United States v. James A. Russo Vincent Meli Roby G. Smith

708 F.2d 209, 13 Fed. R. Serv. 389, 113 L.R.R.M. (BNA) 2658, 1983 U.S. App. LEXIS 27484

• Court: Court of Appeals for the Sixth Circuit
• Decided: May 20, 1983
• Docket: 80-5052, 80-5054 and 80-5055
• Status: Published

Opinions

BAILEY BROWN, Senior Circuit Judge.

Appellants, James A. Russo, Vincent Meli, and Roby Smith, were charged in a two-count indictment with conspiracy to violate and a substantive violation of the Hobbs Act, 18 U.S.C. § 1951.¹ The indictment charged that the appellants, who were an officer and an employee of J & J Cartage Company and a union local business agent, conspired to and did in fact obstruct, delay and affect interstate commerce by threatening employees of the Company with economic loss and thereby forced them to pay J & J Cartage Company’s contributions to a union pension and welfare fund.²

Appellants were convicted on both counts and have appealed, claiming numerous errors. We overrule appellants’ claims and affirm their convictions.

BACKGROUND

The J & J Cartage Company was a corporation engaged in the business of hauling raw steel from the Detroit waterfront to plants and warehouses in the metropolitan Detroit area. Appellant James Russo, along with Joseph Cusmano,³ was part owner of the Company, holding fifty percent of the stock. Appellant Vincent Meli was an employee of the Company, employed both as a public relations person and as a negotiator for the Company. Roby Smith was a business agent of Local 299 of the International Brotherhood of Teamsters, which, at the times pertinent to these proceedings, represented the Company’s employees.

J & J Cartage Company employed approximately forty truck drivers to haul steel. The equipment used to haul the steel belonged in part to the Company and in part to the individual drivers. Some drivers owned both the tractor and trailer, some owned only the tractor, and some did not own either. Drivers who provided the equipment used to haul the steel were known as “owner-operators.”

During the time of the conspiracy alleged in the indictment, the Company was party to collective bargaining agreements with Local 299 of the International Brotherhood of Teamsters, the bargaining representative of Company employees. The basic collective bargaining agreement for the trucking industry was the National Master Freight Agreement, which was supplemented regionally by both the Central States Area Local Cartage Supplemental Agreement and by a special rider known as the Local Cartage Steel Rider. Instead of minimum hourly rates of pay, as set forth in the National Master Freight Agreement, the Local Cartage Steel Rider established a system for paying drivers a percentage of the gross amount paid to the Company for the loads of steel actually hauled.

Specifically, Article 2 of the Local Cartage Steel Rider provided that owner-operators were to be paid not less than 75% of the gross earnings, while drivers other than owner-operators were to receive no less than 60% of the gross. Articles 54 and 55 of the Central States Area Local Cartage Supplemental Agreement provided that the employer was to contribute to the Central States Southeast and Southwest Areas Health and Welfare Fund, as well as to the Pension Fund. Article 7 of the Rider provided that: “It shall be unlawful and illegal for Health and Welfare and/or Pension payments to be deducted from Owner-Operator’s gross earnings.”

It is undisputed that sometime in 1972 some of the Company’s drivers organized a grievance committee which prepared a list of the drivers’ grievances. The drivers sought, among other things, to have the Company pay social security taxes and make contributions to the Teamster health and welfare and pension plans with respect to them, as expressly required under the collective bargaining agreement. The grievances were presented to both the Company and to appellant Roby Smith, the Teamster business agent assigned to represent the Company’s drivers.

In an attempt to resolve some of the employees’ grievances, the Company management called a general meeting of the drivers on November 26, 1972. Appellants Russo and Meli, along with two other Company representatives, appeared on behalf of the Company. According to several of the drivers, the Company proposed that 15% of the gross earnings of each driver be deducted to cover the costs of the drivers’ demands. This proposal was voted down. The November 26, 1972 meeting was adjourned with no agreement having been reached between management and the employees.

The Company called a second general meeting between management and the employees on March 25,1973. At this time the Company presented a new proposal to the drivers: in return for an 11% “service charge” taken from the drivers’ gross earnings, the Company would meet its obligations under the collective bargaining contract. The Company explained that, after deducting the 11% service charge, the amount available for division between the Company and a driver would equal 89% of the gross. The drivers overwhelmingly voted against the 11% proposal by a show of hands.

After the meeting of March 25, the Company’s president, Joseph Cusmano, called each of the drivers individually into his office, and through promises, threats of economic loss, and misrepresentation, procured their signatures on a Supplementary Agreement providing for the 11% deduction discussed above. The agreement was later signed by appellant Roby Smith in his capacity as the representative of Local 299. This 11% “service charge” became effective on June 3, 1973, and continued in effect until on or about April 10, 1974.

