# Petition — Capanegro v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_1470%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1978 - **Citation:** 439 U.S. 928 ## Text Ea ~ Supreme Coust, U. 7” PILED { i Tale 8 1078 IN THE | l | MICHAEL RODAK, JR., CLERK Supreme Court of the United States October Term, 1978 No. 78-193 MICHAEL J. CAPANEGRO, Petitioner, —against— UNITED STATES OF AMERICA, Respondent. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED’ STATES COURT OF APPEALS FOR THE SECOND CIRCUIT HENRY PUTZEL, III Attorney for Petitioner Michael J. Capanegro 140 West 62nd Street New York, New York 11201 Telephone (212) 956-7144 TABLE OF CONTENTS PAGE EE 1 EES SE 2 Constitutional Provision Involved ................ 2 Ne kc ccc c cece 2 EEE IE 2 ES SESS TES 3 Reasons for Granting the Writ .................. 5 Ns ck ce ccc ee ces 11 APPENDIX: 1. Opinion of the Court of Appeals .......... la 2. Judgment of the Court of Appeals ........ 22a 3. Order Denying Petition for Rehearing ..... 23a 4. Order Denying Petition for Rehearing en ES 24a 5. Special Findings of the District Court ..... 25a CITATIONS Cases: * Avis Rent a Car System, Inc. v. United States, 503 cw ccc c cece ees 7 Connally v. General Construction Co., 269 U.S. 385 EE ES 9 il PAGE Hynes v. Mayor of Oradell, 425 U.S. 610 (1976) .. 9 Lanzetta v. New Jersey, 306 U.S. 461 (19389) ..... 6,9 Loque Vv. United States, 412 U.S. 521 (1978) ...... 7 Morisette v. United States, 342 U.S. 246 (1952) ... 5,6 NLRB vy. United Insurance Co., 390 U.S. 254 (1968) ° 7 Radio City Music Hall Corp. v. United States, 135 ome Fae Ce Gels BOGE 6 5s ka Cee eencecvet cs 7 United States v. Culbert, — U.S. —, 98 S.Ct. 1112 SE Lid ua cdla swab bed Sos bamawadevemskaws 9 United States v. DiBrizzi, 393 F.2d 642 (2d Cir. BEE Si enecc bus seyesad eg eethy ela de bahenee 6 United States v. Giordano, 489 F.2d 327 (2d Cir. i: ME EPO EEE Ter re Te pos eres hee ee 8 United States v. Harrelson, 223 F. Supp. 869 (E.D. OOP occ kavbinsicashatedscecensteaaws 7,10 United States v. Harriss, 347 U.S. 612 (1954) .... 6 United States v. Hart, 417 F. Supp. 1314 (D.C. Iowa, BTOD lids Maweub ng hr ebewaeadecuwbe te Poa 6 BOOED in kos5, 0 6k0nd Sb enon assess heniberiests 10 United States v. Santiago, 528 F.2d 1180 (2d Cir. 1976), cert. denied, 425 U.S. 972 (1976) ..... 10 United States v. Silverman, 430 F.2d 106 (2d Cir. 1970), modified per curiam on other grounds, 439 F.2d 1198, cert. denied, 402 U.S. 958 (1971) 7, 8,10 United States v. Vitale, 489 F.2d 1367 (6th Cir. enya |i er rOneD PeNeeN ge 10 ane Lente sedi > eT Be we Sw ew Sees wh bag ea Sart err x oe ee ce ili Constitutional Provisions: . U.S. Constitution, Fifth Amendment .......... Statutes: Title 29, United States Code, Section 50i(¢).. 2, 3, 5, 6, 7, 8,9, 10, 11 Title 28, United States Code, Section 1254(1) ... Title 18, United States Code, Sections 654-66 .... Other: | S. Rep. No. 187, 86th Cong., Ist Sess. (1959) . H.R. Rep. No. 741, 86th Cong., Ist Sess. (1959) 9 - 8 6 6 IN THE Supreme Court of the United States October Term, 1978 MICHAEL J. CAPANEGRO, Petitioner, —against— UNITED STATES OF AMERICA, Respondent. TT Si PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Michael J. Capanegro respectfully petitions for a writ of certiorari to review a judgment of the United States Court of Appeals for the Second Circuit, entered on May 15, 1978, affirming his conviction in the United States District Court for the Southern District of New York for violations of Title 29, United States Code, Section 501(c). Opinion Below Appellant has raised several other arguments—insufficiency of the evi- dence, inconsistent verdict—which are discussed in the text. In addition, wo do not overlook appellant’s elaimn that the settlement of a civil suit. brought by members of the Union against him and based upon the same factual issues here litigated, constitutes a collateral estoppel against this criminal prosecution brought by the United States. The law of course is contrary, Ashe v. Swenson, 397 U.S. 436 (1970) ; United States y. Tramunti, 500 F.2d 1334, 1346-49 (2d Cir.), cert. denied, 419 U.S. 1079 (1974). eee En aw | nail a sR avs | +] : et ~ oi 7a Opinion of The Court of Appeals vices necessary or proper for the protection of the interests and property of the client whenever and to the extent required by such client... . Carnivale or other Union officers either referred mem- bers to Capanegro for legal assistance or advised him that a member had been involved in some incident related to the strike. Appellant’s fees were not paid by Union mem- bers referred to him but by his employer, the Union. In the only legal papers submitted by Capanegro to courts in his representation of the strikers, affidavits for adjourn- ment, he described himself as “Chief Counsel to the Com- munications Workers of America, Local 1101.” Appel- lant’s relationship with the Union was not casual or hap- penstance. His affidavit indicates that he was at the Local’s office “daily and working on union business.” He spoke at Union gatherings. For the year 1972, 76% of his gross professional income was derived from the Union. In sum, Capanegro by express agreement and in fact was employed by the Union. We have no difficulty therefore in holding that Capanegro was employed by the Union within the meaning of § 501(c).’ ; Appellant’s argument to the contrary is that Capanegro was not an “employee” of the Union (i.e., he was not on the -———--- 3 The Government urges that if Capanegro was not employed directly by the Union he was at lonst “indirectly” so employed within the lan- guage of § 501(¢), This argument rests upon the assumption that the words “directly or indirectly” in the statute modify the verb employed. Thore is some indication, however, in our prior opinion in United States v. Robinson, 512 F.2d 491, 494 (2d Cir. 1975), that those words modify embezzlo, steal, abstract or convert. For its interpretation, the Govern- ment relies upon a report of the Department of Labor commenting on a predecessor bill to that which eventually became § 501(c). That report indicated that the Department construed the section to apply to persons having “any direct or indirect functions in connection with the money or other property of a labor organization....” 104 Cong. Rec. 1327 (Jan. 30, 1958). We need take no position on this point since in our view Capanegro was in any event directly employed by the Union. 8a Opinion of The. Court of Appeals Union payroll and no usual empluyee deductions were taken from his fees by the Union). Rather, he argues; as attorney he was an “independent contractor” and hence not within §501(c). We agree that Capanegro as retained counsel of the Union was not its “employee” in the common law sense of a servant as distinguished from an indepen- dent contractor. But the statute we ar» construing does not limits its coverage to officers or employees of a labor organization. It specifically provides for the criminal li- ability of “[a]ny person” who loots the funds of a union “by which he is employed” (emphasis supplied). A labor union like any other employer may employ independent contractors as weli as servants or employees. See, e.g., A.L.L, Restatement of Agency §220 (2)(b) (1933); Black’s Law Dictionary 911 (4th ed. 1968) (independent contractor); Harper The Basis of Immunity of an Em- ployer of an Independent Contractor, 19 Ind. L.J. 494 (1935); Morris, The Torts of an Independent Contractor, 29 Til. L. Rev. 339, 341 (1934); Smith, Scope of the Busi- ness: The Borrowed Servant Problem, 38 Mich. L. Rev. 1222, 1246 (1940); Steffen, Independent Contractor and the Good Life, 2 U. of Chi. L. Rev. 501, 502-08 (1935). ITowever, the common law distinction between these classifications is irrelevant to the question in this case, The issue here is not the vicarious tort liability foisted upon a master by virtue of the unauthorized activity of his ser- vant. Such liability is based on familiar respondeat su- perior concepts which lead to exculpation where the person employed performs the work without being subject to the control of his employer. The lawyer, like the physician, is a professional and if he is guilty of malpractice it may well be that under common law doctrine his employer will not be responsible in damages to one injured as the result of the lawyer’s tortious activity. Cf. Birnbaum, Physicians 9a Opinion of The Court of Appeals Counterattack: Liability of Lawyers for Instituting Un- justified Medical Malpractice Actions, 45 Fordham L. Rev. 1003, 1026 n.126 (1977). Here we are construing a statute enacted by Congress to protect union funds against pil- ferage by any person it employed. Capanegro was given such employment by the Union as its Chief Counsel. This employment provided him with the opportunity, which he clearly scized, to take illicit advantage of Union funds. Whether he was an independent contractor, agent, or ser- vant, was not the concern of Congress. This is clear from the language which Congress chose in § 501(c). The failure of Congress to use the word “employee” in © 901(¢), and its provision instead for criminal liability for any person employed by the labor organization, is of some significance. The definition of employee in 29 U.S.C. 4152 (3)* expressly exeludes independent contractors. The ex- clusion was added by the Taft-Hartley Act in 1947, 61 Stat, 137, in response to N.L.R.B. v. Hearst Publications, Inc., 322 U.S. 111 (1944), H. Rep. No. 245 on H.R. 3020, 80th Cong., Ist Sess., 18 (1947), to clarify the congressional in- tent that the term “employee” be understood in its common 4 29 U.S.C. § 152(3) states: The term “employee” shall include any employee, and shall ndt be limited to the employees of a particular employer, unless this sub- chapter explicitly states otherwise, and shall include any individual whose work has ceased as a consequence of, or in connection with, nny current labor dispute or heenuse of any unfair Inbor practice, and who has net obtained any other regular and substantially equivalent employment, but shall not include any individual em- ployed ax an agricultural laborer, or in the domestic service of any family or person at his home, or any individual employed by his parent or spouse, or any individual having the statua of an inde. pendent contractor, ar any individual employed as a supervisor, or anu individual employed by an employer aubject to the Roilway Labor Act, as amended from time to time or by any other person who is not an employer as herein defined. (Fmphasis supplied.) 10a Opinion of The Court of Appeals law sense as a salaried person working under direct super- vision. In determining the group with which an employer must bargain on issues such as wages, hours and conditions of employment, 29 U.S.C. § 158(d), it makes sense to ex- clude independent contractors who depend not upon wages but a fee and who themselves decide how the work will be done. See H. Rep. No. 245, supra, at 18. On the other hand, the purpose of the Labor-Management Reporting and Dis- closure Act of 1959, of which § 501(¢c) is a part, is not at all served by excluding from the coverage of that section a trusted legal advisor who is able to gain access to the union funds which the Act was designed to shelter. Thus, in setting forth in §501(a) the fiduciary obliga- tions of officers of a union, the statute specifies “officers, agents, shop stewards, and other representatives of a labor organization.” Again in §501(b) the same listing is pro- vided. However, in §501(c) the statute does not refer back to “such” persons but provides for criminal liability for “any person” employed by a union. Section 501(c) does not use the term “employee” which is defined in 29 U.S.C. §402(f), but instead refers to any “person” broadly de- fined in 29 U.S.C, § 402(d). In our view, the choice of language here is sufficiently flexible to include Capanegro’s employment as Chief Coun- sel to the Union. We have heretofore affirmed the convic- tions under § 501(c) of defendants who held such relatively menial positions as Patrolman and Master-at-Arms of a labor organization. United States v. Robinson, 512 F.2d 491, 492 (2d Cir. 1975). It would indeed be incongruous if the Union’s Chief Counsel, who had a close relationship with the Union hierarchy and obvious access to the till, 5 Whether Capanegro would he liable in a civil suit for damages under §501(b) as a representative of the Union is not before us. Va. ; Opinion of The Court :of Appeals were to escape the liabilities imposed by § 501(c) because he was technically not on the Union payroll but was em- ployed as its counsel. The clear intent of Congress, in view of the purpose of the legislation as well as the language of the statute, mandates the conclusion that Capanegro was a person employed by the Union and thus was within the coverage of § 501(c).* 6 In his dissenting opinion Judge Friendly cites cases where the courts, when faced with congressional use of the term employee or its “equiv- alent,” have construed that language in the common law sense excluding independent contractors. However, in all of these cases the distinction served the statutory purpose. If the issue is whether the employer is responsible for the tort of his employee, Strangi v. United Stules, 21! F.2d 305 (Sth Cir. 1954) (Federal Tort Claims Act), or whether an employee is to be compensated when injured during the course of his employment, Baker v. Tezas ¢ Pacific Ry. Co., 359 U.S. 227 (1950) (FELA); Cimorelli v. New York Cent. B. Co., 148 F.2d 575 (6th Cir. 1945) (FELA); or whether the pay, working conditions or nnemploy- ment tax payments of the employee are safeguarded, Rutherford Ford Corp. v. McComb, 331 U.S. 722 (1947) (FLSA); United States v. New England Coal & Coke Co., 318 F.2d 138 (1st Cir. 1963) (Walsh-Healey Act); LR.C. §§ 3121(d)(2), 3306(i), then the degree of control exer- cised by the employer over the work performed and the job environ- ment sensibly determines the employer's responsibility. The distinction between independent contractor and employee in those contexts is mean- ingful. But these cases have no relevance when the purpose of the statute is not to enforce some obligation upon the employer but rather to pro- tect the funds of the union treasury from raids by those whose employ- ment in a position of trust gives them access to those funds. In such eases it should make no difference whether the person employed is an employee or an independent contractor. The employer's degree of con- trol over the thief is simply not relevant. As Mr. Justice Cardozo observed, “Our concern is to define the meaning [of the statutory term] for the purpose of a purticalor statute which must be read in light of the mischief te he corrected and the end to be attnined.” Warner v. Goltra, 208 US. 165, 15R (1034), The purpose of the statute here was to dixcournge corruption hy those employed in a position of trust by the union, 20 U.S.C, ¢ 401. Tad Capanegro been “house counsel” then the dissent apparently would con- eede that he would be criminally liable under § 501(¢). The faet that he had his own outside office and employed his own secretary provides no reason at all to exempt him from that liability. A distinction made on this basis frustrates the congressional purpose by permitting the pro- hibited mischief to be easily achieved. Capanegro enjoyed a position of 12a Opinion of The Court of Appeals Appellant also contends that it was the congressional intent to limit the reach of § 501(c) to insiders. This nar- row target class, it is suggested, includes only “corrupt officers and employees, persons who—like any potential embezzlers—had inherent access to the funds and assets of a labor organization and authority to misappropriate them.” The appellant argues that he had no authority since he had to submit his bills for approval to the Union. Aside from the dubious factual postulate that Capanegro was not an insider in a rather choice position to loot the Union’s funds, the legal argument is devoid of merit. Sec- tion 501(c) is not limited to the common law crime of em- bezzlement, which involves a misappropriation by one en- trusted with funds. Indeed, the section, by its very terms, includes other forms of theft, stealing and converting. United States v. Silverman, 430 F.2d 106, 127 (2d Cir.), modified per curiam on other grounds, 439 F.2d 1198, cert. denied, 402 U.S. 953 (1971) (Friendly, J.). United States v. Sullivan, 498 F.2d 146 (1st Cir.), cert. denied, 419 U.S. 993 (1974) and Colella v. United States, 360 F.2d 792 (1st Cir.), cert. denied 385 U.S. 829 (1966), relied upon by ap- pellant, are also contrary to his position. In Sullivan the court commented: Though common law embezzlement “carries with it the concept of breach of fiduciary relationship,” ... neither “stealing,” “abstraction,” nor “conversion” do. We see no reason grounded in policy or logic to extend to these terms a requirement of breach of fiduciary responsi- bility. 498 F.2d at 149 n.4. Neither do we. trust in his employment as an attorney which he egregiously abused and he should not be permitted to escape by mechanical recourse to a hoary common law rubric which is totally inappropriate here. 13a Opinion of The Court of Appeals The fact that Capanegro’s bills had to be passed upon by the Union is not at all pertinent. As Judge Friendly observed in Stlverman, “the ‘union’ presumably would have objected if it had been able to speak freely.” 