United States v. Parise ( 1998 )

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
10-28-1998
United States v. Parise
Precedential or Non-Precedential:
Docket 97-1740
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Filed October 28, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-1740
UNITED STATES OF AMERICA,
Appellee
v.
LOUIS PARISE, JR.,
Appellant
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 96-CR-273-2)
Argued April 27, 1998
BEFORE: ALITO, GARTH, and RENDELL
Circuit Judges
(Filed: October 28, 1998)
BRUCE A. FRANZEL
Oxenburg & Franzel
1760 Market Street, Suite 600
Philadelphia, PA 19103
Counsel for Appellant,
Louis Parise, Jr.
TIMOTHY R. RICE
Office of the United States Attorney
615 Chestnut Street, Suite 1250
Philadelphia, PA 19106
Counsel for the United States
OPINION OF THE COURT
RENDELL, Circuit Judge.
On January 29, 1997, Louis Parise Jr. and his father,
Louis Parise Sr., were convicted of various crimes arising
out of their involvement with the National Maritime Union
("NMU"). Parise Jr.'s RICO conviction under 18 U.S.C.
S 1962(c) was predicated on his violation of the
Pennsylvania commercial bribery statute, 18 Pa. C.S.A.
S 4108(c). Specifically, Parise Jr. was found to have
delivered cash bribes to two "port agents" in exchange for
their referral of union members with personal injury cases
to Parise Jr.'s employer, the Sacks law firm.
On appeal Parise Jr. argues that there was insufficient
evidence to support his RICO conviction. He also contends
that his actions did not constitute commercial bribery
under Pennsylvania law. We disagree with his view as to
how the law should be applied to the facts of this case, and
find that the evidence was sufficient to support his
conviction. Parise Jr. also challenges the district court's
exclusion of certain testimony relating to the commercial
bribery charge. We find this argument to be similarly
unavailing. We will thus affirm the order of the district
court.
I.
The convictions at issue in this case arose out of an
extensive government investigation of corruption within the
NMU and several related organizations. The NMU
represents merchant marine seafarers who work on
commercial shipping vessels. One of the improprieties
revealed through the government's investigation was a
2
bribery scheme devised and implemented by Louis Parise
Sr., the President of the NMU, his son, Louis Parise Jr., and
attorneys Avrem Adler and Bernard Sacks.1 Through this
plan, developed in 1988, port agents and other union
employees provided Sacks with personal injury case
referrals in exchange for cash payments.2 As part of the
scheme, Parise Jr. was hired as an "investigator" for the
Sacks law firm and was responsible for delivering the bribes
to the port agents. Parise Sr. promised these legal referrals
to Sacks in exchange for a kickback of 5% of the legal fees
generated through NMU cases. In 1992, a Legal Services
Plan ("LSP") was created through which attorneys were to
provide low or no cost legal services to union members. It
was hoped that these members would then be more likely
to retain designated attorneys, including Sacks, for their
more lucrative cases. Parise Jr. was named as "co-
administrator" of the LSP.
Sacks cooperated with the government investigation and
during the trial testified at length about the bribery
scheme. Sacks explained that Parise Jr.'s role was to pay
port agents in particular cities a set fee for referral of
personal injury cases to the Sacks firm. Several port
agents, including Floyd Jones, John Pegan, and Debra
Rywelski,3 testified about the money paid to them by Parise
Jr. for these case referrals. Other witnesses provided
additional evidence relating to Parise Jr.'s role in the NMU
and in carrying out the bribery scheme. After a three week
trial, the jury found Parise Jr. guilty of the RICO violation,
of Travel Act violations and of RICO forfeiture. The RICO
conviction was based on the jury's finding that Parise Jr.
had bribed Pegan and Rywelski in violation of
Pennsylvania's commercial bribery statute. The district
court denied Parise Jr.'s post-trial motion for acquittal or a
new trial, and Parise Jr. appeals the judgment of conviction
_________________________________________________________________
1. Adler died before this case was brought to trial.
2. Between 1988-93 Sacks earned over $1.4 million in legal fees from
these NMU personal injury cases.
3. Rywelski was a NMU employee, but was not officially a "port agent."
She served as a Pension and Welfare Plan Representative who helped
union members with their benefits.
3
entered on September 11, 1997. This court has jurisdiction
to review the final judgment of the district court pursuant
to 28 U.S.C. S 1291.
The jury verdict in this case "must be sustained if there
is substantial evidence, taking the view most favorable to
the Government, to support it." Glasser v. United States,
315 U.S. 60, 80 (1942). See United States v. Aguilar, 843
F.2d 155, 157 (3d Cir. 1988). To the extent that Parise Jr.'s
arguments raise issues of statutory interpretation, our
review is plenary. See United States v. Hayden, 64 F.3d
126, 128 (3d Cir. 1995).
II.
A. RICO violation
Parise Jr. offers two related challenges to the sufficiency
of the evidence which sustained his conviction under RICO.
First, Parise Jr. argues that the government failed to
adequately connect him with the indicted "enterprise"
because several of the racketeering acts charged in the
indictment were committed prior to the existence of the
Legal Services Plan, and even those acts which occurred
after the formation of the LSP were not directly linked with
his role in the LSP. Secondly, Parise Jr. contends that the
government failed to demonstrate that he participated in
directing the affairs of the enterprise as required to sustain
a RICO conviction. In addition, Parise Jr. challenges the
district court's jury instruction relating to the requisite
showing that must be made to establish "association"
under RICO.
1. Connection with an "enterprise"
The RICO statute provides that "it shall be unlawful for
any person employed by or associated with any enterprise
engaged in . . . interstate or foreign commerce, to conduct
or participate, directly or indirectly, in the conduct of such
enterprise's affairs through a pattern of racketeering
activity or collection of unlawful debt." 18 U.S.C. S 1962(c).
A conviction under this statute requires that the
government prove the following four elements:
4
(1) the existence of an enterprise affecting inter state
commerce; (2) that the defendant was employed by o r
associated with the enterprise; (3) that the defen dant
participated, either directly or indirectly, in the conduct
or the affairs of the enterprise; and (4) that he or she
participated through a pattern of racketeering activity.
United States v. Console, 13 F.3d 641, 652-53 (3d Cir.
1993) (citation omitted).
The statute defines an enterprise as "any individual,
partnership, corporation, association, or other legal entity,
and any union or group of individuals associated in fact
although not a legal entity." 18 U.S.C. S 1961(4). The
indictment in this case charged that four legal entities
made up the RICO enterprise: (1) the National Mari time
Union ("NMU"); the NMU Pension and Welfare Plan; (3) the
Committee for the Administration of the NMU; and (4) the
Legal Services Plan ("LSP").
Parise Jr. contends that because the government alleged
in the indictment that the enterprise -- which we will call
the "NMU Enterprise" -- was comprised of four
organizations, no "enterprise" could have existed prior to
September 1992, when the fourth organization, the LSP,
was created. Therefore, Parise Jr. asserts, alleged illegal
activity which took place before September 1992 cannot
properly serve as the basis for his RICO liability. 4
Parise Jr.'s argument fails to appreciate the nature of an
_________________________________________________________________
4. The indictment characterized Parise Jr.'s role as follows:
From in or about late 1988 to the present . . . Louis Parise, Jr.
and
others known and unknown to the grand jury, being persons
employed by and associated with the enterprise . . . knowingly,
unlawfully, and willfully conducted and participated, directly and
indirectly, in the conduct of the affairs of the enterprise . . . .
Defendant Louis Parise, Jr., used his position as an investigator
for
attorney Sacks and as a co-administrator of the ITPE-NMU Legal
Benefits Plan, to promote and aid and abet commercial bribery by
traveling in interstate commerce, and using interstate facilities,
to
deliver cash payments and things of value to union officials who
referred injured union members to attorney Sacks as their lawyer
. . . .
5
"enterprise" as defined by the RICO statute. The four
organizations were included in the indictment because all
were channels through which illegal activity was taking
place and through which the NMU Enterprise operated.
This does not mean, however, that no illegal activity of the
enterprise could occur prior to the existence or entry of one
of the indicted entities. In order to establish the existence
of an "enterprise" for the purposes of RICO, the government
must demonstrate that there is "an ongoing organization"
whose "various associates function as a continuing unit."
