*1 scope of that the Accordingly, we conclude impermissibly did not judicial complaint charge. Paige’s fil- scope of the
exceed proper.
ing a class action was
CONCLUSION jurisdiction to that we have conclude
We grant of interim court’s
review the district
relief, jurisdiction to review that we have summary partial judgment order favor as well as the class certifica- plaintiffs order, orders are because the latter two
tion former.
inextricably intertwined with the judi- scope of the conclude that the
We also improperly exceed complaint
cial did charge, and that
scope of the EEOC properly exercised
district court therefore claims.
jurisdiction plaintiffs’ class over jurisdiction. as to
AFFIRMED America,
UNITED STATES
Plaintiff-Appellee,
Quentin WILES, Defendant-Appellant. T. America, STATES
UNITED
Plaintiff-Appellee, SCHLEIBAUM,
Patrick J.
Defendant-Appellant. 94-1592, 95-1022.
Nos. Appeals, States Court
Tenth Circuit. 10, 1996.
Dec. poten- employer nation. put on notice of the
broad to alleging complaint class-based discrimi- tial
1045 *4 charged
dent of Miniscribe. Sehleibaum was in a two-count criminal indictment with mak ing false statements § violation of 18 U.S.C. securities 78j(b), §§ fraud in violation of 15 U.S.C. Oliva, United States Assistant Vincent J. 78ff(a) and 17 C.F.R. 240.10b-5. Schleib Solano, (Henry United States Attorney L. 1994. The aum’s trial commenced in June Hutchins, Assistant Attorney M. and John twenty-nine government called witnesses him on the Attorney, with States days the course of seven for its case-in- over briefs), Denver, CO, Plaintiff-Appellee. for of his chief. Schleibaum’s defense consisted testimony and that of Miniscribe’s former P.C., Sears, of Daniel J. Daniel J. Sears operations. of far east director Denver, argument), and Michael (panel CO counts. The convicted Sehleibaum both Olson, Doyen Munger, & Los R. Tolies $6,000 and district court fined Sehleibaum (Daniel (en argument), T. bane Angeles, CA twenty-four impris him to months sentenced Denver, Smith, CO; Cary B. Lerman concurrently. count run onment on each CA; Olson, Angeles, & Los Munger, Tolies Dill, A. Dill of Dill and Robert and H. Alan Quentin T. Defendant the former Denver, CO, Stonbraker, Dill, Carr & chairman of the board and chief executive briefs), Defendant-Appellant them on *5 charged Wiles was in a officer Miniscribe. Quentin T. Wiles. making with three-count criminal indictment Winters, Birge Brega & D. Thomas government in statements to the viola- false Denver, CO, P.C., Defendant-Appellant for § in tion of 18 securities fraud U.S.C. Patrick J. Sehleibaum. 78ff(a) 78j(b), §§ 15 U.S.C. and violation of 240.10b-5, in § and wire fraud 17 C.F.R. SEYMOUR, Judge, Chief and Before § 1343. Wiles’ trial violation of U.S.C. TACHA, PORFILIO, ANDERSON, July commenced in 1994. The EBEL, KELLY, BALDOCK, BRORBY, thirty-four over the course called witnesses LUCERO, HENRY, BRISCOE, and days its ease-in-chief. Wiles’ of eleven for MURPHY, Judges, as to Part II.A.* Circuit witnesses, of twelve includ- defense consisted himself, ing over course of two and one- SETH, BRORBY, BALDOCK, and Before on all days. The convicted Wiles half II.B-F.** Judges, to Parts I. & Circuit The district court fined Wiles three counts. thirty-six $60,000 BALDOCK, him to Judge. and sentenced Circuit to run imprisonment on each count months manufac- was a Colorado-based Miniscribe concurrently. computer disk drives. These turer of hard management’s appeals from its criminal arise appeal their convictions Both Defendants cover-up a multimillion dollar fraudulent grounds for Be- urging numerous reversal. inventory December overstatement between fraudu- from the same cause both cases arise January falsely inflated and which overlapping factual cover-up present and lent profits and accelerated its de- Miniscribe’s issues, have consolidated our legal we and bankruptcy. scent into jurisdiction appeals. Our disposition of these in affirm 28 U.S.C. Í291. We is the arises under Patrick J. Sehleibaum . Defendant part. in part and presi- and vice vacate former chief financial officer ** * Seth, States Oliver panel’s opinion The late Honorable in these Prior to release of judges majority argument appeals, Judge, the court's active and heard oral Senior Circuit opinion en banc. voted to rehear Part II.A. of panel's of these conference participated in the argument, purposes consoli- For dated these of oral death, Judge Seth con- appeals. his Prior to Pappert, appeals with United States Judge opinion. but Part II.A. of the curred in all 10, 1995), (10th Cir., filed March No. 95-3071 portion portion participate in that Seth did not which the court also voted rehear opinion, was reheard en banc. court now resubmits en banc. The en banc original panel Pappert for consis- decision opinion. II.A. of this tent with Part I. early January riorate in 1987. In Min- inventory iscribe conducted its annual count began operations in in Miniscribe inventory determine the value of on hand. Longmont, Colorado. Miniscribe was then a accuracy of inventory The count was privately company manufacturing owned proper preparation critical to the of Minis- in computer drives the basement of its disk year cribe’s 1986 end financial statements. founder, Terry Johnson. Miniscribe went public grew beyond Management but soon independent its retained the ac- capacity. capital group, a venture counting Coopers Lybrand firm of & to audit $20,000,000 Quist, verify Hambrecht & invested accuracy Miniscribe аnd of its gained manage- inventory control of Miniscribe its count. procedure standard By overtly verifying ment. Miniscribe was an company’s inventory count is profitable, publicly-owned corporation through inventory a test sampling count —an Colorado, operations Hong Kong, representative deemed of the entire invento- Miniscribe, Singapore. when, ry. whose common stock Problems arose unbeknownst to NASDAQ, subject auditors, was traded on the was management detected an inven- Exchange tory $2,000,000 the Securities Act of $4,000,- as well hole of between regulations as the rules and of the Securities (SEC). Exchange Commission inventory appeared hole because the Following change management, its count, inventory actual and thus dollar value chairman of the board and chief executive inventory, was less than the value of Quentin officer T. Wiles headed Miniscribe inventory recorded on Miniscribe’s books. Oaks, from his office in Sherman California. inventory When the value of book is over- successful, reputation had a as a de- stated, goods correspond- cost sold is manding expected perfor- executive who ingly understated. The understated cost of mance. Salaries and bonuses at Miniscribe goods sold is then from subtracted net sales *6 depended upon often “making Miniscribe resulting in profits equal inflated to the numbers.” hole, inventory amount of the or overstate- ment.
