Opinions of the United 2007 Decisions States Court of Appeals for the Third Circuit
12-7-2007
USA v. Kellogg Precedential or Non-Precedential: Precedential
Docket No. 05-1893
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2007
Recommended Citation "USA v. Kellogg" (2007). 2007 Decisions. Paper 12. http://digitalcommons.law.villanova.edu/thirdcircuit_2007/12
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova University School of Law Digital Repository. It has been accepted for inclusion in 2007 Decisions by an authorized administrator of Villanova University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu. PRECEDENTIAL IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _______________
No: 05-1893 _______________
UNITED STATES OF AMERICA
v.
EDWARD V. KELLOGG,
Appellant _______________
On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 03-cr-00321) District Judge: Honorable James Knoll Gardner _______________
Argued September 25, 2007
Before: AMBRO, JORDAN and ROTH, Circuit Judges
(Filed: December 7, 2007) _______________ Seth Weber [ARGUED] United States Attorney’s Office 504 West Hamilton Street - Suite 3701 Allentown, PA 17901
Robert Epstein Brett G. Sweitzer [ARGUED] Defendant Assn. Of Philadelphia Federal Court Division 601 Walnut Street - Ste. 504 Philadelphia, PA 19106
_______________
OPINION OF THE COURT _______________
JORDAN, Circuit Judge.
Edward V. Kellogg (“Kellogg”) appeals from a
judgment of conviction following a jury verdict finding him
guilty on thirty-four counts of mail fraud pursuant to 18
U.S.C. §§ 1341 and 2. The primary issue before us is whether
the District Court erred by allowing the government to cross-
examine a character witness with a question based on the
-2- assumption of Kellogg’s guilt. Finding no error, we will
affirm the judgment of the District Court.
BACKGROUND1
Kellogg was the owner, President, and Quality Control
Officer of Johnston Laboratories, Inc. (“Johnston
Laboratories”), located in New Cumberland, Pennsylvania.
Johnston Laboratories provided environmental testing
services, specifically, analytical testing of environmental
samples, including water and wastewater, in order to
determine the presence and concentration of contaminants.
Many of Johnston Laboratories’ customers were required to
comply with environmental laws and regulations administered
1 Because we are reviewing a guilty verdict, we have cast the facts in the light most favorable to the government. See United States v. Pungitore, 910 F.2d 1084, 1097 (3d Cir. 1990) (“We are bound, after a jury has delivered a guilty verdict, to interpret the evidence in a light most favorable to the government.”).
-3- by the United States Environmental Protection Agency
(“EPA”) and the Pennsylvania Department of Environmental
Protection (“PA DEP”). Among the tests that customers
ordered from Johnston Laboratories were those for Volatile
Organic Chemicals (“VOC”), contaminants whose presence
in water is regulated by the EPA and PA DEP. In particular,
Johnston Laboratories’ customers required testing under an
EPA protocol called Method 601/602, which tests for
approximately fifty-six contaminants, as opposed to EPA
Method 624, which tests for approximately thirty
contaminants.
From May 1998 to March 1999, Johnston Laboratories
did not possess the appropriately operating equipment to
perform VOC testing under EPA Method 601/602. During
that time period, Johnston Laboratories subcontracted its
VOC testing and analysis to another environmental testing
-4- laboratory, Hydro-Analysis Associates, Inc. (“Hydro-
Analysis”). However, Kellogg knew that Hydro-Analysis
also could not and did not perform VOC testing under EPA
Method 601/602, as required by Johnston Laboratories’
customers, but instead used EPA Method 624. Nonetheless,
Kellogg authorized Hydro-Analysis to test the water samples
of Johnston Laboratories’ customers using the less sensitive
method.
Kellogg caused Johnston Laboratories to mail to its
customers reports falsely stating that EPA Method 601/602
had been used to test the samples, even though only EPA
Method 624 had been used. Kellogg, also through Johnston
Laboratories, fraudulently billed customers for the results of
environmental VOC testing that was not performed according
to the methods ordered by those customers.
-5- In all, Kellogg was charged with causing thirty-four
separate, false and fraudulent VOC environmental test reports
and billing statements for those reports to be delivered by
mail to Johnston Laboratories’ customers from May 1998 to
March 1999, in violation of 18 U.S.C. §§ 1341 and 2.
Following a three week jury trial, Kellogg was found guilty
on all counts. He appeals the judgment of the District Court,
entered March 16, 2005. The District Court had jurisdiction
pursuant to 13 U.S.C. § 3231. We have appellate jurisdiction
pursuant to 28 U.S.C. § 1291.
DISCUSSION
I. Cross-examination of Opinion Character Witnesses
Kellogg claims his right to due process was violated
when the District Court allowed the government to cross-
examine certain of his character witnesses using a
hypothetical that assumed he was guilty of the crimes charged
-6- in this case. We review a District Court’s ruling on the scope
of cross-examination for abuse of discretion. United States v.
Serafini, 233 F.3d 758, 768 n.14 (3d Cir. 2000); United States
v. Furst, 886 F.2d 558, 577 (3d Cir. 1989). As to the District
Court’s legal interpretation of the Federal Rules of Evidence
and its ruling on Kellogg’s due process claim, our review is
plenary. See United States v. Bobb, 471 F.3d 491, 497 (3d
Cir. 2006); United States v. Mack, 229 F.3d 226, 231 (3d Cir.
2000) (citation omitted).
Kellogg raises identical issues with respect to two of
his character witnesses – Saleh Malik and Fred Pennington,
Jr. The circumstances of the cross-examination of each is
reviewed in turn.
-7- A. Saleh Malik
Defense witness Saleh Malik gave testimony
supporting Kellogg’s character as a law-abiding citizen.
