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United States v. Burhoe

United States Court of Appeals, First Circuit

September 8, 2017

UNITED STATES OF AMERICA, Appellee,
v.
JOSEPH BURHOE, a/k/a Jo Jo, and JOHN PERRY, Defendants, Appellants.

         APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Denise Jefferson Casper, U.S. District Judge]

          Miriam Conrad, Chief, Federal Public Defender, with whom Judith H. Mizner, Assistant Federal Public Defender, was on brief, for appellant Burhoe.

          Michael R. Schneider, with whom Jeffrey G. Harris and Good Schneider Cormier were on brief, for appellant Perry.

          Ross B. Goldman, Criminal Division, Appellate Section, U.S. Department of Justice, with whom Leslie R. Caldwell, Assistant Attorney General, Sung-Hee Suh, Deputy Assistant Attorney General, Carmen M. Ortiz, United States Attorney, Randall E. Kromm, Assistant United States Attorney, Laura Jean Kaplan, Assistant United States Attorney, and Susan G. Winkler, Assistant United States Attorney, were on brief, for appellee.

          Before Torruella, Kayatta, and Barron, Circuit Judges.

         INDEX

         INDEX ....................................................... 2-3

         INTRODUCTION ................................................ 4

         I. BACKGROUND ............................................... 5

         II. HOBBS ACT OVERVIEW ...................................... 7

         A. The Hobbs Act and Labor Law ......................... 7

         B. "Wrongful" .......................................... 9

         C."Property" ......................................... 13

         III. EXTORTION OF NONUNION COMPANIES ....................... 15

         A. Background ......................................... 15

         1. Four Pints .................................... 15

         2. Brigham and Women's Hospital .................. 17

         3. U.S. Green Building Council & Wolfgang Puck Catering ...................................... 17

         4. Great Bridal and Westin Waterfront Hotel ...... 19

         5. Massachusetts General Hospital ................ 19

         B. Background ......................................... 44

         1. Edward Flaherty ............................... 45

         2. James Lee ..................................... 47

         3. Robert Wellman ................................ 48

         4. 2009 CBA vote ................................. 49

         B. Analysis ........................................... 50

         1. LMRDA Rights .................................. 50

         2. Wages and Benefits ............................ 53

a. Property ................................. 53
b. Consent .................................. 59
c. Threats .................................. 61

         V. RACKETEERING AND REMAINING CONSPIRACY COUNTS ............ 66

         VI. PROHIBITION AGAINST CERTAIN PERSONS HOLDING OFFICE ..... 69

         VII. CONCLUSION ............................................ 75

          TORRUELLA, Circuit Judge.

         This case involves an attempt by the federal government to use the Hobbs Act to police the activities of members of a labor union. Joseph Burhoe and John Perry, who are union members, challenge the sufficiency of the evidence of their convictions for, inter alia, extortion under the Hobbs Act, as well as the jury instructions with respect to that offense. The government attempted to prove that the defendants extorted property from nonunion companies when they threatened to take certain actions, including picketing, if those companies did not give union members jobs. The government further charged that the defendants extorted wages, benefits, and rights to democratic participation within the union from their fellow union members.

         We sustain the convictions of both defendants on count 29 under 29 U.S.C. § 504(a). We vacate the conviction for extortion of a nonunion company on count 4 and remand for a new trial because the jury instructions allowed the jury to convict upon a finding that the work performed was merely unwanted. On all other counts, we reverse the convictions.

         I. BACKGROUND[1]

         This case is factually complex. We therefore will initially set out only the most basic relevant facts and leave to later sections a more detailed exposition.

         Teamsters Local 82 ("Local 82" or "the Union") was a division of the International Brotherhood of Teamsters ("Teamsters") located in South Boston. Its members worked at trade shows and other events in Boston. This work included bringing in materials and setting up events ("load-in") and dismantling and removing materials from events ("load-out"). Most of the work occurred at the Hynes Convention Center and the Boston Convention and Exhibition Center, both of which require the use of union labor. Three local companies dominated the trade show industry: Freeman Decorating Services, Champion Exposition Services, and Greyhound Exposition Services. The Union negotiated Collective Bargaining Agreements ("CBAs") with those companies. The Union also sought work at locations that did not have CBAs with the Union, including area hotels. Local 82 had a unit called the "strike unit" that would pursue jobs with employers currently using nonunion labor.

         The indictment at issue here covers a period between 2007 and 2011. The Union had approximately 600 members during this time period. During this time the head of Local 82 was John Perry. Joseph Burhoe became a member of Local 82 in 1987, but was inactive for many years until he resumed active participation in 2007. He held no official position within the Union but was seen by many union members to be Perry's right-hand man. Perry and Burhoe were charged with extorting nonunion employers and other union members in a thirty-count indictment.[2] They were also both charged with violating a prohibition against persons with certain criminal convictions serving in particular capacities within the Union. They were jointly tried in a trial that lasted over six weeks. Burhoe and Perry were each found guilty of racketeering, racketeering conspiracy, conspiracy to extort and extortion of nonunion companies and union members, and serving (or allowing a person to serve, respectively) in a prohibited union capacity.

