Opinion ID: 792809
Heading Depth: 2
Heading Rank: 3

Heading: Jury instructions and evidentiary rulings

Text: 126 Stewart and Bacanovic argue that they were prejudiced by the specter of an uncharged offense. They assert that the trial was infected by language and evidence concerning insider trading. The dispute over this issue arose early in the proceedings, when Stewart moved to strike portions of the Superseding Indictment, alleging that it invoked facts, theories and terminology that were relevant only to the crime of insider trading, which was not charged. The Government moved in limine to preclude the defense from arguing that jurors could draw an inference from the fact that Stewart was not charged with insider trading. The District Court granted the Government's motion and established the following ground rules for trial: 127 The Government seeks to prevent defendants from inviting the jury to speculate about why the indictment does not charge the crime of insider trading. 128 Clearly, defendants may inform the jury that the indictment does not charge them with the crime of insider trading. But defendants may not invite the jury to speculate as to why that charge was not included in the indictment. Nor may they argue that the absence of an insider trading charge proves their innocence of such activity. 129 If the Government presents arguments or evidence that tend to show that defendants were motivated not only by the fear that they would be accused of trading illegally, but also that such a fear was justified — that is, that Stewart's trading was illegal — then it will open the door to defense evidence that the conduct was not illegal. 130 United States v. Stewart, No. 03 CR. 717(MGC), 2004 WL 113506, -2 (S.D.N.Y. Jan. 26, 2004). Accusations by each side that the other side failed to comply with the ruling were first lodged during opening statements and repeated throughout the trial. 131 In rulings made in connection with the issue, the District Court drew a distinction between (1) Stewart's state of mind, or belief, regarding the possibility that her ImClone sale would result in insider trading charges, and (2) whether the ImClone sale transaction was actually illegal as a matter of fact or law. The former was relevant to the charged offenses; the latter was not. Defendants now challenge the District Court's refusal to instruct the jury that Defendants were not charged with insider trading. They also argue that the District Court made erroneous evidentiary rulings, including preventing Stewart's securities law expert from testifying, that unfairly restricted their right to present a complete defense. 132
133 Defendants contend that the District Court erred by failing to instruct the jury, as proposed in Stewart's Request Number 17, that 134 Neither Martha Stewart nor Peter Bacanovic has been charged with Insider Trading in this case. Your deliberations are limited to the facts that have been proved in court during the course of this trial. Thus you may only consider that which was presented in court in relation to the charges in the Indictment. 135 You may consider Insider Trading only insofar as it pertains to motive for the obstruction charge. The government contends that information about the Waksal sales was believed by Ms. Stewart to constitute inside information. Ms. Stewart vigorously denies that she so believed or that it was her intention to violate the law by trading on this type of information. You may not, and I caution you strongly against this, you may not conclude that the government should have charged Ms. Stewart with Insider Trading and convict her of anything else in place of a charge that was not filed by the government and charged by the grand jury because it appeals to your sense of fairness or justice or what have you. You may not convict Martha Stewart unless there is sufficient evidence independent of Insider Trading to support a conviction on the charge in question. 