430 F.2d at 127. In United States v. Dibriezi, 393 F.2d 642 (2d Cir. 1968) which also involved a § 501(c) violation, we held that even if payments were authorized by the union, it did not absolve a union official charged with conversion of union funds. “When one sends the union a voucher known to be an improper one, and then receives payment of the voucher, the crime is completed.” Id. at 645. Appellant reminds us that in construing a criminal stat- ute we should not enlarge its reach beyond the language employed by the statute. Morissette v. United States, 342 U.S. 246, 263 (1952). We agree. But the statute, in our view, clearly provides that a person employed by the Union under the circumstances we have set forth is unambigu- ously within its coverage. The Supreme Court has recently noted, It is true that “ambiguity concerning the ambit of criminal statutes should be resolved in favor of len- ity .....” But here the Congress has conveyed its purpose clearly, and we decline to manufacture ambi- guity where none exists. United States v. Culvert, 4261 (March 28, 1978). Judgment affirmed. U.S. ——, 46 U.S.L.W. 4259, = == a lrienpuy, Circuit Judge, dissenting: ‘Judge Griesa was abundantly justified in concluding that Capanegro had been a party to a plan for embezzling, ab- 14a Opinion of “The Court of Appeals stracting and converting the funds of Local 1101 of the Communication Workers of America. If the Government had procured an indictment charging that Carnivale had violated 29 U.S.C. §501(c) and that Capanegro had aided and abetted him, I would have no hesitation in affirming a conviction. However, the Government chose instead to charge Capanegro as principal and thereby raise the ques- tion whether § 501(c) includes a person whose relationship to the union is solely that of an independent contractor. With respect I cannot agree with the majority’s conclu- sion that if does if his relationship with the union is close enough. Although the majority concedes that “Capanegro as re- tained counsel of the Union was not its ‘employee’ in the common law sense of a servant as distinguished from an independent contractor,” it is worth emphasizing how well- advised the concession is. Neither the retainer agreement quoted ante at pages 3042-43, nor Capanegro’s references to himself as the Union’s chief counsel, nor any other aspect of the relationship between Capanegro and the Union re- moves him from the common law description of an indepen- dent contractor as a person “who contracts with another to do something for him but who is not controlled by the other nor subject to the other’s right of control with respect to his physical conduct in the performance of the undertak- ing.” Restatement Second of Agency §2(2) (1958); see Logue v. United States, 412 U.S. 521, 527 (1973); Radio City Muste Hall Corp. v. United States, 135 F.2d 715 (2 Cir, 1948) (I. Hand, J.). In Avis Rent a Car System, Inc. v. United States, 503 F.2d 423, 429 (2 Cir. 1974), we laid out some of the other applicable criteria: whether the per- son rendering service has a substantial investment in his own tools or equipment; whether he undertakes a substan- tial cost, as by employing his own laborers; whether he 15a Opinion of The Court of Appeals has an opportunity to profit depending on his management skill; whether the relationship between the person render- ing the service and the person receiving it is permanent; and whether the person rendering the service works in the ordinary course of the recipient’s business rather than in an ancillary capacity. See also NLRB v. United Insurance Co., 390 U.S. 254, 259 (1968); Restatement Second of Agency § 220. The evidence here was that Capanegro main- tained his own office and employed a secretary, and that he possessed a “special skill” upon which his opportunity to profit depended. It is of no moment that services like ‘apanegro’s could equally well have been rendered by. house counsel. That was not the relationship here. As I understand it, the majority would agree that Cap- anegro would not fall within §501(c) if that section had been worded “Any officer or employee who embezzles, steals” ete. “assets of a labor organization of which he is an officer or employee... .” Its conclusion that “the statute we are construing does not limit its coverage to officers or employees of a labor organization,” rests primarily on the basis that the draftsman applied the prohibition to “any person” who embezzles or steals from a labor organization “by which he is employed.” This method of drafting, it is argued, evidences an intention of Cong:ess to avoid use of the term “employee”, with its attendant common law con- notations, in favor of a bronder usage of the term “em- ploy” which would inelude all persons hired by a union as independent contractors-—lawyers, accountants, physicians, architects, builders of union headquarters, ete.