United States v. Gallo

859 F.2d 1078, 1988 WL 98439

Opinions

WINTER, Circuit Judge:

This appeal raises in stark form the question of under what circumstances a defendant is entitled to a dismissal of an indictment where his fifth amendment rights have been violated by the inadvertent inclusion of prior immunized testimony in an application for electronic surveillance that led to evidence of his criminality.

Julie Miron testified under a grant of immunity before a grand jury looking into the activities of now-convicted labor-racketeer John Cody. A paragraph of Miron’s testimony was erroneously included in a lengthy application for an extension of an electronic surveillance authorization in the home of the late Paul Castellano. The surveillance eventually uncovered a labor payoff scheme implicating Miron. The paragraph containing the immunized testimony was so inconsequential, however, that it could not have influenced the government’s decision to seek or the district judge’s decision to issue the surveillance order. Because inclusion of the paragraph did not affect the course of events leading to Miron's conviction, I would affirm the judgment of conviction.

BACKGROUND

In March 1980 the Organized Crime Strike Force of the Eastern District of New York obtained an order compelling Julie Miron, the president of several building supply corporations, to testify before a grand jury investigating John Cody, a former labor official with suspected ties to organized crime. Miron’s testimony was given under a grant of immunity pursuant to 18 U.S.C. § 6002 (1982), following Mi-ron’s assertion of his fifth amendment privilege in response to the question: “Do you know John Cody?”

On June 18, 1980, Miron appeared before the grand jury and answered questions about the union contracts of his building supply companies, his relationship with John Cody, and his relationship with the late Paul Castellano, the alleged boss of the Gambino organized crime family. Mi-ron testified that one of his companies had a contract with a union headed by Cody and that he had other business dealings with Cody and Cody’s son. Miron also testified that his companies had supplied building materials to Castellano’s sons and that he met with Castellano and John Cody at a Manhattan restaurant to resolve a dispute about the price of those materials.

The grand jury investigation culminated in the indictment and conviction of Cody on labor-racketeering charges. Although Mi-ron did not testify at Cody’s trial, a special agent of the Strike Force provided Miron’s grand jury testimony to the probation officer who prepared Cody’s presentence report. The report used Miron’s immunized testimony to establish a connection between Cody and Castellano.

Subsequently, the Brooklyn Strike Force initiated an investigation of potential racketeering violations by the Gambino organized crime family. On November 12, 1982, the government applied for authorization to place electronic bugs in Castellano’s home. In support of the application, an affidavit by an FBI agent recited information substantiating probable cause for a wiretap concerning possible loansharking and murder. The affidavit also recited other criminal activities of the Gambino crime family. On the basis of that affidavit, Judge Bramwell signed an order authorizing a 30-day wiretap. Because of logistical difficulties in installing the necessary equipment, the Strike Force applied for and received three extensions of the original wiretap order. None of these applications referred to Miron’s immunized testimony.

Information revealed in conversations intercepted at the Castellano residence led the government on April 8, 1983 to seek another extension of the original order and a broader wiretap authorization to cover Hobbs and Taft-Hartley Act violations. The affidavit supporting the application described the Gambino family’s labor-racketeering activities, including providing “muscle” for and sharing payoffs with corrupt union officials, and stated that John Cody was one such official. In addition, the affidavit stated that reliable informants had told the FBI that Cody was a close associate of Carlo Gambino, former head of the organized crime family, and of Paul Castellano. Also included in the affidavit, however, was a reference to part of Mi-ron’s immunized 1980 grand jury testimony. Paragraph 18 stated:

I am also informed ... that during [the] investigation of the Cody case, he heard testimony from Julie Miron, the president of Miron Mason Supplies. Mr. Mi-ron said that he had supplied materials for the construction for homes Castella-no’s sons were building on Staten Island. A dispute arose over the price Mr. Miron was charging for the materials. Mr. Mi-ron was then contacted by John Cody on behalf of Castellano. Cody said that he thought Mr. Miron’s prices for the Cas-tellano materials were too high. Cody then arranged a meeting with Paul Cas-tellano, Cody, and Miron attended to discuss this dispute.