         II. HOBBS ACT OVERVIEW

The Hobbs Act provides in pertinent part:
Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both.

18 U.S.C. § 1951(a). This same Act defines "extortion" as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right." Id. § 1951(b)(2).

         A. The Hobbs Act and Labor Law

         The Hobbs Act explicitly states that its provisions do not "repeal, modify or affect" certain labor law provisions, including the National Labor Relations Act ("NLRA"). 18 U.S.C. § 1951(c); see also 29 U.S.C. §§ 151-166. The NLRA "is a comprehensive code passed by Congress to regulate labor relations in activities affecting interstate and foreign commerce." Tamburello v. Comm-Tract Corp., 67 F.3d 973, 976 (1st Cir. 1995) (quoting Nash v. Fla. Indus. Comm'n, 389 U.S. 235, 238 (1967)). It "reflects congressional intent to create a uniform, nationwide body of labor law interpreted by a centralized expert agency --the National Labor Relations Board (NLRB). Accordingly, the NLRA vests the NLRB with primary jurisdiction over unfair labor practices." Id.

         The Supreme Court has held that "[w]hen an activity is arguably subject to § 7 or § 8 of the [NLRA], the States as well as the federal courts must defer to the exclusive competence of the National Labor Relations Board if the danger of state interference in national policy is to be averted." Id. (quoting San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 245 (1959)). This is known as Garmon preemption and is generally taken to mean that when there is a question of how § 7 or § 8 of the NLRA should be interpreted, the NLRB's interpretations of that Act control. See Chaulk Servs., Inc. v. Mass. Comm'n Against Discrimination, 70 F.3d 1361, 1364-65 (1st Cir. 1995).

         Of central concern, under this doctrine, is the desire "to shield the system from conflicting regulation of conduct." Id. at 1365.[3] In United States v. Enmons, 410 U.S. 396 (1973), the Supreme Court cited to Garmon in narrowly construing the Hobbs Act so as to avoid creating a conflict with federal labor law. Id. at 411.

         B. "Wrongful"

         We are of the view that the resolution of issues inherent in the overlap between the Hobbs Act and labor law (and its limits) is guided, at least in part, by Enmons. There, violence had "erupted" during the course of a lawful strike aimed at compelling an employer to accept certain provisions providing for higher wages in a CBA that was under negotiation. United States v. Enmons, 335 F.Supp. 641, 643 (E.D. La. 1971). While the violence was undoubtedly unlawful, the question before the Court was whether that violence qualified as Hobbs Act extortion when the end sought (higher wages through agreement to certain terms in a CBA) by means of an otherwise lawful strike was a legitimate labor objective under the labor union laws.

         The Supreme Court stated that the term "wrongful, " as included in the Hobbs Act's definition of extortion, "has meaning in the Act only if it limits the statute's coverage to those instances where the obtaining of the property would itself be 'wrongful' because the alleged extortionist has no lawful claim to that property." Enmons, 410 U.S. at 400. Instances that the Court cited included "where union officials threatened force or violence against an employer in order to obtain personal payoffs, " and "where unions used the proscribed means to exact 'wage' payments from employers in return for 'imposed, unwanted, superfluous and fictitious services' of workers." Id. (internal citations omitted). Enmons states that the Hobbs Act does not apply, however, to

the use of violence to achieve legitimate union objectives, such as higher wages in return for genuine services which the employer seeks. In that type of case, there has been no "wrongful" taking of the employer's property; he has paid for the services he bargained for, and the workers receive the wages to which they are entitled in compensation for their services.

Id.

         Thus, Enmons arguably could be read to say that what constitutes a "wrongful" taking by a labor union or its members, such that it would constitute "extortion" under the Hobbs Act, necessarily depends on whether the ends are "legitimate union objectives" as defined in the labor laws. And thus, under Enmons, conduct arguably is not "wrongful" under the Hobbs Act when taken in pursuit of a legitimate labor objective, even if "force, violence, or fear" is used to carry it out. 18 U.S.C. § 1951(b)(2).

         In the wake of Enmons, however, a number of courts, including our own, have questioned whether Enmons's analysis of the importance of the legitimacy of the end sought to the "wrongful" inquiry should be applicable beyond cases in which violence occurs during a lawful strike to obtain a collective bargaining agreement. See United States v. Porcaro, 648 F.2d 753, 759-60 (1st Cir. 1981) (distinguishing Enmons in part on the ground that it is "a labor case dealing with the unique problem of strike violence"); see also United States v. Debs, 949 F.2d 199, 201 (6th Cir. 1991) (noting that "Enmons has not been extended beyond its own facts" and declining to hold that "because some illegality in union activity is justifiable every illegality . . . must also be within the orbit of Enmons"); United States v. Jones, 766 F.2d 994, 1002 (6th Cir. 1985) (reserving the question of whether Enmons applies "to the use of violence outside of the collective bargaining context and in pursuit of goals other than higher wages"); United States v. Cerilli, 603 F.2d 415, 419 (3d Cir. 1979) ("The Court's reasoning [in Enmons] was obviously and explicitly tied to the labor context and more specifically to the strike context. Any application of Enmons to cases outside of that context must be done with caution.").