—provided their relationship with the union is sufficiently intimate. Tn the absence of any legislative history to support such a conclusion,’ this is attributing altogether too much sig- ] Such legislative history as exists is to the contrary. Congress did not enact proposed versions of the LMRDA that would have exposed to 16a Opinion of The Court of Appeals nificance to what on its face appears to be only a drafts- man’s choice. When Congress meant to go beyond officers and employees in imposing criminal liability for the mis- application of funds, it has not left the matter to am- biguous inference. See 18 U.S.C. §§ 656 and 657 (“Who- ever, being an officer, director, agent or employee of, or connected in any capacity with”. . .). The conclusion that Congress would have given a much clearer signal if it had intended §501(c) to include in- dependent contractors is fortified by history with respect to related statutes. When Congress has used the term “employee” or its equivalent, the courts have generally confined it to its common law meaning; in those instances where the courts have gone further, Congress has cor- rected them. Examples of the attitude first described are Cimorelli v. New York Central R.R., 148 F.2d 575, 577-78 (6 Cir. 1945), (provision of the Federal Employers’ Li- ability Act, 45 U.S.C. 451, that “[e]very common carrier by railroad ... shall be liable in damages to any person suffering injury while he is employed by such carrier,” described “the conventional relationship of employer and employee” and excluded independent contractors) ; see also Baker v. Texas & Pacific Ry. Co., 359 U.S. 227 (1959) (Federal Employers’ Liability Act); Rutherford Food Cor}. v. McComb, 331 U.S. 722 (1947) (Fair Labor Stan- dards Act); United States v. New England Coal and Coke Co., 318 F.2d 138, 143-44 (1 Cir. 1963) (phrase “all per- sons employed by the contractor,” in the Walsh-Healy Act criminal liability anyone “engaged directly or indirectly in or connected in any capacity with (i) the administration, management, or control of money or other property of a labor organization . . .,” S. 748, 86th Cong., 1st Sess. § 412(a) (1959); H.R. 4473, 86th Cong., Ist Sess. § 215 (1959), or broader yet, “any person” whether or not employed by 2 labor organization, S. 1137, 86th Cong., Ist Sess. § 407 (1959); IT.R. 7265, 86th Cong., lat Sess, § 306 (1959), : j § fate ee eae A i i OE DO on A ee , Ler RRs LR JF 17a Opinion:of The Court:of Appeals ». 41 U.S.C. § 35(b) was not intended to embrace persons who were independent contractors); Strangi v. United States, 211 F.2d 305 (5 Cir. 1954) (Federal Tort Claims Act). An example of the latter is the 1948 amendments to the Social Security Act and the relevant sections of the In- ternal Revenue Code which overruled the expansive con- struction given in United States v. Silk, 331 U.S. 704 (1947) and Bartels v. Birmingham, 332 U.S. 126 (1947), and tied the definition of “employee” to common law standards, 62 Stat. 438, now codified at I.R.C. §§ 3121(d)(2), 3306(i) ; see 42 U.S.C. § 410(j), in what the Senate Report termed a “reassertion of Congressional intent regarding the ap- plication of the act.” S, Rep. No. 1255, 80th Cong., 2d Sess. 7 (1948). See United States v. W. M. Webb, Inc., 397 U.S. 179, 182-90 (1970). An example still more per- tinent to this case was the overruling of NLRB v. Hearst Publications, Inc., 322 U.S. 111, 129 (1944). There the Court, , arsuing a line of argument of which the majority’s opinion is quite reminiscent, stated that the barebones definition of employee in §2(3) of the NLRA left “no doubt that its applicability is to be determined broadly, in doubtful situations by underlying economic facts rather than technically and exclusively by previously established legal classifications,” and upheld the NLRB’s determina- tion that newsboys distributing papers on a commission basis and subject to various supervisory controls were the papers’ employees.--a view which surely made sense in the statutory context. Nonetheless, in the Taft-ITartley Act Congress amended § 2(3) expressly to exclude independent contractors. The louse report which accompanied the statute used unusually strong terms with respect to the Hearst decision. An “employee”, according to all standard dictio- naries, according to the law as the courts have stated 18a Opinion of The Court of Appeals it, and according to the understanding of almost every- one, with the exception of members of the National Labor Relations Board, means someone who works for another for hire. But in the case of National Labor Relations Board v. Hearst Publications, Inc. (322 U.S. 111 (1944) ), the Board expanded the definition of the term “employee” beyond anything that it ever had included before, and the Supreme Court, relying upon the theoretic “expertness” of the Board, upheld the Board. In this case the Board held independent mer- chants who bought newspapers from the publisher and hired people to sell them to be “employees”. The people the merchants hired to sell the papers were “employees” of the merchants, but holding the mer- chants to be “employees” of the publisher of the papers was most far reaching. It must be presumed that when Congress passed the Labor Act, it intended words it used to have the meanings that they had when Con- gress passed the act, not new meanings that, 9 years later, the Labor Board might think up. In the law, there always has been a difference, and a big differ- ence, between “employees” and “independent contrac- tors”. “Employees” work for wages or salaries under direct supervision. “Independent contractors” under- take to do a job for a price, decide how the work will be done, usually hire others to do the work, and de- pend for their income not upon wages, but upon the difference between what they pay for goods, mate- rials, and labor and what they receive for the end result, that is, upon profits, It is inconecivable that Congress, when it passed the act, authorized the Board to give to every word in the act whatever meaning it wished, On the contrary, Congress intended then, and it intends now, that the Board give to words not far- ‘. LA ¥ as Be be @ 19a Opinion of The Court of Appeals. fetched meanings but ordinary meanings. To correct what the Board has done, and what the Supreme Court, putting misplaced reliance upon the Board’s expert- ness, has approved, the bill excludes “independent contractors” from the definition of “employee”. H. R. Rep. No. 245, 80th Cong., 1st Sess. 18 (1947). While Congress did not repeat the