UNITED STATES оf America, Appellee, v. Louis PARISE, Jr., Appellant.
No. 97-1740.
United States Court of Appeals, Third Circuit.
Argued April 27, 1998. Decided Oct. 28, 1998.
159 F.3d 790
Credit Managers Ass‘n, 809 F.2d at 625. In this case, the individual employers arranged for a “group-type insurance program” by participating in the LEEA Plan. They were not mere advertisers, but rather made contributions to the Plan on behalf of their employees. Therefore, we will reverse the district court‘s grant of summary judgment on this issue.
CONCLUSION
Because we find that the district court properly concluded that the LEEA plan was not an employee welfare benefit plan under ERISA, we will affirm the district court‘s grant of summary judgment to the class members on that issue. However, we hold that the court improperly granted summary judgment on the issue of whether the individual employer members of LEEA established single-employer employee welfare benefit plans under ERISA. Accordingly, the judgment of the district court will be reversed and the case remanded for further proceedings consistent with this opinion.
On appeal Parise Jr. argues that there was insufficient evidence to support his RICO conviction. He also contеnds that his actions did not constitute commercial bribery under Pennsylvania law. We disagree with his view as to how the law should be applied to the facts of this case, and find that the evidence was sufficient to support his conviction. Parise Jr. also challenges the district court‘s exclusion of certain testimony relating to the commercial bribery charge. We find this argument to be similarly unavailing. We will thus affirm the order of the district court.
Bruce A. Franzel, Oxenburg & Franzel, Philadelphia, PA, for Appellant, Louis Parise, Jr.
Timothy R. Rice, Office of United States Attorney, Philadelphia, PA, for United States.
BEFORE: ALITO, GARTH, and RENDELL, Circuit Judges.
OPINION OF THE COURT
RENDELL, Circuit Judge.
On January 29, 1997, Louis Parise Jr. and his father, Louis Parise Sr., were convicted of various crimes arising out of their involvement with the National Maritime Union (“NMU“). Parise Jr.‘s RICO conviction under
I.
The convictions at issue in this case arose out of an extensive government investigation of corruption within the NMU and several related organizations. The NMU represents merchant marine seafarers who work on commercial shipping vessels. One of the improprieties revealed through the government‘s investigation was a bribery scheme devised and implemented by Louis Parise Sr., the President of the NMU, his son, Louis Parise Jr., and attorneys Avrem Adler and Bernard Sacks.1 Through this plan, developed in 1988, port agents and other union employees provided Sacks with personal injury case referrals in exchange for cash payments.2 As part of the scheme, Parise Jr. was hired as an “investigator” for the Sacks law firm and was responsible for delivering the bribes to the port agents. Parise Sr. promised these legal referrals to Sacks in exchange for a kickback of 5% of the legal fees generated through NMU cases. In 1992, a Legal Services Plan (“LSP“) was created through which attorneys were to provide low or no cost legal services to union members. It was hoped that these members would then be more likely to retain designated attorneys, including Sacks, for their more
Sacks cooperated with the government investigation and during the trial testified at length about the bribery scheme. Sacks explained that Parise Jr.‘s role was to pay port agents in particular cities a set fee for referral of personal injury cases to the Sacks firm. Several port agents, including Floyd Jones, John Pegan, and Debra Rywelski,3 testified about the money paid to them by Parise Jr. for these case referrals. Other witnesses provided additional evidence relating to Parise Jr.‘s role in the NMU and in carrying out the bribery scheme. After a three week trial, the jury found Parise Jr. guilty of the RICO violation, of Travel Act violations and of RICO forfeiture. The RICO conviction was based on the jury‘s finding that Parise Jr. had bribed Pegan and Rywelski in violation of Pennsylvania‘s commercial bribery statute. The district court denied Parise Jr.‘s post-trial motion for acquittal or a new trial, and Parise Jr. appeals the judgment of conviction entered on Septеmber 11, 1997. This court has jurisdiction to review the final judgment of the district court pursuant to
The jury verdict in this case “must be sustained if there is substantial evidence, taking the view most favorable to the Government, to support it.” Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942). See United States v. Aguilar, 843 F.2d 155, 157 (3d Cir.1988). To the extent that Parise Jr.‘s arguments raise issues of statutory interpretation, our review is plenary. See United States v. Hayden, 64 F.3d 126, 128 (3d Cir.1995).
II.
A. RICO violation
Parise Jr. offers two related challenges to the sufficiency of the evidence which sustained his conviction under RICO. First, Parise Jr. argues that the government failed to adequately connect him with the indicted “enterprise” because several of the racketeering acts charged in the indictment were committed prior to the existence of the Legal Services Plan, and even those acts which occurred after the formation of the LSP were not directly linked with his role in the LSP. Secondly, Parise Jr. contends that the government failed to demonstrate that he participated in directing the affairs of the enterprise as required to sustain a RICO conviction. In addition, Parise Jr. challenges the district court‘s jury instruction relating to the requisite showing that must be made to establish “association” under RICO.
