Court Opinion

ID: 9494908
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:49:48.363859+00
Date Added: 2024-06-11T17:56:41.816781
License: Public Domain

FEINBERG, Circuit Judge
(dissenting in part and concurring in part).
I dissent from the holding that 18 U.S.C. § 1346 is unconstitutional as applied in this case. I concur, however, in the other portions of the majority opinion.
The majority is concerned that a broad use of the “honest services” provision of the mail fraud statute could “make a criminal out of anyone who breaches any contractual representation.” Majority op. at 108. While an overly broad use of § 1346 may raise a significant question in some circumstances, no such question should be resolved on this appeal.
The majority appropriately notes, but fails to follow, the “one doctrine more deeply rooted than any other in the process of constitutional adjudication[:] that we ought not to pass on questions of constitutionality ... unless such adjudication is unavoidable." Department of Commerce v. United States House of Representatives, 525 U.S. 316, 343, 119 S.Ct. 765, 142 L.Ed.2d 797 (1999) (emphasis supplied) (quoting Spector Motor Service, Inc. v. McLaughlin, 323 U.S. 101, 105, 65 S.Ct. 152, 89 L.Ed. 101 (1944)). For reasons given below, the majority’s “adjudication” that § 1346 is unconstitutionally vague as applied in this case is hardly “unavoidable”.
To begin with, the constitutional issue was not raised in the district court, as the majority apparently concedes.1 This *114should preclude us from reaching out to decide it. As the majority correctly states in its discussion of the structuring counts, challenges “not brought to the attention of the [district] court” are reviewed under the constraints of the plain error standard of Fed R.Crim. P. 52(b). Plain error is (1) error, (2) that is plain, and (3) that affects substantial rights. Johnson v. United States, 520 U.S. 461, 466-67, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997).
Even if we make the unlikely assumption that there was an error below regarding the constitutionality of § 1346 (the district court, of course, did not decide the issue), we cannot properly characterize such error as plain. The Supreme Court has held, in applying the plain error standard, that “plain” is synonymous with “clear” or “obvious”, and that “[a]t a minimum, a court of appeals cannot correct an error pursuant to Rule 52(b) unless the error is clear under current law.” United States v. Olano, 507 U.S. 725, 734, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993). Any alleged error as to the unconstitutionality of § 1346 certainly cannot be “clear under current law” when every circuit court to address the specific question of vagueness since the phrase “honest services” appeared in the statute has found § 1346 to be constitutional on its face or as applied.2
Furthermore, it is the law of this circuit that there must be “binding precedent” “mandating” reversal before an error can be deemed plain. United States v. Weintraub, 273 F.3d 139, 152 (2d Cir.2001) (“Without a prior decision from this court or the Supreme Court mandating the jury instruction that [defendant], for the first time on appeal, says should have been given, we could not find any such error to be plain, if error it was.”). The majority cites no judicial decision, let alone binding precedent in this circuit, dealing with § 1346 that supports its view. It does attempt to distinguish the cases cited at note 2, supra. See majority op. at 111-12. But merely pointing out different factual patterns in cases that held § 1346 was constitutional does nothing to affirmatively demonstrate that it is clear under current law that § 1346 was un constitutionally applied here. In other words, the majority appears to hold that the alleged error is plain under current law because the majority says so. That simply disregards the teachings of Johnson, Olano and Wein-traub.
Thus, under these cases, the second prong of the plain error test is clearly not met.3 This is particularly true because the *115majority’s ruling appears to depart from the analysis used in our recent decision in United States v. Sancho, 157 F.3d 918 (2d Cir.1998) (per curiam), cert. denied, 525 U.S. 1162, 119 S.Ct. 1076, 143 L.Ed.2d 79 (1999). In Sancho, which we are bound to follow (as was the district court), we affirmed a jury finding of guilt under 18 U.S.C. §§ 1343, 1346. The panel first observed that the “essential element of a violation” of § 1346 “is a scheme to deprive another of the ‘intangible right of honest services.’ ” 157 F.3d at 921. The court then (1) looked to New York law to discover whether there was a legal duty in that case by a so-called consultant (actually an FBI agent) not to conceal from a construction company (TCC) his discovery of a proposed fraud on TCC; (2) concluded that there was such a legal duty under New York law; and (3) held that Sancho used interstate telephone communications in furtherance of a scheme to deprive TCC of its intangible right to the consultant’s honest services. Id.
This case cannot be fairly distinguished from Sancho. Here there was a jury finding of guilt on a charge of violating §§ 1341, 1346. As in Sancho, (1) we look to state law to determine whether Handa-kas was under a legal duty to refrain from intentionally paying wages below those required by state law and falsely certifying payroll records that reflected compliance with the wage requirements; (2) applicable New York law makes clear that there was such a duty; and (3) Handakas used the mails in furtherance of a scheme to deprive the New York City School Construction Authority (SCA) of its intangible right to his honest services.
■ It is true that Handakas was under a contractual duty to refrain from falsifying payroll records and paying sub-standard rates. It may also be true, as the majority points out, that there is a question whether a contractual duty alone should be enough to allow a conviction. But here, as in Sancho, there were duties other than simply contractual ones imposed on Handa-kas. Article 1, Section 17 of the New York State Constitution, for example, prohibits any “laborer, workman or mechanic in the employ of a contractor or subcontractor engaged in the performance of any public work” from being “paid less than the rate” of the prevailing wage. That constitutional mandate is implemented by New York Labor Law § 220 et seq (McKinney 1986 & West Supp.2001-2002), which imposes duties upon various entities to enforce the prevailing wage requirement.