express exclusion of inde- pendent contractors in the definition of “employee” in § 402(f) the LMRDA,? this was doubtless because it saw no need to reiterate what it had so plainly said. Indeed, the majority does not contend that Capanegro was an “omployee” as defined in § 402(f). What is ultimately dispositive is that § 501(¢) is a crim- inal provision and thus implicates Justice Jackson’s warn- ing in Morissctte v. United States, 342 U.S. 246, 263 (1952) (footnote omitted) : The spirit of the doctrine which denies to the fed- eral judiciary power to create crimes forthrightly ad- monishes that we should not enlarge the reach of enacted crimes by constituting them from anything less than the incriminating components contemplated by the words used in the statute. And where Con- gress borrows terms of art in which are accumulated the legal tradition and meaning of centuries of prac- tice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken and the S This ronda: (f) “Kmployee” means any individual employed by an employer, nnd includes any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unfair labor practice or because of exclusion or expulsion from a labor organization in any manner or for any reason inconsistent with the requirements of this chapter. 20a Opinion of The Court of Appeals meaning its use will convey to the judicial mind un- less otherwise instructed. In such case, absence of contrary direction may be taken as satisfaction with widely accepted definitions, not as a departure from them. Cf. United States v. Ferrara, 451 F.2d 91, 95 (2 Cir. 1971), cert. denied, 405 U.S. 1032 (1972); and United States v. Ottley, 509 F.2d 667, 672 & n.7 (2 Cir. 1975) (applying Morissette in interpreting criminal provisions of LMRDA). The wisdom of this statement is illustrated by the consequences of ignoring it. Instead of being able to refer to a well-developed body of law which provides a basis on which criminal liability can be determined, trial judges and juries must now minutely scrutinize the rela- tionships of independent contractors to unions to determine if they are close enough for the statute to apply. The ma- jority supplies no real clue as to when “employee” in §501(c) is to be taken in its common law context and when it is not. I am baffled how the majority can conclude that a criminal statute requiring such an inquiry to deter- mine whether a person is subject to it could pass muster under such cases as Langzetta v. New Jersey, 306 U.S, 451, 453 (1939) and United States v. Harriss, 347 U.S. 612, 617 (1954). At the very least such an interpretation of § 501(c) raises constitutional doubts which a court should avoid. Furthermore, the majority seems to have involved itself in the anomaly of giving the criminal provision, § 501(c), a brouder sweep than the civil ones, §§ 501(a) and (b), since Capanegro could be brought under these only by characterizing him as a “representative” of a labor organ- ization——a tour de force in which the majority is as yet unwilling to engage. See footnote 5 to majority opinion. The understandable desire that Capanegro should not es- 2la Opinion of The Court of Appeals cape criminal punishment should not lead us to extend the statute beyond what Congress directed. I would reverse the conviction with instructions to dis- miss the indictment on the ground that Capanegro was not a person employed by a union as required by § 501(e). 22a Judgment of the Court of Appeals UNITED STATES COURT OF APPEALS ' SECOND CIRCUIT At a Stated Term of the United States Court of Appeals, in and for the Second Circuit, held at the United States Court House, in the City of New York, on the 15th day of May, one thousand nine hundred and seventy-eight. Present: HONORABLE HENRY J. FRIENDLY HONORABLE WILLIAM H. MULLIGAN HONORABLE THOMAS J. MESKILL Circuit Judges. 77-1425 —EE OE —— UNITED STATES OF AMERICA, Plaintiff-Appellee, — | MICHAEL J. CAPANEGRO, Defendant-A ppellant. er > Appeal from the United States District Court for the Southern District of New York. This cause came on to be heard on the transcript of record from the United States District Court for the Southern District of New York, and was argued by counsel. ON CONSIDERATION WHEREOF, it is now hereby ordered, adjudged, and decreed that the judgment of said District Court be and it hereby is affirmed in accordance with the opinion of this court. A. DANIEL FUSARO Clerk By ARTHUR HELLER Deputy Clerk 28a Order Denying Petition for Rehearing UNITED STATES COURT OF APPEALS SECOND CIRCUIT At a Stated Term of the United States Court of Appeals, in and for the Second Circuit, held at the United States Court House, in the City of New York, on the fifth day of July, one thousand nine hundred and seventy-eight. Present: HONORABLE WILLIAM H. MULLIGAN HONORABLE HENRY J. FRIENDLY HONORABLE THOMAS J. MESKILL Circuit Judges. 77-1425 cr i UNITED STATES OF AMERICA, Plaintiff-A ppellee, —_— MICHAEL J, CAPANEGRO, Defendant-A ppellant. PT i A petition for’a rehearing having been filed herein by counsel for the appellant Michael J. Capanegro. Upon consideration thereof, it is Ordered that said petition be and it hereby is DENIED. A. DANIEL FUSARO Clerk 24a Order Denying Petition for Rehearing en banc UNITED STATES COURT OF APPEALS SECOND CIRCUIT At a Stated Term of the United States Court of Appeals, in and for the Second Circuit, held at the United States Court House, in the City of New York, on the fifth day of July, one thousand nine hundred and seventy-eight. 