There was testimony at trial that appellant Meli had a reputation as being a part of the Mafia, this being admitted in evidence to show the state of mind of the drivers when they agreed to the deduction of the “service charge.” There was also evidence that appellant Smith failed to process grievances and acted in cooperation with the Company in approving this supplemental agreement that was contrary to and invalid under the collective bargaining agreement.

The first trial of appellants Meli, Russo, and Smith was declared, after several weeks, a mistrial due to the death of the trial judge, the Honorable Lawrence Gu-bow. The case was reassigned to the Honorable Patricia J. Boyle.

As stated, all three appellants were tried and convicted by a jury on both counts. The court sentenced each appellant to three years imprisonment for each count, to be served concurrently. Appellants Meli and Russo were fined $10,000.00 for each count of the indictment, while Smith was ordered to pay a fine of $5,000.00 for each count.

I

Appellants contend that there was, at trial, a constructive amendment of the indictment. They contend, and the Government agrees, that the indictment charges only an extortion by threats of economic loss and does not charge an extortion by threats of physical violence.⁴ Appellants further contend that this constructive amendment was effected because of the admission of evidence that appellant Meli had a reputation as being connected with the Mafia, which could only connote physical violence, and because the charge allowed a finding of extortion by means of threats of physical violence.

As stated (n. 3 at p. 211), Cusmano’s trial was severed, and he was tried separately prior to the trial of these appellants. There, the charge to the jury clearly allowed a finding of extortion by threat of physical violence as well as by threat of economic loss. Cusmano’s conviction was reversed on the ground that the indictment was constructively amended at trial. As we read this court’s opinion in Cusmano’s case, the court did not hold that the admission of proof as to Meli’s reputation of Mafia connections constructively amended the indictment; rather, it held the indictment was so amended because the charge to the jury at Cusmano’s trial specifically allowed a finding by the jury of extortion by threats of physical violence as well as by threats of economic loss. After quoting from the charge to such effect, the opinion in Cusma-no then states:

We cannot know whether the grand jury would have included in its indictment an allegation of extortion through threats of physical violence. The admission of evidence of such extortion, together with the trial court’s instructions, indicate that this might have been the basis of Cusma-no’s conviction. If so, he was convicted on charges the grand jury never made against him. This was fatal error, [citations omitted.]

659 F.2d at 719.

On the contrary, the charge in the instant case made clear that the alleged extortion to be considered by the jury was extortion by threats of economic loss. In this connection the court charged:

Fear is a state of anxious concern, alarm or apprehension of anticipated harm. It does not necessarily refer to physical fear or fear of violence. It includes fear of economic loss. It exists if yo.u find beyond a reasonable doubt that by threats of the defendant, fear of economic loss was created in the victim’s mind, or that the defendants knowingly and willfully used the victim’s fears of economic loss; and that under the circumstances it was reasonable for the victim to have such fear; and that the defendant made use of such fear to extort or attempt to extort money.

The essence of the crime of extortion is a defendant’s knowing and willful use of that fear, not its creation. The defendant need not have created the fear in the minds of the victims. It matters not that the fear may have already been present in the minds of the victims as a result of the victim’s previous experience, or that the fear may have been created by people other than a defendant, or that the defendant may have created such fear.

The law requires proof, beyond a reasonable doubt, that the fear was reasonable and actual, and that the defendant knew of and intentionally used that actual fear, because the law does not hold any man responsible for the unforeseeable or the unreasonable reactions of those with whom he speaks or deals.

But the law does prohibit the knowing and willful creation or instilling of fear, or the knowing and willful use of existing fear, when this is done with the specific purpose of inducing another to part with his property.

. In making your decision as to whether the fear of the employee drivers of J & J Cartage Company was reasonable, should you find such fear, you should use the standards you would use in making decisions in your everyday life.

You may consider the testimony of the state of mind of the alleged victim in determining whether such economic fear existed and whether such fear was reasonable. The testimony of an alleged victim as to what people other than a defendant had told him is admissible not for the truth of what was said but is admissible as to whether the hearing of such statements would have tended to produce a reasonable fear in the victim’s mind. Such statements by people other than a defendant to a victim may, therefore, only be considered in determining the victim’s state of mind, that is, whether there was fear on the part of the victim and whether the fear was reasonable.

App. 1085a et seq.

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The mere deduction of the 11 percent, or the taking of $15.50, or the payment of health, welfare, and/or pension contributions, unaccompanied by fear of economic loss would not constitute extortion.

App. 1088a et seq.