See United States v. Riccobene, 709 F.2d 214, 221 (3d Cir.
1983) (citing United States v. Turkette, 452 U.S. 576, 583
(1981)). However, "continuity does not require that each
member of the enterprise participate in it from beginning to
end." United States v. Feldman, 853 F.2d 648, 659 (9th Cir.
1988); see United States v. Hewes, 729 F.2d 1302, 1310-11
(11th Cir. 1984) (rejecting the argument that government
must prove participation of all members throughout the life
of the enterprise). Rather, the government must
demonstrate that all alleged members who participated at
one time or another were part of an ongoing enterprise with
a shared "organizational pattern" and "system of authority."
United States v. Lemm, 680 F.2d 1193, 1199 (8th Cir.
1982).
The evidence adduced at trial demonstrated that the
NMU Enterprise existed prior to September 1992 and that
upon its formation, the LSP became part of the ongoing
enterprise which satisfied the organizational and structural
requirements of Riccobene. 709 F.2d at 221. The LSP was
developed as another method of generating personal injury
cases; the pursuit of these cases was already an activity of
the NMU Enterprise. The major participants in the
enterprise remained essentially the same from 1988 on,
demonstrating the continuity of the enterprise. The
testimony showed that during this period Louis Parise Sr.
was the "system of authority" which united all of the
organizations which formed the NMU Enterprise: the elder
Parise had relatively unfettered discretion to direct both the
legal and illegal activities of the union and its related
organizations. Because the NMU Enterprise existed before
the formation of the LSP, Parise Jr.'s actions prior to 1992
could properly form the basis for his RICO conviction.
6
Parise Jr. next asserts that all of the racketeering charges
-- even those relating to post-1992 activity -- are deficient
because the government failed to connect any of his alleged
acts of bribery with his position as co-administrator of the
LSP. Parise Jr. contends that his actions taken while he
was an investigator for the Sacks law firm cannot form the
basis for his RICO conviction because the law firm was not
named as one of the organizations which formed the
"enterprise." However, this argument misconstrues the
government's burden. At trial, the government needed to
demonstrate that Parise Jr. participated, directly or
indirectly, in the conduct of the NMU Enterprise's affairs
through a pattern of racketeering activity. In so doing,
however, the government was not limited to demonstrating
that Parise Jr.'s participation in the affairs of the enterprise
flowed from his official role within the LSP. In fact, from the
evidence adduced at trial it is clear that Parise Jr.'s
eventual position with the LSP was not necessary to
establish that he associated with or participated in the
affairs of the NMU Enterprise. Rather, as is discussed
below, we agree with Parise Jr. that his actions as co-
administrator of the LSP were merely a continuation of his
previously established pattern of racketeering activities.
Parise Jr. also appears to be arguing that he could only
have been found to have "associated with" the organization
in which he held a formal position, but the language of the
RICO statute leaves no room for this contention. The law
explicitly states that a RICO defendant must be employed
by or associated with an enterprise. 18 U.S.C. S 1962(c). For
the purposes of RICO, the threshold showing of
"association" is not difficult to establish: it is satisfied by
proof that the defendant was "aware of at least the general
existence of the enterprise named in the indictment." United
States v. Eufrasio, 935 F.2d 553, 577 n.29 (3d Cir. 1991)
(quoting United States v. Castellano, 610 F. Supp. 1359,
1401-02 (S.D.N.Y. 1985)); see also Console, 13 F.3d at 653.
That is, a defendant must be aware of the general nature of
the enterprise and know that the enterprise extends beyond
his individual role. See United States v. Rastelli, 870 F.2d
822, 828 (2d Cir. 1989). Here, the necessary showing of
"association" was easily met. The evidence showed that
Parise Jr. attended the initial meeting during which the
7
bribery scheme was discussed -- this fact alone is sufficient
to demonstrate that he was aware of the NMU Enterprise
and knew that the activities of the NMU Enterprise
extended beyond his role in bribing union employees.
2. Participation in the conduct of the affairs of the
enterprise
We now turn our attention to the third element essential
to a RICO conviction -- namely, whether the government's
evidence demonstrated that Parise Jr. participated in the
conduct of the affairs of the enterprise. Our analysis of this
claim must begin with an examination of the definition of
"participation" under S 1962(c) as clarified by the Supreme
Court in Reves v. Ernst & Young, 507 U.S. 170 (1993). In
Reves, the Court endorsed the "operation or management"
test to determine whether a defendant participated in the
conduct of an enterprise's affairs. Id. at 184. According to
Reves, "[i]n order to ``participate, directly or indirectly, in the
conduct of such enterprise's affairs,' one must have some
part in directing those affairs." Id. at 179. However, one
need not hold a formal position within an enterprise in
order to "participate" in its affairs. Id. at 179. Further, the
"operation or management" test does not limit RICO liability
to upper management because "an enterprise is``operated'
not just by upper management but also by lower-rung
participants in the enterprise who are under the direction
of upper management." Id. at 184. In so holding, the Court
made clear that RICO liability may extend to those who do
not hold a managerial position within an enterprise, but
who do nonetheless knowingly further the illegal aims of
the enterprise by carrying out the directives of those in
control.
In applying Reves, we have stated that the"operation or
management" test is designed to limit RICO liability under
S 1962(c) to those situations in which the government can
demonstrate "a nexus between the person and the conduct
in the affairs of an enterprise." University of Maryland at
Baltimore v. Peat, Marwick, Main & Co., 996 F.2d 1534,
1539 (3d Cir. 1993).5 The First Circuit has stated that RICO
_________________________________________________________________
5. Although Reves was a civil RICO case, the "operation or management"
test is applicable to criminal RICO cases as well. See, e.g., United
States
v. Antar, 53 F.3d 568, 580-81 (3d Cir. 1995).
8
liability extends to those "plainly integral to carrying out"
the enterprise's activities. See United States v. Shifman, 124
F.3d 31, 36 (1st Cir. 1997) (citation omitted), cert. denied,
118 S. Ct. 1053 (1998).
It is clear that Parise Jr. participated in the conduct of
the affairs of the NMU Enterprise for several years before he
was given the formal title of "co-administrator" of the LSP.
In his role as investigator for the Sacks law firm, Parise Jr.
was integral to the enterprise's plan to funnel personal
injury cases to Sacks in order to reap a percentage of the
money generated. Parise Jr. traveled to port cities paying off
the union agents and informing them that Sacks was the
official NMU attorney for the East Coast. Thus, even before
he had a formal role within the LSP, Parise Jr. was deeply
involved in -- and integral to -- the operation of the NMU
Enterprise. The government produced evidence that Parise
Jr. was acting at the direction of his father, the union
President -- clearly upper level management -- to carry out
the illegal activities of the NMU Enterprise. As a result of
Parise Jr.'s work, his father, the head of the enterprise,
received substantial kickbacks from Sacks.
In 1992, in furtherance of the scheme and reflective of
his important role in the enterprise, Parise Jr. became co-
administrator of the LSP. Through this official position, he
maintained and expanded his role in operating the NMU
Enterprise. In addition to continuing the payoff
arrangement with port agents, he also coordinated the
effort of the LSP to select local attorneys to do the routine
legal work for union members -- and to channel more
lucrative cases to attorneys selected by Parise Sr.
Reves focused on the RICO liability of those "outside" an
enterprise who may assist in furthering the illegal activities
of the enterprise. 507 U.S. at 183-85. The Court did not
reach the issue of the liability of those "inside," specifically
declining to determine "how far S 1962(c) extends down the
ladder of operation." Id. at 184 n.9. However, we need not
dwell on this issue because Parise Jr.'s substantial
involvement in the criminal activities of the NMU Enterprise
does not present a close case. We are not concerned with
improperly extending RICO liability to a low-level employee
who was unaware of the criminal activities of the larger
9
enterprise. See United States v. Viola, 35 F.3d 37, 43 (2d
Cir. 1994) (reversing conviction of defendant who did light
clean-up and maintenance work on the ground that the
government had failed to show that he exercised any
"discretionary authority" or that he "was even aware of the
broader enterprise"). Sacks testified that Parise Jr. was
present during the original meeting where the bribery plan
was discussed. The fact that he continued to play an
essential role in implementing the scheme was well
documented during the trial. Parise Jr. does not contend on
appeal that he was an unwitting -- or unwilling-- actor.
