difference in terms of immediacy between the Union‘s health interest and the general public interest in health. But this is not a difference sufficient to overcome the presumption that a governmental body can adequately defend the validity of its laws and thereby fully represent the public interest. In general, we need not take account of all the political cross-currents in measuring the adequacy of representation by a governmental body. These cross-currents might become sufficient to throw the presumption of adequacy into doubt in some circumstances, but those circumstances do not appear to be present here.
Michael J. Shepard, Asst. U.S. Atty., Anton R. Valukas, U.S. Atty., Chicago, Ill., for respondent-appellant.
Before BAUER, Chief Judge, and CUMMINGS and CUDAHY, Circuit Judges.
CUMMINGS, Circuit Judge.
In the district court, petitioner Thomas N. Moore filed a motion for post-conviction relief under
Moore was formerly the Purchasing Agent for the Metropolitan Sanitary District of Greater Chicago (“MSD“). In March 1985, he was charged with five counts of mail fraud and a jury found him guilty on all counts. He was sentenced to
Petitioner‘s motion to vacate his conviction and sentence was based on the subsequent decision of the Supreme Court in McNally v. United States, 483 U.S. 350, 107 S. Ct. 2875, 97 L. Ed. 2d 292 (1987). District Judge Plunkett, who had tried Moore, agreed that McNally controlled and therefore granted petitioner‘s motion to vacate the conviction and sentence. In his accompanying memorandum opinion, the district judge relied on the following rationale:
the jury in Moore‘s case was never instructed to consider anything but the “good government” and “honest and loyal services” theories. Moore‘s jury was never asked to consider whether Moore‘s conduct deprived the MSD of money or property. The jury was never asked to consider whether the kickback Moore received rightfully belonged to the MSD. Had the jury been instructed on these issues, the result we reach may well have been different. But we cannot say that Moore‘s jury had to find that Moore deprived the MSD of money or property in order to have convicted him. (Page 10 of January 14, 1988, Mem.Op.)
The district court concluded that the indictment did not state an offense under the mail fraud statute and that Moore‘s conviction was “based solely on the deprivation of employee‘s loyal and honest services.” Idem at 12. We respectfully disagree.
In deciding whether Moore‘s conviction was improper under McNally, we must consider the evidence, the indictment and the instructions.
The Evidence
The evidence here must be considered in the view most favorable to the Government. Glasser v. United States, 315 U.S. 60, 80, 62 S. Ct. 457, 469, 86 L. Ed. 680 (1942); United States v. Rollins and Slaughter, 862 F.2d 1282, 1287 (7th Cir. 1988). As noted, Moore was the Purchasing Agent of the MSD in 1979 when he devised a scheme to rig bid openings on a contract to perform improvements on the Calumet Union Reservoir, a facility of the MSD. The contract was to be awarded to the lowest qualified bidder through a competitive secret bidding process. Under Moore‘s scheme, a predetermined bidder would win the contract with the highest possible bid that was lower than any competitors’ bids. This was to be done by having the predetermined bidder secretly submit several bid price pages instead of one price page as was required. Moore would read the other competitors’ bids first and then would read off only the highest of several prices submitted by the predetermined bidder that was still lower than the bid prices of the competitors. Then he would covertly discard the other bid price pages that had been submitted by the predetermined bidder.
After discussing this scheme with others, the following transaction occurred with respect to bids on the Calumet Union Reservoir contract. The G. Roberts Material Company submitted the first bid and its bid contained five different price pages in the following amounts: $64,000, $66,000, $68,000, $70,000 and $85,000. On November 20, 1979, this bid should have been opened first because it was submitted first. Instead, Moore first opened a competitor‘s bid for $86,900 and then another competitor‘s bid for $89,000. He then submitted only G. Roberts Material Company‘s $85,000 bid, thereafter throwing in his office wastebasket that company‘s four other bid pages. Thus MSD was required to pay $85,000 for this work, even though the Roberts Company had also submitted a $64,000 bid for it, thus costing MSD $21,000 more than it needed to pay for the improvements. The fact that the Roberts Company submitted a potentially binding offer for $64,000 is indicative of its willingness to perform the contract for $21,000 less than the bid selected by Moore. Moore chose the highest bid of the Roberts
The Indictment
It next becomes necessary to determine whether the indictment, which was returned prior to McNally, involves property as well as intangible rights. In pertinent part it charged that when Moore was the Purchasing Agent of the MSD, it advertised for bids on a contract to perform improvements on its Calumet Union Reservoir facility and that the contract was to be awarded to the lowest qualified bidder through a competitive, secret bidding process. Paragraph 3 of the indictment charged that from August 1979 until July 1980, Moore and his co-schemers devised a scheme to defraud the Metropolitan Sanitary District and the citizens of the Chicago Metropolitan Area of:
(a) their right to the loyal, faithful and honest services of Thomas N. Moore in the performance of acts related to his public employment; and
(b) their right to have the business of the Metropolitan Sanitary District conducted honestly, fairly and impartially, free from corruption, collusion, partiality, dishonesty, conflict of interest and fraud, and in accordance with the laws of the State of Illinois and the rules and regulations of the Metropolitan Sanitary District. (App. 2 p. 1.)