Assisting management Wiles awas team consisting largely of public certified accoun- Huff, Perry, and Wolfe discussed the tants. Patrick initially J. Schleibaum served problem with point, Schleibaum. At this as Miniscribe’s chief financial officer. Wiles’ inventory Wiles was unaware of the hole. management president, team also included properly Schleibaum charge decided operating chief and officer board member portion of the hole against emergency Goodman, Gerald president executive vice fund inventory known as reserves. The re- Parker, Jesse C. opera- of far east director mainder of the hole should also have been Lyons, tions Paul managers division Owen P. charged expensed off or goods as a cost of Perry, operations Tarantа and Warren and sold with a corresponding prof- reduction controllers Kenneth A. Huff and Steven suggested its. But when Perry ap- this (cid:127) joined Wolfe. William P. Lorea later Minis- proach, Instead, Schleibaum balked. when, as cribe chief financial officer in the Schleibaum directed his subordinates to con- trouble, midst of moved Wiles Schleibaum to ceal the inventory remainder of the hole president. vice was in Wiles constant con- through improper . means so that Miniscribe tact with management his through team could continue to the numbers.”1 “make faxes, phone calls many and as as fifteen of knowledge approv- With Schleibaum’s and each, every day. business al, Perry Wolfe and decided cover the inventory by falsely inflating hole the inven-
A. tory count. To hide false count from the Despite reported growth auditors, profitability, and Perry Wolfé and into broke position began Miniseribe’s financial to dete- auditors’ work trunks at Miniscribe after good Needles, Jr., For discussion how income Accounting Belverd E. Financial manipulated through 1995). inventory accounting, see 360-62 ed. $15,000,000 Huff invento- anta and detected the test count and altered hours business Miniscribe, ry largest portion in- hole at inventory count. The the inflated match company’s Colorado which was located Minis- then entered into were flated numbers point, Miniscribe’s finan- operation. At as ad- system and reflected computer eribe’s first two cial statements for 1986 and the signed a inventory. Sehleibaum ditional quarters of 1987 should have been restated au- letter to the representation management inventory hole to reflect a write off of the financial state- indicating Miniscribe’s ditors profits. In- consequent reduction accurate, inventory including its were ments 12,1987, stead, on Miniscribe filed a October 1986 audit. cleared the valuation. Miniscribe 10-Q report quarter third with the SEC profits re- reported false Miniscribe problem. which failed to for the account inventory of the sulting from concealment manage- Miniscribe’s On October statement and 1987 1986 income hole on its team office in Sherman ment met Wiles’ Miniscribe quarter earnings statement. first Oaks, present included California. Those public to the this information disseminated Wiles, Sehleibаum, Goodman, Parker, Taran- first report and 1987 through its 1986 annual ta, Directly meeting, prior and Huff. signed report. financial Sehleibaum quarter inventory informed of the Goodman Wiles quarter 1987 first report and 1986 10-K visibly upset, problem. blam- Wiles became Miniscribe’s 10-Q report which contained failing ing Sehleibaum Goodman Miniscribe filed statements. financial false operations. control told Sehleibaum Wiles 10-Q reports with the SEC 10-K way; stay' and Goodman to out reported suc- required by law. Miniscribe’s and Taranta would find a solution funds company to raise -allowed the cess problem. $97,000,000 issue of debentures through a early in 1987. presented a re- meeting, At the Taranta completed he and had port which Huff
B. report forth previous evening. The set inventory hole. analysis con- Wiles became detailed spring In the nearly proposed to cover report, Taranta internal controls about Miniscribe’s cerned $8,000,000 through various means. management’s of the hole strength. At financial idea, rejected telling Taranta and meeting July Parker ex- Wiles quarterly sug- big inventory others to “think chunks.” Wiles about pressed concern to Wiles up” adding value to operations. gested “grossing far east in Mmiseribe’s control increasing inventory. suggested the far Sehleibaum August traveled to *7 Wiles In failing or to record operations in value of fixed assets Miniscribe’s the to review east rejected Taranta these Singapore. found a certain liabilities. Hong Kong and Wiles independent audi- inventory suggestions in Minis- becausé the control complete loss of measures. Without largely might detect such facility: Wiles tors Singapore eribe’s inventory deciding specifics, Wiles concluded that the for the loss of blamed Sehleibaum inventory return, the hole management moved should hide Upon his Wiles control. directed Taranta present made Tar- for the time. Wiles president to vice and Sehleibaum Shortly report. destroy copies all of the acting officer. chief financial anta Huff, thereafter, Sehleibaum, and Taranta inventory problem if Wiles believed an cover-up.2 to discuss the met details existed, and its officers actually Miniscribe stock market the In late October purchasing investors might liable to those reserves were compa- sharply. Miniscribe’s declined recently issued debentures on large inven- absorb a minimal and unable to strength. At Wiles’ reported financial ny’s affecting profits. Lo- direction, tory off without Huff write Taranta and researched rea, recently hired to become who had In fall of Tar- Wiles inventory problem. Wiles, Interestingly, attending no one manage- meeting his directions. members After meeting prepared a generally prepare I Heard” “What would “What the October ment way, to Wiles. This memos and deliver them memo for I Heard” Wiles. management understood be sure that Wiles could officer, assistance, engaged in an chief financial neverthe- aum’s extensive Miniscribe’s proper to suggested cover-up recording ship- that the time was less which included inventory hole. Taranta and inventory. write off the ment of bricks as in-transit To agreed. Because Goodman Miniscribe’s implement plan, employees Miniscribe depressed, report- already was stock value Boulder, empty in first rented warehouse unlikely profits was ed decline Miniscribe’s Colorado, ten, procured forty-eight foot significantly. value Wiles affect its stock They purchased trailers. then exclusive-use Instead, rejected convened a the idea. Wiles 26,000 bricks from the Colorado Brick Com- meeting management in November second pany. inventory problem. 1987to discuss the Saturday, December On Schleib- Schleibaum, Taranta, Goodman, Wiles, aum, Taranta, Huff, gath- Lorea and others meeting Huff attended the second and Lorea ered at the warehouse. Wiles did not attend. San Francisco November afternoon, early morning From to late those Quist, Hambrecht & the offices of present pallets, loaded the bricks onto shrink group Miniscribe. The continued to control wrapped pallets, and boxed them. The upcoming 1987 audit. Wiles discussed the weight pallet approximated each brick extremely language used harsh when ad- weight pallet of a of disk drives. The brick inventory dressing problem. Wiles had pallets then were loaded onto the trailers and that Miniscribe could not afford to decided County, taken to a farm in Larimer Colora- inventory write off the hole but do. up had to cover it to maintain inves- instead planned to off tor confidence. write Wiles books, however, Miniscribe’s showed the inventory quarters, begin- hole over six inventory approxi- bricks as in-transit worth ning quarter first of 1988. with the Wiles $4,000,000. mately Employees at two of meeting by scanning con- concluded the buyers, CompuAdd Miniscribe’s and CalAb- table, Schleibaum, stopping ference co, agreed inventory had to refuse fictitious “Owen, anyone if stating to Taranta: doesn’t $4,000,- shipments totalling from Miniscribe way, you cooperate, anyone gets in the let purported 000. Miniscribe then reversed the I’ll deal with it.” me know and inventory ship- sales added the fictitious 1987, independent company’s inventory ments into the December auditors records. year began preparing for Miniscribe’s 1987 Additionally, employed the officers other again prob- end audit. Miniscribe faced the hole, inventory to cover including: means clearing independent lem of audit. Tar- (1) recording shipment of nonexistent anta and Lorea met with Wiles California (2) east, inventory from Colorado to the far 4,1987, on December while enroute to review (3) packaging scrap inventory, double operations. Miniscribe’s far east Taranta ex- counting inventory, failing to record plained plan to clear the audit to Wiles. payables upon receipt materials. meeting, At the conclusion in- These various means distributed the invento- inventory formed Lorea that because ry throughout hole Miniscribe’s three facili- problem, sign Lorea would not have Minis- *8 making problem ties more difficult for Report. eribe’s 1987 10-K Schleibaum later independent auditors to detect. confirmed with Lorea. Around the same time, stay told Wiles also Goodman to clear Again, signed management Schleibaum a problem because the representation stating letter to the auditors put seventy year “wouldn’t a old man [Wiles] reports Miniscribe’s 1987 financial were accu- jail.” Upon Singapore, in in their arrival rate and truthful. Miniscribe cleared the Schleibaum, Taranta and Lorea met with independent audit. The result of cover- Parker, Lyons, again and others to discuss that, up. was for Miniscribe’s book in- covering inventory the details оf hole. ventory reported profits and were overstated $15,000,000 $22,000,000 by approximately and mid-December Miniscribe’s man- agement, approval respectively.3 figures represented with Wiles’ and Sehleib- These $15,- 000,000 accounting principles, reported profits 3. Consistent with of Miniscribe's was at- July met with Wiles SCB Officers from inventory of its and 70% of Miniseribe’s 17% fi- false Miniscribe’s delivered and Wiles Despite year. Wiles’ for profits upon the re- Based reports to SCB. Wiles nancial representations, earlier Schleibaum’s outlook, projected and ports, Miniseribe’s 1987 10- sign Miniscribe’s Lorea directed Mrnis- representations, SCB extended Wiles’ to the SEC. report K credit, $60,000,000 $90,000,000 in eribe a reported Miniscribe year For the working capital. used as which Miniscribe Profits over 1986. in revenues increase 96% in Minis- security interest a perfected SCB $33,000,000, in- a 44% taxes were before Sep- On inventory and receivables. cribe’s income net 1986. Miniscribe’s over crease Miniseribe’s SCB satisfied tember share, as per cents 37% to 82 increased $30,000,000 to Bank of America indebtedness in 1986. per cents share compared with 63 through the Feder- transfer a wire fund increased reportedly equity Stockholders Chicago. On November Bank of al Reserve to stockholders announcement Wiles’ 53%. 