From the extensive evidence presented at trial, the jury
could easily conclude that the government established a
nexus between Parise Jr. and the affairs of the NMU
Enterprise. Parise Jr. played a role in directing the affairs
of the NMU Enterprise as required by Reves and could be
found criminally liable under RICO.
3. Challenge to the jury instruction
Parise Jr. next challenges -- as he did at trial-- the
district court's jury instructions in which the district court
advised the jury that "the Government has alleged that
defendant Louis Parise Jr. was associated with the
enterprise through his dealing[s] with various NMU officials
you have heard testify."6 Parise Jr. contends that this
statement led the jury to believe that it couldfind proof of
the requisite association by virtue of the alleged bribery of
port agents Jones, Pegan, and Rywelski even if there was
no other proof that Parise Jr. had associated with the NMU
Enterprise. However, giving the term "dealings" its plain
meaning, we interpret it to mean all interactions or
contacts between the union officials and Parise Jr. during
which they had the opportunity to learn about his role in
the NMU Enterprise. There is no basis either in the context
of the instruction or the evidence of the case to equate the
_________________________________________________________________
6. This instruction will be reviewed to determine if, taken as a whole and
in the light of the evidence, it fairly and adequately submitted the issue
to the jury. See United States v. Traitz, 871 F.2d 368, 385 (3d Cir. 1989)
(citation omitted). No error will be found if the district court correctly
communicated the substance of the law to the jury so that the jury was
not misled as to the relevant law or issues. Id.10
word "dealings" with payoffs or bribes. The substance of the
testimony of NMU employees such as Pegan and Rywelski
was not limited to their discussion of payoffs for legal
referrals, but also included testimony in which they
described Parise Jr.'s overall involvement with the NMU
Enterprise. Furthermore this jury instruction referred to
"various NMU officials" who testified, including James
Overstreet, a business agent for the NMU, and Kenneth
Gerasimos, a former Vice President of the union. Both of
these officials testified that Parise Jr. was present at union
meetings and events. The entire testimony of the officials as
to "dealings" with NMU officials formed the evidentiary
basis for a jury determination that Parise Jr. was
"associated with" the enterprise.
Finally, it is important that the challenged portion of the
charge be read in the context of the entire set of
instructions. The district court did instruct the jury as to
the need for proof of Parise Jr.'s involvement with the
enterprise and its affairs as such:
[T]he Government must establish that each defendant
was able to commit the racketeering offense solely by
virtue of his position in the enterprise or his
involvement in or participation in or control over the
affairs of the enterprise. The Government must also
establish beyond a reasonable doubt that the alleged
racketeering acts were committed in the conduct of the
affairs of the enterprise.
The court's instructions made clear that conduct relating to
the NMU Enterprise must form the basis for RICO liability.
Therefore, we find that the district court's instructions
correctly conveyed the substance of the law and fairly and
adequately submitted this issue to the jury.
B. Predicate Acts of Commercial Bribery
In order to prove a RICO violation, the government must
demonstrate that the defendant participated in the
operation of an enterprise "through a pattern of
racketeering activity . . ." 18 U.S.C. S 1962(c).7 A pattern is
_________________________________________________________________
7. "Racketeering activity" is defined, in pertinent part, as "any act or
threat involving murder, kidnaping, gambling, arson, robbery, bribery,
11
established by proving that the defendant committed two or
more illegal acts of the type associated with organized
crime. See Riccobene, 709 F.2d at 226-27. The indictment
alleged that Parise Jr. had violated Pennsylvania's law
against commercial bribery by paying port agents to refer
personal injury cases to Sacks. The testimony elicited at
trial established that port agents were favoring Sacks in
exchange for payoffs from Parise Jr. The jury found that
Parise Jr. had bribed two union employees, Pegan and
Rywelski. Pennsylvania's statute defines commercial bribery
as follows:
An employee, agent or fiduciary commits a
misdemeanor of the second degree when, without the
consent of his employer or principal, he solicits,
accepts, or agrees to accept any benefit from another
person upon agreement or understanding that such
benefit will influence his conduct in relation to the
affairs of his employer or principal.
18 Pa. C.S.A. S 4108(a). Under the following provision, the
statute also criminalizes solicitation of bribes:"[a] person
commits a misdemeanor of the second degree if he confers,
or offers or agrees to confer, any benefit the acceptance of
which would be criminal under subsections (a) or (b) or this
section." 18 Pa. C.S.A. S 4108(c). Thus, by conferring the
benefit on the union port agents, Parise Jr. could be found
guilty of commercial bribery.
Parise Jr. argues that giving money to a union agent or
employee for the referral of personal injury cases does not
constitute "conduct in relation to the affairs of" the union
as required to establish commercial bribery under
Pennsylvania law. Parise Jr. is essentially contending that
because referring seamen to lawyers is not included among
a port agent's official duties, it cannot constitute "conduct
in relation to the affairs of" the employer. He asserts that
the union -- the employer in this case -- has no interest or
stake in which lawyer an injured worker chooses, and that
_________________________________________________________________
extortion, dealing in obscene matter, or dealing in a controlled substance
or listed chemical . . . which is chargeable under State law and
punishable by imprisonment for more than one year." 18 U.S.C.
S 1961(1)(A).
12
providing legal referrals is not within the scope of the port
agents' employment. The government argues that Parise
Jr.'s reading of the statute, especially in light of the facts of
this case, is too constricted. It urges that the "affairs in
relation to" language of the statute encompasses
employment-related activity beyond that which is part of an
employee's official duties.
As the present case arises under this court's federal
question jurisdiction, we will address all of the issues
necessary to our ruling, including questions involving the
interpretation of state law. See United States v. D'Amato,
436 F.2d 52, 54 (3d Cir. 1970). In interpreting the text of
18 Pa. C.S.A. S 4108, we are mindful that the Constitution
requires that criminal laws be strictly construed. Due
process mandates that criminal statutes give "fair warning
. . . to the world in language that the common world will
understand, of what the law intends to do if a certain line
is passed." McBoyle v. United States, 283 U.S. 25, 27
(1931); see also United States v. Lanier, 520 U.S. 259(1997). In addition, Pennsylvania's laws regarding statutory
construction dictate that penal provision are to be strictly
interpreted. 1 Pa. C.S.A. S 1928(b)(1). However, the
Pennsylvania courts have also held that "strict construction
does not require that the words of a criminal statute be
given their narrowest meaning or that the legislature's
evident intent be disregarded." Commonwealth v. Gordon,
515 A.2d 558, 561 (Pa. 1986). Furthermore, we must also
refrain from reading additional provisions into a statute
when its meaning is clear. See In re J.S., 586 A.2d 909, 913
(Pa. 1991). Against this backdrop, we turn our attention to
the meaning of the statute and the evidence offered to prove
that the port agents' receipt of money influencing their
conduct was "in relation to the affairs" of their employer,
the union.
a. Requirements for Commercial Bribery under the
Pennsylvania Statute
At the outset, it must be noted that the language of the
Pennsylvania commercial bribery statute makes its reach
quite broad. It requires that an employee solicit or accept a
benefit from another in order to influence the employee's
conduct in relation to his employer's affairs. The statute
13
contains no requirement that the affected conduct be in
relation to the official duties of an agent or employee, nor
does it require a showing that an offender's conduct was
adverse to the interests of the employer. In construing the
language of the commercial bribery statute and in
determining the meaning of "conduct in relation to the
affairs" of an employer, we turn to the case of
Commonwealth v. Bellis, 399 A.2d 397 (Pa. 1979), for
direction.
In Bellis -- the only Pennsylvania Supreme Court case
which discusses this issue directly -- the court affirmed the
judgment of sentence of a city councilman convicted of
commercial bribery.8 Bellis, 399 A.2d at 400. Councilman
Bellis had represented private parties before city agencies
in order to help these companies secure contracts with
these agencies. The companies rewarded his efforts
accordingly. Among other contentions, Bellis argued to the
court that he was not guilty of commercial bribery because
the conduct at issue did not interfere with his official duties
as a councilman. His conduct involved contracts between
third parties and other city agencies and departments,
quite apart from any matter before city council or otherwise
affecting his role or responsibilities as a councilman. The
Bellis court found that it was uncontested that the
defendant's acceptance of these bribes "did not affect the
performance of his official duties as a city councilman" and
that "he did not take any action in City Council on behalf
of private parties." Id. at 398. The court stated, however,
that whether a particular activity was among an employee's
"official duties" was "irrelevant" to the commercial bribery
inquiry. Id. at 400. Thus, the Pennsylvania Supreme Court
has rejected the argument that the bribe must impact one's
official duties in order to comprise "conduct in relation to
the affairs of his employer or principal."