During the government’s cross-examination of Malik,
Kellogg objected to the following question2:
2 During trial, defense counsel merely stated “objection” on the record. (Appx. 1998-9.) Once overruled, the trial proceeded without any additional discussion of the question posed to Malik. Notably, the record does not reflect that Kellogg’s counsel advanced the argument about guilt- assuming hypotheticals that is now presented on appeal. Normally, this would constitute a waiver of the argument. See Fed. R. Evid. 103(a) (restricting appellate review of evidentiary errors to those in which the complaining party has “stat[ed] the specific ground of objection, if the specific ground was not apparent from the context ....”). Although the degree of specificity required by Rule 103(a) is not perfectly clear, it has been established that general objections will not suffice. United States v. Sandini, 803 F.2d 123, 126 (3d Cir. 1986) (citing United States v. Blackshear, 568 F.2d 1120, 1121 (5th Cir. 1978)). However, the government has not advanced a waiver argument, and both parties have addressed the issue on its merits in their briefing and at oral argument. Since we are addressing the guilt-assuming hypothetical argument with respect to the cross-examination of Pennington, we choose to address it as to the cross-
-8- Q. Do you have any knowledge about the way Mr. Kellogg ran his environmental laboratory back in 1998?...3
The District Court overruled the objection and said that
“[t]he government may test the opinions concerning character,
and the testimony concerning reputation, [by] testing the
witness’s knowledge of the defendant and his business....”
(Appx. 1999.)
On appeal, Kellogg argues that the challenged question
was improper. More specifically, Kellogg’s position is that
the cross-examination was impermissible because it assumed
the criminal conduct at issue in this case had in fact occurred
and that the question thereby violated his right to due process
examination of Malik as well. 3 The question elicited this brief response: “I know generally, like, you know, he ran the laboratory, but I wasn’t aware how he ran the laboratory.” (Appx. 1999.)
-9- by undermining the presumption of innocence. The
government responds that the question was unobjectionable
because the prosecution was entitled to test the extent of
Malik’s knowledge of Kellogg’s business practices.
Control of cross-examination is largely within the trial
court’s discretion. See Michelson v. United States, 335 U.S.
469, 480 (1948) (...[R]arely, and only on a clear showing of
prejudicial abuse of discretion [,] will Courts of Appeals
disturb the ruling of trial courts on this subject.”). Federal
Rule of Evidence 405(a) expressly allows the government to
cross-examine character witnesses regarding their knowledge
of specific instances of the defendant’s conduct. Fed. R.
Evid. 405(a) (“In all cases in which evidence of character or a
trait of character of a person is admissible, proof may be made
by testimony as to reputation or by testimony in the form of
an opinion. On cross-examination, inquiry is allowable into
-10- relevant specific instances of conduct.”). Such cross-
examination may help the jury evaluate the reliability of the
character testimony. United States v. Shwayder, 312 F.3d
1109, 1120 (9th Cir. 2002).
Here, the government simply asked Malik whether he
knew how Kellogg ran his business, a question which plainly
falls within the purview of Rule 405(a). We are unpersuaded
by Kellogg’s argument that the government’s question to
Malik was in essence a guilt-assuming hypothetical. The
question does not assume Kellogg’s guilt; it does not refer
even obliquely to the conduct that formed the basis of the
charged crimes. Rather, because Malik offered his personal
opinion about Kellogg’s character, the District Court properly
allowed the prosecution to test the foundation for that opinion
by asking a question that could elicit a response
demonstrating how well Malik knew Kellogg in the relevant
arena of day-to-day business. Therefore, the District Court
-11- did not err by allowing the challenged cross-examination
question put to Malik.
B. Fred Pennington, Jr.
Kellogg also argues that the government’s cross-
examination of Fred Pennington, Jr. contained an
impermissible guilt-assuming hypothetical. Like Malik,
Pennington testified to Kellogg’s character as a law-abiding
citizen. Kellogg objected when the government, during cross-
examination, posed the following line of questions:
Q. Sir, would you agree with me that a person who knows that a laboratory used one particular analytical method, but then who reports out a complete-ly different analytical method on final reports of analysis to its customers, would your opinion be different about that person being [a] law abiding citizen?
A. Is this a hypothetical question, or is this specific to this case?
Q. I’m asking you a hypothetical question.
A. I think my opinion would be different.
-12- (Appx. 2021.) The Court overruled Kellogg’s objection and,
immediately after the quoted line of questioning, sua sponte
instructed the jury as follows:
This evidence – this question and answer that was just asked of this witness to test his opinion was offered for a limited purpose and I have to briefly explain to you the limitations of what it was presented for and what it was not presented for. This witness on direct examination expressed opinion that the defendant had a character – the defendant’s character was consistent with that of being a law abiding citizen. He also testified that he knows people who know the defendant, and that the defendant’s reputation among others for being a law abiding citizen is excellent. So he gave both what we call opinion evidence and reputation evidence on the defendant’s character for being a law abiding citizen. In his opinion, he’s a law abiding citizen, and his reputation in the community for being a law abiding citizen is excellent according to the testimony. Now, as [is] the case of any witness, you must decide whether you believe or you don’t believe the testimony of the witness. We will give you more detailed instructions at the end of the trial about what you do with opinion evidence and what you do with reputation evidence, and how that might affect your final decision in your verdict in the case. For now it’s only necessary and important for me to indicate to you that the cross-examination which
-13- was heard by you is cross-examination on the opinion evidence. It is not cross-examination on the reputation evidence. In other words, he expressed the opinion that the person, the defendant has a character – his character is consistent with being a law abiding citizen, and so he was permitted to be asked whether – if someone used a particular analytical method, but reported to a customer that he used a different analytical method, would that hypothetical circumstance change your opinion or result in your giving – have a different opinion, and his answer was yes. So you may consider that in weighing the opinion testimony of this particular witness’s opinion, but you may not consider that answer, and it’s not being offered, on his other testimony that the defendant has a reputation, excellent reputation in the community for being law abiding, because that reputation is based on the views and opinions of others, not of this individual. Those others can’t be cross- examined by this question, that’s why we limit it.