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The defendants are charged only with conspiracy to obstruct, delay and affect interstate commerce, and obstructing, delaying and affecting interstate commerce, by forcing employees of J & J Cartage Company to pay health and welfare and pension contributions, which [sic] the consent of said employees induced by the wrongful use of fear and threat of economic loss from November 1972 up until and including April 10, 1974.

App. 1092a.

We therefore conclude that, different from Gusmano, there was no constructive amendment to the indictment.

II

Appellants also contend that it was error to admit evidence of Meli’s reputation as being connected with the Mafia. This evidence was admitted solely for the purpose of showing the state of mind of some of the victims of the alleged extortion at the time that they consented to the 11% deduction, the proffered purpose of which was to enable the Company to make payments to the Teamster welfare and pension fund. The district judge had determined, as a result of a motion in limine, not to exclude such reputation evidence on the ground that reputation for being involved in the Mafia could only create a fear of physical violence. She concluded, we think correctly, that such reputation could also reasonably create a fear of an actual ability to inflict economic loss. As clearly set out in that part of the charge heretofore quoted, and in the next-quoted parts of the charge, proof of the Mafia reputation could be considered by the jury only to the extent that it created a fear of economic loss, and that such fear could be the basis of a finding of extortion only if it was actual and reasonable and a defendant knew of and intentionally made use of such actual fear.

There have been instances during the course of this trial where references were made to Vincent Meli’s alleged affiliations with organized crime. These references were admitted into evidence for a very limited purpose, that is, to allow you to evaluate the state of mind of the witnesses. You are not here to determine, or even speculate on, who, if anyone, is an alleged affiliate of organized crime. You are only to determine if the defendant is guilty or not of the charges set forth in the indictment. Mr. Meli’s reputation is not before you for an ultimate determination of fact.

App. 1093a-1094a.

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To the extent that Mr. Meli’s reputation may reasonably bear on the witness’s state of mind, you may take it into consideration. So, as you were cautioned before, you must discipline yourselves to consider this evidence only for this very limited purpose.

App. 1094a.

We conclude that it was not error to admit evidence of Meli’s Mafia reputation. In United States v. Billingsley, 474 F.2d 63 (6th Cir.), cert. denied, 414 U.S. 819, 94 S.Ct. 42, 38 L.Ed.2d 51 (1973), a prosecution under the Hobbs Act, it was held that the reputation of the defendant, a business agent for a union, was admissible to show the fear and the reasonableness of the fear of a contractor when the business agent threatened to shut down a job if the contractor did not hire some unneeded and unwanted iron workers. While, in the instant case, the district court could have excluded this reputation evidence, pursuant to Rule 403, Fed.R.Evid., because of the danger of unfair prejudice, the district court did not abuse its discretion in admitting it.

III

Appellants contend that the indictment does not charge a crime and that the evidence (even taking the Government’s view of the evidence) does not prove a crime under the Hobbs Act. Therefore, appellants contend, the indictment should have been dismissed or a directed verdict of acquittal should have been granted. Relying primarily on United States v. Enmons, 410 U.S. 396, 93 S.Ct. 1007, 35 L.Ed.2d 379 (1973), appellants argue that their conduct could not constitute a crime under the Act because their purpose, in obtaining consent from the drivers to the reduction of the driver’s share of the revenue, was not “wrongful.” Appellants particularly rely on the allegation in the conspiracy count that it was a part of the conspiracy, inter alia, “to increase the employer share of the profits from the operation of the Company.... ” Appellants argue that they had a right to protect their interest in realizing a profit, and sought to protect that interest by shifting to the employees the burden of paying into health, welfare and pension funds.

Preliminarily, we note that the record in Cusmano reflects that this very argument was there made by appellant with reliance on Enmons; and while the Cusmano court did not expressly rule on this contention, it did so by inference. If that court had accepted this argument that the conduct alleged in the indictment did not amount to a Hobbs Act violation, it would have reversed and remanded for dismissal of the indictment. Instead, the court, because it determined that the indictment had been constructively amended at trial, reversed but remanded for a new trial.

In any case, we conclude that the doctrine of Enmons does not support appellants’ contention that the indictment should have been dismissed or a verdict directed. In that case, the defendants, members and officials of labor unions on strike for a new collective bargaining contract with higher wages, committed acts of violence against the employer. The acts of violence were the basis of the Hobbs Act indictment. The district court dismissed the indictment on the ground that such acts of violence were not covered by the Act. The Supreme Court agreed, holding only that the Act does not proscribe “the use of force to achieve legitimate collective-bargaining demands.” Id. at 408, 93 S.Ct. at 1014. The Court held that the use of “force, violence or fear” is not “wrongful,” as is required by the Act, unless “the obtaining of the property would itself be ‘wrongful’ because the alleged extortionist has no lawful claim to that property.” Id. at 400, 93 S.Ct. at 1009.