The Bellis court recognized that commercial bribery was
criminalized on the theoretical premise that such acts
represent a violation of the duty of loyalty that an employee
owes to an employer. The court stated that
_________________________________________________________________
8. Bellis was convicted under 18 Pa. C.S.A. S 4667, the predecessor of 18
Pa. C.S.A. S 4108.
14
[t]he purpose of Section 4667 is to require an"agent,
employe or servant" to possess an undivided loyalty to
his principal. It is impossible for an agent to retain this
loyalty as long as he solicits and/or receives money
from third parties in return for acting on their behalf
(i.e., "showing . . . favor or disfavor") in his principal's
affairs. By representing private parties before city
officials while he was a councilman, appellant showed
"favor or disfavor" in the affairs of his principal (the
City of Philadelphia) in that he negotiated on behalf of
and in the best interests of private parties in their
dealings with the city. Hence, appellant violated
Section 4667.
Bellis, 399 A.2d at 400. Thus, the court determined that a
violation of the employee's duty automatically occurs when
an agent or employee offers or receives money which causes
him to act in a certain way -- namely as the payor wishes
-- in the conduct of the affairs of his employer. The court
viewed the violation as being implicit in the conduct. The
act of accepting a benefit to show favor is the gravamen of
the crime.
The above-quoted language in Bellis makes it disloyal,
and criminal, for an employee to accept money to show
favor to third parties in his principal's affairs. We view this
reasoning as undermining the position taken by our
dissenting colleague that being influenced for money in
one's job is criminal only if found to be against the interests
of the employer. Neither the Pennsylvania legislature, nor
its courts, have inserted such a requirement into the
offense of commercial bribery. The Bellis court did not
examine the contracts in question to determine whether
they were good for the City. Nor do we believe that such an
inquiry is appropriate under the plain meaning of the
statute. The Bellis court made clear that the showing of
favor or disfavor on the basis of money paid is the harm
addressed by the commercial bribery statute. The court
need not make a determination as to whether the choice of
a particular vendor influenced by a monetary payment was
detrimental to the employer. In U.S. v. Johns, 742 F. Supp.
196, 220 (E.D. Pa. 1990), the court found the defendant
guilty of commercial bribery under S 4108 even though the
15
parties had stipulated that the price and quality of the
products obtained from the favored vendor were "more
favorable" than any offered by competitors. While it is true
that other states have included this requirement as a
statutory element or interpreted it to be a requirement,
those cases are not our guide.9 Courts should not legislate
by reading into the laws provisions not included by the
legislature.10 This principle was recently reiterated by this
_________________________________________________________________
9. At least one state includes the words "contrary to the interests of the
employer" within its statute. See Utah Code Ann. S 76-6-508 (1953).
Another requires that the "conduct of the employee cause[ ] economic
loss to the employer." See Ariz. Rev. Stat. S 13-2605. Pennsylvania's
statute contains no such limiting language. It is true that "[i]t appears
that in New York, actions which might otherwise contravene Penal S 439
[commercial bribery statute] are not criminal if they do not affect the
employer's interest in any way." D.E. Ytreberg, Annotation, Validity and
Construction of Statutes Punishing Commercial Bribery, 1 A.L.R.3d 1350,
1361 (1965) (citing People v. Jacobs, 130 N.E.2d 636, 637 (N.Y. 1955)
and People v. Graf, 24 N.Y.S.2d 683 (App. Div. 1941)). However, we
believe that the dissent has misinterpreted this excerpt as stating a
requirement which has been read into the statute by all states. As we
discuss, we find the reasoning of these cases to be inconsistent with the
Pennsylvania courts' interpretation of this state's commercial bribery
statute. The dissent also cites Jackson v. Radcliffe, 795 F. Supp. 197,
206 (S.D. Tex. 1992) in support of the proposition that payments in
exchange for referrals will only constitute commercial bribery where an
employee has put the interests of the payor above the contrary interest
of the employer. In that case, the court found that the kickbacks at issue
simply did not constitute a bribe or benefit as required by the statute.
Thus, the court never reached the issue of whether the employer was
adversely impacted by the scheme.
10. The dissent cites State v. Nadeau, 105 A.2d 194 (R.I. 1954) for the
proposition that it is not commercial bribery to induce an agent to accept
a payment in an attempt to influence conduct over which the agent had
no control. We note first that Nadeau had been convicted under Rhode
Island's statute prohibiting bribery of a public official, not under that
state's commercial bribery statute. Nadeau is thus inapposite because its
language regarding "official acts" seems clearly limited to the context in
which that appeal was brought, namely, a government official accused of
taking bribes in connection with his duties as an official. Further, to
the
extent that the holding of Nadeau can be applied to commercial bribery,
we do not find it to be consistent with Pennsylvania precedent. The court
in Bellis did not concern itself with whether Councilman Bellis could
actually control or influence the contracting practices of the various
city
agencies involved. Again, the imposition of elements not present in the
statute is not warranted.
16
court in Brokerage Concepts, Inc. v. U.S. Healthcare, Inc.,
140 F.3d 494, 527-28 (3d Cir. 1998). There, interpreting a
different section of Pennsylvania's commercial bribery
statute, we rejected an attempt by one of the parties to
insert an additional element -- that of the defendant's
motivation -- into the statute. Id. We noted that the crime
of commercial bribery is "carefully circumscribed,"
consistent with our view that elements which do not appear
in the statutory language should not be read into the law.11
In order to find the payment of money influenced the
employee's conduct in relation to the employer's affairs, we
must define the scope of the union's affairs. In so doing, we
will consider not only the mission and activities of the
union but whether the conduct in question was consistent
with the scope of the union agents' employment. Thus, in
this case, we must determine if the port agents were
performing their jobs in advising the seamen as to counsel
for work-related injuries and whether this practice of
referral was a concern of the union and part of its affairs.
Appellants do not seek to define "affairs" but contend that
whatever it means, the referral to counsel was not part of
the affairs of the union. We believe the evidence supports
the opposite conclusion.
b. The Union's Affairs
The purpose of the NMU, as set forth in its constitution,
is described as helping "needy, sick and distressed"
_________________________________________________________________
11. Having determined that the government was not obligated to prove as
a separate element of the commercial bribery offense that the agent was
acting against the interest of the employer, we need not reach the issue
raised by the dissent that the conduct in question was not contrary to
the interest of the employer because the employer in this case condoned
the corrupt activity. However, we question the assumption inherent in
that argument that the corrupt management of the union should be
equated with the union entity itself for the purposes of determining what
was "contrary to its interest." Simply because Parise Sr. and some other
corrupt union leaders knew that some port agents were bribed does not
mean that the practice could not have been against the interest of the
port agents' employer, the union. The union has an existence separate
from its leadership -- its mission is to represent and assist union
members.
17
members. One union official described the role of the union
in the following terms:
[T]he NMU has a very proud history. And I think we're
important to our members. Certainly we represent
them before the companies. We are responsible for
their collective bargaining agreement overall, but we
also represent them on a day to day basis. If a seaman
has a problem aboard a ship, he will come to the hall
and talk to a union official.
J.A. at 1308. Other testimony supported this description of
the union as concerned with the work-related welfare of
union members. We can easily take judicial notice of the
fact that the union movement exists of, by, and for workers
and dedicates itself to their welfare and the recognition of
their rights. Seeking redress for work-related injury through
proper legal representation easily fits within this sphere of
the union's interest and affairs. In addition to the fact that
making attorney referrals was consistent with the purposes
of the union, there was significant evidence presented from
which the jury could have determined that the union
concerned itself with its members' legal representation and
that making attorney referrals was part of the union's
affairs.
The testimony demonstrated that the job of port agent
involved a wide range of tasks encompassing as many
different aspects as there are facets of the union members'
work-related needs. J.A. at 1309. One agent explained that
in addition to taking care of finances he enforced ship
rules, took care of grievances and supervised the operation
of the union hall. J.A. at 594. Another stated that as the
business agent of the port he would "[t]ake care of all the
union business, ship people out, take care of my members."