The majority points out that paying substandard wages is a criminal misdemeanor under N.Y. Lab. Law § 220. Majority op. at 96, 110. But state law imposes even more extensive duties on contractors such as Handakas. For instance, under N.Y. Lab. Law § 220(3 a.a.), contractors “shall keep original payrolls or transcripts thereof, subscribed and affirmed by him as true under the penalties of perjury,” showing the “hours and days worked by” and “hourly wage rate paid” to each “workman, laborer or mechanic.” Another section of the statute further extends the criminal penalties for false statements. See N.Y. Lab. Law § 220-c (“Any contractor or subcontractor who shall upon his oath verify any statement required to be filed under this act which is known by him to be false shall be guilty of perjury and punishable as provided by the penal law.”).4 It is *116therefore a state felony to submit falsified material information on any filing required by the labor statute. See N.Y. Penal Law § 210.10 (McKinney 1999) (defining perjury in the second degree as a “class E felony”). Because the state law duties here are so explicit, this case is governed by the analysis used in Sancho.
The majority attempts to distinguish Sancho and “Sancho’s only progeny,” United States v. Middlemiss, 217 F.3d 112 (2d Cir.2000), on the dubious ground that those cases limited the state law duties that, when breached, may support a conviction for a scheme to defraud another of “honest services” to duties actionable only in tort. Majority op. at 106. However, nowhere in Sancho or Middlemiss is there such a limiting principle. Rather, each case looked only to whether there was a legal duty to provide honest services, without imposing any requirements on the nature of that duty. In fact, Sancho held that a fiduciary duty is not required to support an honest services conviction, strongly suggesting that the type of duty breached is not a limiting factor in the honest services analysis. The majority is thus making a gigantic leap from Sancho and Middlemiss to the holding that a breach of a state law tort duty is required in a case like this to support a conviction under § 1346. In any event, Handakas violated both contractual and criminal state law duties, as the majority acknowledges. A defendant has more notice that his behavior violated § 1346, and there is less risk of an abuse of prosecutorial discretion, when that behavior also constitutes a state crime rather than simply a tort.
The majority also cites Chatin v. Coombe, 186 F.3d 82 (2d Cir.1999) to support its holding of unconstitutional vagueness here. But Chatin “implicated the free exercise of an individual’s religion,” and thus involved First Amendment freedoms. Id. at 87. In affirming the district court’s finding that a New York State Department of Correctional Services Rule that regulated inmates’ religious practices was unconstitutionally vague, we recognized that “[vjagueness is particularly problematic when it ‘abuts upon sensitive areas of basic First Amendment freedoms.’ ” Id. at 86 (quoting Grayned v. City of Rockford, 408 U.S. 104, 109, 92 S.Ct. 2294, 33 L.Ed.2d 222 (1972)); see also Chapman v. United States, 500 U.S. 453, 467, 111 S.Ct. 1919, 114 L.Ed.2d 524 (1991) (holding that a vagueness claim must be evaluated as “applied to the facts of [the] case” when “First Amendment freedoms are not infringed”). We have no First Amendment issue here. Furthermore, unlike Handa-kas’s actions, Chatin’s religious practices did not violate additional state criminal statutes, and therefore Chatin was not afforded the same level of notice about the illegality of his behavior as Handakas was.
In addition, the record shows that Han-dakas had clear notice that his conduct subjected him to criminal penalties under the mail fraud statute. The Government presented evidence at trial that Handakas made false statements on a pre-qualification application form (required by state law and part of his contract with the SCA) that specifically stated, “[a] material false statement or omission made in connection with this application ... may subject a person ... to criminal charges, including ... Title 18, U.S.Code, Section 1001, false or fraudulent statement, and ISfl, mail fraud” (emphasis supplied). Therefore, any argument that the statute was uncon*117stitutionally vague as applied to Handakas because he lacked notice must fail.
Moreover, even assuming that there was plain error below — a proposition I reject— the question whether we as an appellate court should “notice a forfeited error,” is committed to our discretion. Johnson, 520 U.S. at 467, 117 S.Ct. 1544. We have been instructed to “notice” such an error “only if ... [it] seriously affeet[s] the fairness, integrity, or public reputation of judicial proceedings.” Id. (citations and internal quotation marks omitted). It is imprudent for us to exercise that discretion to reach and decide a far-reaching issue of constitutional law in a case where the defendant’s services were so clearly not “honest services” under § 1346. That statutory term must mean, at the very least, that in providing such services a person does not sign perjurious statements or falsely certify padded payrolls in violation of state law. Handakas cannot persuasively say that he provided the SCA with honest services or that “the fairness, integrity, or public reputation” of the district court proceedings was seriously affected by his mail fraud conviction on the facts of this case. Id.
I understand the majority’s concern that allowing convictions on the basis of any dishonesty in the course of performing a contract might criminalize trivial breaches of contract. But that concern is unfounded in this case, where Handakas clearly violated duties imposed by state laws in addition to breaching his contractual duties. As the Fifth Circuit noted in Brumley, “[b]ecause Congress was not faced with a uniform formulation of the precise contours of the [honest-services] doctrine [when it passed § 1346], some defendants on the outer reaches of the statute might be able to complain that they were not on notice that Congress criminal-ízed their conduct when it revived the honest-services doctrine!’ 116 F.3d at 733. The Fifth Circuit concluded, however, that Brumley was not among such defendants, because his conduct (like Handakas’s) was “inconsistent with his duties under [state] law.” Id. I agree with the Fifth Circuit’s conclusion that while “the boundaries of intangible rights may be difficult to discern, [that] does not mean that it is difficult to determine whether [a defendant] in particular violated them.” Id. It is clear to me that in this case Handakas did violate the SCA’s intangible right .to his honest services. I therefore see no justification to “notice” the allegedly plain error in order to forge in this case a new approach for our Court on § 1346.
In sum, I dissent from the holding that § 1346 is unconstitutionally vague as applied in this case because as noted above, the Supreme Court has instructed us not to pass on questions of constitutionality unless such adjudication is unavoidable. The constitutional error here, if any, was eminently avoidable: it was not plain and we should not reach out to “notice” it, particularly because this case is governed by the analysis in Sancho. As in Sancho, we need only decide whether Handakas’s conduct “constituted a scheme to deprive [the SCA] of a right of honest services,” and I “have no doubt that it did.” 157 F.3d at 922.
I respectfully dissent in part as set forth above and concur in the other portions of the majority opinion.5

