Petition — United States v. New Mexico

Supreme Court, U.S.

FILED

OCT 26 1977

RODAK, JR., CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

DON B. HARDING,

Petitioner,

versus

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

To the United States Sixth Circuit

Court of Appeals

EDWARD A. KIZER

GOFF, CANALE, KIZER & CRIBBS, P.C.

Suite 2103—Clark Tower

5100 Poplar Avenue

Memphis, Tennessee 38137

HOWARD F. BUTLER

BUTLER, TUNE & ENTREKIN

Twenty-Sixth Floor

First American Center

Nashville, Tennessee 37238

Attorneys for Petitioner

St. Louis Law Printing Co., Inc, 812 Olive Street 63101 314-231-4477

ee.

INDEX

Page

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NE ge ek eee e es pee ce ee ea 2

sa hahah cee eae Ee oe eS ena

ee ee eee ee ee et ee 2

PUI oo. space cesvcteacesecyecesee’ 4

Reasons for Granting the Writ ..........5cccceeees 6

EE ov o-5 oss ehaw ped eebee cee pe ew eens euneal 10

CL cleo. al ewe eae a ees eies Lees 11

SN 6 506 Cans hb eeaeseveavas Vasneeanasees A-1l

| RT eee rene Tee ee er eee A-16

CITATIONS

Cases Cited

United States v. Staszcuk, 517 F. 2d 53 (7th Cir.), cert.

Bs ree 6,7

Robertson v. People of State of California, 328 U.S. 440

ry Sr re rere reer rr rt eT 9,10

Statutes and Regulations

eS pic van bau ness ep ehenecoeues 2, 3, 4, 5, 6

OS So i cstv cUadedads bean bane neue 2

Tennessee Code Annotated, Chapter 13, Section 62-1330 9

ii

Miscellaneous Cited

United States Constitution, Article 1, Section 8, Clause

EE TET LD ee ee ALI Vos RNR 2,4, 6,9, 11

28 Vand. L. Rev. 1348 (1975)

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

se aaa

DON B. HARDING,

Petitioner,

versus

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

To the United States Sixth Circuit

Court of Appeals

The petitioner prays that a Writ of Certiorari issue to review

a judgment of the United States Court of Appeals for the Sixth

Circuit.

I

OPINIONS BELOW

The petitioner was convicted in the United States District

Court, Western District of Tennessee, for violation of 18 U.S.C.

tu

Section 1951. The judgment was affirmed by the United States

Court of Appeals for the Sixth Circuit on September 29, 1977: a

copy of the opinion is appended to the petition in the Appendix

at pp. A-1-A-15 with a copy of the judgment appended at pp.

A-16-A-17.

Il

JURISDICTION

The petition for Writ of Certiorari is filed within thirty days

from the judgment entered herein. Jurisdiction of this Court

is invoked under U.S.C. § 1254 (1).

Ill

QUESTIONS PRESENTED

The sole issue presented by this petition is whether or not the

prosecution and conviction of petitioner by Federal authorities

constitutes, under 18 U.S.C. $ 1951, an unconstitutional ex-

pansion of Federal authority into state and local affairs under

Article 1, Section 8, Clause 3 of the United States Constitution.

IV

STATUTES INVOLVED

18 U.S.C. § 1951

Interference With Commerce

By Threats or Violence

“(a) Whoever in any way or degree obstructs, delays, or

affects commerce or the movement of any article or com-

modity 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 not more than $10,000 or imprisoned not more

than twenty years, or both.”

“(b) As used in this section—

(1) The term ‘robbery’ means the unlawful taking or

obtaining of personal property from the person or in

the presence of another, against his will, by means of

actual or threatened force, or violence, or fear of in-

jury, immediate or future, to his person or property,

or property in his custody or possession, or the person

or property of a relative or member of his family or

of anyone in his company at the time of the taking

or obtaining.”

“(2) The term ‘extortion’ means 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.”

“(3) The term ‘commerce’ means commerce within

the District of Columbia, or any Territory or Posses-

sion of the United States; all commerce between any

point in a State, Territory, Possession, or the District

of Columbia and any point outside thereof; all com-

merce between points within the same State through

any place outside such State; and all other commerce

over which the United States has jurisdiction.”

“(c) This section shall not be construed to repeal, modify

or affect section 17 of Title 15, sections 52, 101-115,

151-166 of Title 29 of sections 151-188 of Title 45.”

United States Constitution

Article 1, $8—Powers of Congress

“(3] To regulate commerce with foreign nations, and

among the several states, and with Indian tribes:”

\

STATEMENT OF THE CASE

On May 17, 1976, petitioner. Don B. Harding of Nashville.

Tennessee, was charged in a two-count Federal indictment. with

a violation of Title 18, United States Code § 1981. Petitioner

at this time and during the period of time as alleged within both

counts of the indictment was Executive Director of the Tennes-

see Real Estate Commission located in Nashville. Tennessee.