So far the indictment was obviously couched on a pre-McNally intangible rights theory. However, the next nine paragraphs alleged that it was part of the scheme to defraud through the above-described bid rigging. As we have seen, this bid rigging resulted in the MSD‘s awarding the contract to the Roberts Material Company at $21,000 more than Roberts’ lowest bid. The ensuing concise five counts of the indictment described five of the different mailings employed in the bid-rigging scheme. Thus it is apparent that the major portions of the indictment describe the bid-rigging process that resulted in the MSD‘s having to pay Roberts Material Company a much higher price than its lowest bid. Because of this emphasis in the indictment McNally was satisfied.
As we said in United States v. Wellman, 830 F.2d 1453, 1463 (7th Cir.1987), in terms applicable here, even if this indictment‘s allegations (here intangible rights and bid rigging) “were (in form at least) separate, the government could not logically prove one scheme without proving the other since the elements of the two were identical. The legal characterization the indictment places on the scheme should not obscure the fact that the specific conduct alleged in the indictment is clearly proscribed by the mail fraud statute.” See also United States v. Bailey, 859 F.2d 1265, 1275-1276 (7th Cir.1988). Since it is obvious that the MSD would lose money from the scheme portrayed in paragraphs 3-11 of the indictment and later consummated, the case differs from Magnuson v. United States, 861 F.2d 166 (7th Cir.1988), where no money or property was lost. Instead Moore‘s scheme to defraud MSD of tangible property rights was “easily separable” from the scheme to deprive it of its intangible rights, so that the indictment is sufficient to state an offense under the mail fraud statute. United States v. Eckhardt, 843 F.2d 989, 997 (7th Cir.1988), certiorari denied, --- U.S. ----, 109 S.Ct. 106, 102 L.Ed.2d 81, quoting from United States v. Cooke, 833 F.2d 109, 110 (7th Cir.1987).
The Instructions
The jury was first told that the government must prove the scheme to defraud described in the indictment and that
A scheme means some plan or course of action intended to deprive another of something of value including intangible rights (emphasis supplied).
This instruction mirrors the rule of United States v. Keane, 852 F.2d 199, 205 (7th Cir.1988), where we said “An indictment [here an instruction] adverting principally to rights to faithful service still may lead to a valid conviction if [as here] the prosecution shows that the defendant defrauded someone out of property, including intangible property” (emphasis supplied).
The next instruction thrice refers to intangible rights. It provides as follows:
The Metropolitan Sanitary District of Greater Chicago and the citizens of the Chicago Metropolitan area have an intangible right to the loyal, faithful and honest services of public employees and an intangible right to have the business of the Metropolitan Sanitary District conducted honestly, fairly and impartially, free from corruption, collusion, partiality, dishonesty, conflict of interest and fraud, and in accordance with the laws of the State of Illinois and the rules and regulations of the Metropolitan Sanitary District.
A scheme to defraud the Metropolitan Sanitary District or the citizens of the Chicago Metropolitan area of these intangible rights may constitute a scheme to defraud within the meaning of the mail fraud statute. (App. 2 p. 7.) (Emphasis supplied.)