3,1989, 15,1988, January Wiles again and report stated: 1987 annual Miniscribe’s request addi- from SCB to met with officials compa- in the results the best achieved “We $30,000,000. rejected SCB credit tional consecutive have ten history now ny’s and $30,- eventually lost request. SCB Wiles’ earnings and revenues quarters increased 000,000 of the cover- as a result to Miniscribe year the outlook great was a .... 1987 up. releases Press better.” 1988 looks even for Street Journal in the Wall appearing ads re- increasing pressure, Sehleibaum Under success. reported Miniscribe’s touted in June officer of Miniscribe signed as an month, accepted
1988. The next Sehleibaum Technologies, a position with Sunward C. During his supplier to Miniscribe. parts Miniscribe, obtained Sehleibaum tenure with of cards house saw Miniscribe’s But 1988 116,000 company approximately shares planned, Miniscribe had collapse. As Wiles $305,000.00. cost of approximate stock at inventory hole $7,000,000 off wrote price at a his shares Sehleibaum obtained quarters of 1988. Wiles the first three over through incen- significantly than market $3,000,000 less an additional to write off planned to Miniseribe’s options related tive stock quarter of inventory in the fourth hole company’s through the performance, the first two over and the remainder top plan. As a ex- purchase employee stock conditions Due to market of 1989. quarters company, publicly-traded however, ecutive returns, di- resulting poor aware of SEC’s well $600,- was Sehleibaum only off management to write rected trading. Neverthe- insider prohibition Kong operations, Hong attributable January August less, between Thus, had Miniscribe quarter. fourth every share sold $10,- Sehleibaum $7,600,000 planned of a only off written gross owned. Schleibaum’s Miniscribe he 000,000 in 1988. write off $775,940.00. profits totalled Meanwhile, in the significant downturn convened in board of directors Miniscribe’s during third disk drives for hard market sug- 1988. Wiles on December Colorado Miniscribe’s had concerned of 1988 quarter Hambrecht William member gested to board Minis- lender, Bank of America. principal in- had Quist, whom Wiles & of Hambrecht $35,000,000revolv- fully had a extended cribe January inventory hole in formed of America. Bank agreement with ing credit $40,000,000 loss in report that Miniscribe request rejected Miniscribe’s bank re- Hambrecht however, of 1988. quarter fourth time, *9 credit. About further report idea, such a (SCB) suggesting that jected the of London Bank Chartered Standard of di- entire board force Miniscribe’s lending would rela- about Miniscribe approached re- Instead, Miniscribe resign. rectors tionship. $7,000,000 hole, other profits was attributable $15,000,000 inventory to the tributable liabilities. as unrecorded remaining adjustments such adjustment taxes. The for without $14,000,000 ported quarter thereafter, loss for the final meeting. Shortly 1989 board Ri- of 1988. fenburgh perform directed Parker to an in- ventory analysis. Parker informed Rifen- directors, point, At this except- the outside burgh inventory cover-up. hole and its Hambrecht, ing remained unaware of the approval, With the Rifenburgh board’s estab- inventory scheme to cover the hole. At the independent lished an evaluation committee meeting, report Goodman submitted a investigate the matter. company’s board which summarized the con- report phrases dition. used such April as On Rifenburgh issuеd a position,” sheet,” “weak cash “weak press balance informing public release that Min- negative,” “living products,” “cash flow on old past reports iscribe’s financial could not be profitable required,” “not as and “out of upon relied company would dispute A delay control.” arose between releasing board reports its 1988 financial Wiles, Goodman, members and Russell pending Plan- investigation. the results of the itzer. Goodman and Planitzer wanted to is- resigned shortly Taranta thereafter. Minis- press informing sue a public release incomplete cribe filed an 10-K report Miniscribe’s weak condition. Wiles reluc- with the SEC that same month. In Decem- tantly agreed over Planitzer’s threat to re- ber Miniscribe released corrected fi- sign from the board. 1986, 1987, 1988, nancial statements Early
the first half of 1989. in Minis- bankruptcy. NASDAQ cribe filed for delist- D. ed Miniscribe’s February common stock in January began spending Wiles headquarters more time at Miniscribe’s in During investigation, both Wiles and Longmont, plan Colorado. Wiles’ was first Schleibaum contacted members Minis- company, stabilize the improve then its prior management cribe’s urged team and performance. January On Wiles nothing. them to reveal Schleibaum told sent Goodman a memo stating that in the if Wolfe that no one said anything only innu- future, “we will make not fake our numbers.” endo would gave exist. Schleibaum Wolfe time, But Miniscribe’s outlook was sign. Similarly, “shush” phoned Wiles hopeless. Goodman, Wiles had lost control. Goodman to ask him and say Lorea to Lorea, others, Parker and among noted management nothing illegal. had done Wiles’ distress. resigned position Wiles his as Miniscribe’s chief executive officer and 22,1989.
chairman E. February of the board on Between 1985 and grand Wiles had ac- A indicted Wiles and Sehleib- 780,517 quired shares of separately Miniscribe’s com- aum in March 1993. The indict- 1,724 mon stock and company’s shares of the against ment alleged participation Wiles his preferred stock. initially Wiles had SEC, invested SCB, scheme to defraud the $1,500,000 in part Miniscribe 1985 as of Miniscribe’s shareholders and investors. Quist’s Thereafter, Hambrecht & takeover. alleged The indictment joined that Wiles he received discounted through shares August 1987, war- scheme when he instructed options. rants and stock April Between Taranta and Huff to research Miniscribe’s May 1988 and year less than inventory one problem. According to the indict- prior resignation, 150,000 his ment, Wiles sold participation Wiles in the scheme end- shares of Miniscribe’s common stock for ed in March 1989 after he instructed Good- $1,700,000. profit Wiles’ before taxes and man and Lorea not anyone. to incriminate $1,400,000. commissions amounted to against The indictment Schleibaum simi- 600,000 retained over shares of Miniscribe’s larly alleged participation his in a scheme to eventually stock which became worthless. defraud the SEC and Miniseribe’s sharehold- Rifenburgh Richard became Miniscribe’s ers and investors. The alleged indictment the,board new chairman of joined chief execu- that Schleibaum scheme Janu- upon tive officer election at February ary 1987 he inventory when learned of an *10 — Gaudin, U.S. -, and v. Wolfe instructed and hole at Miniscribe (1995), after a decision rendered partic- L.Ed.2d it. Sehleibaum’s Perry conceal to (2) trials;4 and securities Defendants’ continued allegedly in the scheme ipation 78j(b), §§ charges under to fraud when he told Wolfe August 1989 until U.S.C. 78ff(a) prej § 240.10b-5 were and 17 C.F.R. wrongdoing. any reveal charges al in that the udicially duplicitous respective indictments one of Count false multiple leged multiple means which under Schleibaum and charged Wiles only one se acts constituted statements and making false Miniscribe’s § 1001 with U.S.C. curities fraud scheme. filing with the SEC. it report and 10-K financial report’s alleged count Additionally, and Schleibaum Wiles invento- fraudulently overstated statements our separate issues for preserved four have taxes, income for and net ry, income before (1) govern contends: review.5 Wiles insufficient evidence presented ment indictments respective two of Count scheme to knowledge of the fraudulent Wiles’ with securi- and Schleibaum charged Wiles each of the his convictions under .sustain 78ff(a), 78j(b), §§ 15 U.S.C. ties fraud under (2) him; venue on against counts three Specifically, § 240.10b-5. and 17 C.F.R. charge 18 U.S.C. under false statements violated the alleged that Defendants count (3) Colorado; and improper § was (1) a scheme by: employing laws securities improperly admitted hear the district (2) defraud, making untrue statements charge fraud say testimony as to the wire material failing to state and facts material “single § on a 1343 based under 18 U.S.C. (3) acts and in deceitful facts, engaging and sole individu theory. Schleibaum’s scheme” Miniscribe, defrauded practices, all of which Congress did not intend al contention is investors. its shareholders making against prohibition general § 1001’s charged alone against Wiles A third count apply government to to the false statements § 1343. under 18 U.S.C. fraud him with wire of 15 U.S.C. filings view to false SEC Wiles, alleged that three count Specifically, making prohibits 78ff, specifically § defraud, caused a scheme in furtherance to the SEC. statements false from transfers wire make interstate SCB in turn. issue discuss We each $70,000,000for Illinois excess Chicago, Mmiseribe’s benefit. A.