         Setting aside the issue of "wrongful" ends on which Enmons itself turned, there is also another principle in play --namely, that the means used to obtain the end must also be "wrongful." United States v. Kattar, 840 F.2d 118, 123 (1st Cir. 1988). The Hobbs Act references the means used to obtain property through the phrase "actual or threatened force, violence, or fear." 18 U.S.C. § 1951(b)(2). The meaning of that phrase has been developed from a broad range of subsequent Hobbs Act cases and is not unique to situations involving labor unions. The threat may be explicit or implied. Sánchez v. Triple-S Mgmt. Corp., 492 F.3d 1, 13 (1st Cir. 2007); United States v. Rivera-Rangel, 396 F.3d 476, 484 n.7 (1st Cir. 2005). With respect to the use of fear, "[w]hat is required is evidence that the defendant knowingly and willfully created or instilled fear, or used or exploited existing fear with the specific purpose of inducing another to part with property." United States v. Coppola, 671 F.3d 220, 241 (2d Cir. 2012) (citations omitted).

         With respect to whether such means are "wrongful, " we have made clear that the use of actual or threatened violence or force is "inherently wrongful, " United States v. Sturm, 870 F.2d 769, 773 (1st Cir. 1989), as is the use of fear of physical harm. Kattar, 840 F.2d at 123. Fear of economic loss, however, is also a type of fear. Rivera-Rangel, 396 F.3d at 483. But because fear of economic harm is a part of many legitimate business transactions, see Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 503, 509 (3d Cir. 1998), the use of economic fear is not necessarily "wrongful" for Hobbs Act purposes. Kattar, 840 F.2d at 123. The use of economic fear is rendered wrongful under the Hobbs Act, however, "when employed to achieve a wrongful purpose." Id. (quoting United States v. Clemente, 640 F.2d 1069, 1077 (2d Cir. 1981)). Thus, we have held that "the use of legitimate economic threats" to procure property is "wrongful" under the Hobbs Act "only if the defendant has no claim of right to that property" and knew as much. Sturm, 870 F.2d at 773-74.

         C. "Property"

         Also at issue in this case is how the Hobbs Act defines property. The indictment in this case alleges that each defendant extorted fellow union members of (1) wages and benefits and (2) rights to participate in union affairs.

         The Supreme Court has refined the property element of the Hobbs Act by focusing on the word "obtain, " emphasizing that extortion under the Act requires not only that a victim be deprived of his or her property, but also that the perpetrator acquire it. Scheidler v. Nat'l Org. for Women, Inc., 537 U.S. 393, 403-404 (2003). Thus, in order to commit Hobbs Act extortion an individual "must 'obtain' property from another party." Id. at 404. Scheidler involved allegations that a group of anti-abortion activists committed various acts in attempts to "shut down" abortion clinics. Id. at 398. There was no dispute that this group "interfered with, disrupted, and in some instances completely deprived respondents of their ability to exercise their property rights" in various ways including via criminal acts. Id. at 404. However, the Supreme Court held that these acts were not extortion because even when the activists succeeded at "shutting down" an abortion clinic, they "did not 'obtain' [the clinic's] property" and they "neither pursued nor received 'something of value from' respondents that they could exercise, transfer, or sell." Id. at 405 (quoting United States v. Nardello, 393 U.S. 286, 290 (1969)).

         The Court found that if the requirement that the property be obtained were eliminated, the result would be to collapse the distinctions between extortion and the "separate crime of coercion." Id. Coercion involves "the use of force or threat of force to restrict another's freedom of action" and, at the time the Hobbs Act was passed by Congress, was seen "as a separate, and lesser, offense than extortion." Id. The fact that when Congress drafted the Hobbs Act it omitted coercion provides strong evidence that the lesser offense (coercion) was not to be included within the meaning of the greater offense (extortion) in the Hobbs Act. Id. at 406.

         The Court further refined this definition in Sekhar v. United States, holding that obtaining property "requires that the victim 'part with' his property and that the extortionist 'gain possession' of it." 133 S.Ct. 2720, 2725 (2013) (quoting Scheidler, 537 U.S. at 403 n.8) (internal citation omitted). The key, according to Sekhar, is that "[t]he property extorted must therefore be transferable -- that is, capable of passing from one person to another." Id. at 2725.

         III. EXTORTION OF NONUNION COMPANIES

         A. Background

         Burhoe and Perry each faced numerous counts of alleged extortion of nonunion companies. In each instance the indictment ...


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