136 It is not clear that Defendants preserved this argument because the request was not discussed at the charge conference, nor was there any explicit objection to its omission. See Fed.R.Crim.P. 30 (a party objecting to the failure to give a requested instruction must inform the court of the specific objection and the grounds for the objection before the jury retires to deliberate). We need not resolve the waiver issue, however, because the argument fails whether we review the District Court's decision de novo, see, e.g., United States v. Gonzalez, 407 F.3d 118, 122 (2d Cir.2005), or for plain error, see, e.g., United States v. Crowley, 318 F.3d 401, 414 (2d Cir.2003). 137 In charging the jury, the District Court identified each specific charge against each Defendant and instructed the jury as to the elements essential to convicting each Defendant on each count as well as the necessity that the elements be proved beyond a reasonable doubt to support a guilty verdict. In addition, the jury received a copy of the Redacted Superseding Indictment and a verdict sheet that identified each specification in each count against each Defendant. The jury was directed to weigh the evidence and reach a verdict based solely on a consideration of the evidence and the instructions, and the District Court stressed that it would violate your sworn duty to base a verdict upon any other view of the law than that which I give you. 138 `A conviction will not be overturned for refusal to give a requested charge . . . unless that [requested] instruction is legally correct, represents a theory of defense with basis in the record that would lead to acquittal, and the theory is not effectively presented elsewhere in the charge.' United States v. Holland, 381 F.3d 80, 84 (2d Cir.) (quoting United States v. Han, 230 F.3d 560, 565 (2d Cir.2000) (alteration in original)), cert. denied, ___ U.S. ___, 125 S.Ct. 921, 160 L.Ed.2d 814 (2005). We look at the charge as a whole to see if it correctly stated the law, United States v. Jones, 30 F.3d 276, 284 (2d Cir.1994), and will not find reversible error unless a charge either failed to inform the jury adequately of the law or misled the jury as to the correct legal rule, United States v. Alfisi, 308 F.3d 144, 148 (2d Cir.2002). Defendants do not cite any precedent for finding that a trial was unfair because the jury did not receive an instruction not to consider culpability for specified uncharged crimes, where the instructions were otherwise proper. 139 The District Court's instructions were sufficient to restrict the jury's use of the evidence to the crimes charged. It is clear from the partial verdict of acquittal that the jury carefully evaluated the evidence and rendered [a] discriminating verdict[ ] and not one that was based on uncharged acts or bad character. United States v. Casamento, 887 F.2d 1141, 1153 (2d Cir.1989); see also United States v. Diaz, 922 F.2d 998, 1007-08 (2d Cir.1990) (partial acquittal belies notion of spillover prejudice). Certainly, the theory that Defendants should not be convicted for uncharged conduct was effectively presented elsewhere in the charge, namely in the portion devoted to explaining the elements that must be found beyond a reasonable doubt in order to convict. See Holland, 381 F.3d at 84. 140 The District Court gave clear instructions as to the charges against each Defendant and the type and quantum of evidence on which to base a guilty verdict. We presume that juries follow their instructions, and the record does not suggest that the jurors were either confused or prejudiced against Defendants in determining the counts of conviction. See, e.g., United States v. Geibel, 369 F.3d 682, 700 (2d Cir.), cert. denied sub nom. Allen v. United States, ___ U.S. ___, 125 S.Ct. 619, 160 L.Ed.2d 457 (2004) and Conner v. United States, ___ U.S. ___, 125 S.Ct. 1827, 161 L.Ed.2d 732 (2005). On this record, therefore, we find that the District Court did not err by omitting Stewart's Request Number 17, much less commit plain error. See United States v. Carr, 424 F.3d 213, 221 (2d Cir.2005) (There being no error, it follows a fortiori that there was no plain error.).
