Court Opinion

ID: 9468350
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:12:40.21975+00
Date Added: 2024-06-11T17:40:49.761445
License: Public Domain

VAN GRAAFEILAND, Circuit Judge,
dissenting:
Although I yield to no one in the strength of my conviction that lawyers should adhere *931to the highest ethical standards, see, e. g., Cinema 5 Ltd. v. Cinerama, Inc., 528 F.2d 1384 (2d Cir. 1976), I feel equally strongly that lawyers accused of crimes based on alleged unethical conduct are entitled to fair trials. Because of what I believe were prejudicial errors in the court below, I respectfully dissent.
The present mail fraud statute, 18 U.S.C. § 1341, is the successor to section 301 of the 1872 Act to revise, consolidate and amend the Statutes relating to the Post-Office Department, 17 Stat. 283, 323 (1872). While legislative history is sparse, what there is indicates that the statute was originally aimed at flimflam artists who use the mails to defraud the gullible. Durland v. United States, 161 U.S. 306, 314, 16 S.Ct. 508, 511, 40 L.Ed. 709 (1896); United States v. Von Barta, 635 F.2d 999, 1005 (2d Cir. 1980); Note, The Intangible-Rights Doctrine and Political-Corruption Prosecutions under the Federal Mail Fraud Statute, 47 U.Chi.L. Rev. 562, 568 (1980). In contravention of the general rule that “ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity”, see United States v. Dixon, 536 F.2d 1388, 1401 (2d Cir. 1976), quoting Rewis v. United States, 401 U.S. 808, 812, 91 S.Ct. 1056, 1059, 28 L.Ed.2d 493 (1971), section 1341 has been broadly interpreted to apply to fiduciaries who use their position for personal pecuniary gain. Dixon, supra, 536 F.2d at 1399; United States v. Buckner, 108 F.2d 921 (2d Cir.), cert. denied, 309 U.S. 669, 60 S.Ct. 613, 84 L.Ed. 1016 (1940). Where liability has been found, however, it was inevitably because the fiduciary relationship enabled the defendant to commit the wrongful acts for which he was convicted.
Where, as here, liability is predicated upon the vicarious fiduciary responsibility of an individual lawyer in a large, modern-day law firm and there is no evidence that the defendant exploited the vicarious relationship for personal gain, the statute should be applied with careful attention to its basic purpose.
[T]o say that a man is a fiduciary only begins an analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge those obligations? And what are the consequences of his deviation from duty?
SEC v. Chenery Corp., 318 U.S. 80, 85-86, 63 S.Ct. 454, 458, 87 L.Ed. 626 (1943).
Courts and commentators dealing with individual conflict of interest claims in today’s colossal law firms have struggled to avoid unfair, mechanically applied rules formulated at a time when such law firms as existed were small in size. See, e. g., Armstrong v. McAlpin, 606 F.2d 28 (2d Cir. 1979), vacated by en banc court, 625 F.2d 433 (1980), vacated 449 U.S. 1106, 101 S.Ct. 911, 66 L.Ed.2d 835 (1981); Note, The Chinese Wall Defense to Law-Firm Disqualification 128 U.Pa.L.Rev. 677 (1980); Anderson, Conflict of Interest 52 Wash.L.Rev. 807 (1977); Note, Unchanging Rules in Changing Times; The Canons of Ethics and IntraFirm Conflicts of Interests, 73 Yale L.J. 1058 (1964). Differences of opinion among knowledgeable persons are not uncommon. When a man’s freedom is at stake, these differences of opinion should be fully explored. I believe that the defense was unduly and unfairly hampered in this respect by the questions, rulings, and instructions of the trial court.
This is not a case in which the defendant took advantage of or used his fiduciary relationship with firm clients to do them harm. Judge Mansfield’s statement that there was sufficient evidence to support an inference of “use of or manipulation of Bronston’s breach of fiduciary relationship” is completely without support in the record. The Government took the position at the outset of the trial that it was not required to prove that any confidential information was wrongfully utilized or leaked by Bronston, and the Goverment did not prove it. The Government did not even prove that there was information of a confidential nature that might have been wrongfully disclosed. Every witness who was queried on the matter testified that there was no misuse of confidential information. The prose*932cution did not say one word in support of this contention in summation, and the district court did not discuss it in its charge. Violation of 18 U.S.C. § 1341 could not be predicated upon misuse of confidential information; proof of other wrongful conduct was required.
The trial court told counsel and jurors on numerous occasions that whether or not there was a breach of ethics was not an issue in the case. I disagree. The essence of the crime of mail fraud is wrongful intent. Pelz v. United States, 54 F.2d 1001, 1005 (2d Cir. 1932). For there to have been a violation of the mail fraud statute, there must have been a “conscious knowing intent to defraud”, United States v. Kyle, 257 F.2d 559, 564 (2d Cir. 1958), cert. denied, 358 U.S. 937, 79 S.Ct. 327, 3 L.Ed.2d 308 (1959), a conscious knowing violation of defendant’s ethical fiduciary obligations. Evidence concerning the defendant’s motives and his belief in the propriety of his conduct was material, because it might have tended to repel the inference of fraudulent intent. Id. at 563.
[Sjince [intent] may be only inferentially proven, 2 Wigmore on Evidence §§ 300, 302, 3d Ed. 1940, no events or actions which bear even remotely on its probability should be withdrawn from the jury unless the tangential and confusing elements interjected by such evidence clearly outweigh any relevancy it might have.
