United States v. Parise

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Precedential or Non-Precedential: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

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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

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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

_________________________________________________________________

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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