1. Connection with an “enterprise”
The RICO statute provides that “it shall be unlawful for any person employed by or associated with any enterprise engaged in interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise‘s affairs through a pattern of racketeering activity or collection of unlawful debt.”
(1) the existence of an enterprise affecting interstate commerce; (2) that the defendant was employed by or associated with the enterprise; (3) that the defendant participated, either directly or indirectly, in the conduct or the affairs of the enterprise; and (4) that he or she participated through a pattern of racketeering activity.
United States v. Console, 13 F.3d 641, 652-53 (3d Cir.1993) (citation omitted).
The statute defines an enterprise as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.”
Parise Jr. contends that because the government alleged in the indictment that the enterprise—which we will call the “NMU Enterprise“—was comprised of four organizations, no “enterprise” could have existed prior to September 1992, when the fourth organization, the LSP, was created. Therefore, Parise Jr. asserts, alleged illegal activity which took place before September 1992 cannot properly serve as the basis for his RICO liability.4
Parise Jr.‘s argument fails to appreciate the nature of an “enterprise” as defined by the RICO statute. The four organizations were included in thе indictment because all were channels through which illegal activity was taking place and through which the NMU Enterprise operated. This does not mean, however, that no illegal activity of the enterprise could occur prior to the existence or entry of one of the indicted entities. In order to establish the existence of an “enterprise” for the purposes of RICO, the government must demonstrate that there is “an ongoing organization” whose “various associates function as a continuing unit.” See United States v. Riccobene, 709 F.2d 214, 221 (3d Cir.1983) (citing United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981)). However, “continuity does not require that each member of the enterprise participate in it from beginning to end.” United States v. Feldman, 853 F.2d 648, 659 (9th Cir.1988); see United States v. Hewes, 729 F.2d 1302, 1310-11 (11th Cir.1984) (rejecting the argument that government must prove participation of all members throughout the life of the enterprise). Rather, the government must demonstrate that all alleged members who participated at one time or another were part of an ongoing enterprise with a shared “organizational pattern” and “system of authority.” United States v. Lemm, 680 F.2d 1193, 1199 (8th Cir.1982).
Parise Jr. next asserts that all of the racketeering charges—even those relating to post-1992 activity—are deficient because the government failed to connect any of his alleged acts of bribery with his position as co-administrator of the LSP. Parise Jr. contends that his actions taken while he was an investigator for the Sacks law firm cannot form the basis for his RICO conviction because the law firm was not named as one of the organizations which formed the “enterprise.” However, this argument misconstrues the government‘s burden. At trial, the government needed to demonstrate that Parise Jr. participated, directly or indirectly, in the conduct of the NMU Enterprise‘s affairs through a pattern of racketeering activity. In so doing, however, the government was not limited to demonstrating that Parise Jr.‘s participation in the affairs of the enter-
Parise Jr. also appears to be arguing that he could only have been found to have “associated with” the organization in which he held a formal position, but the language of the RICO statute leaves no room for this contention. The law explicitly states that a RICO defendant must be employed by or associated with an enterprise.
2. Participation in the conduct of the affairs of the enterprise
We now turn our attention to the third element essential to a RICO conviction—namely, whether the government‘s evidence demonstrated that Parise Jr. participated in the conduct of the affairs of the enterprise. Our analysis of this claim must begin with an examination of the definition of “participation” under
In applying Reves, we have stated that the “operation or management” test is designed to limit RICO liability under
In 1992, in furtherance of the scheme and reflective of his important role in the enterprise, Parise Jr. became coadministrator of the LSP. Through this official position, he maintained and expanded his role in operating the NMU Enterprise. In addition to continuing the payoff arrangement with port agents, he also coordinated thе effort of the LSP to select local attorneys to do the routine legal work for union members—and to channel more lucrative cases to attorneys selected by Parise Sr.
Reves focused on the RICO liability of those “outside” an enterprise who may assist in furthering the illegal activities of the enterprise. 507 U.S. at 183-85. The Court did not reach the issue of the liability of those “inside,” specifically declining to determine “how far
From the extensive evidence presented at trial, the jury could easily conclude that the government established a nexus between Parise Jr. and the affairs оf the NMU Enterprise. Parise Jr. played a role in directing the affairs of the NMU Enterprise as required by Reves and could be found criminally liable under RICO.
3. Challenge to the jury instruction
Parise Jr. next challenges—as he did at trial—the district court‘s jury instructions in which the district court advised the jury that “the Government has alleged that defendant Louis Parise Jr. was associated with the enterprise through his dealing[s] with various NMU officials you have heard testify.”6 Parise Jr. contends that this statement led the jury to believe that it could find proof of the requisite association by virtue of the alleged bribery of port agents Jones, Pegan, and Rywelski even if there was no other proof that Parise Jr. had associated with the NMU Enterprise. However, giving the term “dealings” its plain meaning, we interpret it to mean all interactions or contacts between the union officials and Parise Jr. during which they had the opportunity to learn about his role in the NMU Enterprise.