J.A. at 637. While in some types of work, helping others
mights be viewed as incidental to a job function, we view
the union - port agent - member relationship depicted here
to provide a unique setting in which assistance of this
nature was integral to, not incidental to, the union's
business of caring for its members. In describing her job as
a Pension and Welfare Plan Representative, Rywelski said
that she assisted union members and stated of this
population, "the average seaman is not well educated and
18
they need -- a lot of them can barely read and they need
help preparing these forms. A lot of them, they don't
understand them and they just need assistance." J.A. at
521-22.
Thus, the union through its port agents and other
employees, served as counselors and helpers of this
itinerant, seafaring population. Consistent with this role,
making attorney referrals was a service routinely provided
to the seamen coming into port by port agents and other
union employees. Union members testified that they relied
on port agents for attorney referrals after suffering an on-
the-job injury. J.A. at 507; 1201. It was well-known among
union members that port agents provided such referrals.
Significantly, there was no evidence presented that union
members, officials, or employees believed that making
attorney referrals was inappropriate or beyond the scope of
the port agents' employment or the union's sphere of
interest. The evidence is clear that these employees
provided attorney referrals to injured members and that
this practice was consistent with the mission of the NMU.
This practice furthered the union's express goal of assisting
sick or needy members.
Further, not all union employees received payoffs for
making these referrals. Gerasimos, a union official, testified
that assisting members with legal representation was"an
unofficial duty" of port agents and that as a port agent he
had provided such referrals without receiving any
payments. J.A. at 737-38. Another official, a Vice President
of the NMU, testified that she had never taken any money
for making attorney referrals. J.A. at 1311.12
Additionally, in determining that providing attorney
referrals was conduct "in relation to the affairs" of the
union, we cannot ignore the NMU's involvement in the
business of legal services and referrals. Parise Sr. circulated
a letter in which he named individual lawyers as the official
_________________________________________________________________
12. This Vice President testified that while she knew port agents made
referrals to personal injury lawyers, she was unaware that some received
payments or fees in exchange for making these referrals. J.A. at 1310.
This contradicts the dissent's view that "the entire Union leadership
knew of cash payments." Dissent at 28.
19
"union attorneys" for particular geographic regions. Sacks
was named as the official attorney for the East Coast and
was given office space in the union hall in New Orleans. In
addition, members of the NMU Enterprise, including Parise
Sr. and Jr., established the Legal Services Plan for the
purpose of providing routine legal services to union
members -- hoping that participating attorneys would
eventually be retained for lucrative personal injury cases.
Thus, in the present case, Parise Sr. and others in the NMU
Enterprise went out of their way to make the legal concerns
of union members part of the NMU's "affairs."13
We believe that the facts of this case clearly bring the
agents' conduct within the ambit of their jobs for the union
and that the referrals of seamen to counsel was part and
parcel of the affairs of the union. Union employees were
able to be bribed by virtue of their employment with the
union; that is, they held positions in which they were
expected to counsel and advise union members. The
injuries for which members required legal representation
were sustained on-the-job. That attorney referrals were
given for employment-related injuries further strengthens
the relationship between the role of the union and these
services. This practice is easily within the explicit mission
of the NMU. Having examined the language of the statute
and the facts of this case, we conclude that providing
attorney referrals constituted conduct in relation to the
affairs of the union.
While not specifically challenged by the appellant, we also
note that the other requisite under the commercial bribery
_________________________________________________________________
13. We recognize that the involvement of the NMU in the "legal affairs" of
the union members was undertaken by Parise Sr. -- at least in part --
for his own financial gain. Thus, Parise Sr.'s efforts in this regard are
not
dispositive of the fact that attorney referrals and legal services were
part
of the union's affairs. However, this involvement must be viewed in the
context of the evidence that providing attorney referrals was a common
practice of the port agents. In addition, there was no testimony offered
that any union members or officials questioned the use of union space
for this purpose or establishment of the LSP to aid the seamen in their
legal affairs. Providing these services was considered to be a legitimate
activity of the union which furthered its mission of helping needy
members.
20
statute, that is, that the employee be influenced to act in a
particular way in relation to the employer's affairs is also
shown by the evidence. The payments in this case clearly
influenced the conduct of the port agents. These agents
testified that their referrals were not based on a
determination that Sacks was the best lawyer to represent
injured union members. J.A. at 599; 640. Rywelski stated
that she knew nothing about Sacks's skills as a lawyer or
the fees he charged. J.A. at 528. In fact, when asked
whether he was chosen to be the "NMU attorney" because
he was a good lawyer, Sacks himself replied, "No, I got
picked because I could pay off the agents. I had the money
to do it." J.A. at 255. Both Pegan and Rywelski testified
that they understood that they were receiving money to
make referrals to Sacks -- they received a benefit to
influence their conduct in relation to the union's affairs.
The dissent urges that our view of the relationship of
lawyer referrals to the unions' affairs is misguided and
attempts to analogize this situation to a hospital's lack of
interest in a doctor's referral of a patient.14 We are also
chastised for going beyond the classic example of conflict of
interest depicted in Bellis. It is our ruling, however, that the
evidence at trial provided ample support for the jury's
finding that, given the unique relationship among the union,
its members, and the port agents, the commercial
Pennsylvania bribery statute had been violated.
The evidence and the case law support the conclusion
that the union employees' conduct in these matters
constituted the acceptance of money to affect conduct in
relation to the affairs of the employer. Given the union's
mission, the nature of the port agents' work, and the
subject matter and nature of the referrals, the jury could
reasonably find, as it did, that the agents' conduct violated
Pennsylvania's commercial bribery statute and that Parise
Jr., as solicitor, was guilty of this underlying offense for the
purposes of the RICO conviction.
_________________________________________________________________
14. In order for this analogy to be apposite, the hospital would have to
be made up of, and exist solely by reason of, the patients as its
members, and the doctor's sole responsibility, as charged by the
hospital, would be to further the hospital's mission and assist the
members/patients and provide for their needs. This is not the case.
21
C. Exclusion of evidence
Finally, Parise Jr. contends that the district court
improperly excluded relevant testimony of a government
witness on cross examination as to the non-criminal intent
of the recipient of the alleged commercial bribe. The district
court's exclusion of evidence is reviewed for abuse of
discretion. See Abrams v. Lightolier Inc., 50 F.3d 1204,
1213 (3d Cir. 1995).
Pennsylvania's commercial bribery statute requires the
establishment of an agreement or understanding between
both parties that the benefit offered will influence conduct
in relation to the affairs of the employer. 18 Pa. C.S.
S 4108(c). Parise Jr. argues that the district court erred in
excluding testimony which related to whether Rywelski
thought she was "doing something wrong" or"committing a
crime" when she took money from Parise Jr. The district
court excluded the evidence because her state of mind
regarding the criminal nature of the conduct was irrelevant.
We agree. Parise Jr. confuses the need to show that there
was an "agreement or understanding" with evidence of the
intent or state-of-mind of the parties. The statute does not
require that the parties knew that their agreement was
wrong or illegal. The government did elicit relevant
testimony from both Pegan and Rywelski that they
understood that the payments they received from Parise Jr.
were for referrals to lawyers. Thus, the district court did not
exclude evidence which related to Rywelski's belief about
whether an agreement or understanding had been formed.
It excluded only that which was irrelevant -- evidence as to
whether Rywelski had a criminal state of mind. Therefore,
the district court's exclusion of that portion of Rywelski's
testimony was not an abuse of discretion.
III.
Having considered all of the issues raised by Parise Jr. in
this appeal, we find them to be without merit. Therefore,
the judgment of the district court and its order denying the
defendant's post-trial motion will be affirmed.
22
GARTH, Circuit Judge, dissenting:
Louis Parise, Jr. has been convicted and sentenced to
serve thirty months in federal prison for racketeering. The
jury convicted Parise of engaging in a pattern of
racketeering acts by making cash payments to union
officials John Pegan and Deborah Rywelski in exchange for
referring injured union members to an attorney associated
with Parise. The difficult question raised in this appeal is
whether Parise's conduct qualifies as a "racketeering
activity," which turns on whether his conduct constituted a
violation of Pennsylvania's commercial bribery statute, 18
Pa. C.S.A. S 4108. See 18 U.S.C. S 1962(c); Brokerage
Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 521
(3d Cir. 1998). If Parise's conduct did not violateS 4108,
then his RICO conviction cannot stand.