Proof at trial evidenced the fact that petitioner, after being

contacted by one Brenda K. Johnson, a resident of Memphis,

Tennessee and an affiliate real estate broker, hereinafter called

Johnson, who was inquiring as to why she had been unable to

pass the Tennessee Real Estate Brokers’ Exam, offered at a

meeting in Memphis to sell copies of the brokers’ exam and

answers to Johnson for the sum of $300.00. At this Meeting,

Johnson was given the brokers’ exam: however. petitioner re-

turned to Nashville without receiving the agreed sum for the

banks were closed on this date due to a legal holiday. Johnson,

thereafter notified the United States Attorney's Office in Mem-

phis, and then was placed in contact with agents of the Federal

Bureau of Investigation who secured Johnson's cooperation in

later Meeting petitioner in Jackson, Tennessee. where the agreed

sum which had been supplied to her by agents of the Federal

Bureau of Investigation passed hands.

The proot further showed that agents of the Federal Bureau

of Investigation approached one Donald Nasca. a resident of

Memphis, Tennessee, hereinafter referred to as Nasca, who had

_—

also, on occasions in the past, failed the brokers’ exam, and

enlisted Nasca’s support by preparing and writing a letter for

his signature on his employer's stationery, which requested in-

formation of petitioner as to how he might better prepare him-

self for the exam. The proof showed that petitioner, in response

to this letter, subsequently arranged to sell a copy of the exam

and answers to Nasca for the sum of $300.00. The transaction

consummating the arrangement between petitioner and Nasco

occurred in Jackson, Tennessee, with the purchase being made

with money supplied by the Federal Bureau of Investigation.

Subsequent to these actions and following the indictment,

the District Court hearing the matter without a jury found peti-

tioner had violated the provisions of 18 U.S.C. § 1951 and re-

turned a guilty verdict on both counts of the indictment. The

Court then sentenced petitioner to six months’ confinement as

to each count with sentences to run concurrently and fined peti-

tioner the sum of $1,000.00 on each count.

It is undisputed that all acts occurring between petitioner,

Johnson, and Nasca took place entirely within the State of Ten-

nessee. The proof introduced at trial by the United States

Government as to interstate activity concerned itself wi

fact that real estate listings are contained in the Memphis

newspapers, which are circulated outside the State and it is not

an uncommon occurrence for real estate agents to sell or arrange

for purchases of real estate either to individuals moving into or

out of the State.

VI

REASONS FOR GRANTING THE WRIT

Petitioner believes that the decision of the Sixth Circuit Court

of Appeals constitutes an unwarranted infringement into matters

of state and local concern outside the scope and breadth of

Article 1, Section 8, Clause 3 of the United States Constitution.

The Sixth Circuit Court of Appeals relies upon the decision

of United States v. Staszcuk, 517 F. 2d 53 (7th Cir.), cert.

denied, 423 U.S. 837 (1975), in applying the “de minimis

rule” in its finding that the actions of petitioner had an impact

upon interstate commerce. In an application of this rule, as

interpreted by Staszcuk, no more than a “realistic probability”

that certain actions may affect interstate commerce need be

shown in order to satisfy requirements of 18 U.S.C. 1951.

The Court concluded from trial testimony that certain ac-

tions which were never shown to involve petitioner, involving

the sale of real estate within the Memphis market had an

affect across state lines; however, there was a complete lack

of proof, nor did the Court of Appeals point to any item evi-

dencing the fact that petitioner's particular actions or any re-

sults flowing therefrom constituted an affect upon interstate

* Commerce.

The Act itself reads as follows:

“(a) Whoever in any way or degree obstructs, delays, or

affects commerce or the movement of any article or com-

modity in commerce . . .” (Emphasis added)

It is petitioner's belief that the Court in supporting the “de

minimis rule” ignores the ordinary meanings of the words ob-

struct, delay and affect, which by their plain meanings imply

that there must be some affect or impact upon interstate com-

fs

po

merce, however, insubstantial, rather than a mere potentiality

as the Court finds here by its application of Stasczuk.

As the dissent in Staszcuk pointed out at page 63:

“That The Hobbs Act which was aimed at a specific evil,

is sufficiently broad to catch in its net other extortionists

whose nefarious activities do in fact affect commerce does

not signify to me an intention on the part of Congress,

even if Congress has the constitutional right which is not

at all clear, to extend the exercise of legislative power to

local activities which have no effect whatsoever on inter-

state commerce. . . .”

By holding that a potential effect on commerce gives the

government prosecutor jurisdiction, the Court of Appeals joins

in an expansion of the power of the Federal system into tra-

ditional areas of local state concern.

Petitioner recognizes the fact that Congress was granted by

the Constitution the power to regulate commerce among the

several states, with regulation of purely intrastate economic ac-

tivity permitted when that activity directly affects interstate

commerce. Further, Courts have frequently sustained Federal

criminal statutes proscribing the misuse of the channels of in-

terstate commerce and protecting the instrumentalities of com-

merce, the judiciary traditionally, however, has disapproved

legislation punishing local criminal conduct that incidentally

affects interstate commerce absent exceptional circumstances.