Finally, it is important that the challenged portion of the charge be read in the context of the entire set of instructions. The district court did instruct the jury as to the need for proof of Parise Jr.‘s involvement with the enterprise and its affairs as such:
[T]he Government must establish that each defendant was able to commit the racketeering offense solely by virtue of his position in the enterprise or his involvement in or participation in or control over the affairs of the enterprise. The Government must also establish beyond a reasonable doubt that the alleged racketeering acts were committed in the conduct of the affairs of the enterprise.
The court‘s instructions made clear that conduct relating to the NMU Enterprise must form the basis for RICO liability. Therefore, we find that the district court‘s instructions correctly conveyed the substance of the law and fairly and adequately submitted this issue to the jury.
B. Predicate Acts of Commercial Bribery
In order to prove a RICO violation, the government must demonstrate that the defendant participated in the operation of an enterprise “through a pattern of racketeering activity...”
An employee, agent or fiduciary commits a misdemeanor of the second degree when, without the consent of his employer or principal, he solicits, accepts, or agrees to accept any benefit from another person upon agreement or understanding that such benefit will influence his conduct in relation to the affairs of his employer or principal.
Parise Jr. argues that giving money to a union agent or employee for the referral of personal injury cases does not constitute “conduct in relation to the affairs of” the union as required to establish commercial bribery under Pennsylvania law. Parise Jr. is essentially contending that because rеferring seamen to lawyers is not included among a port agent‘s official duties, it cannot constitute “conduct in relation to the affairs of” the employer. He asserts that the union—the employer in this case—has no interest or stake in which lawyer an injured worker chooses, and that providing legal referrals
As the present case arises under this court‘s federal question jurisdiction, we will address all of the issues necessary to our ruling, including questions involving the interpretation of state law. See United States v. D‘Amato, 436 F.2d 52, 54 (3d Cir.1970). In interpreting the text of
a. Requirements for Commercial Bribery under the Pennsylvania Statute
At the outset, it must be noted that the language of the Pennsylvania commercial bribery statute makes its reach quite broad. It requires that an employee solicit or accept a benefit from another in order to influence the employee‘s conduct in relation to his employer‘s affairs. The statute contains no requirement that the affected conduct be in relation to the official duties of an agent or employee, nor does it require a showing that an offender‘s conduct was adverse to the interests of the employer. In construing the language of the commercial bribery statute and in determining the meaning of “conduct in relation to the affairs” of an employer, we turn to the case of Commonwealth v. Bellis, 484 Pa. 486, 399 A.2d 397 (Pa.1979), for direction.
In Bellis—the only Pennsylvania Supreme Court case which discusses this issue directly—the court affirmed the judgment of sentence of a city councilman convicted of commercial bribery.8 Bellis, 399 A.2d at 400. Councilman Bellis had represented private parties before city agencies in order to help these companies secure contracts with these аgencies. The companies rewarded his efforts accordingly. Among other contentions, Bellis argued to the court that he was not guilty of commercial bribery because the conduct at issue did not interfere with his official duties as a councilman. His conduct involved contracts between third parties and other city agencies and departments, quite apart from any matter before city council or otherwise affecting his role or responsibilities as a councilman. The Bellis court found that it was uncontested that the defendant‘s acceptance of these bribes “did not affect the performance of his official duties as a city councilman” and that “he did not take any action in City Council on behalf of private parties.” Id. at 398. The court stated, however, that whether a particular activity was among an employee‘s “official duties” was “irrelevant” to the commercial bribery inquiry. Id. at 400. Thus, the Pennsylvania Supreme Court has rejected the argument that the bribe must impact one‘s official duties in order to comprise “conduct in relation to the affairs of his employer or principal.”
The Bellis court recognized that commercial bribery was criminalized on the theoreti-
Bellis, 399 A.2d at 400. Thus, the court determined that a violation of the employee‘s duty automatically occurs when an agent or employee offers or receives money which causes him to act in a certain way—namely as the payor wishes—in the conduct of the affairs of his employer. The court viewed the violation as being implicit in the conduct. The act of accepting a benefit to show favor is the gravamen of the crime.