II. that the assert first present Wiles Schleibaum and Schleibaum appeal, On respec- to instruct failure court’s district consideration. for our issues two common of the materiality element (1) as an juries on dis tive that: contend Both Defendants 18 U.S.C. charges under false statements on to instruct court’s trict failure warranting reversal error § constitutes state false element as an § Section 1001 convictions. of their con charges under 18 U.S.C. ments provides: United States error under reversible stitutes grand jury’s indict expanded the improperly ment; challenge the suffi- also 4. Wiles and Schleibaum (2) unanimity instruction ciency evidence which equivocal; in viola charge §(cid:127) statements both 1001 false was presented fraud wire plain of materiali- specifically Applying charges, element Amendment. tion of the Fifth Olano, re- Defendants’ ty. court overruled district analysis States forth in United set sufficiency of the objections as to the spective 123 L.Ed.2d apparent, a discussion As become evidence. will do not that Wiles claims we conclude element sufficiency on the of the evidence thus, his has plain waived he constitute analysis unnecessary given our materiality is appeal. See claims on right present these first of this issue. Lira-Arredondo, 38 F.3d States error, 1994) (to party preserve 2n. Cir. which he two additional claims 5. Wiles raises stating spe objection timely generally make must court: in the district failed to raise therefore). grounds cific charge fraud the securities instructions as *11 1054
Whoever, any jurisdic- matter triаls, within respective aum’s Daily was still the any department agency tion of or of law of this objection, circuit. Without knowingly United willfully States falsi- district court materiality concluded that was fies, up by trick, conceals any question or covers of law consistent with binding scheme, fact, precedent. or device a material or makes concluded, court also over false, any or respective fictitious Defendants’ objections, fraudulent state- representations, government ments or or makes or uses met its burden producing any writing false or knowing document “some evidence” of the false statements’ ma- any false, same to teriality. contain fictitious or The court did not indicate what fraudulent entry, evidentiary statement or applied shall it burden in reaching this title, fined under this imprisoned or conclusion. not years, more than five both. During pendency appeals, these § 18 U.S.C. 1001. Count I respective of the Supreme Court decided United States v. — charged indictments Wiles and Schleibaum Gaudin, U.S. -, 132 under the § second and third clauses of 1001. The Court reasoned alleged indictments that both Defen- that a right defendant has a under the Fifth knowingly dants “did willfully make and Amendments, Sixth U.S. Const. amend. false, cause to be made fictitious and fraudu- VI, V & jury to have a guilt determine lent statements and a writing false and docu- beyond a every reasonable doubt on element ment, is, that Miniscribe’s Form 10-K Re- charged of a offense. The Constitution “re
port
year 1987,
for fiscal
submitted to the
quire[s] criminal
upon
convictions to rest
SEC.”
jury determination that
the defendant
is
guilty
every
element
While the
second and
crime
third
clauses of
charged,
§
he is
beyond
1001 do
expressly
materiality
make
reasonable
an
at -,
doubt.” Id.
offense,
element of
115
S.Ct. at
we have
2313. Be
held since
materiality
cause
1960
materiality
§
an
is an
element of a
any
element of
1001
charge,
§
jury,
court,
1001
not the
States,
offense. Gonzales v.
must find
United
(10th
materiality.
at -,
286
Id.
Cir.1960),
F.2d 118
115
denied,
S.Ct. at
cert.
2314.7
Obviously,
365
Gaudin
prior
U.S.
81
overruled
prece
our
v.
577-78, 106
3101,
478 U.S.
S.Ct.
malice).
ment of
3105-06,
(1986).
1061
jorn-
as
is defined
Duplicity
struetur-
error is
Because
at 1778.
separate
and
more distinct
two or
der of
analysis under
amenable
al,
not
thus
and
of an
count
in the same
offenses
criminal
pos-
52,
we
the discretion
or
Fed.R.Crim.P.
Haddock, 956
v.
States
indictment. United
Defendants’
thereunder,
vacate
we
sess
Cir.),
reh’g
part, 961
(10th
F.2d
re-
I
Count
under
convictions
§ 1001
denied,
(10th Cir.),
cert.
506 U.S.
F.2d 933
indictments.13
spective
(1992).
88,
50
828,
121 L.Ed.2d
(1) A
duplicity are three-fold:
dangers of
unani
B.
without
may
a defendant
convict
(2)
offense;
A
the same
on
mously agreeing
also assert
Schleibaum
subsequent
in a
may
prejudiced
be
defendant
charge contained
fraud
the securities
that
defense;
court
A
jeopardy
double
indictments
respective
count
two
determining the admissi
difficulty
may have
duplicitous.
prejudicially
Sasser,
was
against
them
v.
United States
bility of evidence.
Defendants,
juries
Cir.1992),
cert.
(10th
According to
470,
5
477 n.
971 F.2d
fraud
1292,
denied,
924,
of securities
122
guilty
them
have found
(1993).
verdict
that al
unanimous
An indictment
having reached
683
L.Ed.2d
without
or
methods of commit
offense
particular
leges several means
of a
on
commission
offense,
several
than
single
rathеr
ting
district
fraud.
act of securities
necessarily
however,
offenses,
is not
separate
The court
arguments.
rejected Defendants’
Jaynes,
v.
United States
duplicitous.
would
unanimity instruction
reasoned
Cir.1996);
United
(10th
1493,
n. 7
F.3d
and en
jury confusion
any possible
alleviate
Inc.,
720,
Browning,
572 F.2d
v.
States
de novo
We review
verdicts.
unanimous
sure
denied,
(10th Cir.),
cert.
an indictment
question of whether
58 L.Ed.2d
Martin, 4 F.3d
v.
United States
duplicitous.
Cir.1993).
(9th
conclude that
alleged
We
cases,
two
count
these
scheme, Wiles
indictments was
respective
of the fraudulent
part
as
count two
unanimity
reports
in
with
filed false
duplicitous and
Schleibaum
Defen
charged each
count
The second
to the Defen
prejudice
SEC.
any
cured
structions
Minis-
sales of
multiple fraudulent
dant with
dants.
materiality on
(failure
element of
David,
on
to instruct
error);
83 F.3d
plain
United States v.
tutes
prejudicial).