(See 28 Vand. L. Rev. 1348 (1975) at p. 1350, with foot-

notes. )

As stated in Vand. L. Rev., supra, at p. 1350:

“This judicial reluctance to ex[1351]tend the reach of fed-

eral commerce power to local crime derives from the

American system of federalism which historically has al-

a we

located the power to define and punish crimes to the

States.”

Petitioner asserts that judicial decisions such as the one under

consideration create an unconstitutional infringement into mat-

ters of state and local concern which should be left to the State

of Tennessee, who in the instant matter was never given the

opportunity for action. Petitioner believes that the problems and

dangers associated with continued Federal incursion into matters

which are and should be of local concern, and which should be

left to the consideration and talent of local prosecutors, is best

expressed in the herein cited Vand. L. Rev., which points out the

dangers that arise in the Court’s decision, wherein it is stated at

p. 1359:

“. . . One major weakness in the Court’s analysis was its

underlying assumption that Congress is empowered under

the commerce clause to reach purely local activities that

probably would have affected commerce; such a proposi-

tion remains unsupported by precedent. Furthermore, a

significant omission in the opinion was the Court's failure

to draw the traditional distinction between federal com-

merce power in the economic and criminal realms. While

the Court correctly discerned that Congress intended to ex-

ercise its plenary constitutional power in The Hobbs Acct, it

failed to recognize that full commerce power in a criminal

context historically has never been commensurate with the

wider scope of commerce power in the economic realm . . .

the legislative history of the statute gives no indication that

elimination of local political corruption was specifically

contemplated by the drafters of either The Hobbs Act or the

Anti-Racketeering Act . . . The instant Court, however,

failed to demonstrate that state officials were either un-

willing or unable to prosecute the defendant for extortion

... The Court failed to consider the extent to which local

authorities are better situated to control essentially local

— we

crime, limited federal resources may be drained by federal

enforcement efforts, state authorities may relax prosecution

of robbery and extortion, and the existing federal-state

balance of criminal jurisdiction may be altered. Finally,

the instant decision was impaired by the failure to specify

adequate guidelines for implementing the ‘realistic proba-

bility test’ ”.

The Tennessee Legislature has set forth within Chapter 13

of the Tennessee Code Annotated detailed statutes dealing with

the regulations and control of real estate brokers. The Code

at Section 62-1330 goes so far as to require a non-resident appli-

cant for a broker's license to file an irrevocable consent to allow

legal actions to be commenced against the non-resident in the

proper Court of any county of Tennessee in which the cause of

action may arise. It is thus apparent that the State of Tennessee

considers the sale of real estate within its borders to be of para-

mount local concern and that as far as Section 62-1330 is con-

cerned, the legislature felt the Courts of this State to be the

proper forum to resolve disputes.

The Federal Government has not promulgated legislation or

guidelines applicable to real estate brokers or the sale of real

estate; thus, it is apparent that the licensing of brokers and the

sale of real estate is of paramount state concern.

In Robertson v. People of State of California, 328 US. 440

(1948), this Court dealt with an appeal from a conviction for

violation of certain statutes of the California Insurance Code

requiring the licensing of insurance agents for non-admitted

insurers selling policies of insurance within the State. The ap-

pellant attacked the convictions as a regulation of interstate com-

merce forbidden by the commerce clause of the Constitution,

Article 1, Section 8.

The Court at p. 448 stated:

—

“In the absence of contrary action by Congress, a state may

license agents or brokers for the sale of interstate transpor-

tation in order to prevent fraud. . .”

“That appellant's activities were of a kind which vitally

affect the welfare and security of the local community, the

state and their residents could not be denied. They have

in fact a highly ‘special [449]* interest’ in his localized

pursuit * of this phase of the comprehensive process of

conducting an interstate insurance business. Here, as in

each of the instances cited, appellant's activities called in

question were concentrated in the regulating state, al-

though affecting or constituting interstate commerce . . .”

Significant is the fact that Robertson is a criminal case and

the statutes involved of a regulatory nature. In the matter be-

fore the Court, the State of Tennessee has detailed specific legis-

lation applicable to the sale of real estate with the Congress of

the United States yet to act.

It is petitioner’s assertion that the activities involved herein

are those which vitally affect the welfare and security of the

local community with the determination as to whether or not a

law has been violated being properly left to local authorities.

Vil

CONCLUSION

Petitioner, Don B. Harding, respectfully requests this Court

to reverse the decision of the Sixth Circuit Court of Appeals in

that prosecution and conviction of petitioner by Federal au-

thorities and the affirmance of that conviction by the Sixth Cir-

cuit Court of Appeals evidences an unwarranted and unneces-

sary intrusion into the affairs of the State of Tennessee by rea-

=

son of an unconstitutional expansion of Article 1, Section 8,

Clause 3 of the United States Constitution.

Respectfully submitted,

GOFF, CANALE, KIZER & CRIBBS, P.C.

Attorneys for Petitioner, Don B. Harding

By: EDWARD A. KIZER

Of Counsel:

HOWARD F. BUTLER

Attorney at Law

Twenty-Sixth Floor

First American Center

Nashville, TN 37238

Certificate of Service

I hereby certify that the foregoing Petition for Writ of Certi-

orari to the Sixth Circuit Court of Appeals has been served on

the Solicitor General, Department of Justice, Washington, D.C.