The above-quoted language in Bellis makes it disloyal, and criminal, for an employee to accept money to show favor to third parties in his principal‘s affairs. We view this reasoning as undermining the position taken by our dissenting colleague that being influenced for money in one‘s job is criminal only if found to be against the interests of the employer. Neither the Pennsylvania legislature, nor its courts, have inserted such a requirement into the offense of commercial bribery. The Bellis cоurt did not examine the contracts in question to determine whether they were good for the City. Nor do we believe that such an inquiry is appropriate under the plain meaning of the statute. The Bellis court made clear that the showing of favor or disfavor on the basis of money paid is the harm addressed by the commercial bribery statute. The court need not make a determination as to whether the choice of a particular vendor influenced by a monetary payment was detrimental to the employer. In U.S. v. Johns, 742 F.Supp. 196, 220 (E.D.Pa.1990), the court found the defendant guilty of commercial bribery under § 4108 even though the parties had stipulated that the price and quality of the products obtained from the favored vendor were “more favorable” than any offered by competitors. While it is true that other states have included this requirement as a statutory element or interpreted it to be a requirement, those cases are not our guide.9 Courts should not legislate by reading into the laws provisions not included by the legislature.10 This prin-
In order to find the payment of money influenced the employee‘s conduct in relation to the employer‘s affairs, we must define the scope of the union‘s affairs. In so doing, we will consider not only the mission and activities of the union but whether the conduct in question was consistent with the scope of the union agents’ employment. Thus, in this case, we must determine if the port agents were performing their jobs in advising the seamen as to counsel for work-related injuries and whether this practice of referral was a concern of the union and part of its affairs. Appellants do not seek to define “affairs” but contend that whatever it means, the referral to counsel was not part of the affairs of the union. We believe the evidence supports the opposite conclusion.
b. The Union‘s Affairs
The purpose of the NMU, as set forth in its constitution, is described as helping “needy, sick and distressed” members. One union official described the role of the union in the following terms:
[T]he NMU has a very proud history. And I think we‘re important to our members. Certainly we represent them before the companies. We are responsible for their collective bargaining agreement overall, but we also represent them on a day to day basis. If a seaman has a problem aboard a ship, he will come to the hall and talk to a union official.
J.A. at 1308. Other testimony supported this description of the union as concerned with the work-related welfare of union members. We can easily take judicial notice of the fact that the union movement exists of, by, and for workers and dedicates itself to their welfare and the recognition of their rights. Seeking redress for work-related injury through proper legal representation easily fits within this sphere of the union‘s interest and affairs. In addition to the fact that making attorney referrals was consistent with the purposes of the union, there was significant evidence presented from which the jury could have determined that the union concerned itself with its members’ legal representation and that making attorney referrals was part of the union‘s affairs.
The testimony demonstrated that the job of port agent involved a wide range of tasks encompassing as many different aspects as there are facets of the union members’ work-related needs. J.A. at 1309. One agent explained that in addition to taking care of finances he enforced ship rules, took care of grievances and supervised the operation of the union hall. J.A. at 594. Another stated that as the business agent of the port he would “[t]ake care of all the union business, ship people out, take care of my members.” J.A. at 637. While in some types of work,
Thus, the union through its port agents and other employees, served as counselors and helpers of this itinerant, seafaring population. Consistent with this role, making attorney referrals was a service routinely provided to the seamen coming into port by port agents and other union employees. Union members testified that they relied on port agents for attorney referrals after suffering an on-the-job injury. J.A. at 507; 1201. It was well-known among union members that port agents provided such referrals. Significantly, there was no evidence presented that union members, officials, or employees believed that making attorney referrals was inappropriate or beyond the scope of the port agents’ employment or the union‘s sphere of interest. The evidence is clear that these employees provided attorney referrals to injured members and that this practice was consistent with the mission of the NMU. This practice furthered the union‘s express goal of assisting sick or needy members.
Further, not all union employees received payoffs for making these referrals. Gerasimos, a union official, testified that аssisting members with legal representation was “an unofficial duty” of port agents and that as a port agent he had provided such referrals without receiving any payments. J.A. at 737-38. Another official, a Vice President of the NMU, testified that she had never taken any money for making attorney referrals. J.A. at 1311.12
Additionally, in determining that providing attorney referrals was conduct “in relation to the affairs” of the union, we cannot ignore the NMU‘s involvement in the business of legal services and referrals. Parise Sr. circulated a letter in which he named individual lawyers as the official “union attorneys” for particular geographic regions. Sacks was named as the official attorney for the East Coast and was given office space in the union hall in New Orleans. In addition, members of the NMU Enterprise, including Parise Sr. and Jr., established the Legal Services Plan for the purpose of providing routine legal services to union members—hoping that participating attorneys would eventually be retained for lucrative personal injury cases. Thus, in the present case, Parise Sr. and others in the NMU Enterprise went out of their way to make the legal concerns of union members part of the NMU‘s “affairs.”13
We believe that the facts of this case clearly bring the agents’ conduct within the ambit of their jobs for the union and that the referrals of seamen to counsel was part and parcel of the affairs of the union. Union employees were able to be bribed by virtue of their employmеnt with the union; that is, they held positions in which they were expected to counsel and advise union members. The injuries for which members required legal representation were sustained on-the-job. That attorney referrals were given for
While not specifically challenged by the appellant, we also note that the other requisite under the commercial bribery statute, that is, that the employee be influenced to act in a particular way in relation to the employer‘s affairs is also shown by the evidence. The payments in this case clearly influenced the conduct of the port agents. These agents testified that their referrals were not based on a determination that Sacks was the best lawyer to represent injured union members. J.A. at 599; 640. Rywelski stated that she knew nothing about Sacks‘s skills as a lawyer or the fees he charged. J.A. at 528. In fact, when asked whether he was chosen to be the “NMU attorney” because he was a good lawyer, Sacks himself replied, “No, I got picked because I could pay off the agents. I had the money to do it.” J.A. at 255. Both Pegan and Rywelski testified that they understоod that they were receiving money to make referrals to Sacks—they received a benefit to influence their conduct in relation to the union‘s affairs.
