Opinion ID: 622756
Heading Depth: 4
Heading Rank: 1

Heading: The Intangible Property Theory

Text: The government's intangible property theory was based on a provision of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), Pub.L. No. 86-257, 73 Stat. 519, stating that the officials of a labor organization occupy positions of trust in relation to such organization and its members as a group. 29 U.S.C. § 501(a). That provision specifies particular duties owed by officials to the union and membership they serve: It is, therefore, the duty of each such person, taking into account the special problems and functions of a labor organization, to hold its money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted thereunder, to refrain from dealing with such organization as an adverse party or in behalf of an adverse party in any matter connected with his duties and from holding or acquiring any pecuniary or personal interest which conflicts with the interests of such organization, and to account to the organization for any profit received by him in whatever capacity in connection with transactions conducted by him or under his direction on behalf of the organization. Id. Explaining this provision to the jury in this case, the district court charged that union members have a right to the loyal service of union officials; and this right constitutes a form of property. Trial Tr. at 1816. This instruction conforms to our precedent, which recognizes that the concept of property under the Hobbs Act reaches beyond tangible property to include union members' LMRDA rights to loyal representation by their officers, agents, and other representatives. United States v. Gotti, 459 F.3d at 325; see also United States v. Tropiano, 418 F.2d 1069, 1075-76 (2d Cir.1969) (holding that concept of property under the Hobbs Act ... is not limited to physical or tangible property or things, but includes ... any valuable right considered as a source or element of wealth (citations omitted)). Coppola does not contend that the district court misconstrued Gotti. Rather, he asserts that we must revisit Gotti's holding in light of the Supreme Court's recent decision in Skilling v. United States, 130 S.Ct. 2896. Skilling was not a Hobbs Act case. It considered a conviction under the honest services provision of the wire fraud statute. See 18 U.S.C. § 1346 (defining term `scheme or artifice to defraud' to include scheme or artifice to deprive another of the intangible right of honest services). To avoid due process concerns underlying the vagueness doctrine in the undefined phrase right of honest services, Skilling v. United States, 130 S.Ct. at 2931; see id. at 2935 (Scalia, J., concurring in part and concurring in judgment), the Supreme Court construed the statutory provision as limited to fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who had not been deceived, id. at 2928 (identifying bribe and kickback schemes as core of honest services fraud recognized by appellate courts before McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987)). Coppola argues that there is little difference between the LMRDA rights alleged in this case and the right to honest services at issue in Skilling. He maintains that both are too vague to state a criminal charge consistent with due process. See Appellant Br. at 67 (stating it makes no sense to posit that the same `honest services' that are too vague to be defrauded nonetheless can be extorted). We disagree. First, to the extent Coppola asserts that Skilling identifies vagueness concerns with intangible rights generally, he is mistaken. Skilling addressed a particular intangible rightto honest servicesidentified, but not defined, by § 1346. It did not identify vagueness concerns with all intangible rights. To the contrary, Skilling held that even the intangible right of honest services can constitutionally be the basis of a wire fraud prosecution when that intangible right is deprived through a bribe or kickback. See 130 S.Ct. at 2928. Thus, nothing in Skilling warrants a conclusion that intangible property rights can no longer support a Hobbs Act extortion or extortion conspiracy charge. See United States v. Cain, 671 F.3d 271, 281-82 (2d Cir.2012) (affirming conviction for extortion under Hobbs Act of intangible right to solicit business). Second, the vagueness concerns identified in Skilling with respect to the § 1346 right to honest services do not translate to the LMRDA rights derived from § 501(a). A statute is not void for vagueness if it define[s] the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement. Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 75 L.Ed.2d 903 (1983); accord Arriaga v. Mukasey, 521 F.3d 219, 224 (2d Cir.2008). This test does not demand meticulous specificity in the identification of proscribed conduct. Rather, it requires only that the statutory language conveys sufficiently definite warning as to the proscribed conduct when measured by common understanding and practices. United States v. Farhane, 634 F.3d 127, 139 (2d Cir.) (internal quotation marks and citations omitted), cert. denied sub nom. Sabir v. United States, ___ U.S. ___, 132 S.Ct. 833, 181 L.Ed.2d 542 (2011). Additionally, [v]agueness challenges to statutes not threatening First Amendment interests are examined in light of the facts of the case at hand; the statute is judged on an as-applied basis. Maynard v. Cartwright, 486 U.S. 356, 361, 108 S.Ct. 1853, 100 L.Ed.2d 372 (1988); accord Arriaga v. Mukasey, 521 F.3d at 223. In challenging § 501(a) as vague, Coppola notably avoids discussion of the statutory language, a failure that obscures critical textual distinctions between § 501(a) and § 1346. Whereas § 1346 provides no textual guidance about the duties whose violation will amount to a deprivation of honest services, see, e.g., Sorich v. United States, 555 U.S. 1204, 129 S.Ct. 1308, 1310, 173 L.Ed.2d 645 (2009) (Scalia, J., dissenting from denial of certiorari ) (discerning no coherent limiting principle defining what honest services is, whence it derives, and how it is violated), § 501(a) specifically enumerates the duties that labor representatives owe to their union and its members: (1) to hold union money and property solely for the benefit of the union and its members; (2) to manage, invest, and expend union money in accordance with the union's constitution and bylaws and any applicable resolutions; (3) to refrain from dealing with the union as an adverse party or on behalf of an adverse party in any matter connected with the representative's union duties; (4) to refrain from holding or acquiring any pecuniary or personal interest which conflicts with the interests of the union; and (5) to account to the union for any profit received by the representative in whatever capacity in connection with transactions conducted by him or under his direction on behalf of the union. See 29 U.S.C. § 501(a). Thus, in contrast to § 1346, which references, at best, only a general and undefined fiduciary standard, see Skilling v. United States, 130 S.Ct. at 2936 (Scalia, J., concurring in part and concurring in judgment), § 501(a) avoids unconstitutional ambiguity by detailing the duties owed and the persons from and to whom they are owed, see Gurton v. Arons, 339 F.2d 371, 375 (2d Cir.1964) (A simple reading of [§ 501(a) ] shows that it applies to fiduciary responsibility with respect to the money and property of the union and that it is not a catch-all provision under which union officials can be sued on any ground of misconduct with which the plaintiffs choose to charge them.). Third, while § 501(a) creates the intangible right here at issue, it does not define the predicate crime. That task is performed by the Hobbs Act, which identifies a crime only when propertyincluding the intangible rights specified in § 501(a)is obtained by extortion. The Hobbs Act, unlike § 1346, cannot be construed to proscribe mere self-dealing, that potentially staggeringly broad swath of behavior, Sorich v. United States, 129 S.Ct. at 1309 (Scalia, J., dissenting from denial of certiorari ), that had raised particular vagueness concerns regarding honest services fraud before Skilling, 130 S.Ct. at 2932-33 & n. 44 (noting that if Congress wished to criminalize self-dealing, it would have to speak more clearly than it has, and further noting various concerns with limiting standard proposed by government). To eliminate that vagueness concern, Skilling cabined honest services fraud to cases in which the breach of duty was procured by the corrupt participation of a third party who paid either bribes or kickbacks for the breach. See id. at 2928. By contrast, because the principal in a Hobbs Act violation is not the party committing the fiduciary breach, but the person who procures the breach by statutorily specified wrongful meansextortionthe ambiguity concerns with § 1346 are simply not present in the Hobbs Act. The extortion element of the Hobbs Act serves the same limiting function as the bribe-kickback element of § 1346, serving notice that a crime depends on a third party obtaining property through the wrongful use of threats or fear to achieve the property's surrender. Indeed, such extortion with respect to § 501(a) rights fits within the core misconduct that is labor racketeering. See Evans v. United States, 504 U.S. 255, 262-63, 112 S.Ct. 1881, 119 L.Ed.2d 57 (1992) (noting Congress passed Hobbs Act to prohibit labor racketeering). In sum, we identify nothing in Skilling that warrants a deviation from our holding in Gotti that intangible property, specifically, the LMRDA rights derived from the enumerated duties in § 501(a), can support a valid Hobbs Act extortion charge.