The agent who included this paragraph did not know that it was based on immunized grand jury testimony.

The affidavit went on to describe a number of intercepted conversations involving explicit and extensive labor-racketeering activities. It also stated that cars registered in Miron’s name arrived at the Cas-tellano residence and that Miron visited the home, after arranging a meeting with Cas-tellano in a phone conversation during which Miron used a code name.

On April 8, 1983, Judge Bramwell extended and expanded the wiretap authorization as requested by the government. Conversations intercepted thereafter implicated Miron and his co-defendants in a large-scale labor payoff scheme involving the use of non-union labor on multi-million dollar contracts for work on Mobile Oil Corporation’s deep water terminal and pipeline facility at Port Mobil, New York.

Based on this evidence, Miron was indicted on Taft-Hartley, racketeering and obstruction of justice charges in June 1986. Before trial, Miron moved to dismiss the indictment or, alternatively, to suppress the evidence on the ground that the government had improperly used his immunized grand jury testimony to obtain both the indictment and the evidence to be used against him at trial. Then Chief Judge Weinstein denied the motion, stating that the small part of Miron’s immunized 1980 grand jury testimony referred to in the wiretap affidavit was “of no significance,” and that its use was like “having a horse blanket and throwing it on top of ... a little handkerchief, no effect whatsoever.” Judge Weinstein found that: (1) the FBI agent who prepared the affidavit in question did not know that Miron’s testimony had been immunized; and (2) the government proved beyond a reasonable doubt the existence of “wholly independent legitimate sources” causing the government to apply for and the district court to grant the renewed and expanded wiretap order. He concluded that

It is apparent that (1) any judge of this court would have taken the same action, and that (2) the absence of the Miron references would have made no difference in the result. In terms of the order actually obtained, the immunized testimony of Miron had no impact at all.

DISCUSSION

The parties agree that the evidence against Miron developed through the electronic surveillance authorization was the basis for his conviction. This appeal presents two issues: (1) whether the government’s use of Miron’s immunized testimony violated his fifth amendment and statutory rights; and (2) if so, whether he is entitled to relief for improper use of his immunized testimony where use of the testimony did not affect the course of events leading to his indictment.

1. Unlawful Use of Immunized Testimony

I believe it clear that the portion of Mi-ron’s grand jury testimony used in the affidavit was subject to a valid claim of privilege. The precise question causing Miron to invoke the fifth amendment, and the government to enforce the immunity order, was, “Do you know John Cody?” No claim was made by the government that the privilege was improperly invoked, as an admission of a relationship with Cody might well have been a link in a chain of evidence showing criminality. See Hoffman v. United States, 341 U.S. 479, 486-87, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951). Had Miron continued to refuse to testify concerning his relationship with Cody, which of course led to disclosure of his relationship with Castellano, Miron would have been held in contempt. That testimony is thus covered by use-immunity under 18 U.S.C. § 6002 (1982).¹

The government argues, however, that because the crimes committed by Miron occurred after he gave his immunized testimony, the use of that testimony in securing the indictment and his conviction violates neither the statute nor the fifth amendment. I do not discern in relevant Supreme Court decisions such a broad principle. Indeed, Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968), held the registration provisions of the gambling tax statutes unconstitutional on the ground that “[prospective registrants can reasonably expect that registration ... will significantly enhance the likelihood of their prosecution for future acts, and that it will readily provide evidence which will facilitate their convictions.” Id. at 54, 88 S.Ct. at 706. Marchetti rejected an inflexible “chronological formula” because it might open avenues for evasion of the privilege and adopted as the proper test “the sub-stantiality of the risks of incrimination.” Id. Because compliance with the registration provisions of the gambling tax statutes virtually always required the registrant to announce an intention to commence violations of various state and federal gambling statutes, the risk of incrimination was high indeed and the Court invalidated the provisions in question.