141 Defendants assert that several of the District Court's evidentiary rulings interfered with their rights to present a meaningful defense by calling witnesses on their behalf and cross-examining prosecution witnesses. Most of the challenged rulings pertain to the insider trading issues. These rulings precluded Defendants from calling a securities law expert, and imposed limitations on direct examination of Stewart's business manager, Heidi DeLuca, and on cross-examination of Faneuil. 142 The [D]ue [P]rocess [C]lause of the Fifth Amendment and the compulsory process clause of the Sixth Amendment guarantee each criminal defendant the right to present a defense. United States v. Almonte, 956 F.2d 27, 30 (2d Cir.1992) (per curiam). It is equally well-settled that the right is subject to the application of procedural and evidentiary rules. See, e.g., Wade v. Mantello, 333 F.3d 51, 58 (2d Cir.2003) (collecting cases). Restrictions on presenting evidence do not offend the Constitution if they serve legitimate interests in the criminal trial process and are not arbitrary or disproportionate to the purposes they are designed to serve. Rock v. Arkansas, 483 U.S. 44, 55-56, 107 S.Ct. 2704, 97 L.Ed.2d 37 (1987) (internal quotation marks omitted). Similarly, the right to confront and cross examine witnesses is tempered by a trial judge's wide latitude to impose reasonable limits in order to avoid matters that are confusing or of marginal relevance. Howard v. Walker, 406 F.3d 114, 128-29 (2d Cir.2005) (quoting Van Arsdall, 475 U.S. at 679, 106 S.Ct. 1431). 143 Clearly, [t]he accused does not have an unfettered right to offer testimony that is incompetent, privileged, or otherwise inadmissible under standard rules of evidence. Taylor v. Illinois, 484 U.S. 400, 410, 108 S.Ct. 646, 98 L.Ed.2d 798 (1988). We review a trial court's evidentiary rulings, including the decision to admit or exclude expert testimony, for abuse of discretion. See, e.g., Nimely v. City of New York, 414 F.3d 381, 393 (2d Cir.2005); see also United States. v. Anglin, 169 F.3d 154, 162 (2d Cir.1999) (rulings on relevance under Rule 401 and admissibility under Rule 403 [reviewed] for abuse of discretion); United States v. Duncan, 42 F.3d 97, 101 (2d Cir.1994) (the trial court's discretion to admit or exclude expert testimony will not be disturbed unless manifestly erroneous). As we recently reiterated, a trial court acts within its discretion when it imposes restrictions that are not arbitrary or disproportionate to purposes designed to accommodate legitimate interests in the criminal trial process. See Howard, 406 F.3d at 132 (citing Rock, 483 U.S. at 55-56, 107 S.Ct. 2704).
144 Defendants contend that they were unfairly restricted from putting on a defense to the purported uncharged accusations of insider trading when the District Court prevented a securities law expert from testifying about the legality of Stewart's ImClone trade. Generally, the use of expert testimony is not permitted if it will `usurp either the role of the trial judge in instructing the jury as to the applicable law or the role of the jury in applying that law to the facts before it.' Duncan, 42 F.3d at 101 (quoting United States v. Bilzerian, 926 F.2d 1285, 1294 (2d Cir.1991)). The proffered testimony regarding the legal principles underlying insider trading and their application to Stewart's trade had the potential to invade both prohibited areas. Clearly, an opinion that purports to explain the law to the jury trespasses on the trial judge's exclusive territory. 9 See, e.g., United States v. Scop, 846 F.2d 135, 139 (2d Cir.) (Fed.R.Evid. 704 was not intended to allow experts to offer opinions embodying legal conclusions), rev'd in part on reh'g on other grounds, 856 F.2d 5 (2d Cir.1988). In addition, the expert's opinion that Stewart's conduct did not violate the securities laws would have increased the potential for confusion because the facts supporting an insider trading charge were not relevant to the charges under consideration. 10 145 Ultimately, the legality of trading upon the knowledge that Waksal was selling his ImClone holdings is irrelevant to the issue of whether Stewart later lied to investigators about having received that information. See Fed.R.Evid. 401 (relevant evidence tends to make the existence of a fact more or less probable). Nor would an opinion to that effect have assisted the jurors to understand the evidence or determine a factual issue. See Fed R. Evid. 702 (a witness qualified by the court as an expert may testify to an opinion that will assist the trier of fact to understand the evidence or to determine a fact in issue). Accordingly, preclusion of the expert witness was a proper exercise of the District Court's discretion and did not violate Defendants' right to present a defense. 