(App. 2022-23.)
As detailed herein, the District Court subsequently
stated its reasons for overruling Kellogg’s objection on the
record, outside of the presence of the jury, prior to giving this
limiting instruction.
-14- 1. Permissibility of a Guilt-Assuming Hypothetical
Kellogg argues that the District Court violated his right
to due process and erred under Federal Rule of Evidence
405(a) by permitting the government to pose a question that
assumed Kellogg is guilty of the charged offense.
The District Court relied primarily on United States v.
Curtis, 644 F.2d 263 (3d Cir. 1981), in overruling Kellogg’s
objection to the question posed to Pennington. There we
recognized that Rule 405(a) “provides that proof of character
may be made by testimony as to reputation or by testimony in
the form of an opinion” and emphasized the necessity “for
keeping separate the two different types of character
evidence” permitted under the Rule – those being reputation
character evidence and opinion character evidence. Id. at
267, 268 (internal quotation marks omitted). In sum,
reputation character evidence is “that of the [defendant’s]
reputation in the community for the character trait at issue,”
id. at 267, while opinion character evidence is elicited when a
-15- defendant’s character witness provides his or her own
personal opinion of “any facet of the [defendant’s] character,”
id. at 265. The District Court also considered United States v.
Mason, 933 F.2d 406 (4th Cir. 1993), in which the United
States Court of Appeals for the Fourth Circuit held that a
guilt-assuming hypothetical is improper regardless of whether
the government is cross-examining a reputation or an opinion
character witness. However, the District Court declined to
follow Mason because it found the Fourth Circuit’s approach
contrary to Federal Rule of Evidence 405(a) and our decision
in Curtis.
As noted in the District Court’s limiting instruction,
there is a distinction between reputation character evidence
and opinion character evidence. See Curtis, 644 F.2d at 269
(“...Rule 405(a) has not effected a merger between reputation
and opinion evidence.”). However, that distinction has not
been significant to a majority of the Courts of Appeals that
have addressed the propriety of guilt-assuming hypotheticals.
-16- Without necessarily distinguishing whether the issue involved
cross-examining an opinion witness or a reputation witness,
those courts have broadly held such questions are improper.
See United States v. Shwayder, 312 F.3d 1109, 1121 (9th Cir.
2002) (“The prosecution’s use of guilt-assuming hypothetical
questions on cross-examination of Shwayder’s character
witnesses...constituted error.”); United States v. Guzman, 167
F.3d 1350, 1352 (11th Cir. 1999) (“The government may
not...pose hypothetical questions that assume the guilt of the
accused in the very case at bar.”); United States v. Mason, 993
F.2d 406, 408 (4th Cir. 1993) (guilt-assuming hypotheticals
are “not proper and should not have been allowed”); United
States v. Oshatz, 912 F.2d 534, 539 (2d Cir. 1990) (“...[A]
hypothetical question based on the assumption of guilt should
not be asked.”) (internal quotation marks and citation
omitted); United States v. Williams, 738 F.2d 172, 177 (7th
Cir. 1984) (“We hold that permitting this line of cross-
examination [guilt-assuming hypotheticals] over objection
-17- was error, and we see no reason to treat reputation and
opinion witnesses differently in this regard.”) (citation
omitted); United States v. McGuire, 744 F.2d 1197, 1204 (6th
Cir. 1984) (“It would be error to allow the prosecution to ask
the character witness to assume defendant’s guilt of the
offenses for which he is then on trial.”); but see United States
v. White, 887 F.2d 267, 275-6 (D.C. Cir. 1989) (using guilt-
assuming hypotheticals during cross-examination of character
witnesses “who...give their own opinion of the defendant’s
character is not error”). Generally, the reason given for these
holdings is that a guilt-assuming hypothetical impairs the
presumption of innocence and thus violates the defendant’s
due process rights. Guzman, 167 F.3d at 1352; Mason, 993
F.2d at 409; Oshatz, 912 F.2d at 539; Shwayder, 312 F.3d at
1121; Williams, 738 F.2d at 177.
A few Courts have also noted that an alternative basis
for holding guilt-assuming hypotheticals are improper is that
they are unfairly prejudicial to the defendant, Oshatz, 912
-18- F.2d at 539, Williams, 738 F.2d at 177, which would indeed
seem to follow necessarily from a conclusion that there had
been a due process violation. The Second Circuit has
acknowledged that a guilt-assuming hypothetical may elicit
evidence of some probative value, particularly when posed to
an opinion character witness, since “[s]teadfast adherence to a
favorable opinion by a witness asked to assume the
defendant’s guilt might provide some basis for concluding
that the witness is simply supporting the defendant, rather
than providing credible testimony about his character.”
Oshatz, 912 F.2d at 539. However, the Court concluded that
any probative value was outweighed by the risk that “after a
jury has repeatedly heard a prosecutor assure a trial judge that
he has a good faith basis for asking permitted hypothetical
questions, the jury might infer from the judge’s permission to
ask a guilt-based hypothetical question that the prosecutor has
evidence of guilt beyond the evidence in the record.” Id. The
Seventh Circuit also commented on the potentially prejudicial
-19- impact of a guilt-assuming hypothetical, suggesting that such
questions allow “the prosecution to foist its theory of the case
repeatedly on the jury.” Williams, 738 F.2d at 177.
Several other Courts of Appeals have had the
opportunity to consider guilt-assuming hypotheticals, but only
in the context of reputation testimony, where such questions
are uniformly held to be impermissible. See United States v.