77-1425 i UNITED STATES OF AMERICA, Plaintiff-A ppellee, —_ MICHAEL J. CAPANEGRO, Defendant-A ppellant. — A petition for rehearing containing a suggestion that the action be reheard en banc having been filed herein by counsel for the appellant Michael J. Capanegro, and no active judge or judge who was a member of the panel having requested that a vote be taken on said suggestion, Upon consideration thereof, it is Ordered that said petition be and it hereby is DENIED. /s/ IRVING R. KAUFMAN IRVING R. KAUFMAN, Chief Judge 25a Special Findings of the District Court UNITED STATES DISTRICT COURT SOUTHERN District oF NEW YORK 76 Cr. 914 SS UNITED STATES OF AMERICA = MICHAEL CAPANEGRO, Defendant. OPINION GRIESA, J. The indictment in this action charges 24 counts of violation of 29 U.S.C. §501(c). The statute provides: “Embezzlement of assets; penalty (c) Any person who embezzles, steals, or un- lawfully and willfully abstracts or converts to his own use, or the use of another, any of the moneys, funds, securities, property, or other assets of a labor organization of which he is an officer, or by which he is employed, directly or indirectly, shall be fined not more than $10,000 or imprisoned for not more than five years, or both.” Defendant Capanegro was tried by the court without a jury. Pursuant to Criminal Rule 23(c), the court announced general findings at the conclusion of the trial, and thereafter defense counsel — that the facts be found specially. 26a Special Findings of the District Court The general findings with respect to the various counts are: Count Finding 1 Guilty 2 Guilty 3 Guilty 4 Not Guilty 5 Guilty 6 Guilty 7 Guilty 8 Guilty 9 Not Guilty 10 Guilty 11 Guilty 12 Guilty 13 Not Guilty 14 Not Guilty 15 Guilty 16 Guilty 17 Guilty 18 Not Guilty 19 Not Guilty 20 Not Guilty 21 Guilty 22 Guilty 23 Guilty 24 Guilty The purpose of this opinion is to find the facts specially as requested by defense counsel. Unless otherwise noted, I find the following facts proved beyond a reasonable doubt. Capanegro is an attorney. During the relevant period in 1971-72 Capanegro was counsel to Local 1101 of the 27a Special Findings of the District Court Communication Workers of America, under a $25,000 per year retainer. Commencing in the summer of 1971, and continuing until February 18, 1972, Local 1101 was on strike against New York Telephone Company. The International Union of the Communication Work- ers of America had a so-called “Defense Fund.” This fund was set up to take care of a variety of needs of a local union and its members during a strike. Expenses which might be paid out of the Defense Fund included legal bills of the union and members for matters arising out of the strike, and also other types of strike-related expenses. | The International Union made Defense Fund funds available to Local 1101 with respect to the 1971-72 strike against New York Telephone Company. The present case arises out of legal fees collected by defendant from the Local 1101 Defense Fund during 1971 and 1972, over and above his regular retainer. In the following description of the various counts in the indictment, the persons to whom legal services were rendered, or allegedly rendered, by Capanegro were members of Local 1101, unless otherwise noted. First Count On December 10, 1971 Capanegro rendered a bili to Local 1101, which included the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: MICHAEL ROSSO As and for all negotiations and confer- ences; appearances at Police Station; 28a Special Findings of the District Court appearances in Court; preparation for trial and appearances on Trial Dates for Criminal charges in Riverhead: 1,850.00” Capanegro received payment of this amount from Local 1101 on December 16, 1971. Rosso was arrested December 3, 1971 in Suffolk County and charged with disorderly conduct, which is a “Violation”, as distinct from either a felony or a mis- demeanor. Rosso received a summons to appear in court December 8. He appeared on that date with a friend, and without any lawyer. He then consulted Local 1101, and was given Capanegro’s telephone number. Rosso spoke to Capanegro for a few minutes in one or two telephone calls, in which Capanegro stated that he would not handle the case because it would be tried in Suffolk County. Capanegro referred the matter to a Suffolk at- torney, John Clayton. Capanegro spoke to Clayton, and told him that the legal fee would be paid by the union and wanted it to be nominal. Clayton agreed to charge $250. Capanegro paid Clayton the $250 on January 4, 1972. Clayton represented Rosso, and on March 24, 1972 Rosso received an Adjournment in Contemplation of Dismissal (“ACD”). It is not clear whether Capanegro’s bill was sent before or after there had been an agreement with Clayton for the $250 charge. However, Capanegro has admitted that at the time of the bill he had no intention of handling the matter personally and intended to bring in another attorney. I find that Capanegro submitted the Rosso item know- ing that it was almost entirely a statement of services which he had not rendered and had no intention of rendering. I find that Capanegro obtained payment of $1850 which he knew he was not entitled to. Moreover, 29a Special Findings of the District Court after he had paid the $250 to Clayton, Capanegro failed to send a corrected bill to Local 1101 or to refund to Local 1101 any part of the remaining $1,600. Counts 2 and 3 On December 16, 1971 Capanegro submitted a bill to Local 1101 for the following items: “FOR PROFESSIONAL SERVICES RENDERED IN RE: LLOYD HAROLD AND FRANK CARLO As and for all negotiations and confer- ences; appearances in Court; Prepara- tion for Trial and appearances on trial dates for Criminal Charges in re LLOYD HAROLD; $1300.00 As and for all negotiations and confer- ences; appearances in Court; Prepara- tion for Trial and appearances on Trial dates for Criminal Charges in re FRANK CARLO: 1300.00 Total Due $2600.00” Capanegro received payment of this amount from Local 1101 on the day the bill was submitted. Lloyd Harold and Frank Carlo were arrested on December 13, 1971 and charged with Disorderly Conduct and Harassment—both being “Violations”. They were released and told to appear in court December %2, 1971. Both Harold and Carlo spoke to Ricky Carnivale, presi- dent of Local 1101, who referred them to Capanegro for legal assistance. Harold and Carlo spoke to Capanegro’s secretary (not to Capanegro), and Harold was given an affidavit to take to court requesting an adjournment. 