United States v. Brandt, 196 F.2d 653, 657 (2d Cir. 1952).
Contrary to the district court’s repeated assertions, the question whether defendant’s conduct properly could be considered as conforming to the legal profession’s Code of Professional Responsibility was squarely in the case as bearing upon the defendant’s intent and good faith. This argument was made to the district court by defense counsel:
There is a third ground, and that is it would bear on the witness’ state of mind and his intention. If in fact it is reasonable to believe that what he is charged with doing was not a violation of a professional ethics, then I think that is certainly relevant to the issue of good faith which your Honor has recognized as a vital issue in this case.
The' expert testimony which defendant sought to introduce should have been admitted for this purpose. United States v. Garvin, 565 F.2d 519, 522-23 (8th Cir. 1977). The district court’s summary rejection of this testimony with the comment “We are trying a case, not a breach of ethics,” was prejudicial error.
After having stressed to the jury that the ethical propriety of defendant’s conduct was not an issue in the case, the district court interjected itself into the questioning of one of the Government’s witnesses, and the following colloquy occurred:
THE COURT: Now that the subject has been opened, I would like to know, as a member of the firm, was Mr. Bronston free to promote the mutually exclusive interests of a competitor of your client on the subject of the firm’s engagement for the client?
MR. NIZER: I object to that, your Honor.
THE COURT: Overruled.
THE WITNESS: No, absolutely not.
THE COURT: Why not?
MR. NIZER: Objection, sir.
THE COURT: Well, I will leave it for the jury to answer the question why not. I sustain your objection.
MR. NIZER: And I object to that comment, your Honor, as if — I won’t say further. I move to strike it out.
THE COURT: What comment?
MR. NIZER: That you leave it to the jury to answer that question, as if the implication on that—
THE COURT: What you have objected to I have sustained you on. That is not being left to the jury.
MR. NIZER: I see.
THE COURT: There is no further implication.
This questioning by the district court dealt either with a breach of legal ethics or with the alleged violation of section 1341. It could have had no other purpose. In *933view of the trial judge’s instructions that the jurors were not to be concerned with the question of ethics, they might well have concluded that the judge was pointing them to a clear statutory violation. If so, the judge’s conduct was prejudiciously erroneous.
If, on the other hand, the question dealt solely with the ethics of defendant’s conduct, it was part of an equally erroneous pattern. Although the judge permitted the prosecution to question several witnesses concerning the asserted unethical nature of defendant’s conduct, he blocked defense counsel’s efforts to prove the contrary. Having effectively stymied the defense on this issue, the judge charged the jury as a matter of law that “[a] lawyer such as the defendant Jack E. Bronston has a duty not to act in any manner which is inconsistent with a client’s interest.” Thereafter, the court charged:
I already have explained to you the concept of a lawyer’s duties, fiduciary duties to you. You may consider a knowing breach of such duties by the defendant Jack E. Bronston if you find that such a breach occurred as evidence of intent to defraud.
The district court’s emasculation of the defense of good faith did not stop there. Although the court charged the jury that good faith on the part of the defendant in urging competitive bidding was a complete defense, other rulings and instructions by the court made this a meaningless sop for the defense. The defense contended that what my colleagues term a “quick, unopposed renewal” of the BusTop franchise was in fact a “rip-off” of the people of the City of New York. The letter from the defendant to the City Comptroller, which was the linchpin in the Government’s case, stated that BusTop was in default under its short-term contract with the City, that BusTop had built less than half of the shelters it had agreed to build, and had erected almost none of them in the disadvantaged areas of the Bronx. After this agreement had been terminated, BusTop attempted to push through a “quick, unopposed” twenty-year renewal without any competitive bidding by other companies.
Are my colleagues now prepared to say that if the “quick, unopposed” renewal of BusTop’s contract had taken place, the City would not have been ripped off? I doubt it. Should not the jury have been given all the facts so that it could have made a fair, even-handed determination whether the defendant, a State Senator representing the Borough of Queens, was acting in good faith in attempting to prevent a rip-off? The jury was not given all the facts. The district court prevented it.
Defendant’s letter stated that BusTop was in default under its contract. The truth of falsity of this statement goes directly to the heart of the Government’s claim of bad faith. Where lies the truth? The jury doesn’t know, and neither do we. Questions dealing with the impropriety and harmful effects of BusTop’s conduct were held not to be pertinent. After sustaining the Government’s objections to defense questions aimed at developing the facts, the court charged the jury:
You must keep your attention riveted on the issue on trial. We are trying the terms of the indictment, the accusation. We are not trying here the question of which competitor was entitled to a franchise or on what terms, nor are we trying whether Bus Top Shelters, Inc. was or was not in compliance with the original agreement with the City. Those are not the matters you are here to decide. Don’t be sidetracked thereby.
I suggest that the truth or falsity of defendant’s letter was not a “sidetrack” but was a fundamental issue in the case. If the defendant acted with an honest intent to accomplish a laudable object, there was no crime. Durland v. United States, supra, 161 U.S. 306, 313-14, 16 S.Ct. 508, 511, 40 L.Ed. 709.
Since the jury was required to weigh defendant’s bona fides with only half of the facts before it, I cannot agree with my colleagues that defendant had a fair trial.
I would reverse.