Barta, 888 F.2d 1220, 1224-5 (8th Cir. 1989); United States v.
Polsinelli, 649 F.2d 793, 796-7 (10th Cir. 1981); United
States v. Calendaria-Gonzalez, 647 F.2d 291, 294 (5th Cir.
1977). These Courts too have reasoned that allowing the
prosecution to ask a question that assumes the defendant’s
guilt would infringe upon the presumption of innocence.
Barta, 888 F.2d at 1224; Calendaria-Gonzalez, 547 F.2d at
294. The Fifth Circuit has provided the further persuasive
explanation that a guilt-assuming hypothetical cannot sensibly
be asked of a reputation witness because reputation testimony
is based on what the witness heard in the community about
-20- the defendant, and “[o]bviously the character witness ... had
heard nothing in the community about [the defendant’s] post
conviction reputation when he had been convicted of nothing
whatsoever.” Calendaria-Gonzalez, 546 F.2d at 294.
2. The District Court Did Not Err
With these views of our sister Circuits in mind, we turn
to the main issue presented by Kellogg’s arguments on
appeal: whether the government’s question to Pennington was
impermissible. The answer to that question turns on the
meaningful distinction between reputation and opinion
character witnesses.4 We agree with the consensus of the
4 Perhaps the clearest exposition of this distinction between reputation character witnesses and opinion character witnesses is set forth in the concurring opinion in the Second Circuit’s Oshatz case. Then-District Judge Michael B. Mukasey, sitting by designation, asserted that a guilt- assuming hypothetical should be permissible during the cross- examination of an opinion character witness. First, he explained why such a question has significant probative value:
A jury evaluating the testimony of an opinion witness...must determine two things: how well the witness knows the defendant, and by what
-21- standard the witness judges the defendant. Both are essential in order for the jury to weigh the testimony. If the witness does not know the defendant well, it is unlikely the witness will have seen enough of the defendant’s behavior to judge his character. If the witness’ judgment is distorted either by such partisanship that the witness would think highly of the defendant despite misbehavior, or by a warped ethical standard, the witness’ opinion may be correspondingly discounted. A strong enough partisan would swear truthfully that the defendant is a person of good character even if he has committed the crime on trial; a witness who thinks the crime on trial is not inconsistent with good character would do the same. The question at issue in this case probes both the witness’ bias and the witness’ own standards by asking whether the witness would retain a favorable opinion of the defendant even if the evidence at trial proved guilt.
Oshatz, 912 F.2d at 544. Judge Mukasey then endeavored to rebut the view that a guilt-assuming hypothetical would infringe upon the presumption of innocence. He reasoned that no rational jury could conclude that, because a witness was asked to assume the defendant’s guilt for the purpose of testing that witness’ opinion, it should therefore apply a similar assumption in weighing the evidence. Id. at 545. Furthermore, he noted, there are several procedures that protect the presumption of innocence. Following the examination of a character witness, the trial judge instructs the jury that any hypothetical was used for the limited purpose of testing the witness’ opinion and does not bear on the
-22- Courts of Appeals that posing a guilt-assuming hypothetical
to a reputation character witness is improper. Cf. Curtis, 644
F.2d at 269 (“...[A] reputation witness can only be examined
on matters reasonably proximate to the time of the alleged
offense and likely to have been known to the relevant
community at that time.”). Because a reputation character
witness, by definition, can only provide testimony about the
defendant’s reputation in the community, a person testifying
regarding the defendant’s reputation at the time of the crime
can only speculate about how information regarding the crime
would affect the community’s assessment of the defendant,
and a witness’s speculation in that regard is of no probative
value at all.
As to cross-examination of opinion character
witnesses, however, while we recognize that a question like
the one posed by the government in this case may prove
defendant’s guilt or innocence. Id. In addition, the presumption of innocence is reiterated in the jury charge and often in the defense’s summation. Id.
-23- problematic if it arises in circumstances that implicate the
presumption of innocence or otherwise undermine due
process, such circumstances are a possibility and by no means
a certainty. In our view, there is nothing inherent in guilt-
assuming hypotheticals, in the abstract, that makes them
unfairly prejudicial, let alone so prejudicial as to constitute a
per se violation of due process. We therefore see no need to
adopt a bright-line rule prohibiting a potentially probative
type of inquiry. Generally speaking, a person testifying
regarding a present opinion should be open to cross-
examination on how additional facts would affect that
opinion. In the context of opinion character testimony cross-
examination about the charged crime tests “both the witness’
bias and the witness’ own standards by asking whether the
witness would retain a favorable opinion of the defendant
even if the evidence at trial proved guilt.” Oshatz, 912 F.2d at
544 (Mukasey, J., concurring). Such evidence may aid in the
-24- jury’s ultimate credibility determinations and in deciding how
much weight to give to a defendant’s character evidence.
In this case, the District Court did not err by permitting
the government to pursue the challenged cross-examination of
Pennington. Cf. United States v. Palmere, 578 F.2d 105, 107
(5th Cir. 1978) (“[A]ny reversal here would have to rest on a
determination that one asking of such questions [guilt-
assuming hypotheticals] constitutes plain error. We conclude
that it does not.”). The parties agree that the question posed
to Pennington was relevant,5 and its hypothetical nature was
so emphasized as to allay any real concern about undermining
the presumption of Kellogg’s innocence. Further, because it
was but one question posed to one witness during the course
of a three-week trial, this is not a situation where Kellogg was
unfairly prejudiced by the prosecution repeatedly “foist[ing]
its theory of the case...on the jury.” Williams, 738 F.2d at
5 Both government and defense counsel agreed, during oral argument, that the question posed to Pennington was indeed relevant to the case.