146 Similarly appropriate was the District Court's exclusion of a portion of Heidi DeLuca's testimony regarding a conversation she had with Faneuil concerning the impact of the ImClone trade on Stewart's tax loss selling plan. Bacanovic asserts that he was unfairly prevented from eliciting from DeLuca that she recalled speaking with Faneuil about the ImClone gain in February 2002. Fanueil testified that the conversation took place in early January, giving rise to the Government's argument that Defendants had to abandon the tax loss selling story and invent the $60 stop-loss story. The substance of DeLuca's testimony about her conversation with Faneuil was properly excluded as hearsay. That ruling certainly resulted in no harm to Bacanovic because testimony from DeLuca about the date of the conversation was already in the record and because her testimony was relevant only to the counts concerning the legitimacy of Defendants' pre-existing decision to sell ImClone at $60, of which they were acquitted. 147 The District Court properly applied evidentiary rules that serve legitimate interests in the criminal trial process, and the resulting restrictions on the presentation of evidence were neither arbitrary nor disproportionate to those purposes. Rock, 483 U.S. at 55, 107 S.Ct. 2704 (internal quotation marks omitted). Defendants were not deprived of their constitutional rights to present a defense. 11
148 Defendants also claim that the District Court unreasonably restricted their rights to challenge prosecution witnesses. Stewart asserts that the District Court prevented her from cross-examining Faneuil fully about whether he thought that his conduct on December 27th violated the law, a matter she contends was critical to her defense against the uncharged crime of insider trading. Specifically, she asserts that she should have been permitted to probe Faneuil regarding his understanding of a theory of liability based on misappropriation of client information. Stewart alleges that one of the ways that the Government opened the door to insider trading was to elicit testimony from Faneuil that he believed he did something illegal on December 27th, i.e., he misappropriated client information; he told one client about what another client was doing in his account and then lied about it to cover up. In a line of questioning that focused on Faneuil's belief that there was something wrong with Stewart's ImClone transaction, Stewart's counsel elicited testimony that Faneuil didn't feel comfortable with the situation, that he suspected Stewart was precluded from trading on the information he gave her, and that twice on December 27th he involved himself in an illegal trade. We agree with the District Court that the legal basis for [Faneuil's] state of mind, whatever it was, whether it was because of the misappropriation theory or some other legal theory, is entirely beside the point. The District Court's decision to sustain an objection to questioning Faneuil on his understanding of the misappropriation theory was a proper exercise of its discretion to exclude irrelevant evidence and is not inconsistent with the right to confrontation. See, e.g., Howard, 406 F.3d at 129. 149 Nor did the District Court abuse its discretion by deciding, pursuant to Fed.R.Evid. 403, that cross-examination of Faneuil on the subject of whether his marijuana use during a 2003 trip to Jamaica violated his cooperation agreement. Bacanovic sought to raise the matter to illustrate Faneuil's incentive to lie to avoid termination of his cooperation agreement. A mini-trial on the legality of marijuana use in Jamaica and whether or not Faneuil could be prosecuted for his conduct or had breached his cooperation agreement would have been a confusing distraction in an already lengthy and complex trial. In determining whether a trial judge has abused his discretion in the curtailment of cross-examination of government witnesses, the test is whether the jury was already in possession of sufficient information to make a discriminating appraisal of the particular witness's possible motives for testifying falsely in favor of the government. United States v. Singh, 628 F.2d 758, 763 (2d Cir.1980). Considering the plethora of impeachment material against Faneuil — including his drug use, which featured prominently in the defense summations — the District Court did not abuse its discretion by determining that the risk of confusing and misleading the jury with collateral matters outweighed the probative value of clearly cumulative impeachment evidence. 150 The District Court properly exercised its discretion to exclude the foregoing matters from evidence for the purpose of keeping the record reasonably free of evidence that was cumulative, confusing, misleading or irrelevant to the issues the jury was to decide. The restrictions were reasonable and did not violate Defendants' confrontation rights. 151 In sum, Defendants are not entitled to have their convictions set aside based on the District Court's failure to give the requested insider trading charge, its exclusion of expert testimony or the limitations it imposed on examination and cross examination of witnesses.