20530, by forwarding a copy of same by U. S. Mail, postage

prepaid, to his office address, this 25 day of October, 1977.

. oe a4

a oe @ eee. & 64 ao 8 6 S28 62 ee ££ ee £88 9°¢

Edward A. Kizer

APPENDIX

APPENDIX A

No. 77-5030

United States Court of Appeals

for the Sixth Circuit

United States of America, 7

Plaintiff-Appellee, | “PP¢2! from the

United States Dis-

> trict Court for the

Western District of

Don B. Harding, T

ennessee.

Defendant-Appellant. |

Decided and Filed September 29, 1977

Before: Phillips, Chief Judge; Engel, Circuit Judge, and Free-

man, Senior District Judge.*

Ralph M. Freeman, Senior District Judge. Appellant Don B.

Harding, urging this Court to re-examine the scope of the

statute under which he was convicted, challenges the applica-

tion of 18 U.S.C. § 1951, commonly known as the Hobbs Act,

to his allegedly crimina! activity.

Harding was the executive director of the Ten.essee Real

Estate Commission, one function of which is to issue licenses

to real estate brokers and affiliate brokers. Harding, as execu-

* Honorable Ralph M. Freeman, Senior Judge, United States

District Court for the Eastern District of Michigan sitting by desig-

nation.

ye

tive director, was the office manager of the Commission office

located in Nashville, Tennessee. He was not a member of

the Commission itself and therefore had no authority or discre-

tion to issue licenses.

In January, 1976, Harding received a letter from Brenda

Kaye Johnson, a licensed affiliate broker who had just failed

in her third attempt to pass the Tennessee real estate brokers’

licensing examination. Ms. Johnson wrote to Harding because

his name appeared on the letter which had notified her of her

failure, and she wanted to discuss the matter with him. Hard-

ing’s secretary telephoned Ms. Johnson and arranged for a

meeting between Harding and Ms. Johnson at the Hyatt Re-

gency Hotel in Memphis in mid-February, 1976. At that

meeting, Harding suggested that he could assist Ms. Johnson

in passing her brokers’ exam by selling her a copy of the

questions and answers for $300. Although Ms. Johnson agreed

to that arrangement, she reported the incident to the FBI,

who then enlisted her cooperation in investigating Harding's

activities. The tape recorded a conversation during which

Harding arranged another meeting with Ms. Johnson, and also

tape recorded the meeting at which Ms. Johnson paid him

$300 supplied by the FBI in exchange for the brokers’ exam.

In furtherance of the investigation into Harding’s miscon-

duct, the FBI contacted Donald Nasca, who had also twice

failed the Tennessee real estate brokers’ examination. Nasca

cooperated with the FBI in sending Harding a letter similar

to Ms. Johnson's requesting assistance in passing the brokers’

examination. Harding then called Nasca and offered to sell

him a copy of the exam. In Apmil. 1976, Nasca met with

Harding in Jackson, Tennessee, and gave him money provided

by the FBI to purchase the exam; he also tape recorded the en-

tire transaction.

The sole question on appeal in this case is whether Hard-

ing’s conduct is cognizable as extortion under the terms of

— *

the Hobbs Act, 18 U.S.C. § 1951. The statute provides as

follows:

(a) 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 at-

tempts or conspires to do so, or commits or threatens

physical violence to any person or property in further-

ance of a plan or purpose to do anything in violation

of this section shall be fined not more than $10,000 or im-

prisoned not more than twenty years, or both.

(b) As used in this section—

(2) The term “extortion” means 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.

(3) The term “commerce” means commerce within

the District of Columbia, or any Territory or Posses-

sion of the United States; all commerce between

any point in a State, Territory, Possession, or the

District of Columbia and any point outside thereof:

all commerce between points within the same State

through any place outside such State; and all other

commerce over which the United States has juris-

diction.

The defendant raises two issues concerning the scope of the

Hobbs Act. First, defendant claims that the offending transac-

tions were not shown to have the requisite effect on interstate

commerce. Secondly, defendant suggests that his activity does

not constitute the obtaining of property “under color of official

right” because he in fact had no power to issue a broker's license

and the other parties involved did not believe he had such power.

As part of this contention defendant suggests that his conduct

was never intended to b> encompassed within the scope of the

Hobbs Act because it involves common law bribery rather than

extortion as defined in the statute.