-25- 177. Nor was this a scenario, such as the one contemplated in
Oshatz, where the jury “repeatedly hear[d] [the] prosecutor
assure [the] trial judge that he ha[d] a good faith basis for
asking permitted hypothetical questions” and thus
“infer[red]...that the prosecutor ha[d] evidence of guilt beyond
the evidence in the record.” 912 F.2d at 539. Finally, while
the asking of a guilt-assuming hypothetical has been found to
be reversible error when the case involved a swearing contest
between the defendant and a key government witness, see,
e.g., United States v. Polsinelli, 649 F.2d 793, 798 (10th Cir.
1981) (finding reversible error where the case “was, in a
sense, a one-on-one situation, i.e., it was the word of the
defendant against the word of McFarland, the key government
witness”), that plainly was not the case here. To be clear,
we are not suggesting, let alone holding, that guilt-assuming
hypotheticals can properly be asked of opinion character
witnesses in every case. However, in light of the facts and
circumstances of this case, the District Court did not err by
-26- permitting the government’s cross-examination of Pennington
with the guilt-assuming hypothetical at issue.6
II. The District Court Did Not Abuse its Discretion in Admitting Evidence Offered Pursuant to Rule 404(b)
Kellogg also argues that the District Court erred by
allowing the government to introduce certain evidence
pursuant to Federal Rule of Evidence 404(b).7 When
considering the District Court’s decisions on the admission of
6 It seems that the issues surrounding guilt-assuming hypotheticals may typically be avoided by asking an opinion character witness about specific details raised by other evidence in the case, rather than putting to the witness a hypothetical that incorporates the conclusion to which the details might lead. Such an approach could have the added benefit of greater persuasive force, since jurors may be likelier to be persuaded by evidence that leads logically to a conclusion than by an abrupt presentation of the conclusion itself. 7 Federal Rule of Evidence 404(b) provides, in relevant part:
Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity or absence of mistake or accident.... Fed. R. Evid. 404(b).
-27- evidence, we review for abuse of discretion. United States v.
Jemal, 26 F.3d 1267, 1272 (3d Cir. 1994). Rule 404(b) is a
rule of inclusion rather than exclusion. United States v.
Givan, 320 F.3d 452, 460 (3d Cir. 2003) (citing Jemal, 26
F.3d at 1272); see also United States v. Copple, 24 F.3d 535,
545 (3d Cir. 1994) (“Proving specific intent in mail fraud
cases is difficult, and, as a result, a liberal policy has
developed to allow the government to introduce evidence that
even peripherally bears on the question of intent.”). Hence,
“[t]rial court rulings under Rule 404(b) ... may be reversed
only when they are ‘clearly contrary to reason and not
justified by the evidence.’” United States v. Balter, 91 F.3d
427, 437 (3d Cir. 1996) (citing United States v. Bethancourt,
65 F.3d 1074, 1079 (3d Cir. 1995), cert. denied, 516 U.S.
1153, 116 S. Ct. 1032, 134 L. Ed. 2d 109 (1996) (citation
omitted)). Similarly, in order to justify reversal of a District
Court’s balancing of probative and unfairly prejudicial
qualities of evidence under Rule 403, the District Court’s
-28- “analysis and resulting conclusion must be ‘arbitrary or
irrational.’” United States v. Universal Rehabilitation Services
(PA), Inc., 205 F.3d 657, 665 (3d Cir. 2000) (citation
omitted). Indeed, “[i]f judicial self-restraint is ever desirable,
it is when a Rule 403 analysis of a trial court is reviewed by
an appellate tribunal.” Id. (citation omitted). Given these
standards, we hold that the District Court did not abuse its
discretion in this case.
The District Court admitted evidence that PA DEP
revoked Johnston Laboratories’ certification for testing
drinking water. It also admitted the testimony of two former
Johnston Laboratories employees regarding deficient
procedures at Johnston Laboratories and it admitted evidence
of certain misrepresentations Kellogg made to PA DEP. The
challenged evidence was offered by the government as proof
of Kellogg’s knowledge and fraudulent intent, pursuant to
Rule 404(b). We address each of those sets of evidence in
turn.
-29- A. The Decertification Evidence
Kellogg argues that the decertification evidence was
irrelevant to the charges in this case, as it pertained only to
Johnston Laboratories’ decertification for drinking water
testing, as opposed to non-drinking water testing. Kellogg
also argues that the evidence is impermissible under Rule
404(b) because it is being offered for an improper purpose
and not for one of the specific reasons articulated by the Rule.
The decertification evidence was provided by James
Yoder and Richard Sheibley. Yoder, an employee in the lab
certification section of PA DEP’s Bureau of Laboratories,
testified as an expert in environmental lab certification and
stated that he knew Kellogg because Johnston Laboratories
applied to be a certified lab in the PA DEP drinking water
program.8 Yoder conducted a February 20, 1997 inspection
of Johnston Laboratories and wrote a report regarding that
8 The record indicates that there is no certified program for waste water or ground water analysis. (Appx. 1530.)
-30- inspection on March 12, 1997, which he subsequently sent to
Kellogg. Yoder provided detailed testimony on the numerous
deviations9 set forth in his written report, including problems
with the laboratory relating to VOC analysis.
Yoder returned to Johnston Laboratories for another
inspection on January 28 and 29, 1998, and prepared a
February 20, 1998 report about that inspection that was also
sent to Kellogg. Some of the deviations found during the
February 20, 1997 inspection were not corrected and
remained as deficiencies during the January 1998 inspection,
particularly those related to quality control and quality
assurance. The PA DEP inspectors discussed these
continuing deficiencies with Kellogg.
Richard Sheibley, the chief of the PA DEP laboratory
accreditation program, testified as an expert on laboratory
accreditation. Sheibley knew about Yoder’s inspection of
9 In this context, “deviations” refers to instances of actual procedures differing from approved or required procedures at Johnston Laboratories.