Cir.1996) (failure
charge
(4th
perjury
on
to instruct
641-48
charge
materiality on false statements
element of
adopt per
declining
expressly
prejudicial, but
have
disagree
those decisions
13. We
element
of essential
that omission
se rule
to instruct
labeled
failure
error);
v.
States
United
plain
constitutes
offense
presumed
an offense
structural
element
Cir.1994) (fail
(4th
265, 267-68
Rogers, 18 F.3d
proceeded
then
prejudicial, but
failure
such
knowledge of un
on element
ure to instruct
under
conviction
uphold the
defendant’s
structuring
currency
offense con
lawfulness
E.g.,
analysis.
plain error
prong of the
fourth
labeling
expressly
error,
plain
but not
stitutes
(5th
Upton,
F.3d
685-86
v.
United States
McGuire,
structural);
v.
States
United
(5th Cir.)
error as
Jobe,
Cir.1996);
F.3d
States v.
United
(failure
(plurality)
1400-05
F.3d
Cir.1996);
(5th
v.
United States Randaz
923-24
filing
materiality on
on element
to instruct
Cir.1996);
(1st
zo,
States
80 F.3d
charge prejudicial),
receipt form
cash
false IRS
Cir.1996);
(7th
Ross,
Unit
77 F.3d
Cir.1996);
(5th
granted
F.3d 107
reh’g
en banc
Cir.),
Allen,
76 F.3d
ed States
*18
(5th
Parker,
50-53
73 F.3d
v.
United States
Cir.1996) (failure
-
-,
denied,
cert.
requirement of
instruct on
to
that
reason
These decisions
L.Ed.2d
prejudi
not
Hobbs Act
nexus under
interstate
guilt is over
of a defendant's
the evidence
where
McGhee,
cial);
185-
87 F.3d
United States v.
prejudice,
no
whelming,
defendant suffered
Cir.) (failure
(6th
on element
instruct
to
“seriously
did not
to instruct
thus
failure
and
charge
prejudi
not
false
on
statement
fairness,
reputation
public
integrity or
affect
granted
cial),
reh’g
F.3d
en banc
vacated
seen, how
we have
proceedings.” As
judicial
of
ever,
Jones, 21
1335, (6th Cir.1996);
v.
States
United
every
in
requires reversal
structural
Cir.1994) (failure
in
(7th
172-73
F.3d
"undermines
such error
because
instance
knowledge of unlawfulness
element of
struct on
it
the criminal tribunal
integrity of
structural
prejudicial; “no
structuring
currency
offense
on
at
U.S. at
Vasquez, 474
self.”
presented); United States
on element
evidence”
Cir.1996)
(11th
Kramer,
F.3d
1074-75
Additionally,
cribe stock.
count two of the
Because
complexity
of the
of the
against
charged
indictment
him with
scheme and the concern over non-unanimous
issuing
mailings
false
press
verdicts,
numerous
the court nevertheless tendered a
releases.
two of the
Count
indictments was
unanimity
juries
instruction to the respective
necessarily complex because the fraudulent
part
of their instructions on count two.
in
participated
scheme which Defendants
was The court
jury
instructed
although
each
that
complex, extending over the course of two
jurors
agree
individual
need not
on all the
years.
by
means methods which Defendants com
fraud,
mitted
they
securities
must unani
charging
single
offense of se
But
mously agree upon at least one such means
involving
curities
ways
fraud
multitude of
or method to convict Defendants of securities
courses
action as a
ongo
result of an
circuit,
fraud.14 In this
such an instruction
ing scheme to defraud
not
does
render that
“
jury
‘suffices to
they
instruct the
must
7(c)
charge duplicitous.
per
Fed.R.Crim.P.
specifications
unanimous
whatever
mits the government
allege
single
in a
they find to
predicate
be the
guilty
count that the defendant committed an of
” Sasser,
verdict.’
included the scheme accomplish- for its responded court jury ment did render the duplici- detail, indictment again stressing the requirement of tous. unanimity for conviction.15 pre- We must 14. The district court following mously agree submitted the method, but, on each means or unanimity instruction convict, two count to the at in order to unanimously agree must Wiles’trial: upon at one least such means or method as engaged by one the defendant. Unless the Count 2 of charges the indictment the Defen- government proven has the same means or dant Wiles with a violation of federal law con- you, method beyond to each of a reasonable cerning securities fraud. The indictment al- doubt, you acquit must the defendant of the leged separate a number of means or methods charged crime in count 2 of the indictment. defendant violating is accused of Aplts.App. Vol. XII 3354-56. The district this law. gave this same instruction required is not prove all Aplts. App. Schleibaum's trial. at 333-35. alleged means or methods in Count 2 of indictment, juror agree but each must 15. The jury: court stated to the however, jurors, each of the other *19 was, 2, same means or alleged method 2 Count government In Count alleged that in fact, engaged employed by in or the defen- purchases connection with the and sales of committing dant in charged stock, the crime defendant, Wiles, Count Miniscribe Q.T. 2 of the jury indictment. The need not unani- knowledge concerning Miniscribe’s inflat-
1063 guilt.” except United possibilities negate all loyal to their jurors remained that sume (10th Johnson, 1319 42 F.3d v. dis States conscientiously followed and oaths - -, denied, Cir.1994), Frank cert. v. Francis instructions. trict court’s (internal 131 L.Ed.2d n. lin, omitted)’. a (1985). as will overturn This We quotations L.Ed.2d 1976 n. fact system of of only our if no rational trier guilty fundamental verdict sumption is F.2d of Lonedog, 929 elements v. found the contested States could have justice. United denied, 502 U.S. (10th Cir.), Unit cert. reasonable doubt. beyond a the crime (1991). (10th Owens, L.Ed.2d 70 F.3d v. ed States jurors find us “to urges Cir.1995). who A defendant following a unable, incapable of or unwilling, heavy burden a bear instructions court’s
trial not sufficiency argument need Wiles’ Carter, 973 v. States United persuasion.” sure, any of denied long. To be Wiles us detain denied, Cir.1992), (10th cert. 1509, 1514 F.2d wrongdoing at Miniscribe any knowledge of 1289, 122 922, 113 L.Ed.2d cover-up. And the of the during the course this (1993). burden. has not met Wiles so cho him had it believed jury could have him. believe sen; not to chose but the C. myriad Instead, jury chose to believe pre government contends testi who their government witnesses of knowledge of his evidence sented insufficient inferences mony, and the reasonable jury’s to sustain scheme key of the fraudulent therefrom, as a implicated Wiles drawn sum district court him. The against verdicts scheme. player in the a chal While rejected argument. marily pres sufficiency of the evidence lenge to the carefully the volu reviewed haveWe novo subject de question of law a ents quarrel with have no record and minous trial Markum, 4 F.3d v. review, States United well quite knew jury’s finding that Wiles Cir.1993), Well established 891, 893 its illicit to further cover-up, and acted govern that review. principles testimony ultimate aims. purposes and scheme, namely key players in of other sufficiency of the addressing a Huff, Parker, Taranta, Kenneth Jesse Owen the evi all argument, examine we evidence Goodman, William and Perry, Gerald Warren govern light most favorable in a dence testimony of Miniscribe Lorea, as the as well evidence, togeth that and ask ment whether Schouw, Gene Der Marta Van employees drawn to be inferences all reasonable er with Hicks, Bolster- Dehner, Hannah Kelly and guilt therefrom, finding support can jury’s Valadez, sustain is sufficient to States doubt. beyond a reasonable the fraudulent Wiles knew finding that (10th Cir.1995), Wacker, 1453, 1462 F.3d “ eon- - the evidence ‘To the extent scheme. 136, 136 U.S. -, denied, cert. accept flict[ed], required to] [are we sup the evidence “While conflicting evidence jury’s resolution must be conviction substantial porting credibility of wit its assessment suspicion of a mere than raise do more ” (quoting Owens, at 70 F.3d every nesses.’ conclusively exclude it guilt, need F.3d Sapp, States need not United hypothesis it reasonable other is, using trading, insider to insider refers in- and net inventory, before taxes income ed of his stock. on the sale information come, to con- resulting illicit efforts from all prove three all one, shortfall, need employed inventory ceal an committing the or methods these means device, This to defraud. or artifice scheme necessary, It is how- securities fraud. inventory crime to conceal an the scheme refers ever, on this be a conviction there can two, Or, before untrue statements shortage. made unanimously agree count, must material omissions facts or made material has or methods means one of these misleading. least causing made to be statements fact doubt, and beyond reasonable proven been the annual to false refers statements This means agree on the same jurors must Or, three, all engaged in fraud reports. method. and un- upon shareholders Miniscribe deceit Aplts.App.Vol. XII This sellers of stock. witting purchasers and *20 1064 —
(10th Cir.1995), denied, U.S. -, cert. Except expressly provided otherwise 796, 133 (1996)). 116 S.Ct. L.Ed.2d by 744 enactment Congress, any offense
against
begun
the United States
in one
another,
district
completed
in
or com-
D..