The statute itself provides in subsection (a) that “[w]hoever

in any way or degree obstructs, delays. or affects commerce. .

by robbery or extortion . . . shall be [guilty of a felony].” (em-

phasis added). Many courts have considered whether the show-

ing of a minimal effect on interstate commerce will satisfy the re-

quirements of the Act, and all have agreed that it will. In United

States v. Staszcuk, 517 F.2d 53 (7th Cir.), cert. denied 423

U.S. 837 (1975), the Seventh Circuit held en banc that federal

jurisdiction under the Hobbs Act was satisfied by showing that

at the time of the offense there was a realistic probability that

the robbery or extortion would have affected interstate com-

merce. This was an expansion of their earlier holding in United

States v. DeMet, 486 F.2d 816, 821-22 (7th Cir. 1973), cert.

denied 416 U.S. 967 (1974); and United States v. Braasch,

505 F.2d 139, 147 (7th Cir. 1974), cert. denied 421 U.S. 910

(1975), that “[b]ecause Congress has seen fit to exercise its full

power under the commerce clause, extortionate conduct having

an arguably de minimus effect on commerce may nevertheless

be punished.” The Third Circuit, in United States v. Mazzei,

521 F.2d 639, 642-43 (3rd Cir.), cert. denied 423 U.S. 1014

(1975) held that the depletion of assets of a firm which con-

ducts interstate activities creates an effect on commerce sufficient

to satisfy the Hobbs Act despite the local character of the par-

ticular extortionate transaction. The de minimus rule was also

applied in United States v. Hathaway, 534 F.2d 386 (1st Cir.),

cert. denied 429 U.S. 819 (1976), 3249 (1976): and United

States v. Brown, 540 F.2d 364 (8th Cir. 1976).

This Court agrees with the de minimus rule applied by the

other Circuits. The Act itself suggests that no more than a

— =

minimal effect on interstate commerce need be shown, and the

case law is entirely consistent with that language. Moreover,

the Court is satisfied that the Government proofs on the issue of

intestate commerce meet the requirements of the Hobbs Act.

John Palmer, a real estate broker from Memphis, testified that

Tennessee real estate transactions frequently involve purchasers

from other states, that real estate listings in Memphis news-

papers are widely circulated in Arkansas and Mississippi, and

that Tennessee brokers are regulated by the federal government

with respect to various housing and loan programs.

Mr. Nasca, who purchased a copy of the exam from Mr.

Harding, testified that extensive advertising of Tennessee real

estate listing was directed to out-of-state customers, that brokers

often made use of a service named Inter-Community Relocation

Service, which involves real estate companies in every city of the

country, and that fifty percent of the business done by his firm

involved people being transferred in and out of Memphis.

Under the facts as described above, the Government clearly

established that the extortionate transaction affected interstate

commerce. Defendant's argument that the de minimus rule

creates an unwarranted incursion into the sphere of state crim-

inal law ignores the language and intent of the statute itself.

The jurisdictional requirement concerning interstate commerce

is satisfied by the facts of this case.

Defendant's contention that his conduct did not constitute

extortion as defined by the Act has also been heavily litigated.

While this Court agrees with the other courts which have con-

sidered the issue and decided that conduct similar to that of

Mr. Harding's is cognizable under the Hobbs Act, a few addi-

tional words of explanation seem in order.

The statute defines extortion as “the obtaining of property

from another, with his consent, induced by wrongful use of

— "ne

actual or threatened force, violence or fear, or under color of

official right.” An examination of the legislative history of the

Hobbs Act helps to add content to that definition. The pre-

cursor of the Hobbs Act was the Anti-Racketeering Act of

1934.' That Act did not use the word “extortion” to define

the proscribed conduct, but rather used the descriptive termi-

nology of the common law offense.*

While the Act was passed without formal debate, the House

and Senate Reports* both indicate the intent of the legislation.

The Senate Report stated:

The accompanying proposed statute is designed to avoid

many of the embarrassing limitations in the wording and

interpretation of the Sherman Act, and to extend Federal

jurisdiction over all restraints of any commerce within the

scope of the Federal Government's constitutional powers.

! Act of June 18, 1934, ch. 569, 48 Stat. 979.

- The 1934 Act stated, in pertinent part:

Sec. 2. Any person who, in connection with or in relation to

any act in any way or in any degree affecting trade or com-

merce or any article or commodity moving or about to move in

trade or commerce—

(a) Obtains or attempts to obtain, by the use of or

attempt to use the threat to use force, violence, or coer-

cion, the payment of money or other valuable considera-

tions, or the purchase or rental of property or protective

services, not including, however, the payment of wages by

a bona-fide employer to a bona-fide employee; or

_ (b) Obtains the property of another, with his consent,

induced by wrongful use of force or fear, or under color

of official right; or

_(c) Commits or threatens to commit an act of physical

violence or physical injury to a person or property in fur-

eee of a plan or purpose to violate sections (a) or

oe

(d) .. . shall . . . be guilty of a felony .

* H. Rep. No. 1833 and S.Rep. No. 532, 73d Cong., 2d Sess.

(1934).

—_ >. ~

Such restraints if accompanied by extortion, violence, co-

ercion, or intimidation, are made felonies, whether the

restraints are in form of conspiracies or not. The pro-

posed statute also makes it a felony to do any act “affect-

ing” or “burdening” such trade or commerce if accom-

panied by extortion, violence, coercion, or intimidation.

The provisions of the proposed statute are limited so

as not to include the usual activities of capitalistic com-

binations, bona fide labor unions, and ordinary business

practices which are not accompanied by manifestations

of racketeering.