In a later case, United States v. Freed, 401 U.S. 601, 91 S.Ct. 1112, 28 L.Ed.2d 356 (1971), the Court upheld the registration provisions of the National Firearms Acts that require the transferor to register the transfer prior to its execution by providing the fingerprints and photograph of the transferee. Once the registration is approved (transfers to persons with criminal records being prohibited), the transfer may take place. The Court rejected the argument that registration might incriminate the transferee for future crimes. Its rationale, however, was not that the fifth amendment makes strict chronological distinctions, but that the risk of incrimination as to future crimes was insubstantial because the government had assured the Court that registration data was not made available by the Internal Revenue Service to local, state or federal law enforcement agencies, except for the prosecution of unlawful failures to register. Because other agencies “never see the information,” the Court reasoned, the transferee “is left in the same position as if he had not given it.” Id. at 606, 91 S.Ct. at 1117.

I believe the facts in the instant case are governed by Marchetti rather than Freed. The grand jury here was gathering information about ongoing criminal activity involving labor racketeering, and the information it gathered was available to federal law enforcement officials. In a real sense, therefore, testimony by Miron regarding his business, which was closely related to the construction industry and involved union contracts, his relationship with Cody, who was the subject of the investigation, and his relationship with Castellano, who was a widely-reputed organized crime boss, disclosed “links in a chain of evidence,” Marchetti, 390 U.S. at 48, 88 S.Ct. at 703, that were potentially incriminating both as to past and future crimes arising out of the activity being investigated. The very use of Miron’s immunized testimony in the application for an extension and expansion of the surveillance authorization demonstrates the testimony’s inculpatory nature. As in Marchetti, therefore, application of an inflexible chronological test in the present circumstances would open avenues of evasion, by allowing a grand jury investigating ongoing activity to immunize a person so as to obtain testimony that would thereafter support probable cause for electronic surveillance of that person. Moreover, because labor racketeering is, like gambling, generally an ongoing activity, a substantial risk of incrimination attends the questioning of persons in situations similar to Miron’s. I thus conclude that the use of Miron’s immunized testimony violated the use-immunity statute and the fifth amendment.

2. Harmless Error

I conclude, however, that the violation of Miron’s statutory and constitutional rights had no effect on the course of events leading to his indictment and conviction and therefore does not require dismissal of the indictment. The affidavit contained numerous facts directly establishing probable cause to extend the prior order concerning loan-sharking, extortion and murder, and to expand it to include labor racketeering. The evidence of conversations in Castella-no’s home relating to labor racketeering was quite explicit with regard to ends, means and the unions involved. The short paragraph derived from Miron’s immunized testimony merely indicated that Miron knew Cody, then a convicted labor racketeer, and that Miron had met with Castella-no to discuss innocent matters at Cody’s suggestion. This was of negligible significance, however, in light of independent evidence that, after the grand jury testimony, Miron’s cars were seen at Castellano’s home and that Miron used a code name in a phone call to arrange a meeting with Cas-tellano. The district court was thus entirely correct in concluding that “even without [the immunized] testimony, the government would have acted exactly as it did, and no judge of this court would have deviated in the slightest from the course of granting orders authorizing the bugs that revealed information incriminatory to Miron.”

That finding being fully supported, I would affirm. The existence of a federal constitutional violation does not per se compel relief. Chapman v. California, 386 U.S. 18, 21-22, 87 S.Ct. 824, 826-27, 17 L.Ed.2d 705 (1967). “[S]ome constitutional errors ... are so unimportant and insignificant” and have so “little, if any, likelihood of having changed the result of the [proceeding]” that they “may ... be deemed harmless.” Id. at 22, 87 S.Ct. at 827. With such errors, the court must be able to declare its belief that the error was harmless beyond a reasonable doubt, id. at 21-24, 87 S.Ct. at 826-28, as the district court did in this case.