district,
in
mitted more than
may
one
inquired
prosecuted
any
in
district
States,
Relying
v.
on Travis
United
364
in which
begun,
such offense was
contin-
1065
Cir.1995),
(10th
1466
reh’g, 80 F.3d
1066
process of
Thus,
that “the whole
we conclude
-
denied,
U.S. -,
(10th Cir.),
117
cert.
in this
offense”
the
constitute[s]
filing ...
Id,.'
265,
189
136 L.Ed.2d
of
the District
This includes
instance.
made.
false 10-K was
the
where
Colorado
801(d)(2)(E)
from the
excepts
Rule
248,
Zwego, 657 F.2d
v.
States
See United
by
hearsay “a
a co-
of
statement
definition
denied,
Cir.1981),
cert.
during the course and
party
conspirator of
(in
919, 102
71 L.Ed.2d
conspiracy,” where the
of
in furtherance
the
to
making
statements
for
false
prosecution
against
party. Fed.
the
is offered
statement
bank,
proper
is
venue
federally insured
801(d)(2)(E).
party
not be
The
need
R.Evid.
executed,
“prepared,
were
statements
where
applies
charged
conspiracy.
rule
with
bank).
made,”
by
or received
or
indi
two or more
shows
where the evidence
in,
despite the absence
acting
concert
viduals
E.
States v.
charge. United
conspiracy
of a
(10th Cir.1978).
the district court
finally
Durland,
that
asserts
575 F.2d
Wiles
hearsay testimony on
improperly admitted
plainly
against Wiles
The evidence
charge
under
fraud
three’s wire
count
with
acted in concert
that he
established
alleged Wiles’
§
three
1343. Count
U.S.C.
management
of Miniscribe’s
other members
designed
defraud
to
a scheme
participated in
begin
inventory
concealing the
hole
team in
(SCB)
lending
into
Bank
Chartered
Standard
meeting on
quarterly
management’s
ning at
challenge
does
Wiles
monies.
Miniscribe
sup
14,1987. The evidence further
October
by
any particular statement
of
admission
the
finding that Wiles’
court’s
the district
ports
three.
count
Rath-
witness on
any particular
February
through
participation continued
evi-
er,
the government’s
that
Wiles claims
argument
resigned. Wiles’
he
when
his involvement
establish that
did not
dence
a consideration
defrauding
was not
that
SCB
of
part
was
of Miniscribe
on behalf
SCB
with
inventory hole
the
to conceal
in the decision
Thus,
according
scheme.
any fraudulent
in United States
misplaced. We stated
testimony
to Wiles’
hearsay
Wiles, any
(10th Cir.),
cert.
Russell,
F.2d
re-
and Miniscribe’s
SCB
negotiations with
denied,
was inad-
SCB
sulting
agreement
loan
(1992):
disagree.
We
missible.
for crimes
responsible
[C]onspirators are
government’s
the close
At
scope
the unlaw-
the
“within
committed
the
case-in-chief,
that
court concluded
“reasonably foreseen
project” and thus
ful
a common fraud
had established
consequence of
necessary
natural
aas
manage
among Miniscribe’s
scheme
ulent
conspir-
...
agreement.”
[A]
the unlawful
ment,
participated
that
and that
instituted,
exist until
continues to
acy, once
through Feb
from October
scheme
succeeds,
abandoned,
otherwise
or is
it is
under Fed.
that
court ruled
ruary 1989. The
act, such
by
affirmative
some
terminated
testimony of
801(d)(2)(E), hearsay
R.Evid.
defendant.
as withdrawal
admissible
was
participants
scheme’s
States, 328 U.S.
Pinkerton v. United
(quoting
against Wiles.16
indictment
counts
all
1180, 1184, 90 L.Ed.
decision
district court’s
review
We
(1946)).
exception
hearsay
testimony
under
admit
awas
on SCB
perpetrated
fraud Wiles
801(d)(2)(E)
discre
an abuse of
Rule
consequence of
and natural
Olivo,
foreseeable
69 F.3d
States
tion.
February
go
indictment here
in the
court stated:
The district
16.
in-
in the
actually March of 1989
It's
admissibility
... under
respect
[W]ith
801(d)(2)(E)
continued
that
it
by co-conspira-
but I find
...
the statements
dictment
through
finding
among
hearsay, I'm
February
therefore
of 1989. And
tors
that
are
evidence that
preponderance
pres-
by a
were
all those who
participants were
proved the defendant
and,
has
in
Government
...
meeting
ent at the October
course,
conspiracy
...
began participation
persons.
other
a number of
And,
meeting.
it
the October
X at 2714.
Aplts.App.Vol.
charges
through
...
dates
continued
inventory
conceal
passing
general
scheme to
hole and
prohibition against
mak-
falsify
ing
Miniscribe’s
financial
government.
statements.
false
statements
Un-
Large
naturally
businesses
look to
like
express
banks to
is an
element
*22
supply working capital
through lending
making
§
false statement under
78ff.
agreements. MMscribe was no different.
only
The
decision to address Schleibaum’s
naturally rely
in turn
Banks
the financial
argument
Bilzerian,
is United States v.
represen
statements of the business and the
(2d Cir.),
denied,
F.2d 1285
cert.
502 U.S.
management
tations of its
to determine the
years, or both....
We do not share the dissent’s concern. As
Congress passed
U.S.C.
78ff.
noted,
the Secu-
previously
we
in the Tenth Circuit
Exchange
rities
shortly
Act of
materiality
before
long
has
any
been an element of
classification of
.The mere
the second.
§ 1001. Gon-
under
offense
false statements
automatically
does not
“structural”
government
zales,
120. The
F.2d at
52(b)
under Fed.R.Crim.P.
materiality
reversal
dictate
a false statement’s
prove
must
Thus,
review.1
permit-
plain-error
§ 1001.
§ 78ff and
under both
making of
charge the
ting
roots, plain-error review
its earliest
From
§ 1001
under
to the SEC
false statements
Wiborg v.
discretionary.
has been
element
render
does not
States,
statements
of the first
one
Circuit.
in the Tenth
superfluous
§ 78ff
rule,
plain
“if a
law
holds
common
that Con-
any express indication
Without
absolutely vital
in a
so
matter
was committed
otherwise,
join the Second
we
gress intended
liberty
defendants,
ourselves at
we
feel
*23
§ 78ff and
that both
and conclude
Circuit
it,”
has “not
if
defendant
even
the
correct
making
false
of
state-
the
proscribe
§ 1001
632, 658,
163 U.S.
duly excepted” the error.
may
SEC,
and
ments to
1137, 1138,
5. The
Applying
Fulminante:
Harm
controversy
Fulmi
in the 1991
Arizona
was bom in
error
Confessions,
Harv.