The question before us is whether the conviction must be vacated because this instruction erroneously referred to “intangible rights.” The Supreme Court recently decided that even where an instruction contains constitutional error, it is for the court of appeals to determine whether the error is harmless beyond a reasonable doubt. Rose v. Clark, 478 U.S. 570, 106 S. Ct. 3101, 3109, 92 L. Ed. 2d 460 (1986). Pope v. Illinois, 481 U.S. 497, 107 S. Ct. 1918, 1919, 95 L. Ed. 2d 439 (1987), further expressed that if an erroneous instruction does not render “a trial fundamentally unfair, a conviction should be affirmed when the reviewing court can find that the record developed at trial established guilt beyond a reasonable doubt.” We hold that considering the indictment and evidence, this record did establish Moore‘s guilt beyond a reasonable doubt because the MSD plainly lost money or property as a result of the proven bid-rigging scheme.1 Consequently, the references to intangible rights in the pre-McNally instructions do not require the vacation of Moore‘s conviction. This conclusion is reinforced by Moore‘s own instruction that “if you do not believe beyond a reasonable doubt that Thomas Moore participated in a scheme to rig the Calumet Union Reservoir bid as alleged by the government, then you must find the defendant Thomas Moore not guilty” (p. 11 of Instructions given to jury, R. Item 57).
The jury was next told that the government need only prove one or more of “the acts charged in paragraphs 3 through 11” 2 of the indictment. Since paragraphs 3 through 11 were all facets of the bid-rigging scheme used with respect to the Calumet Union Reservoir improvements contract, McNally is satisfied by that instruction.
The final instruction given reads in pertinent part as follows:
You are instructed if you do not believe beyond a reasonable doubt that Thomas Moore participated in a scheme to rig the Calumet Union Reservoir bid as alleged
Moore relies solely on United States v. Ochs, 842 F.2d 515 (1st Cir.1988), to support his argument that the conviction must be vacated in view of the instructions given (Br. 24-25). However, the instruction there in its heading and text thrice told the jury that the scheme need not financially harm the City of Boston or cost it any money loss (842 F.2d at 524-525). In contrast, this jury was never instructed that it was proper to rely solely on the invalid intangible rights theory of criminal liability.
Here the jury could not have found a scheme to defraud the MSD of its intangible rights separate from a criminal scheme to obtain money or property by the bid rigging charged and shown. Consequently, the verdict did not rest exclusively on the insufficient intangible rights ground. Cf. Zant v. Stephens, 462 U.S. 862, 881, 103 S. Ct. 2733, 2744, 77 L. Ed. 2d 235 (1983); Stromberg v. California, 283 U.S. 359, 367-368, 51 S. Ct. 532, 535, 75 L. Ed. 1117 (1931).
Taken together and in the light of Rose and Pope, the indictment, evidence and trial emphasis, the instructions given do not require us to upset a conviction which was clearly based on loss of money or property by the MSD.
JUDGMENT REVERSED.
CUDAHY, Circuit Judge, dissenting:
There is no doubt that Moore was indicted and the jury instructed under the now-rejected “intangible rights” theory of mail fraud. The only question is whether, for the jury to find a deprivation of intangible rights, it had necessarily to find a deprivation of money as well. See United States v. Wellman, 830 F.2d 1453 (7th Cir.1987). As a matter of fact, the jury did not have to find an actual loss of money to the MSD as a result of the scheme since without the scheme Roberts might not have bid at all. In that event, the contract would have gone to a competitor at $86,900, which is $1,900 more than the Roberts bid that was actually accepted. Under this scenario the MSD lost absolutely no money as a result of the scheme.
It is true, of course, that if we look at the situation from within the scenario of the scheme as its planners conceived it, the purpose of the scheme was to deprive the MSD of the lowest Roberts bid. Thus, if we begin by assuming the plan in place, we can conclude that its aim was to deprive the MSD of the difference between Roberts’ lowest bid and his highest one that came in under bids of the other bidders. And, of course, a scheme does not have to actually succeed in depriving a victim of money or property in order to fall under the mail fraud statute. United States v. Dial, 757 F.2d 163 (7th Cir.1985); United States v. Reicin, 497 F.2d 563 (7th Cir.1974). But it is necessary that the jury find that a deprivation of “money or property” was necessarily envisioned by the scheme. McNally, 107 S.Ct. at 2882.
This case is admittedly a close one; the fact situation here does not fall easily into the categories established by existing cases. Unlike the schemes in cases where convictions have been upheld,1 this
Given that the issue is close, and that we are attempting to look back into the minds of a jury that was unambiguously instructed in intangible rights language,3 I think it better to proceed with caution in extending Wellman. A contrary approach is not clearly wrong but it seems better policy, when we cannot say with certainty that the jury found a deprivation of money or property, to vacate the conviction. For this reason, I respectfully dissent.