The dissent urges that our view of the relationship of lawyer referrals to the unions’ affairs is misguided and attempts to analogize this situation to a hospital‘s lack of interest in a doctor‘s referral of a patient.14 We are also chastised for going beyond the classic example of conflict of interest depicted in Bellis. It is our ruling, however, that the evidence at trial provided ample support for the jury‘s finding that, given the unique relationship among the union, its members, and the port agents, the commercial Pennsylvania bribery statute had been violated.
The evidence and the case law support the conclusion that the union employees’ conduct
in these matters constituted the acceptance of money to affect conduct in relation to the affairs of the employer. Given the union‘s mission, the nature of the port agents’ work, and the subject matter and nature of the referrals, the jury could reasonably find, as it did, that the agents’ conduct violated Pennsylvania‘s commercial bribery statute and that Parise Jr., as solicitor, was guilty of this underlying offense for the purposes of the RICO conviction.
C. Exclusion of evidence
Finally, Parise Jr. contends that the district court improperly excluded relevant testimony of a government witness on cross examination as to the non-criminal intent of the reсipient of the alleged commercial bribe. The district court‘s exclusion of evidence is reviewed for abuse of discretion. See Abrams v. Lightolier Inc., 50 F.3d 1204, 1213 (3d Cir.1995).
Pennsylvania‘s commercial bribery statute requires the establishment of an agreement or understanding between both parties that the benefit offered will influence conduct in relation to the affairs of the employer.
III.
Having considered all of the issues raised by Parise Jr. in this appeal, we find them to be without merit. Therefore, the judgment of the district court and its order denying the defendant‘s post-trial motion will be affirmed.
GARTH, Circuit Judge, dissenting:
Louis Parise, Jr. has been convicted and sentenced to serve thirty months in federal prison for racketeering. The jury convicted Parise of engaging in a pattern of racketeering acts by making cash payments to union officials John Pegan and Deborah Rywelski in exchange for referring injured union members to an attorney associated with Parise. The difficult question raised in this appeal is whether Parise‘s conduct qualifies as a “racketeering activity,” which turns on whether his conduct constituted a violation of Pennsylvania‘s commercial bribery statute,
The government‘s theory is that Parise‘s referral payments violated § 4108 because Pegan and Rywelski acted “in relation to the affairs” of the union when they referred union members to Parise and Bernard Sacks, Esq. in exchange for payments from Parise. The majority has agreed with this theory, and has affirmed Parise‘s conviction and sentence.
I disagree with the majority‘s conclusion that Parise‘s conduct violated § 4108. I believe that the majority‘s broad interpretation of the “in relation to the affairs” language of § 4108 represents an unwarranted expansion of its scope contrary to its “carefully circumscribed” meaning, Brokerage Concepts, 140 F.3d at 528, and that the record reveals no evidence that Parise violated § 4108 when the statute is properly construed. Accordingly, I respectfully dissent.
I.
Pennsylvania is one of twenty states that criminalizes commercial bribery for influencing an agent‘s conduct “in relation to the affairs” of the agent‘s principal.1
Pennsylvania‘s commercial bribery statute is representative of these statutes. Its text reads:
(a) Corrupt employee, agent or fiduciary.—An employee, agent or fiduciary commits a misdemeanor of the second degree when, without the consent of his employer or principal, he solicits, accepts, or agrees to accept any benefit from another person upon agreement or understanding that such benefit will influence his conduct in relation to the affairs of his employer or principal.
...
(c) Solicitation.—A person commits a misdemeanor of the second degree if he confers, or offers or agrees to confer, any benefit the acceptance of which would be criminal under [subsection (a)] of this section.
The precise scope of conduct criminalized by the “in relation to the affairs” language in state commercial bribery statutes identical to Pennsylvania‘s has been the subject of a substantial body of case law. These cases have established a consistent and certain meaning for the text we must interpret.2 According to these cases, the duty of loyalty protected by the statute is not violated unless the agent (here, Pegan or Rywelski) accepts a payment in exchange for conduct that puts the interests of the payor (here, Parise and Sacks) above the contrary interests of the principal (here, NMU, the union). See, e.g., D.E. Ytreberg, Annotation, Validity and Construction of Statutes Punishing Commercial Bribery, 1 A.L.R.3d 1350, 1361, 1965 WL 13223 (1965) (noting that in the cases interpreting the “in relation to the affairs” language, actions that did “not affect the employer‘s interest in any way” were not criminal); 11 C.J.S. Bribery § 3 (1995) (noting that commercial bribery statutes “require the offer of a bribe to an employee with the intent thаt he promote the interests of the
person offering the bribe over those of his employer“).