In the instant case, the Company, for which appellants acted, had no legitimate claim to the “service charge” of 11% of the gross revenues. This is true because the existing contracts expressly required the Company to make the payments to the welfare and pension funds out of the Company’s own funds. Indeed, the contract provided that it would be “unlawful and illegal” to deduct the welfare and pension payments from the owner-operator’s gross earnings. Moreover, the provision requiring the Company to make payments to the pension and welfare funds was, as stated, contained in a collective bargaining contract, and yet the agreement to shift this burden to the drivers did not result from collective bargaining. It is true that co-defendant and appellant Smith, the business agent for the local, signed the agreement, but this was done after it had been individually signed by the drivers as a result of individual negotiation with and pressure exerted on them by representatives of the Company. As we see it, the situation for purposes of the applicability of the Hobbs Act would not have been different had the drivers, as a result of threats of economic loss, been forced to take money out of their pockets and pay it to the Company to be used to satisfy the Company’s legal obligation to the pension and welfare funds.

While it is not necessary to our decision here, we further point out that the Enmons exception to the application of the Hobbs Act has been held to be confined to payments gained or sought in furtherance of legitimate labor objectives. United States v. Quinn, 514 F.2d 1250, 1257 (5th Cir.1975). Further, in United States v. Cerilli, 603 F.2d 415, 419 (3d Cir.1979), it is said:

More importantly, Enmons is a labor case. The Court’s reasoning was obviously and explicitly tied to the labor context and more specifically to the strike context. Any application of Enmons to cases outside of that context must be done with caution.

603 F.2d at 419.

We therefore conclude that the indictment charges crimes under the Hobbs Act and that, under the Government’s view of the evidence, a case was made for submission to the jury.

IV

Appellants further contend that there was not sufficient evidence to establish a conspiracy between the appellants and Cusmano, who actually obtained the signatures of the drivers on the agreement allowing the deduction of 11% from their share of the revenues. Meli contends that he was only a salesman for the Company and knew nothing of it. Russo claims that he was an “outside” man and, though he was a 50% owner and officer of the Company, had nothing to do with either the Company’s labor relations or Cusmano’s activity. Smith contends that he had no knowledge of the pressure placed on the drivers to execute the agreement and that he thought that it was a proper agreement when he signed it. We conclude, however, that there was substantial evidence, taking the view most favorable to the Government, Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942), to support the allegations in each count of the indictment.

Appellants make other claims of reversible error but, upon due consideration, we conclude that they are not well taken and must be overruled.

The judgment of the district court is therefore Affirmed.

1 . The Hobbs Act provides in pertinent part:

(a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both.

(b) As used in this section—

(2) The term “extortion” means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.

2 . Count One of the indictment stated, in pertinent part:

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2. At all times pertinent hereto, the Company was contractually bound by the terms of the National Master Freight Agreement, Central States Area Local Cartage Supplemental Agreement and certain supplemental agreements thereto with the International Brotherhood of Teamsters, ... and was required to pay certain employer contributions to the Central States Southeast and Southwest Health, Welfare and Pension Funds, including the Michigan Conference Health and Welfare Fund....

6. That commencing on or about the 18th day of November, 1972, and continuously thereafter up to on or about the 10th day of April, 1974, .. . VINCENT A. MELI, JOSEPH D. CUSMANO, JAMES A. RUSSO, and ROBY G. SMITH, ... did knowingly and willfully conspire, combine, confederate and agree together, and with each other ... to obstruct, delay and affect interstate commerce .. . and did attempt to do so by extortion, to wit: by threats of economic loss, that is to say, the defendants did force the drivers who were employees, agents, and owner-operators of the Company to pay the Company employer contributions to the Funds with their consent induced by the wrongful use of force and fear, in that the defendants did threaten certain drivers of the Company with unprofitable truck loads, the loss of their jobs, and the loss of equity in their equipment unless they agreed to the deduction from their weekly gross earnings. Count Two of the indictment alleged the same conduct as the conspiracy offense, but as a substantive offense.

3 . Joseph Cusmano, the founder and half owner of J&J, along with appellant James Russo, was also named as a defendant. Cusmano was tried separately and convicted on both counts of the indictment. This court, in a 2-1 decision, reversed his conviction on appeal. United States v. Cusmano, 659 F.2d 714 (6th Cir.1981), discussed more fully infra.

4 . This was the holding of the majority in United States v. Cusmano, 659 F.2d 714, 715 (6th Cir.1981).