White,
to Coerced
Error
speaking
Harmless
for four
decision. Justice
nante
essence,
(1991).
164-66
L.Rev.
dissenters,
"meaningless
called the distinction
struc
"clearly articulatefd] the
yet
has not
Court
noting
jurisprudence
harm
dichotomy,”
"our
Id. at
errors undermine.”
ture
structural
that
neatly
errors
so
error has
classified
less
not
290-91,
at
111 S.Ct.
at
at issue." 499 U.S.
disagreement
margin,
there is much
Harry
refers
Judge
T.
At the
Chief
Edwards
1254-55.
This
given
error.
baffling
to affix to
label
about which
that I find
to it as a "distinction
my
by
Edwards,
views of
point is well demonstrated
Harry
is
mostly unhelpful.”
T.
Err
To
Briscoe,
Judge
dissenting colleague,
separately
Human,
Always
Should
Harmless: When
But Not
the "tri-
Tolerated?,
pigeonhole
error in
Gaudin
who would
Ilegal
N.Y.U.L.Rev.
Error Be
box,
range
by
wide
as well as
(1995).
al-error”
distinction between
If
essential
majori-
13 of
12 and
suscepti
views
at footnotes
noted
lies in their
errors
trial and structural
affixing the
problem
opinion.
ty
con
being quantitatively
in the
bility
assessed
harmless-
it
label is that
denotes
presented
jury, see
"structural”
text of other evidence
connoting
merely
307-08,
consequence,
Fulminante,
while
at
U.S. at
error;
extent
to the
egregiousness of the
level
flawed
is
because
the framework
jt
correcting
error that does
requires
do not
that
and trial errors
cases labeled as structural
trial’s re-
fairness
feasibility
affect
fundamental
accurately
divide
the basis
part
I
majority
contrast,
with the
By
to the extent that
the claimed error in these
cases,
it regards
taking
structural error as
that
automatically
an element of the of-
away
jury,
fense
from the
judicial
is
deeming
proceedings
structural
fundamentally
sense defined
applied
Fulminante and
unfair, thereby escaping fourth-prong Atkin-
Sullivan. Yet I cannot
conclude
Maj. Op.
son review.
at 1062 n.13. Such an
requires
every case,
regard-
reversal in
approach
both
is
over-inclusive and under-
posture
less of the
in which it was raised.
errors,
inclusive. Some
the admission of a
True, this error defies harmless-error review.
confession,
example, might
coerced
seem
This is
meaningfully
because we cannot
con-
sufficiently grave
of a
magnitude that “a
template its effect
jury’s
on the
delibera-
reliably
criminal trial cannot
serve its func-
tion —the nature of the error was to remove
tion as a
guilt
for determination
vehicle
or
jury.
review,
issue from the
Plain-error
innocence,
punishment
and no criminal
may
above,
as noted
has a different focus than
regarded
fundamentally
as
fair.” Rose v.
review;
harmless-error
it concerns the er-
Clark,
570, 577-78,
ror’s effect on
proceed-
the fairness of the
manship at
jury on the issue of
instruct
failure to
policy. One
as a matter
inappropriate
a structural er-
materiality ... constitutes
imagi-
asymptotic levels of
not exercise
need
and,
so,
ror”;
the error is
if
“whether
an-
under the rule
nation to conceive
under
per se or reviewable
reversible
deliberately
today, counsel
nounced
analysis
in United States
plain
set out
error
pro-
in
the trial
a structural
overlook
Olano,
[507
doubt
faulty reasonablе
ceeding,
as a
such
(1993).”
answering these
L.Ed.2d
508]
Sullivan, 508 U.S.
see
jury,
instruction
to instruct the
I conclude failure
questions,
if
knowing that
materiality is not struc-
jury on
issue of
guar-
convicts,
nonetheless be
client will
her
Therefore,
from
dissent
I
tural error.
purpose of
The whole
trial.
anteed
new
question.
first
majority’s
as to the
conclusion
harmless-error
distinguishing between
on the ele-
failure to instruct
agree
I
tac-
these
is to eliminate
plain-error review
error,
it
but whether
is
ment
plain-error review
should leave
We
tics.
beyond
question
presents a
reversible
correcting those errors
purpose:
its imended
for en
designated by this court
banc
those
52(b)
“seriously
affect
Rule
under
question
Answering the first
review.
ju-
fairness,
reputation of
integrity
public
ques-
the second
I need not reach
negative,
proceedings.”
dicial
is not
I
the error
conclude
tion. Because
structural,
plain error anal-
apply the
reasons,
I would
I
join
while
foregoing
For
52(b)
timely
of a
U.A.2.C.,
in the
ysis of
absence
I
Rule
to Part
court’s conclusion
However, given the
objection
trial.
the court’s resolu-
respectfully dissent from
court);
open
see also Fed.
writing
or in
ex-
majority announces an
In footnote
(waiver
23(a)
must be
trial
R.Crim.P.
struc-
ception
Gaudin errors are
to the rule that
writing).
in all circumstances.
be reversed
and must
tural
*27
exception,
in which the defendant
for cases
This
suggests
majority
‘‘[a]
that
situation
While the
element,
limited
is of
stipulates
removal of an
to
may
reviewing
conclude
may
when a
arise
ability
bearing on
utility
no
our
and should have
a failure to
complete
that
in
confidence
agree
if a
plain
I
error.
play
review for
to
did
of an
on
element
offense
struct
an
offense,
offense,”
of the
stipulates
apply
an element
to
jury’s
defendant
verdict on
role in the
jury’s
stipulation
consid-
from the
anything
to remove it
of a
ing
it is not error
short
10
footnote
Mason,
F.3d
v.
85
of "harmless
engage
United States
See
us in determinations
would
eration.
Cir.1996).
Roy,
the
But because
See
472
error.”
structural
California
337, 339-40,
Gaudin-type
- U.S. -, -,
arises
error
117 S.Ct.
‘‘structuralness”
J.,
(Scalia,
(1996)
concurring)
right
have
defendant's
denial of
the
the
L.Ed.2d
from
pre
(where
be-
was not
of the offense
of the
jury
each element
an element
offense
decide
the
doubt,
jury,
can be harmless
the error
yond.a
an informal concession
sented
reasonable
attorney
points effective
jury
on
"only
verdict
by
or his
other
the defendant
if
an element
upon
impossible,
jury
ly
one or if
right to a
determina-
this
it
embraces
not remove his
would
evidence,
what the verdict did
have found
Wayne
&
R. LaFave
See
of that element.
tion
well.”).
21.1(h)
any
finding
point
this
Israel,
find
event,
Procedure
without
H.
Criminal
Jerold
is deemed struc
or not the
by "express
error
only
whether
be waived
(jury trial
plain
tural,
defendant,”
for
review
not limit our
should
it
intelligent
consent
defendant,
error.
by
either
personally
be made
should
unique
created in
requisite degree
circumstance
these cases
of confidence that the
intervening change
as a
result
in the
jury necessarily found the existence of the
circuit,
require
settled law of this
I would
finding by
omitted element.
such
Without
proving
to bear the burden of
jury,
required
reversal would be
under
prejudice
the absence of
because defendants’
principles
Louisiana,
of Sullivan v.
object
failure to
was the result of their reli
U.S.