-31- Johnston Laboratories in February 1997, and Sheibley
personally participated in the January 28 and 29, 1998 on-site
inspection of Johnston Laboratories. He met with Kellogg
and other Johnston Laboratories employees to discuss the
inspection procedure before the actual inspection on January
28, 1998. During the two day on-site inspection, fifty-seven
deviations were found. Sheibley testified that the inspectors
conducted an exit interview with Kellogg during which they
discussed the numerous deviations and required corrective
actions. Sheibley further testified that, due to the number of
deviations found during the inspection, PA DEP decided to
decertify Johnston Laboratories, or, in other words, to remove
it from the list of labs approved to do drinking water testing.
Sheibley testified that the decision to decertify
Johnston Laboratories was based, in part, on the need to
protect the public’s health, safety and welfare. He stated that
Johnston Laboratories did not follow its own required quality
control procedures, that Kellogg, as the laboratory supervisor,
-32- was responsible for assuring that Johnston Laboratories met
the required quality assurance and regulatory criteria, and that
Kellogg ultimately failed in carrying out that responsibility.
The government gave pretrial notice of its intent to
introduce evidence pursuant to Rule 404(b) relating to the
inspection of Johnston Laboratories conducted by PA DEP in
January 1998, the subsequent revocation of Johnston
Laboratories’ certification for testing drinking water, and
Johnston Laboratories’ allegedly deficient laboratory
practices. During a September 5, 2003 hearing, the District
Court held that this evidence was admissible.
With respect to the decertification evidence, the
District Court determined that the evidence was relevant to
the government’s case pursuant to Federal Rules of Evidence
401 and 402, and that, under Rule 403, the potential for unfair
prejudice did not outweigh the probative value of the
evidence. As to relevance, the District Court stated:
The decertification gives the defendant evidence that something is wrong at Johnston
-33- Laboratories. If Mr. [Kellogg] received that information and takes no affirmative action, a jury can, but does not have to, infer that the defendant intended to defraud. The jury can, although it does not have to, draw this inference. But if it can draw this inference, the evidence has relevance. (Appx. 140.)
The District Court also agreed with the government’s
argument that the decertification evidence was admissible to
prove Kellogg’s knowledge and intent. Recognizing and
applying the guidelines for admissibility under Rule 404(b)
set forth by the Supreme Court in Huddleston v. United
States, 485 U.S. 681, 108 S. Ct. 1496 (1988)10, and
10 These guidelines are as follows: first, the other crimes evidence must have a proper purpose; second, the proffered evidence must be relevant; third, its probative value must outweigh its potential for unfair prejudice; and fourth, the court must charge the jury to consider the other crimes evidence only for the limited purpose for which it is admitted. Huddleston, 485 U.S. at 691-92, 108 S. Ct. at 1502; see also United States v. Scarfo, 850 F.2d 1015, 1019 (3d Cir. 1988).
-34- conducting the necessary Rule 403 weighing11, the District
Court reasoned as follows:
Applying these guidelines to the facts of this case, the first prong, requiring other crimes evidence to have a proper purpose, here, the proper purpose is to establish the knowledge and intent of the defendant. Two, the proffered evidence must be relevant. Well, it is relevant...because the decertification gives the defendant evidence that something is wrong, and if he took no affirmative action, the jury could infer from that that he intended to defraud his customers. The third guideline is that the probative value must outweigh its potential for unfair prejudice. The potential for prejudice is there only if the jury concludes that because defendant was negligent and he deceived the [PA DEP] regarding the decertification for drinking water testing, therefore, he must have defrauded in the test results for the non- drinking, which is the subject of this criminal action. [T]hat will be inappropriately concluding, in other words, that because he did something wrong in the past, he did something
11 “In addition to the Rule 404(b) test, evidence of other crimes must also be evaluated against the unfair prejudice standard of Rule 403....In making this determination, the trial judge must appraise the genuine need for the challenged evidence and balance that necessity against the risk that the information will influence the jury to convict on improper grounds.” Id. at 1019 (citations omitted).
-35- wrong presently. That would be unfair prejudice. And that potential is eliminated by complying with prong four, which is the giving of a limiting instruction. So if we assume in the balancing test that a limiting instruction will be heard, understood and followed [by] the jury, then that will eliminate or diminish the potential for unfair prejudice to the degree that the relevance will outweigh any potential for unfair prejudice.
(Appx. 140-46.)
The District Court’s analysis is sound. The Rule
404(b) evidence showed that, in similar matters close in time
to the charged conduct, Kellogg acted deceitfully in the
management of his business. In 1997, after PA DEP found
numerous shortcomings at Johnston Laboratories, Kellogg
represented that the problems were corrected. These
representations were proved false when PA DEP conducted
another inspection in January 1998. The inadequacies at
Johnston Laboratories were so significant that the laboratory
was decertified in February 1998. That Kellogg deceived
state inspectors was probative of his fraudulent intent. The
District Court properly applied the law, and its decision to
-36- admit the decertification evidence was well within the proper
exercise of its discretion.
B. Evidence of Kellogg’s Misrepresentations to PA DEP
The government also presented evidence of Johnston
Laboratories’ lack of quality control, and Kellogg’s
misrepresentations to PA DEP, through two former Johnston
Laboratories employees – Ronald Andrae and Stephen
Williams. Kellogg objected to this evidence, stating that it
was only being offered to prove his bad character, and again,
not for any permissible purpose articulated by Rule 404(b).
Andrae testified that certain quality assurance and
quality control procedures must be followed to validate the
data produced in the laboratory, and he also emphasized the
importance of a quality assurance plan and a quality control
plan in a laboratory, in general. Andrae further testified that
Johnston Laboratories had a quality assurance plan in effect in
1998 which was signed and approved by Kellogg. Andrae
then testified about numerous aspects of the Johnston
-37- Laboratories quality assurance plan, written by Kellogg,
which were supposed to be followed but were not.