. The majority states only that "it cannot be said that the issue escaped the district court's notice” because the special verdict form separately asked whether Handakas deprived the New York City School Construction Authority of (a) "money or property” or (b) "honest services.” Majority op. at 111. However, the use of separate questions on the verdict form does not indicate in any way that the district court considered the vagueness question. A simpler explanation is much more likely: the Government argued both grounds for the mail fraud conviction and the verdict form focused the jury's attention on both. In any event, for purposes of plain error analysis, it does not matter whether the vagueness issue happened to have passed through the district court judge's mind. Rather, the appellant must have raised the issue with the district court in order to avoid the constraints of plain error *114review on appeal, and the majority does not point to anything in the record to indicate that the issue was raised below.

. See United States v. Frega, 179 F.3d 793, 803 (9th Cir.1999), cert. denied, 528 U.S. 1191, 120 S.Ct. 1247, 146 L.Ed.2d 105 (2000); United States v. Frost, 125 F.3d 346, 370-71 (6th Cir.1997), cert. denied, 525 U.S. 810, 119 S.Ct. 40, 142 L.Ed.2d 32 (1998); United States v. Castro, 89 F.3d 1443, 1455 (11th Cir.1996), cert. denied, 519 U.S. 1118, 117 S.Ct. 965, 136 L.Ed.2d 850 (1997); United States v. Gray, 96 F.3d 769, 776-77 (5th Cir.1996), cert. denied, 520 U.S. 1129, 117 S.Ct. 1275, 137 L.Ed.2d 351 (1997); United States v. Paradies, 98 F.3d 1266, 1282-83 (11th Cir.1996), cert. denied, 522 U.S. 1014, 118 S.Ct. 598, 139 L.Ed.2d 487 (1997); United States v. Bryan, 58 F.3d 933, 941-43 (4th Cir.1995), overruled on other grounds, United States v. O’Hagan, 521 U.S. 642, 117 S.Ct. 2199, 138 L.Ed.2d 724 (1997); United States v. Waymer, 55 F.3d 564, 568-69 (11th Cir.1995), cert. denied, 517 U.S. 1119, 116 S.Ct. 1350, 134 L.Ed.2d 519 (1996); cf. United States v. Brumley, 116 F.3d 728, 732-33 (5th Cir.) (en banc), cert. denied, 522 U.S. 1028, 118 S.Ct. 625, 139 L.Ed.2d 606 (1997) (rejecting argument of dissenting judges that § 1346 fails to give average citizens adequate notice of the prohibited conduct).

. In contrast, the majority is correct in holding that the district court committed plain error as to the structuring convictions be*115cause the multiple charges were contrary to a well-established body of directly relevant case law. Majorily op. at 97-99.

. In addition, state regulations require the SCA to evaluate a contractor's qualifications (as stated in a pre-qualification application required of the contractor by the same regula*116tions), including compliance with "wage, hour and other fair labor standards.” 21 N.Y. Comp.Codes R. & Regs. § 9602.2 (1999).

. Although I disagree with the majority’s view regarding the constitutionality of § 1346, I *118concur in the majority's analysis regarding the reversal of the money laundering charge once it holds that the mail fraud conviction should be reversed.