The government's theory is that Parise's referral
payments violated S 4108 because Pegan and Rywelski
acted "in relation to the affairs" of the union when they
referred union members to Parise and Bernard Sacks, Esq.
in exchange for payments from Parise. The majority has
agreed with this theory, and has affirmed Parise's
conviction and sentence.
I disagree with the majority's conclusion that Parise's
conduct violated S 4108. I believe that the majority's broad
interpretation of the "in relation to the affairs" language of
S 4108 represents an unwarranted expansion of its scope
contrary to its "carefully circumscribed" meaning,
Brokerage Concepts, 140 F.3d at 528, and that the record
reveals no evidence that Parise violated S 4108 when the
statute is properly construed. Accordingly, I respectfully
dissent.
I.
Pennsylvania is one of twenty states that criminalizes
commercial bribery for influencing an agent's conduct "in
relation to the affairs" of the agent's principal.1
_________________________________________________________________
1. States that presently criminalize commercial bribery for influencing an
agent's conduct "in relation to the affairs" of the agent's principal
include
23
Pennsylvania's commercial bribery statute is representative
of these statutes. Its text reads:
(a) Corrupt employee, agent or fiduciary .--An
employee, agent or fiduciary commits a misdemeanor
of the second degree when, without the consent of his
employer or principal, he solicits, accepts, or agrees to
accept any benefit from another person upon
agreement or understanding that such benefit will
influence his conduct in relation to the affairs of his
employer or principal.
....
(c) Solicitation.-- A person commits a m isdemeanor of
the second degree if he confers, or offers or agrees to
confer, any benefit the acceptance of which would be
criminal under [subsection (a)] of this section.
18 Pa. C.S.A. S 4108. Courts interpreting the "in relation to
the affairs" language in the century since commercial
bribery statutes were first enacted have held universally
that the core of the offense is the breach of an agent's duty
of loyalty. See, e.g., Note, Bribery in Commercial
Relationships, 45 Harv. L. Rev. 1248, 1249 n.10 (1932)
("The breach of fiduciary duty has been considered the
foundation of the offense [of commercial bribery.]").
Pennsylvania is no exception: in Commonwealth v. Bellis,
399 A.2d 397 (Pa. 1979), the Pennsylvania Supreme Court
_________________________________________________________________
Alabama, see Ala. Code S 13A-11-120 (1975); Arizona, see Ariz. Rev.
Stat. S 13-2605; Connecticut, see Conn. Gen. Stat. S 53a-160; Illinois,
see 720 Ill. Comp. Stat. 5/29A-1; Louisiana, see La. Rev. Stat. Ann.
S 14:73; Michigan, see Mich. Comp. Laws Ann. S 750.125; Minnesota,
see Minn. Stat. Ann. S 609.86; Mississippi, see Miss. Code Ann.
S 97-9-10 (1972); Nevada, see Nev. Rev. Stat. S 207.295; New Hampshire,
see N.H. Rev. Stat. Ann. S 638:7; New York, see N.Y. Penal Law S 180.00
(McKinney); North Dakota, see N.D. Cent. Code, S 12.1-12-08;
Oklahoma, see Okla. Stat. tit. 21, S 380; Pennsylvania, see 18 Pa. Cons.
Stat. Ann. S 4108; Rhode Island, see R.I. Gen. Laws S 11-7-4 (1956);
South Carolina, see S.C. Code Ann. S 16-17-540 (Law. Co-op. 1976);
South Dakota, see S.D. Codified Laws S 22-43-1; Texas, see Tex. Penal
Code S 32.43; Utah, see Utah Code Ann.S 76-6-508 (1953); Wisconsin,
see Wis. Stat. Ann. S 134.05.
24
stated that "the purpose of [Pennsylvania's commercial
bribery statute] is to require an agent, employe[e,] or
servant to possess an undivided duty of loyalty to his
principal." Id. at 400 (internal quotations omitted). This is
consistent with the Pennsylvania legislature's Official
Comment associated with S 4108, which states that the
statute's purpose is to criminalize bribery in "relationships
where a duty of fidelity is owed." This duty of loyalty is
breached only when an employee acts contrary to the
interest of his employer.
The precise scope of conduct criminalized by the "in
relation to the affairs" language in state commercial bribery
statutes identical to Pennsylvania's has been the subject of
a substantial body of case law. These cases have
established a consistent and certain meaning for the text
we must interpret.2 According to these cases, the duty of
loyalty protected by the statute is not violated unless the
agent (here, Pegan or Rywelski) accepts a payment in
exchange for conduct that puts the interests of the payor
(here, Parise and Sacks) above the contrary interests of the
principal (here, NMU, the union). See, e.g., D.E. Ytreberg,
Annotation, Validity and Construction of Statutes Punishing
Commercial Bribery, 1 A.L.R.3d 1350, 1361 (1965) (noting
that in the cases interpreting the "in relation to the affairs"
language, actions that did "not affect the employer's
interest in any way" were not criminal); 11 C.J.S. Bribery
S 3 (1995) (noting that commercial bribery statutes "require
the offer of a bribe to an employee with the intent that he
promote the interests of the person offering the bribe over
those of his employer").
Accordingly, it is not commercial bribery to induce an
agent to accept payment for conduct that does not
adversely affect the interests of the agent's principal. See
People v. Jacobs, 130 N.E.2d 636, 637 (N.Y. 1955)
_________________________________________________________________
2. Although most of the cases have arisen outside of Pennsylvania, the
fact that they have established a certain meaning for the text in question
makes these cases a natural source of interpretive authority. See
Simmler v. City of Philadelphia, 198 A. 1, 3 (Pa. 1938) (looking to the
interpretations of the same language in statutes by other state courts in
order to interpret a vague Pennsylvania statute).
25
(overturning conviction of photographer who paid bursar for
list of names of ocean liner passengers, because there was
no evidence that release of the names of the passengers
was contrary to the interests of the ocean liner company).
Further, it is not commercial bribery to induce an agent to
accept payment in an attempt to influence conduct over
which the agent has no control. See State v. Nadeau, 105
A.2d 194 (R.I. 1954) (overturning commercial bribery
conviction of councilman for planning to accept payment to
attempt to influence selection of city police chief, because
councilman had no control over selection process).
An illustrative example of these principles is People v.
Graf, 24 N.Y.S.2d 683 (App. Div. 1941). In Graf, a New York
appellate court reversed the conviction of a union official
who had accepted expense payments from management.
Management had wanted to expand the territorial scope of
its sign making business beyond New York, and sought to
have Graf travel to union headquarters outside of New York
to encourage the union members outside of New York to
allow the sign company to accept work there. When the
union refused to pay Graf's travel expenses, management
made a secret arrangement with Graf to do so. Graf was
subsequently indicted and convicted of commercial bribery.
The basis of the charge was that Graf had accepted
payments from management that had induced him to act
"in relation to the affairs" of his union.
On appeal, Graf argued that his conduct was not "in
relation to the affairs" of the union. The Appellate Division
agreed, noting inter alia that Graf had done nothing that
could be construed as putting the interests of the sign
company over those of his union. Even though Graf had
secretly accepted payments to do union-related activity,
"the action taken by [Graf] was favorable to the union." Id.
at 687. This was insufficient to constitute commercial
bribery, the court held, because the statute "requires proof
of payment of money to influence an agent in a way
inconsistent with his duties towards his employer." Id.
(emphasis added).
As these cases indicate and our court recently
recognized, the scope of Pennsylvania's commercial bribery
statute is "carefully circumscribed." Brokerage Concepts,
26
140 F.3d at 528. Of course, this does not mean that it is
impossible for payments made in exchange for an agent's
referral to a third party to constitute commercial bribery.
See, e.g., Hastings v. Fidelity Mortgage Decisions Corp., 984
F. Supp. 600, 606-07 (N.D.Ill. 1997) (Civil RICO) (denying
motion to dismiss for failure to state a claim under Illinois
commercial bribery statute for referral payment scheme,
but noting that plaintiffs had survived 12(b)(6) dismissal
only "barely," and noting that "[i]f this set of facts were
presented to us at the summary judgment stage, we would
be inclined to grant judgment for the defendants"); cf.
Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., No.
95-1698, 1995 WL 455969 (E.D.Pa. July 27, 1995) (Civil
RICO) (denying motion to dismiss for failure to state a claim
of corruption of a disinterested person under 18 Pa. St.
Ann. S 4108(b) in a referral scheme involving health care
company). However, it does mean that making payments in
exchange for agents' referrals constitutes commercial
bribery only when the agent has put the interests of the
payor above the contrary interests of the agent's principal.
See Jackson v. Radcliffe, 795 F. Supp. 197, 206 (S.D.Tex.
1992) (Civil RICO) (holding that hospital that referred
clients to a radiologist in exchange for 30% of the
radiologist's fees did not violate commercial bribery statute
by breaching duty of loyalty to patients).
II.
An application of these legal principles to Parise's
payments to Pegan and Rywelski leads ineluctably to the
conclusion that these payments did not constitute
commercial bribery. The record simply fails to support the
view that Pegan and Rywelski acted in any way contrary to
the interests of the union when they referred injured union
members to Parise and Sacks. There is no evidence that
Pegan and Rywelski put Parise's and Sack's interests over
the union's because the union was completely disinterested
in which lawyer an injured seaman retained for a personal
lawsuit.
Under the statute, an employee may not take a bribe if it
will "influence his conduct in relation to the affairs of his
employer or principal." 18 Pa. C.S.A. S 4108(a) (emphasis
27
added). Although an individual seaman obviously has an
interest in which lawyer represents him, an individual
seaman is not the employer or principal of the port agents;
the union as a collective whole is the port agent's employer
or principal. Thus, whether or not a seaman knew that the
port agents were receiving referral fees, the port agents did
not, under this Pennsylvania statute, owe an individual
seaman a duty of loyalty.
I begin with the union's position on its port agents
accepting referral payments. The record reveals that the
entire union leadership knew of the cash payments, and
even encouraged them. Referral payments were considered
rewards for loyal port agents, whose official duties focused
on the much more mundane tasks of accounting and
producing weekly financial reports for higher union
officials. App. 743. As the Government concedes in its brief,
"the [union] historically allowed its officials (usually port
agents) to refer injured members to designated maritime
lawyers in exchange for cash payoffs. Indeed, Parise, Sr.
admitted that as union president he sometimes fielded
member requests for legal referrals, and that he expressly
allowed port agents to refer members to personal injury
attorneys." Appellee's Br. at 8 (emphasis added and
citations omitted). In other words, the payments were part
of the union's standard procedure, endorsed by the union
president himself.
In light of the union's express allowance (if not
encouragement) of referral payments, it is unclear how port
agents could have been acting contrary to the union's
interests in receiving them. See Jacobs, 130 N.E.2d at 637
(holding that an employee could not be guilty of violating
commercial bribery statute because employer knew of
payment and declined to stop it; employer's allowance
reflected fact that payment could not have been contrary to
employer's interest).
Further, although the union had no interest in union
members' selection of a personal injury lawyer, the
testimony of Pegan and Rywelski reveal that they were not
acting contrary to the best interests of the union when they
referred seamen to Parise Jr. and Sacks.3 John Pegan, the
_________________________________________________________________
3. Pegan and Rywelski testified under immunity agreements, as did
Sacks.
28
port agent for Boston, first became acquainted with Sacks
when Pegan became unsatisfied with the lawyer he had
hired three years earlier to represent him in a personal
injury action. App. 663. Acting on the advice of Louis
Parise, Sr., Pegan consulted with Sacks, who advised Pegan
that "it wouldn't be feasible" to switch lawyers at that time
"because of all the investigation work" that Pegan's lawyer
had already performed. App. 665. Pegan believed that
Sacks was a good lawyer: Pegan testified that he "had
heard" that Sacks "got good results in the injury cases."
App. 667. Thus, when the union members in Boston were
"not satisfied with [Boston maritime lawyers] . . . [and]
want[ed] somebody else," App. 667, Pegan would refer the
members to Parise, Jr. and Sacks.
Similarly, there is no evidence that Deborah Rywelski,
who acted as the port agent in Charleston, South Carolina,
was acting contrary to the union's interest when she made
attorney referrals. When a member would come to her and
ask her for a lawyer, she testified, she would give the
member Parise, Jr.'s card. Rywelski would then explain
that Parise, Jr. was an investigator for Sacks, and that
Parise, Jr.'s father was the head of the union. App. 530.
She would tell the union member, "Call him up. If you like
what they've got to say, fine. [I]f you don't, I know some
other attorneys I can send you to." Id. (emphasis added). As
in State v. Nadeau, supra, the port agents had no control
over which lawyer an individual seaman would eventually
choose; they could not themselves commit the union
members to Sacks's representation.
The union's express allowance of the payments,
combined with the testimony of Rywelski and Pegan,
reveals that there is no evidence that Pegan and Rywelski
placed the interests of Sacks and Parise, Jr. ahead of the
interest of the union in accepting payments from Parise, Jr.
Pegan thought that Sacks was a good lawyer, and even
sought Sacks's representation for himself. Rywelski was
very careful to explain that Sacks was only one of several
attorneys to whom she could refer the member, and
directed the member to accept Sacks's representation only
if the member "liked what [Parise, Jr. and Sacks had] to
say." The union leadership not only knew of the referral
29
payments, but encouraged and even directed them. Given
these facts, there is simply no evidence that the union had
an interest in which lawyer a member retained and no
evidence that Rywelski or Pegan acted against the interests
of the union in referring injured union members to Parise,
Jr. and Sacks. Accordingly, Parise, Jr.'s payments to
Rywelski and Pegan for making the referrals could not
constitute commercial bribery.
III.
The majority's understanding of S 4108 is dramatically
different from the one I have presented. As I see it, the
majority's approach has five significant flaws.
1. Failure to follow the accepted interpretation of
commercial bribery.
In the absence of definitive authority in Pennsylvania,4
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4. The few cases in Pennsylvania that interpretS 4108 do not address
the issue at hand. United States v. Johns, 742 F. Supp. 196 (E.D. Pa.
1990), aff'd, 972 F.2d 1333 (3d Cir. 1991) (table), is inapplicable
because
it involved the quintessential example of commercial bribery. In Johns,
an employee, responsible for purchasing supplies and services for his
employer, chose vendors for his employer in exchange for kickbacks from
the vendors. The employer certainly had an interest in which vendors
provided the employer goods and services. In this case, the port agents
gave seamen (who were not the port agents' employers or principals)
advice on who to choose as a personal injury lawyer. The port agents
themselves had no control over who the seamen would choose as a
lawyer, and the port agents' employer, the union, had no control or
interest over the seamen's choice of a lawyer.
Likewise, Pennsylvania v. Bellis, 484 Pa. 486, 399 A.2d 397 (1979),
involved a city councilman's representation of third parties in their
contractual dealings with the city and its agencies. The contracts at
issue in Bellis were between the third party entities who paid the
councilman a fee and the councilman's employer, the city. Thus, the
councilman was taking money to help third parties gain advantages with
his employer. In this case, the port agents did not receive referral fees
from Sacks so that Sacks could represent the port agents' employer, the
union, in its affairs. Rather, individual union members chose Sacks to be
their personal lawyers to assist them in pursuing their personal, not
union, claims.
30
the majority's refusal to acknowledge a century of law from
other jurisdictions interpreting the same or similar
commercial bribery statutes is perplexing. As I have
previously pointed out, some twenty states have
commercial bribery statutes that contain S 4108's exact
phrase. See note 1, supra. Most of the relevant cases
(especially Graf, Jacobs, Nadeau, and Radcliffe) advance an
interpretation of the commercial bribery statute that is very
different from that offered in the majority's opinion, and
that would lead to a contrary result. The majority opinion
seeks to distinguish only Nadeau, see Maj. Op. at 16 n.10,
and declines to discuss the other statutes I have cited and
the other cases. Id. Hence, it neither reconciles those cases
with its approach, nor explains why they were wrongly
decided, if in fact it believes they were.
2. Failure to identify any breach of loyalty owed to the
union as the employer of the port agents.