113 S.Ct.
reached jury right a ver [to that ‘Where unavoid- reversal. is reversal clear that inquiry, it is denied, the cannot altogether State dict] to a fair right the defendant’s protect to able harmless deprivation' was that the contend trial. the defen established the evidence because and was had counsel defendant the [I]f a case is that such guilt; the error dant’s is a adjudicator, there by impartial an tried judged the entity defendant wrong the any other errors that strong presumption at 3106. at guilty.” subject to are occurred might have that However, a Sandstrom the Court noted that thrust of the analysis. The harmless-error a directed distinguishable from was error governing the rules many constitutional the jury considered in that the still verdict that to ensure trials is of criminal conduct it The Court reasoned disputed element. judg- correct fair and lead to those trials jury have found that no could possible was reviewing can find a ments. Where criminal act without committed defendant estab- developed at trial record that established finding malice implicitly was also doubt, the beyond a reasonable guilt lishes case, In a doubt. such beyond a reasonable been satisfied has in fairness interest “is on malice sim the erroneous instruction As we affirmed. should be judgment Rose, at superfluous.” U.S. ply stated, “the Constitution repeatedly have instruc Despite the erroneous at 3107. S.Ct. trial, to a fair defendant a criminal entitles tion, viola be no constitutional would there a one.” perfect not “ jury have found ‘ev would tion because Rose, at 3106 at U.S. every necessary’ establish element ery fact omitted). (citations doubt.” a reasonable beyond offense distinguish- completely Roy Even if were Id. face, the cases we question able from Sandstrom, held an Thus, the Court have Supreme Court which by the decided regarding the pre instruction erroneous viola- Amendment type of Sixth identified produce a could con of an sumption element sup- do requiring automatic reversal tion Rose, In stitutionally verdict. deficiеnt requires here the error a that port conclusion set an erroneous held that where Court structur- is therefore reversal and automatic “altogether does instructions omitting an instruction al. The error jury found that den[y]” “ possibility from evalu- preclude us materiality does not every necessary1 to establish ‘every fact guilt established ating evidence whether beyond a reasonable of the offense element or whether doubt beyond a reasonable inquire whether there doubt,” proper it is satisfying the inter- a verdict jury rendered this constitu violation of in fact been a has of fairness. est the verdict requiring right that tional before Montana, U.S. In Sandstrom reversed. 2458-59, L.Ed.2d 39 Hence, an erroneous while instruction an Court held error re not structural alone is instruction of malice violated due creating presumption a reversal, given inmay, it a quiring automatic proof shifting the burden process substantial ease, defendant’s prejudice defendant, contrary to In re intent a element of on each a verdict right to Winship, instruction an erroneous charge. Whether (holding process due rights in substantial the defendant’s violated beyond a by proof required conviction law inquiry a type of exactly given case is a doubt). Rose, Court ad- reasonable analysis answer. serves Rule 52 left unan- Sandstrom question dressed and Rose implications of Sandstrom error re- Sandstrom swered —whether inAs- Sand- are clear. instead, present case or, was quired reversal automatic strom, identified in Gaudin the Court analysis. subject ato harmless resulting in constitutional- capable verdict directed Rose noted Court in *29 Sandstrom, the As in ly verdict. deficient the Sixth would violate prosecution the for Sullivan, right right at risk is the to a doubt in constitutional reasonable instruction by jury analysis simply a on each element of a harmless error determination where was beyond impossible a in the offense reasonable doubt. As as there could be no basis the Rose, question jury implicitly applied now face the of whether record to conclude the we particular instructing jury a a a error reasonable doubt standard because lack of will always right deny jury’s Amendment to a such an instruction “vitiates all Sixth jury finding guilty each findings.” on element and 508 U.S. at at 2082. reversal, automatically require precisely ability therefore It is to review the record meaningful whether in some the instructional error and render a determination as to cases right, will not this Sixth Amendment whether an a violate error affected defendant’s sub providing imperfect rights distinguishes defendant with an but stantial trial a Fulminante, fair trial. a from structural error. 1264. Where the question jury before us assumes the jury has not received instruction on rea was instructed on all but one element of the doubt, reviewing always a sonable court will subject offense. Unlike the case where remain doubt that the serious defendant’s prosecu- a there is directed verdict rights basic Sixth Amendment have been ad tion, in a case where an instruction on a contrast, equately safeguarded. where omitted, single right jury is element jury has not received an instruction on “altogether trial is not denied.” Had the materiality, reviewing court will not al predicate conclusively facts so established ways uncertainty. harbor such materiality jury that no rational could reach finding majority verdicts rendered without also required contends reversal is satisfied, materiality element to be fail- require because Rule 52 review would materiality ure to instruct on the “wrong entity” appellate element of court —to —the superfluous. jury If implicitly would be materiality. make the A determination satisfied, materiality found the element was question Rule 52 standard that looks at the it is of no constitutional jury missing moment that of whether the found the ele- court, acting authority, satisfied, district outside its ment rather than what a found jury found, the element to be satisfied as places .well.4 reasonable would have Rose, As in it is materiality conceivable that the “right both determination of in the entity” could occur and that the constitutional jury. Applying such a Rule 52 —the right preserved at issue could be intact.5 standard does not offend the Sixth Amend- Thus, absence of an by placing instruction on materiali- ment guilt the determination of — ty distinguishable is from jury. the absence of a Roy, outside See U.S. at case, jury In such a materiality." disagree majori- would have fulfilled its ment of I with the constitutional function to "stand between the ac- ty's far-reaching generic view that the broad and potentially arbitrary cused and a or abusive Gov- questions parties we have instructed the to brief ernment that is in command of the criminal can be answered reference to the facts of two Supply sanction.” United States v. Martin Linen the three cases we have consolidated herein. Co., 564, 572, agreed We have to address whether failure to materiality instruct on the element of is structur- questions al error. We have not limited our majority opinion largely 5. The consistent with particular developed facts in Wiles and the view I have set out. In footnote majority Schleibaum. To extent the reasons opinion may states: "A situation arise when a that Wiles’ and Schleibaum's convictions should reviewing complete conclude with looking appellate be vacated because after at the confidence that a failure to instruct on an ele- ment of the offense did not majority records the is convinced the did not play a role in the verdict, otherwise,” jury's render "a formal or it has verdict on that offense.... Because both engaged analysis Wiles and in a Schleibaum contested the form of the Rule 52 element of trials, respective at their majority apparently we are not I advocate. The does not confronted with that situation.” simply vacate the convictions because of a miss- Similarly, Roy, applying majority ing majority missing instruction. The *30 Sullivan, 339-40; -, at 117 S.Ct. 2082; at Carella 113 S.Ct. at
508 U.S. 268-70, 109 S.Ct. California, Rose, (1989); 2422-23, 105 L.Ed.2d 3107; 580-81, cf. Carpenters & Joiners Brotherhood States, v. United America 91 L.Ed. States, v. United Bollenbach 402, 406, L.Ed. for actual no substitute
(strength of evidence conclusively Here, is not finding). it rights constitutional
established basis for an as the in Sullivan
identified by the violated been reversal have automatic alone. materiality instruction of a absence materiality in of a labeling the absence
By error, majority as structural
struction regard trial without requires a
opinion new to a guarantee the constitutional
to whether jury has been impartial trial before
fair
satisfied. jury on to instruct
I conclude failure itself, trial materiality,
the element analysis error, subject to it is trial As error. 52(b) in the ab Rule under plain at trial. Howev timely objection
sence of object
er, was result failure to as the upon the settled law reliance defendants’ circuit, should bear prejudice. absence proving
burden
Viola,
See join HENRY, Judges, Circuit
KELLY foregoing dissent.
in the Plaintiff-Appellant, SMITH,
Cynthia OF SHIELD BLUE
BLUE CROSS INC.,
KANSAS, Defendant-
Appellee.
No. 95-3306. Appeals,
United States Court
Tenth Circuit. 17, 1996.
Dec. notes finds the finding its part of structural error is based in instruction merits reversal because it cannot find the fact discerned from the Wiles and Schleib that the "otherwise” satisfied defendants’ juries aum case records that the “did not render rights. Sixth Amendment verdict, otherwise, formal or ... on the ele-