The House Report, which suggested some changes from

the original Senate bill, contained a letter from Homer Cum-

mings, Attorney General, to the chairman of the House Ju-

diciary Committee. The letter explained the proposed changes

as follows:

We believe that the bill in this form will accomplish the

purposes of such legislation and at the same time meet the

objections made to the original bill.

The original bill was susceptible to the objection that

it might include within its prohibition the legitimate and

bona fide activities of employers and employees. As the

purpose of the legislation is not to interfere with such

legitimate activities but rather to set up severe penalties

for racketeering by violence, extortion, or coercion, which

affects interstate commerce, it seems advisable to defi-

nitely exclude such legitimate activities.

As the typical racketeering activities affecting interstate

commerce are those in connection with price fixing and

economic extortion directed by professional gangsters, we

have insterted subparagraphs (a) and (b), making such

activities unlawful when accompanied by violence and

affecting interstate commerce.

aie I ee

The Sherman Antitrust Act is too restricted in its terms

and the penalties thereunder are too moderate to make

that act an effective weapon in prosecuting racketeers. The

antiracketeering bill would extend Federal jurisdiction in

those cases where racketeering acts are related to inter-

state commerce and are therefore of concern to the Nation

as a whole.

The final version of the Anti-Racketeering Act of 1934 was in

fact substantially similar to the version proposed by the House.

Apparently the 1934 Act was not clear enough in its wording

and intent, however, because the Supreme Court in United

States v. Teamsters Local 807, 315 U.S. 521 (1942) narrowly

construed the statute to exclude certain types of labor union

activity. The immediate response of Congress was to amend

the statute to the form currently known as the Hobbs Act.*

In the debates surrounding the passage of the Hobbs Act

a number of New York Congressmen expressed opposition to

the Act because they considered it to be anti-labor.* The Act's

proponents sought to allay the fears of their colleagues by

pointing out that the Act was comparable to the existing law

of New York. Congressman Hobbs stated:

[There is nothing clearer than the definitions of robbery

and extortion in this bill. They have been construed by

the courts not once, but a thousand times. The definitions

in this bill are copied from the New York Code substan-

tially.®

* Act of July 3, 1946, ch. 437, 60 Stat. 420. Actually, the Act

was slightly amended again in 1948.

* 91 Cong. Rec. 11901-02 (1945) (remarks of Congressman

Cellar).

® Id. 11900.

—*

In fact, the Hobbs Act definition of extortion is similar, al-

though not identical to, New York law as it existed at that time.’

A point of critical importance, however, is that many states

other than New York had extortion statutes which used the

phrase “under color of official right.”* Moreover, while it is

true that the debates focused on the New York statute as a

point of reference, nothing in those debates leads this Court

to conclude that Congress intended to adopt New York de-

cisional law as controlling on the federal courts, particularly

since the anomalous New York definition of extortion was not

articulated until 1960, some 14 years after the passage of the

Hobbs Act.

The leading New York case on extortion is People v. Dio-

guardi, 8 N.Y.2d 260, 168 N.E.2d 683, 203 N.Y.S.2d 870

(1960), which held that bribery and extortion are mutually

exclusive and that while bribery involves the voluntary giving

of something of value to influence the performance of official

duty, extortion involves a taking accompanied by duress. The

Dioguardi distinction was picked up by several federal cases,

although none of those cases involved the definitional phrase

“under color of official right.” See United States v. Kennedy,

291 F.2d 457 (2d Cir. 1961); United States v. Kubacki, 237

F.Supp. 638 (E.D. Pa. 1965). Rather, those cases suggested

that the two prongs of the Hobbs Act definition—‘! -e] of

actual or threatened force, or violence or fear” or “under color

* The New York statute provides:

Extortion is the obtaining of property from another, or the

obtaining the property of a corporation from an officer, agent

or employee thereof, with his consent, induced by a wrongful

use of force or fear, or under color of official right.

Penal Law of 1909, § 850, as amended, Laws of 1917, ch. 518,

reprinted in N.Y. Penal Law, appendix § 850 (McKinney 1967).

* See remarks of Congressman Robison of Kentucky, 91 Cong.

Rec. at 11906, 11910 (1945); and remarks of Congressman Springer

of Indiana, id.

— A-10 —

of official right’—are meant to be read as interrelated, i.e.,

that extortion requires an act done under color of official right

which is induced by force, violence or fear. The upshot was

that cases following the New York interpretation of extortion

focused on the victim’s state of mind to determine whether

an offense committed under color of office was bribery or

extortion.

The common law understanding of extortion, however, and

its evolution into contemporary statutes and decisions does

not require this distinction between extortion and bribery. At

common law, extortion was a crime which could only be

committed by a public official. Corpus Juris Secundum states:

[Jn the common law the term “extortion” has acquired

a technical meaning, and designates a crime committed

by an officer of the law who, under cover or color of

his office, unlawfully and corruptly takes any money or

thing of value that is not due to him, or more than is due,

or before it is due. In a more enlarged sense, it signifies

any Oppression under color or pretense of right®

In defining the phrase “color of office,” C.J.S. goes on to

explain:

{The} phrase [is] generally defined as meaning a claim or

assumption of right to do an act by virtue of an office,

made by a person who is legally destitute of any such

me; . .