Accordingly, it is not commercial bribery to induce an agent to accept payment for conduct that does not adversely affect the interests of the agent‘s principal. See People v. Jacobs, 309 N.Y. 315, 130 N.E.2d 636, 637 (N.Y.1955) (overturning conviction of photographer who paid bursar for list of names of ocean liner passengers, because there was no evidence that release of the names of the passengers was contrary to the interests of the ocean liner company). Further, it is not commercial bribery to induce an agent to accept payment in an attempt to influence conduct over which the agent has no control. See State v. Nadeau, 81 R.I. 505, 105 A.2d 194 (R.I.1954) (overturning commercial bribery conviction of councilman for planning to accept payment to attempt to influence selection of city police chief, because councilman had no control over selection process).
An illustrative example of these principles is People v. Graf, 261 A.D. 188, 24 N.Y.S.2d 683 (App.Div.1941). In Graf, a New York appellate court reversed the conviction of a union official who had accepted expense payments from management. Management had wanted to expand the territorial scope of its sign making business beyond New York, and sought to have Graf travel to union headquarters outside of New York to encourage the union members outside of New York to allow the sign company to accept work there. When the union refused to pay Graf‘s travel expenses, management made a secret arrangement with Graf to do so. Graf was subsequently indicted and convicted of commercial bribery. The basis of the charge was that Graf had accepted payments from management that had induced him to act “in relation to the affairs” of his union.
On appeal, Graf argued that his conduct was not “in relation to the affairs” of the union. The Appellate Division agreed, noting inter alia that Graf had done nothing that could be construed as putting the inter-
As these cases indicate and our court recently recognized, the scope of Pennsylvania‘s commercial bribery statute is “carefully circumscribed.” Brokerage Concepts, 140 F.3d at 528. Of course, this does not mean that it is impossible for payments made in exchange for an agent‘s referral to a third party to constitute commercial bribery. See, e.g., Hastings v. Fidelity Mortgage Decisions Corp., 984 F.Supp. 600, 606-07 (N.D.Ill.1997) (Civil RICO) (denying motion to dismiss for failure to state a claim under Illinois commercial bribery statute for referral payment scheme, but noting that plaintiffs had survived 12(b)(6) dismissal only “barely,” and noting that “[i]f this set of facts were presented to us at the summary judgment stage, we would be inclined to grant judgment for the defendants“); cf. Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., No. 95-1698, 1995 WL 455969 (E.D.Pa. July 27, 1995) (Civil RICO) (denying motion to dismiss for failure to state a claim of corruption of a disinterested person under
II.
An application of these legal principles to Parise‘s payments to Pegan and Rywelski leads ineluctably to the conclusion that these payments did not constitute commercial bribery. The record simply fails to support the view that Pegan and Rywelski acted in any way contrary to the interests of the union when they referred injured union members to Parise and Sacks. There is no evidence that Pegan and Rywelski put Parise‘s and Sack‘s interests over the union‘s because the union was completely disinterested in which lawyer an injured seaman retained for a personal lawsuit.
Under the statute, an employee may not take a bribe if it will “influence his conduct in relation to the affairs of his employer or principal.”
I begin with the union‘s position on its port agents accepting referral payments. The record reveals that the entire union leadership knew of the cash payments, and even encouraged them. Referral payments were considered rewards for loyal port agents, whose official duties focused on the much more mundane tasks of accounting and producing weekly financial reports for higher union officials. App. 743. As the Government concedes in its brief, “the [union] historically allowed its officials (usually port agents) to refer injured members to designated maritime lawyers in exchange for cash payoffs. Indeed, Parise, Sr. admitted that as union president he sometimes fielded member requests for legal referrals, and that he expressly allowed port agents to refer members to personal injury attorneys.” Appellee‘s Br. at 8 (emphasis added and citations omitted). In other words, the payments were part of the union‘s standard procedure, endorsed by the union president himself.
In light of the union‘s express allowance (if not encouragement) of referral payments, it is unclear how port agents could have been acting contrary to the union‘s interests in
Further, although the union had no interest in union members’ selection of a personal injury lawyer, the testimony of Pegan and Rywelski reveal that they were not acting contrary to the best interests of the union when they referred seamen to Parise Jr. and Sacks.3 John Pegan, the port agent for Boston, first became acquainted with Sacks when Pegan became unsatisfied with the lawyer he had hired three years earlier to represent him in a personal injury action. App. 663. Acting on the advice of Louis Parise, Sr., Pegan consulted with Sacks, who advised Pegan that “it wouldn‘t be feasible” to switch lawyers at that time “because of all the investigation work” that Pegan‘s lawyer had already performed. App. 665. Pegan believed that Sacks was a good lawyer: Pegan testified that he “had heard” that Sacks “got good results in the injury cases.” App. 667. Thus, when the union members in Boston were “not satisfied with [Boston maritime lawyers] ... [and] want[ed] somebody else,” App. 667, Pegan would refer the members to Parise, Jr. and Sacks.