In examining a particular error to determine whether it was harmless, we bear in mind that “while there are some errors to which Chapman does not apply, they are the exception and not the rule.” Rose v. Clark, 478 U.S. 570, 106 S.Ct. 3101, 3106, 92 L.Ed.2d 460 (1986). An example of a violation to which Chapman would not apply would be the denial of the assistance of counsel at trial. See Gideon v. Wainwright, 372 U.S. 335, 83 S.Ct. 792, 9 L.Ed.2d 799 (1963). In such a case, of course, the error permeates the entire proceeding, and harmless error analysis would inevitably entail speculation. Where the effect of the error is more confined, however, we can be more confident of a judgment as to its effect on the proceeding as having been harmless beyond a reasonable doubt. See, e.g., Rushen v. Spain, 464 U.S. 114, 118, 104 S.Ct. 453, 455, 78 L.Ed.2d 267 (1983) (per curiam) (ex parte communications to judge); United States v. Hasting, 461 U.S. 499, 508-09, 103 S.Ct. 1974, 1980, 76 L.Ed.2d 96 (1983) (improper comment on defendant’s failure to testify); Milton v. Wainwright, 407 U.S. 371, 92 S.Ct. 2174, 33 L.Ed.2d 1 (1972) (admission of confession obtained in violation of right to counsel); Chambers v. Maroney, 399 U.S. 42, 52-53, 90 S.Ct. 1975, 1981-82, 26 L.Ed.2d 419 (1970) (admission of evidence obtained in violation of fourth amendment); Harrington v. California, 395 U.S. 250, 251-54, 89 S.Ct. 1726, 1727-28, 23 L.Ed.2d 284 (1969) (admission of non-testifying codefendant’s statement).

The defect in the instant case does not fit within the “limited category of constitutional errors that are deemed prejudicial in every case.” Delaware v. Van Arsdall, 475 U.S. 673, 106 S.Ct. 1431, 89 L.Ed.2d 674 (1986). This case requires us only to render a judgment concerning the significance of the paragraph of immunized material as to the finding of probable cause. I conclude that the use of immunized testimony in this case constituted harmless error beyond a reasonable doubt. See United States v. Nemes, 555 F.2d 51, 55-56 (2d Cir.1977) (use of immunized testimony in indictment subject to harmless error rule); United States v. Byrd, 765 F.2d 1524, 1530-31 (11th Cir.1985) (same); United States v. Gregory, 730 F.2d 692, 697-98 (11th Cir.1984), cert. denied, 469 U.S. 1208, 105 S.Ct. 1170, 84 L.Ed.2d 321 (1985); United States v. Shelton, 669 F.2d 446, 461-64 (7th Cir.), cert. denied, 456 U.S. 934, 102 S.Ct. 1989, 72 L.Ed.2d 454 (1982). Here the record plainly indicates that, except for the single paragraph in question, the government’s information came from reliable FBI informants other than appellant, and from direct surveillance, and that the paragraph in question was of negligible significance. See Kastigar v. United States, 406 U.S. 441, 460, 92 S.Ct. 1653, 1664-65, 32 L.Ed.2d 212 (1972) (evidence introduced by government must be derived from legitimate sources wholly independent of compelled testimony); United States v. Mariani, 851 F.2d 595 (2d Cir.1988) (same); United States v. Seiffert, 501 F.2d 974, 982 (5th Cir.1974); United States v. Kurzer, 534 F.2d 511, 516 (2d Cir.1976); United States v. Hampton, 775 F.2d 1479, 1485-86 (11th Cir.1985). With regard to labor racketeering, the subsequent extension and expansion of the order was not a borderline ease. The affidavit recited a range of explicit information from confidential sources and intercepted conversations showing that the Gambino organized crime family was engaged in labor racketeering, and that conversations in furtherance of that racketeering were occurring in Castellano’s home. Miron, who owned a building supply business, had arranged a meeting at Castellano’s home under a code name, and his cars were seen there on other occasions.