Williams testified that Kellogg hired him in 1998 for
another of Kellogg’s companies, Spectra Services, to perform
underground storage tank removals and to serve as a project
manager.12 He further testified that he did not perform any
services for Johnston Laboratories, nor did he have anything
to do with quality assurance or quality control at Johnston
Laboratories. Despite the fact the Williams had no
responsibility for these matters at Johnston Laboratories,
Kellogg asked Williams, just prior to the January 1998 PA
DEP inspection, whether he could put Williams’s name down
as the Quality Assurance/Quality Control Officer on the list of
positions at Johnston Laboratories. Kellogg did not tell
Williams that Kellogg planned to provide the positions list to
12 Spectra Services apparently has some business connection with Kellogg’s Johnston Laboratories, though the nature of the connection is not entirely clear from the record. (Appx. 1073-74.)
-38- PA DEP, nor did Williams give Kellogg permission to so
characterize him to PA DEP. Nevertheless, Kellogg listed
Williams as the Quality Assurance/Quality Control Officer in
information he provided to PA DEP, even though Williams
never performed any services in that capacity.
Kellogg specifically objected to the government’s use
of Williams’s testimony at trial, arguing that the evidence
violated Rule 404(b) because it showed only bad character in
that Kellogg fraudulently listed Williams as Quality
Assurance/Quality Control Officer in connection with a PA
DEP audit and was irrelevant to the charged conduct. The
defense argued that the jury would impermissibly infer that,
because Kellogg made misrepresentations to PA DEP, then he
must have prepared fraudulent reports and made
misrepresentations to Johnston Laboratories’ customers.
After conducting a lengthy colloquy with government and
defense counsel, the District Court overruled the objection,
-39- first incorporating by reference the reasons articulated during
the September 5, 2003 hearing on this issue, and then stating:
I did separately perform the balancing test required by 403, concerning today’s evidence.... Because of the similarities of the extrinsic evidence to crimes charged there is a considerable amount of probative value. It is close in time to the charged offense, the charged offenses having allegedly taken place between April 1998 and July 2000 and the extrinsic evidence, here, having taken place in February 1998. Very shortly before the alleged crimes here. Also this isn’t some fraud [or] alleged fraud or deception by the Defendant in some totally unrelated matter, at some bank when he was trying to get [a] mortgage or bilking some investors who he was trying to bring into some investment scheme, none of which this Defendant is charged with doing. *** There is a very close nexus between the extrinsic evidence and the crimes charged here. There is a temporal connection, there is a subject matter connection, the same type of fraud or the fraud of listing someone as a quality control officer who wasn’t the quality control officer.
(Appx. 1060-63.)
-40- Again, the District Court did not abuse its discretion by
admitting this evidence under Rule 404(b). The challenged
evidence demonstrates that Kellogg made material
misrepresentations to PA DEP when he identified Williams as
the Quality Assurance/ Quality Control Officer, though
Williams, in fact, never held that position, and supports the
government’s contention that Kellogg was equally
knowledgeable when, just months later, he began a lengthy
course of misinforming customers that Johnston Laboratories
was performing tests which it in fact did not have the
capability to perform and had not subcontracted to anyone
who could. During the relevant time period, Kellogg made
false statements in order to save his business, which is
relevant to the charged conduct that he prepared and mailed
false laboratory reports and billing statements to his
customers.
In reaching its decision to admit the government’s Rule
404(b) evidence, the District Court conducted a careful
-41- analysis, more than once. It applied the proper guidelines
under Huddleston, 485 U.S. at 691-92, 108 S. Ct. at 1502, and
the law of this Circuit to the facts before it, and undertook the
appropriate balancing test under Rule 403, see Scarfo, 850
F.2d at 1019, each time Kellogg raised an objection to the
government’s Rule 404(b) evidence. Further, the District
Court provided the jury with explicit instructions defining the
permissible and impermissible uses of the Rule 404(b)
evidence.13 The District Court did not abuse its discretion in
13 The District Court gave the following instruction: This evidence concerns the defendant’s actions while president of Johnston Laborator[ies] approximately three months before the date first charged in the indictment when the [PA DEP] decertified the defendant and his laboratory from conduct[ing] environmental testing of drinking water. In that connection, let me remind you that the defendant, Edward Kellogg, is not on trial for committing any act that is not alleged in the indictment. Accordingly you may not consider this evidence of the similar act as a substitute for proof that the defendant committed the crimes charge[d], nor may you consider this evidence as proof that the defendant has a criminal
-42- allowing evidence of fraudulent acts to prove later knowledge
and intent in the charged offenses.
III. Sufficiency of the Evidence
Finally, Kellogg argues that his conviction is not
supported by substantial evidence. We apply “a particularly
deferential standard of review when deciding whether a jury
verdict rests on legally sufficient evidence.” United States v.
Dent, 149 F.3d 180, 187 (3d Cir. 1998) (citations omitted).
We “must view the evidence in the light most favorable to the
government, and will sustain the verdict if ‘any rational trier
of fact could have found the essential elements of the crime
beyond a reasonable doubt.’” Id. (quoting United States v.
personality or a bad character. Specifically, you may not use this evidence to conclude that because the defendant committed the other act, he must also have committed the acts charged in the indictment. The evidence of the other similar act was admitted for a much more limited purpose, and you may consider it only for that limited purpose.
-43- Voigt, 89 F.3d 1050, 1080 (3d Cir. 1996)) (other citations
omitted).
Kellogg argues that the government presented
insufficient evidence of his specific intent to defraud, as
required by the Federal mail fraud statute, 18 U.S.C. § 1341.