Similarly, there is no evidence that Deborah Rywelski, who acted as the port agent in Charleston, South Carolina, wаs acting contrary to the union‘s interest when she made attorney referrals. When a member would come to her and ask her for a lawyer, she testified, she would give the member Parise, Jr.‘s card. Rywelski would then explain that Parise, Jr. was an investigator for Sacks, and that Parise, Jr.‘s father was the head of the union. App. 530. She would tell the union member, “Call him up. If you like what they‘ve got to say, fine. [I]f you don‘t, I know some other attorneys I can send you to.” Id. (emphasis added). As in State v. Nadeau, supra, the port agents had no control over which lawyer an individual seaman would eventually choose; they could not themselves commit the union members to Sacks‘s representation.
The union‘s express allowance of the payments, combined with the testimony of Rywelski and Pegan, reveals that there is no evidence that Pegan and Rywelski placed the interests of Sacks and Parise, Jr. ahead of the interest of the union in accepting payments from Parise, Jr. Pegan thought that Sacks was a good lawyer, and even sought Sacks‘s representation for himself. Rywelski was very careful to explain that Sacks was only one of several attorneys to whom she could refer the member, and directed the member to accept Sacks‘s representation only if the member “liked what [Parise, Jr. and Sacks had] to say.” The union leadership not only knew of the referral payments, but encouraged and even directed them. Given these facts, there is simply no evidence that the union had an interest in which lawyer a member retained and no evidence that Rywelski or Pegan acted against the interests of the union in referring injured union members to Parise, Jr. and Sacks. Accordingly, Parise, Jr.‘s payments to Rywelski and Pegan for making the referrals could not constitute commercial bribery.
III.
The majority‘s understanding of
1. Failure to follow the accepted interpretation of commercial bribery.
In the absence of definitive authority in Pennsylvania,4 the majority‘s refusal to ac-
2. Failure to identify any breach of loyalty owed to the union as the employer of the port agents.
My second objection is the majority‘s focus on union members, who are not the port agents’ employеrs, as distinct from the union itself, which is the port agents’ employer. It should be remembered that the commercial bribery statute requires and Bellis emphasizes that an agent must possess an undivided loyalty to his principal, that is, his employer. The record reveals that none of the actions taken by the port agents in any way affected adversely or were disloyal to the union. Indeed, one would be hard pressed to argue that the port agent‘s referral activities were adverse to the union members, but of course, that is irrelevant. As I have stated repeatedly, the port agent must have been disloyal to the union to meet the statutory standard and be held criminally liable.
One can search far and wide in the majority opinion and in the record but still cannot ascertain disloyalty or adverse actions taken by Pegan and Rywelski with respect to the affairs of the union. Hence, the holding of Bellis, as distinct from the standard applied in Bellis, is inapposite to Parise‘s appeal. Bellis, which is cited by the majority at 799-800, is a classic example of conflict of interest, falling within the purview of
But Parise is not Bellis because Parise‘s payments to Pegan and Rywelski did not involvе the union, and it is the union which is the employer of the two port agents. An example furnished to me by one of my colleagues highlights this distinction. He posited:
Suppose an individual visits a hospital to receive an inoculation required for foreign travel. After receiving his shot, the patient asks the doctor if she knows where the patient could get his vision checked before departing. If the doctor refers the patient to an optometrist from whom she had received payments in exchange for referrals, is the doctor guilty of commercial bribery (and, by extension, a RICO violation)? Even assuming that making referrals is part of the hospital‘s affairs, the doctor has not committed commercial bribery because she has not acted contrary to the interest of her employer, the hospital.
In this case, the port agents did not receive referral fees from Sacks so that Sacks could represent the port agents’ employer, the union, in its affairs. Rather, individual union members chose Sacks to be their personal lawyers to assist them in pursuing their personal, not union, claims.
3. Invading the function of the legislature.
My third objection is that the majority‘s interpretive approach seems to me inconsistent with a proper judicial role. As the Supreme Court stated in United States v. Bass, 404 U.S. 336, 92 S.Ct. 515, 30 L.Ed.2d 488 (1971), “legislatures and not courts should define criminal activity.” Id. at 348. Courts must be careful not to expand the reach of criminal statutes by judicial fiat because citizens should not be sent to “languish[] in prison unless the [legislature] has said they should.” Id. (quoting Henry Friendly, Mr. Justice Frankfurter and the Reading of Statutes, in Benchmarks, 196, 207 (1967)); see also Yates v. United States, 354 U.S. 298, 310, 77 S.Ct. 1064, 1072, 1 L.Ed.2d 1356 (1957) (Harlan, J.) (absent legislative guidance, criminal statutes are to be strictly construed).