My second objection is the majority's focus on union
members, who are not the port agents' employers, as
distinct from the union itself, which is the port agents'
employer. It should be remembered that the commercial
bribery statute requires and Bellis emphasizes that an
agent must possess an undivided loyalty to his principal,
that is, his employer. The record reveals that none of the
actions taken by the port agents in any way affected
adversely or were disloyal to the union. Indeed, one would
be hard pressed to argue that the port agent's referral
activities were adverse to the union members, but of
course, that is irrelevant. As I have stated repeatedly, the
port agent must have been disloyal to the union to meet the
statutory standard and be held criminally liable.
One can search far and wide in the majority opinion and
in the record but still cannot ascertain disloyalty or adverse
actions taken by Pegan and Rywelski with respect to the
affairs of the union. Hence, the holding of Bellis, as distinct
from the standard applied in Bellis, is inapposite to Parise's
appeal. Bellis, which is cited by the majority at 14-15, is a
classic example of conflict of interest, falling within the
purview of S 4108's reach. In Bellis, a city councilman
accepted payment from third parties to negotiate on their
behalf with the councilman's employer or principal. This
31
action adversely affected the City of Philadelphia's interest
and affairs. It would have been impossible for Bellis to
negotiate on behalf of his third party clients and against the
City of Philadelphia without breaching his duty of loyalty to
the City.
But Parise is not Bellis because Parise's payments to
Pegan and Rywelski did not involve the union, and it is the
union which is the employer of the two port agents. An
example furnished to me by one of my colleagues highlights
this distinction. He posited:
Suppose an individual visits a hospital to receive an
inoculation required for foreign travel. After receiving
his shot, the patient asks the doctor if she knows
where the patient could get his vision checked before
departing. If the doctor refers the patient to an
optometrist from whom she had received payments in
exchange for referrals, is the doctor guilty of
commercial bribery (and, by extension, a RICO
violation)? Even assuming that making referrals is part
of the hospital's affairs, the doctor has not committed
commercial bribery because she has not acted contrary
to the interest of her employer, the hospital.
Even if the referral is contrary to the patient's interest (as
a referral to an allegedly poor attorney may be contrary to
a union member's interest), the overarching principle upon
which Bellis is predicated requires an agent's "undivided
loyalty to his employer." Thus, extending the bribery statute
to cover payments for "employment-related activity" leaves
it without limit and far exceeds the text of the statute and
the import of Bellis.
3. Invading the function of the legislature.
My third objection is that the majority's interpretive
approach seems to me inconsistent with a proper judicial
role. As the Supreme Court stated in United States v. Bass,
404 U.S. 336, 92 S. Ct. 515 (1971), "legislatures and not
courts should define criminal activity." Id. at 348, 92 S. Ct.
at 523. Courts must be careful not to expand the reach of
criminal statutes by judicial fiat because citizens should
not be sent to "languish[ ] in prison unless the [legislature]
has said they should." Id. (quoting Henry Friendly, Mr.
32
Justice Frankfurter and the Reading of Statutes, in
Benchmarks, 196, 207 (1967)); see also Yates v. United
States, 354 U.S. 298, 310, 77 S. Ct. 1064, 1072 (1957)
(Harlan, J.) (absent legislative guidance, criminal statutes
are to be strictly construed).
The majority recognizes these principles, see Maj. Op. at
12-13, but has not honored them. It has chosen simply to
reject the long-established meaning of the "in relation to the
affairs" language, and has substituted its own, much
broader interpretation. As the majority acknowledges, a few
months ago our Chief Judge stated in a civil RICO case that
commercial bribery in Pennsylvania is "a carefully
circumscribed crime," Brokerage Concepts, 140 F.3d. at 528
(Becker, C.J.), and refused to expand the reach ofS 4108 to
include conduct that would not otherwise be criminal
under the statute. The majority turns the Brokerage
Concepts holding on its head--the case stands for the
proposition that the reach of the criminal bribery statute
should not be expanded, yet the majority cites the case for
the proposition that the criminal bribery statute should not
be limited in accordance with established principles of
criminal statutory interpretation. The Brokerage Concepts
case requires that the courts not expand S 4108 beyond its
current parameters; I submit that a broadening of the
scope of conduct criminalized by S 4108 is best left to the
Pennsylvania legislature.
4. Majority's misapplication of its broad reading of
S 4108 to this case.
My fourth objection relates to the majority's application of
its newly fashioned standard to the facts of this case. The
majority reasons that port agents regularly referred injured
union members to lawyers, such that paying port agents for
those referrals influenced their work-related conduct. Maj.
Op. at 19-21. However, the record is clear that the port
agents almost always received payments in exchange for
their attorney referrals. According to Sacks' testimony,
payments were the standard practice in the union: the
question was not whether the port agents would be paid for
their referrals, but who would pay. App. 160-66. Even the
Government's brief concedes this, stating that the union
"historically allowed its officials (usually port agents) to
33
refer injured members to designated maritime lawyers in
exchange for cash payoffs." Appellee's Br. at 8.
Absent evidence that port agents regularly referred
injured union members to lawyers when they were not
being paid off to do so, and more importantly, absent any
record evidence of adverse effects on the union, 5 I do not
understand how the majority can conclude that making
attorney referrals was part of the union's affairs. Surely, if
it was part of the union "affairs" to refer seamen to lawyers,
then there would be substantial evidence of port agents
referring union members to lawyers when no payments
were involved. The record only supports the view that port
agents regularly engaged in activities of no concern to their
employer and beyond the scope of their employment (which
was focused on accounting and financial reporting). They
simply took advantage of their acquaintances with the
injured seamen and enhanced their income by making
attorney referrals.
5. Overextended reading of the port agents' scope of
employment.
My fifth and final objection has to do with the actual and
not the hypothetical functions of the port agent. The record
discloses that their established duties embraced primarily
accounting and financial reporting. App. 743.6 Any referrals
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5. The majority refers to Mr. Gerasimos as having provided legal referrals
without receiving any payments. Maj. Op. at 19. Gerasimos, however,
characterized this function as an unofficial duty, not an official duty,
of
a port agent. App. 737. The other reference by the majority to a vice-
president who did not take money for attorney referrals obviously was
not a port agent.
6. The union's constitution and by-laws specifically describe the duties
of
a port agent. Kenneth Gerasimos, a union vice-president and former port
agent of NMU, agreed that the constitution and by-laws accurately
reflected the duties of a port agent, which provides:
Branch [port] agent shall be responsible for implementing the
directives of the division chairman and council in the port or
ports
of their jurisdiction. They shall be prepared to account
financially or
otherwise for the activities of their port or ports whenever
demanded
by the division chairman. In any event, they shall prepare and
forward to the district treasurer a weekly financial report showing
in
34
made, whether to doctors, lawyers, therapists, accountants,
barbers, or the like, were undertakings beyond the scope of
their employment. The fact that they were paid for these
activities could be of no moment to the union, their
employer, and indeed could not be deemed evidence of
disloyalty to the union. On the other hand, had the port
agents falsified their financial reporting and accounting or
disclosed to a third party confidential union information in
return for a payment by a third party, that falsification or
disclosure would have been evidence of disloyalty to the
union and would have constituted commercial bribery
because it affected the affairs of the union, their employer.
The port agents could not have been fired or sanctioned,
and indeed they were not, for taking monies for referrals,
but common sense dictates that had they affected their
employer's interest by falsifying or in any way not truthfully
performing their accounting and financial reporting
functions in exchange for third party monies, their jobs
would be at risk, to say nothing of criminal liability being
visited upon them.
IV.
Given Louis Parise, Jr.'s intimate involvement in his
father's schemes over a period of years, he may have
violated several criminal statutes. However, the United
States prosecuted Parise, Jr. on a RICO charge based only
on a tenuous reading of a rarely used state criminal
statute. In the course of affirming Parise, Jr.'s conviction,
the majority has extended the statute just enough to
include his conduct within its grasp. A fair and consistent
interpretation of the statute, however, reveals that Parise,
Jr. has been convicted and sentenced to serve thirty
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detail weekly income and expenses and complying with all other
accounting directions issued by the district treasurer.
The majority relies upon the preamble of the NMU constitution, rather
than this provision specific to port agents, to define the scope of the
port
agents' employment. The preamble describes the union's purpose with
respect to its members, while the provision above cited describes the
port agents' duties with respect to the union.
35
months in prison for conduct that did not constitute the
crime of commercial bribery.
Accordingly, I respectfully dissent.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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