See United States v. Dobson, 419 F.3d 231, 237 (3d Cir.
2005) (setting forth elements required to sustain conviction
under 18 U.S.C. § 1341); see also Copple, 24 F.3d at 544 (3d
Cir. 1994) (“The essential elements of the crime of mail fraud
are 1) a scheme or artifice to defraud; 2) participation by the
defendant with specific intent to defraud; and 3) use of the
mail in furtherance of the scheme.”).
After carefully considering the trial record, and
mindful of the scope of our review, we are not persuaded that
Kellogg has met the “very heavy burden” of demonstrating
his claim of insufficiency of the evidence. Dent, 149 F.3d at
187 (citations omitted); United States v. Gonzalez, 918 F.2d
1129, 1132 (3d Cir. 1990). There is ample evidence in the
-44- record14 for a reasonable jury to conclude that Kellogg
intended to defraud Johnston Laboratories’ customers by
substituting EPA Method 624 for EPA Method 601/602, by
sending false reports to customers stating that testing based on
EPA Method 601/602 had been performed, and by
14 See, e.g., trial testimony of Randy Haring, the president of Hydro-Analysis, who stated that he recalled a telephone conversation with Kellogg in which he told him that Hydro- Analysis could not perform EPA Method 601/602, and Kellogg agreed to have testing done using EPA Method 624 (Appx. 1650-51); trial testimony of Akhter Mehmood, a chemist who oversaw Hydro-Analysis’ day-to-day operations, stating that he had a May 11, 1998 telephone conversation with Kellogg about a request for Hydro-Analysis to perform EPA Method 601/602 testing, and that he personally told Kellogg that Hydro-Analysis did not have the capability to perform this method, and that Kellogg gave him the authorization to do EPA Method 624 instead of 601/602 (Appx. 1245-48); trial testimony of Ronald Andrae, a chemist employed by Johnston Laboratories, stating that in 1998 he became aware that Hydro-Analysis was reporting testing by a method other than EPA Method 601/602, but that Johnston Laboratories’ reports stated that EPA Method 601/602 was being used (Appx. 537); trial testimony of Tracy Buzalka, a microbiologist employed by Johnston Laboratories, stating that she noticed that Hydro-Analysis reported using EPA Method 624, but that Johnston Laboratories reported out EPA Method 601/602, and that she told Kellogg about the differences in the reports [Appx. 431-32].
-45- subsequently billing customers for the EPA Method 601/602
tests without actually having performed them. Because there
is evidence to support each of the elements of the charged
offenses, Kellogg’s assertions to the contrary are unavailing.
CONCLUSION
For the reasons set forth, we will affirm the judgment
of the District Court.
ROTH, Circuit Judge, CONCURRING:
I am pleased to join the majority in all but Section I.B
of the opinion. The majority acknowledges that guilt-
assuming hypotheticals may not properly be asked of opinion
witnesses in every case. The majority holds that such a
question was permissible in this case, however, based on a
perceived distinction between reputation and opinion
-46- character witnesses. The majority concludes that the question
asked of Pennington (who offered both opinion and reputation
testimony) was relevant and its hypothetical nature was clear,
thereby assuaging any concern with respect to the
presumption of innocence. I respectfully disagree. However,
because the error in permitting the questioning was harmless,
I concur in the result.
“‘The principle that there is a presumption of
innocence in favor of the accused is the undoubted law,
axiomatic and elementary, and its enforcement lies at the
foundation of the administration of our criminal law.’”
Taylor v. Kentucky, 436 U.S. 478, 483 (1978) (quoting Coffin
v. United States, 156 U.S. 432 (1895)). Because of the
potential of guilt-assuming hypotheticals to impair this
presumption, the majority of circuits have held that they are
not permissible, whether asked of reputation or opinion
witnesses. The distinction between reputation and opinion
-47- testimony may relate to the probative value of a guilt-
assuming hypothetical, but any such distinction does not
affect how such questions impact the presumption of
innocence. See United States v. Oshatz, 912 F.2d 534, 539
(2d Cir. 1990).
Contrary to the government’s argument, the challenged
cross-examination of Pennington posed a guilt-assuming
hypothetical, even though the defendant’s name was not
mentioned. This hypothetical was directed to the crux of
Kellogg’s defense. Kellogg maintained that there was
insufficient evidence that he had the intent to defraud required
to convict under the mail fraud statute. In his defense,
Kellogg relied in part on witness testimony to the effect that,
while the Johnston Laboratories computer system for
assigning method numbers to repeat customers was difficult
to change, Johnston would never have intentionally reported
the wrong methodology, as well as that the EPA Method 624
-48- used by Hydro-Analysis was sophisticated and tested for
essentially the same contaminants as EPA Method 601/602,
the method that Johnston Laboratories reported to customers.
The question posed to Pennington referred, in contrast,
to “a person who knows that a laboratory used one particular
analytical method, but then . . . reports out a completely
different analytical method on final reports of analysis to its
customers . . ..” In my view, this questioning was improper
and should not have been permitted. It is not clear to me, as it
is to the majority, that this guilt-assuming hypothetical was
sufficiently hypothetical to be permissible.
Substantial other evidence supported a finding of guilt,
however, such that the error in allowing the questioning of
Pennington was harmless. As the majority explains in note
14, for example, multiple witnesses testified that Kellogg
agreed to have Hydro-Analysis test using EPA Method 624,
-49- and Johnston Laboratories employees testified to having
conversations with Kellogg about the discrepancies in the
reports sent to customers. In addition, numerous Johnston
customers attested that they had received reports and invoices
from Johnston stating that Method 601/602 had been used.
Because I find that substantial other evidence renders the
error in permitting the guilt-assuming hypothetical harmless, I
concur in the result.
-50-