The majority recognizes these principles, see Maj. Op. at 798-99, but has not honored them. It has chosen simply to reject the long-established meaning of the “in relation to the affairs” language, and has substituted its own, much broader interpretation. As the majority acknowledges, a few months ago our Chief Judge stated in a civil RICO case that commercial bribery in Pennsylvania is “a carefully circumscribed crime,” Brokerage Concepts, 140 F.3d. at 528, and refused to expand the reach of
4. Majority‘s misapplication of its broad reading of § 4108 to this case.
My fourth objection relates to the majority‘s application of its newly fashioned standard to the facts of this case. The majority reasons that port agents regularly referred injured union members to lawyers, such that paying port agents for those referrals influenced their work-related conduct. Maj. Op. at 802-03. However, the record is clear that the port agents almost always received payments in exchange for their attorney referrals. According to Sacks’ testimony, payments were the standard practice in the union: the question was not whether the port agents would be paid for their referrals, but who would pay. App. 160-66. Even the Government‘s brief concedes this, stating that the union “historically allowed its officials (usually port agents) to refer injured members to designated maritime lawyers in exchange for cash payoffs.” Appellee‘s Br. at 8.
Absent evidence that port agents regularly referred injured union members to lawyers when they were not being paid off to do so, and more importantly, absent any record evidence of adverse effects on the union,5 I do not understand how the majority can conclude that making attorney referrals was part of the union‘s affairs. Surely, if it was part of the union “affairs” to refer seamen to lawyers, then there would be substantial evidence of port agents referring union members to lawyers when no payments were involved. The record only supports the view
5. Overextended reading of the port agents’ scope of employment.
My fifth and final objection has to do with the actual and not the hypothetical functions of the port agent. The record discloses that their established duties embraced primarily accounting and financial reporting. App. 743.6 Any referrals made, whether to doctors, lawyers, therapists, accountants, barbers, or the like, were undertakings beyond the scope of their employment. The fact that they were paid for these activities could be of no moment to the union, their employer, and indeed could not be deemed evidence of disloyalty to the union. On the other hand, had the port agents falsified their financial reporting and accounting or disclosed to a third party confidential union information in return for a payment by a third party, that falsification or disclosure would have been evidence of disloyalty to the union and would have constituted commercial bribery because it affected the affairs of the union, their employer.
The port agents could not have been fired or sanctioned, and indeed they were not, for taking monies for refеrrals, but common sense dictates that had they affected their employer‘s interest by falsifying or in any way not truthfully performing their accounting and financial reporting functions in exchange for third party monies, their jobs
would be at risk, to say nothing of criminal liability being visited upon them.
IV.
Given Louis Parise, Jr.‘s intimate involvement in his father‘s schemes over a period of years, he may have violated several criminal statutes. However, the United States prosecuted Parise, Jr. on a RICO charge based only on a tenuous reading of a rarely used state criminal statute. In the course of affirming Parise, Jr.‘s conviction, the majority has extended the statute just enough to include his conduct within its grasp. A fair and consistent interpretation of the statute, however, reveals that Parise, Jr. has been convicted and sentenced to serve thirty months in prison for conduct that did not constitute the crime of commercial bribery.
Accordingly, I respectfully dissent.
UNITED STATES of America v. Francis X. VITALE, Appellant.
No. 98-5072.
United States Court of Appeals, Third Circuit.
Argued July 9, 1998. Decided Nov. 6, 1998.
Notes
From in or about late 1988 to the present ... Louis Parise, Jr. and others known and unknown to the grand jury, being persons employed by and associated with the enterprise knowingly, unlawfully, and willfully conducted and participated, directly and indirectly, in the conduct of the affairs of the enterprise....
Defendant Louis Parise, Jr., used his position as an investigator for attorney Sacks and as a co-administrator of the ITPE-NMU Legal Benefits Plan, to promote and aid and abet commercial bribery by traveling in interstate commerce, and using interstate facilities, to deliver cash payments and things of value to union officials who referred injured union members to attorney Sacks as their lawyer....
The few cases in Pennsylvania that interpretBranch [port] agent shall be responsible for implementing the directives of the division chairman and council in the port or ports of their jurisdiction. They shall be prepared to account financially or otherwise for the activities of their port or ports whenever demanded by the division chairman. In any event, they shall prepare and forward to the district treasurer a weekly financial report showing in detail weekly income and expenses and complying with all other accounting directions issued by the district treasurer.
The majority relies upon the preamble of the NMU constitution, rather than this provision specific to port agents, to define the scope of the port agents’ employment. The preamble describes the union‘s purpose with respect to its members, while the provision above cited describes the port agents’ duties with respect to the union.