The term is a technical expression, and usually implies

bad faith, corruption, breach of duty, or an evil or cor-

rupt motive.'®

A number of extortion statutes purport to do no more than

codify the common law. New Jersey, for example, has inter-

* 35 Corpus Juris Secundum 355-56.

1” 15 Corpus Juris Secundum 352-53.

aw A111 —

preted its statute to have adopted the common law meaning

of extortion. State v. Matule, 54 N.J. Super. 326, 148 A.2d

848 (1959). Other statutes, however, add an additional basis

for finding extortion by including any obtaining of property

from another with his consent through a wrongful use of force

or fear, thus including acts not done under color of official right.

Michigan, California and Oklahoma all have extortion statutes

which define this additional basis for the offense. People v.

Goodman, 159 Cal. App. 2d 54, 323 P.2d 536 (1958): People

v. Ritholz, 359 Mich. 539, 103 N.W.2d 481 (1960); Yoder

v. State, 493 P.2d 1141 (Okla. 1972).

Whether or not their particular statute defines a basis for

extortion which does not involve the color of official right

doctrine, a number of states have held that extortion based on

that doctrine covers a wide range of activity, including what is

commonly understood as bribery, and that extortion and bribery

are not mutually exclusive. The New Jersey courts have defined

extortion as “the wrongful taking of money by a public officer,

whether accompanied by ‘threats’ or not.” State v. Begyn, 34

N.J. 35, 167 A.2d 161 (1961). See also State v. Newton, 328

So.2d 110 (La. 1976); United States v. Hyde, 448 F.2d 815

(Sth Cir. 1971), cert. denied 404 U.S. 1058 (1972); United

States v. Hathaway, 534 F.2d 386 (lst Cir.), cert. denied 429

U.S. 819 (1976). The decisions of Illinois, Kansas and Massa-

chusetts also support such a reading of the law, in that cases

decided in those jurisdictions have used the terms “bribery” and

“extortion” interchangeably. See People v. Clemons, 46 Ill.2d

481, 187 N.E.2d 260 (1962); State v. Jordan, 220 Kan. 110,

551 P.2d 773 (1976); Commonwealth v. DeVincent, 358 Mass.

592, 266 N.E.2d 314 (1971). Thus extortion defined as the

wrongful obtaining of property under color of official right need

not include the element of force or duress, and could include

such activity as is commonly considered to be bribery.

The fact that the Hobbs Act is drafted in the disjunctive

supports an interpretation of the Act which covers the wrongful

7 eo

— A-12 —

obtaining of property under color of official right whether or not

accompanied by threats, force or duress. The other Circuits

which have considered this issue have all accepted such an inter-

pretation. In United States v. Braasch, 505 F.2d 139, 151 (7th

Cir. 1974), cert. denied 421 U.S. 910 (1975), the court re-

jected the extortion, bribery distinction and held that the Hobbs

Act had been violated by police officers who had set up a scheme

of protection money payoffs from bars and other establishments

in their district. The court stated:

The use of office to obtain payments is the crux of the

Statutory requirement of “under color of official right”,

and appellants’ wrongful use of official power was ob-

viously the basis of this extortion. See United States v.

Staszcuk, 502 F.2d 875 (7th Cir. 1974). It matters not

whether the public official induces payments to perform

his duties . . . or not to perform acts unrelated to his

duties which can only be undertaken because of his official

position. So long as the motivation for the payment focuses

on the recipient's office, the conduct falls within the ambit

of 18 U.S.C. § 1951. That such conduct may also consti-

tute “classic bribery” is not a relevant consideration.?

* As appellants themselves point out, “the modern trend of

the federal courts is to hold that bribery and extortion as used in

the Hobbs Act are not mutually exclusive.” United States v.

i 472 F.2d 272, 278 (2d Cir. 1973) cert. den., 411 US.

In United States v. Mazzei, 521 F.2d 639, 644 (3d Cir.),

cert. denied 423 U.S. 1014 (1975), the Third Circuit en banc

distinguished its own precedent in United States v. Addonizio,

451 F.2d 49 (3d Cir.), cert. denied 495 U.S. 936 (1972), reh.

denied 405 U.S. 1048 (1972) and held that “[a]ny element of

coercion that may be required to establish extortion under the

Hobbs Act is supplied by the misuse of the defendant's official

power.” The First Circuit referred to the evolution of the

common law crime of extortion in applying the Hobbs Act

— A-13 —

to a scheme involving payoffs to the executive director of a

Massachusetts redevelopment authority. United States v.

Hathaway, 534 F.2d 386, 393 “(Ist Cir.), cert. denied 429

U.S. 819 (1976). The court first explained why the disjunctive

language of the statute permits conviction upon a finding that

property was unlawfully obtained either under color of official

right or through force or duress. The court stated:

[W]e find no reason to part company with the other cir-

cuits which have considered this question, all of which

have read the statute as did the court below. [citations

omitted] The statute is clearly phrased in the disjunctive

. Further, a disjunctive reading comports with the

historical development of the crime of extortion. The

“under color of official right” language reflects the com-

mon law definition of extortion, which could be com-

mitted only by a public official’s corrupt taking of a fee

under color of his office and did not require proof of

threat, fear or duress. [citations omitted] The misuse of

public office is said to supply the element of coercion.

