Opinion ID: 767958
Heading Depth: 3
Heading Rank: 1

Heading: The Smoot Evidence

Text: 55 The district court largely disregarded the new evidence that involved Smoot and Lyon & Lyon because it concluded that attorney Smoot's conduct and knowledge could not be attributed to the company. The court gave two explanations for this conclusion. The first suggested a legal principle that Smoot's knowledge could not be attributed to American Honda management if the defendants' assertion that the Japanese management of American Honda [were] the controlling figures of the company was correct. The second was that there were no facts in the record to support the defendants' factual assertions about Smoot's role. Our view of these matters differs from the district court's. 56 The record -- particularly those portions reflecting the conclusions drawn by the district court in the MDL litigation --provides support for the defendants' factual assertions about Smoot's role. In the MDL litigation, the court found that both Lyon & Lyon and American Honda acknowledged the close relationship the law firm... had with the company, even while they tried to emphasize that Lyon & Lyon was outside counsel. The picture of the firm's minimal involvement initially put forth by American Honda and Lyon & Lyon is at odds with the description of their relationship that emerged from the MDL litigation. In a memorandum disclosed as a result of that litigation, American Honda's attorneys related the following discussion with the prosecutors: 57 That led to a discussion about Lyon & Lyon's outside counsel's role to the company, and we talked a little about Bud Smoot and how he started with the company in the 1970's when it was a motorcycle company and eventually ended up on the Board of Directors and actually came in-house for a while, and how, as a result of the Lyon & Lyon relationship, that the institutional memory of the company's problems and successes really resided with the law firm because, traditionally, the top Japanese management of the company was not there for 20-30 years at a time, and they rotated out maybe in the five to eight year range, so that nobody was left within the company who really had a historical perspective on problems that may have arisen over the years within the company but for Lyon & Lyon and Bud Smoot. Connolly [the lead prosecutor] was... [informed that] there was not a strong general counsel's office in the company and that Lyon & Lyon literally had authority to deal with line personnel, people in the field could call Lyon & Lyon with the most insignificant of matters, and that their relationship was such that all dealer litigation and corporate litigation went directly to Lyon & Lyon and really was not handled or managed in-house at all. 58 The important role that Lyon & Lyon played in the company suggests the magnitude of Smoot's role as the attorney whom the parties acknowledge handled most of American Honda's legal work. In fact, the evidence suggests that Smoot -- at the very least in his role as counsel for American Honda -- had sufficient authority to hire an outside private investigator to investigate allegations of bribe-taking by company managers. In addition to his role as counsel, Smoot served the company directly in several roles. It is undisputed that Smoot was a member of American Honda's Board of Directors during relevant periods. He also served on American Honda's ethics committee and internal audit committee. In these roles, Smoot apparently had sufficient authority in the company to bring about the destruction of the results of an internal audit that had been ordered by the company president. 59 As to the legal principle, we clarify that there is no requirement that a person be a central figure at a company in order for that person's knowledge to be imputed to the company. 12 The person whose knowledge is to be imputed must have some relationship to the company -- whether director, officer, agent, or employee -- which allows the person to obtain the knowledge in the course of the engagement with the company and within the scope of his or her authority. See 3 William Meade Fletcher, Fletcher Cyclopedia of the Law of Private Corporations § 790, at 15 (Beth A. Buday & Gail A. O'Gradney, eds. 1994). Determining whether a given relationship is sufficient to support the imputation of knowledge may, in some cases, depend on an assessment of the person's level of responsibility. Continental Oil Co. v. Bonanza Corp., 706 F.2d 1365, 1376 (5th Cir. 1983); see also 3 Fletcher, supra, § 807, at 61 ([W]hen notice to an agent is relied upon to bind a corporation, the nature of the agency must be such that the law will presume that the agent carried the notice to the principal..., for notice to every employee of a corporation would not be held notice to the employer.). Second, that other individuals may be controlling figures within the company does not mean that a person is not considered an agent for purposes of imputing his or her knowledge to a corporation. Whether knowledge can be imputed depends on a fact-specific assessment of the particular individual's authority within the company. See id. § 807, at 62 (The best test of imputation of knowledge is not whether the agent... is president, treasurer, and so forth, but whether the condition and facts known were within the sphere of the authority of the particular agent.). 60 Smoot clearly occupied a role in the company that allows his knowledge of these pieces of newly discovered evidence to be imputed to American Honda. Whether in his capacity as director, see Dinco v. Dylex Ltd., 111 F.3d 964, 972 (1st Cir. 1997) (stating that a director's knowledge can be imputed to the company); Baker v. Latham Sparrowbush Assocs., 72 F.3d 246, 255 (2d Cir. 1995) (same), or as attorney, see 3 Fletcher, supra, § 807.10, at 71 (Whether notice to or knowledge of an attorney is imputed to his or her client is governed by the general rules....), or as general agent, the facts clearly show that he had authority to act for the company and, in the instances relevant for these appeals, that he was acting in that capacity with the interests of the corporation in mind, see United States v. Route 2, Box 472, 60 F.3d 1523, 1527 (11th Cir. 1995); United States v. 7326 Highway 45 N., 965 F.2d 311, 316 (7th Cir. 1992). See also United States v. Bank of New England, N.A., 821 F.2d 844, 856 (1st Cir. 1987) (indicating that the collective knowledge of a corporation's employees can be attributed to the corporation). 13 Thus, the district court should not have disregarded these pieces of newly discovered evidence in its assessment of the new trial motion. 14 61 The question is whether this error made any difference. We think not, because even if the new Smoot evidence were considered on remand, see Montilla-Rivera I, 115 F.3d at 1066-67, the outcome would undoubtedly be the same. The district judge, who presided over this three-month trial, made it clear in both of his denials of the new trial motions that he felt the evidence of guilt was overwhelming. Indeed, this court also called the evidence against Josleyn and Billmyer overwhelming. See Josleyn, 99 F.3d at 1189. In fact, the district judge made clear his conclusion that, whatever the degree to which American Honda knew of and ignored the corruption, the defendants had the requisite intent: they knew that what they did was wrong, they went to great lengths to conceal their activities from upper-level management, and they had no belief that their activities were condoned by American Honda.