In concluding that the inadvertant use of immunized testimony in this case was harmless, I find support in decisions concerning whether evidence is tainted as a result of inaccuracies subsequently found in an affidavit supporting an application for a warrant. Under Franks v. Delaware, 438 U.S. 154, 98 S.Ct. 2674, 57 L.Ed.2d 667 (1978), a reviewing court must examine the unchallenged portions of the affidavit and determine whether those portions are sufficient to support a probable cause finding. The analogy between fourth and fifth amendment cases is, of course, limited. As Kurzer stated,

The reason is that the principal function of the Fourth Amendment exclusionary rule is to deter unlawful police conduct, and it can be argued that it serves little deterrent purpose to exclude evidence which is only indirectly and by an attenuated chain of causation the product of improper police conduct. The Fifth Amendment, in contrast, is by its terms an exclusionary rule, and as implemented in the immunity statute it is a very broad one, prohibiting the use not only of evidence, but of “information,” “directly or indirectly derived” from the immunized testimony. The statute requires not merely that evidence be excluded when such exclusion would deter wrongful police or prosecution conduct, but that the witness be left “in substantially the same position as if [he] had claimed the Fifth Amendment privilege.”

534 F.2d at 516 (citations omitted). Kurzer says no more, however, than that when the defendant has been put at a disadvantage because of the use of his immunized testimony, although indirect and attenuated, then he deserves relief under Kastigar. In the instant case, the use of immunized testimony did not disadvantage Miron. Moreover, I can state with confidence not only that the unchallenged portions of the affidavit would support a finding of probable cause, but also that any judge would have made such a finding.

My analysis is bolstered by the recent decision in Murray v. United States, — U.S. -, 108 S.Ct. 2529, 101 L.Ed.2d 472 (1988), a fourth amendment case ruling that the “independent source” doctrine permits the admission of evidence initially discovered during an unlawful search but later obtained independently from lawful activities. The Court noted that the situation would be different if the government’s decision to seek the warrant or the judge’s decision to issue the warrant had been affected by what was observed during the illegal initial search. The Murray holding clearly is apposite to the instant case, where neither the government’s decision to seek the expanded wiretap order nor the judge’s decision to grant it was affected by the use of the small portion of immunized testimony.

In addition, the contract analogy urged by appellant supports, rather than undermines, my conclusion. Appellant argues that immunity is based on a bargained exchange between the government and the witness — in return for his partial surrender of his right to remain silent, the witness is promised that the information he provides will not be used against him. Appellant asks us to rule that any breach of this agreement, however immaterial, requires that the judgment of conviction be vacated. I cannot agree. Such a rule would vitiate the function of the harmless error rule. While it is of utmost importance that the government respect and scrupulously observe restrictions on the use of immunized testimony, I see no reason to set aside an otherwise valid conviction because of an error that had no effect on the course of events. Application of a contract analogy to these facts does not lead us to a different result. A partial breach with no harm or damage to the complaining party cannot be a basis for a contract action. See Calabria v. Associated Hospital Serv., 459 F.Supp. 946, 949 (S.D.N.Y.1978) (without allegation of facts showing damages, action for breach of contract cannot be maintained), aff'd sub nom. Spoto v. Associated Hospital Serv., 610 F.2d 807 (2d Cir.1979).

In view of Judge Van Graafeiland’s separate concurring opinion, the judgment is affirmed.

1 . That statute states:

Whenever a witness refuses, on the basis of his privilege against self-incrimination, to testify or provide other information in a proceeding before or ancillary to ... a court or grand jury of the United States ... the witness may not refuse to comply with the order on the basis of his privilege against self-incrimination; but no testimony or other information compelled under the order (or any information directly or indirectly derived from such testimony or other information) may be used against the witness in any criminal case, except a prosecution for perjury, giving a false statement, or otherwise failing to comply with the order.