{citations omitted] Threats, fear and duress became ex-

press elements only when the crime was later broadened

to include actions by private individuals, who had no

official power to wield over their victims.

The court went on to note that bribery and extortion as used

in the Hobbs Act are not mutually exclusive. The Tenth Circuit

made similar findings in United States v. Hall, 536 F.2d 313

(10th Cir., cert. denied 429 U.S. 919 (1976).

This Court is satisfied that the disjunctive language of the

statute, the legislative history, and the common law under-

standing of extortion support the interpretation of the other

courts which have considered this matter. Under such an inter-

pretation, the Hobbs Act would clearly include the conduct of

which Harding was convicted. This Court's decision in United

a fpi§ —

States v. Yokely, 542 F.2d 300 (6th Cir. 1976) does not re-

quire a different result. In that case, this Court held that the

armed robbery of a K-Mart Department Store was not within

the scope of the Hobbs Act because it did not constitute “rack-

eteering”. The concept of racketeering, however, has long been

understood to include the obtaining of property under color of

official right, as is clear from the focus of the Congressional de-

bates.'! Black's Law Dictionary defines racketeeing as “extortion

or coercion” in certain contexts and includes by implication the

common law background of extortion. Thus the rconcepts of

racketeering, extortion, and unlawful obtaining of property under

color of official right have large areas of overlap which are

applicable through the Hobbs Act to conduct such as that of the

defendant in this case.

Finally, the Court rejects the defendant's contention that he

cannot be convicted for obtaining property under color of office

because he in fact had no power to grant real estate brokers’

licenses and the persons to whom he sold the exam did not be-

lieve that he had such power. The law is well settled that an

official need not have the de jure power to effectuate the end

for which he accepts or induces payment in order to be con-

victed under the Hobbs Act. In United States v. Mazzei, 521

F.2d 639 (3d Cir.), cert. denied 423 U.S. 1014 (1975), the

court stated:

It is clear, of course, that defendant had no statutory

power as a state senator to control the granting of leases

by state executive agencies. But in order to find that defend-

ant acted “under color of official right,” the jury need not

have concluded that he had actual de jure power to secure

grant of the lease so long as it found that Kelly held, and de-

fendant exploited, a reasonable belief that the state system

SO operated thai the power in fact of defendant's office in-

1! See 91 Cong. Rec. 11840-910 (1945).

Seer

— A-15 —

cluded the effective authority to determine recipients of the

state leases here involved. [citations omitted] Such an ex-

ploitation involves the wrongful use of official power that

has long been punished at common law as extortion “under

color of public office.”

See also United States v. Meyers, 52> F.2d 1033 (7th Cir. ), cert.

denied 429 U.S. 894 (1976); and United States v. Hall, 536

F.2d 313 (10th Cir.), cert. denied 429 U.S. 919 (1976).

Defendant's argument that he had no control over the grant-

ing of brokers’ licenses merely shows that he had no direct

authority over such matters. Through his position as executive

director of the real estate commission, however, he had access

to the examination, which was the key to obtaining the brokers’

license. Selling the exam was but a step removed from selling

the license, and it is an artless sophistry to argue that the persons

who paid Harding did not believe that they were in effect pur-

chasing a broker’s license.

Harding's activity with respect to the selling of licensing exam-

inations was a clear abuse of his office within the proscription of

the Hobbs Act. As the court observed in United States v.

Braasch, 505 F.2d 139, | 51 (7th Cir. 1974), cert. denied 421

U.S. 910 (1975): “So long as the motivation for the payment

focuses on the recipient's office, the conduct falls within the

ambit of 18 U.S.C. § 1951.” Thus defendant's contention that

his activity was outside the scope of the statute is without merit.

As it has been interpreted by modern courts, the Hobbs Act has

become an effective force in the prosecution of venal public

officials. This Court sees no reason to differ from the numerous

other courts which have found conduct similar to that of Hard-

ing’s to be a federal offense.

For the reasons herein stated the judgment of the district court

is affirmed.

— iho

APPENDIX B

United States Court of Appeals

for the Sixth Circuit

No. 77-5030

United States of America,

Plaintiff-Appellee,

Don B. Harding,

Defendant-Appellant.

Before: Phillips, Chief Judge; Engel, Circuit Judge, and Free-

man, Senior District Judge.

Judgment

APPEAL from the United States District Court for the West-

ern District of Tennessee.

THIS CAUSE came on to be heard on the record from the

United States District Court for the Western District of Ten-

nessee and was argued by counsel.

ON CONSIDERATION WHEREOF, It is now here ordered

and adjudged by this Court that the judgment of the said District

Court in this cause be and the same is hereby affirmed.

No costs taxed.

Entered by Order of the Court

JOHN P. HEHMAN

Clerk

Issued as Mandate:

COSTS:

Filing fee

Printing

Total

—_ =) eo

A True Copy.

Attest:

Deputy Clerk