30a Special Findings of the District Court Harold and Carlo went to court on December 22, and for some reason did not present the adjournment affidavit. Carlo called the union and complained about not having a lawyer in court. A lawyer named Udoff, who normally handles workmen’s compensation matters, came to court. Udoff represented Harold and Carlo in a brief hearing before the judge, who granted ACD’s to both men. Capanegro testified that he spoke to Harold on the telephone December 14 or December 15, and that he probably spoke to the Assistant District Attorney prior to the court date. I will give Capanegro the benefit of the doubt as to conversing with Harold, but I reject the contention that the defendant talked to the Assistant District Attorney. Capanegro contends that the Harold and Carlo bill, like several others involved in the indictment, was one of the bills which he prepared shortly after the opening of a case, and that it reflected his estimate of the value of the services based on the nature of the offense, and his estimate as to what work would be required. I find that Capanegro submitted this bill knowing that it was almost entirely a statement of services which had not been rendered. Separate items were written for Harold and Carlo, on what was the same case, in order to inflate the amount of the bill. I reject the contention that the bill should be interpreted as, or was intended as, a good faith estimate of services to be performed. I find that Capanegro obtained payment of $2600 which he knew he was not entitled to. 3la Special Findings of the District Court Count 4 On January 7, 1972 Capanegro rendered a bill to Local 1101, which included the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: AS AND FOR negotiations, conferences and advice in regard to Criminal Charges by Nick Fittipaldi, ROBERT AST, and DENNIS LINCOLN in re Telephone Company 1,000.00” Capanegro received payment of this amount from Local 1101 on January 26, 1972. Union members Fittipaldi, Ast and Lincoln were in- volved in an incident January 3, 1972 leading to criminal charges by them against certain other persons. The criminal prosecution was handled by one or more Assist- ant District Attornies. However, Capanegro conferred with Lincoln and also probably with Fittipaldi. Capa- negro appeared in court January 6, 1972 and introduced the three complainants to an Assistant District Attorney. I cannot find beyond a reasonable doubt that the description of services was false. As to the $1,000 fee, although it would appear high in relation to the amount of services perfcrined, I cannot find beyond a reasonable doubt that Capanegro knew he was not entitled to this fee. 32a Special Findings of the District Court Count 5 Capanegro’s bill of January 7, 1972 to Local 1101 included the following item: “AS AND FOR PROFESSIONAL SERVICES RENDERED IN RE: all conferences, negotiations and ap- pearances at hearing; appearance at arraignment for charges involving Paul Radloff, felonious assault charges; ad- vice and legal briefs in regard there- to: 1,075.00” Capanegro received payment of this amount from Local 1101 on January 26, 1972. A week or two before Christmas 1971 Radloff was brushed by a car while he was in a picket line. President Carnivale of Local 1101 referred him to Capanegro. Radloff talked to Capanegro on the telephone for about 15 minutes. Capanegro advised Radloff to file a complaint against the driver of the car. Capanegro told Radloff he would defend him if any charge was made against Radloff. Capanegro did nothing further in the matter. Radloff did not file any complaint against the driver. No pro- ceedings were taken by anyone against Radloff. As of the time Capanegro rendered his bill on January 7, 1972 defendant knew that this was a matter where services might or might not be needed depending upon what, if anything, developed. Defendant was simply “available to this man” (Tr. 1110). I find that Capanegro submitted the Radloff item knowing that it was almost entirely a statement of services which had not been rendered. This item was 33a Special Findings of the District Court not a good faith estimate of services to be performed. I find that Capanegro obtained payment of $1075 which he knew he was not entitled to. Counts 6 and 7 On January 13, 1972 Capanegro rendered a bill to Local 1101, which included the following items: “FOR PROFESSIONAL SERVICES RENDERED IN RE: HAL DOLGIN As and for all negotiations, confer- ences, appearances in Court in regard to criminal Charges in re the above; appearance in Court and attendance at trial: $1,075.00 FOR PROFESSIONAL SERVICES RENDERED IN RE: As and for all negotiations, conferences, advice, appearances in Court in regard to Criminal Charges with DUNCAN HEVENOR: 1,000.00” Capanegro received payment of these amounts from Local 1101 on February 11, 1972. Hevenor and Dolgin were involved in a scuffle at a picket line on January 10, 1972. The police advised making a complaint against one Sterling Hostern, as a protection against any complaint against Hevenor and Dolgin. Hevenor spoke to Carnivale, who said that the union lawyer would be in touch with Hevenor. No union lawyer ever communicated with Hevenor or Dolgin. Nothing came of the case. The charge against Hostern was not pursued, and no proceedings were taken against Hevenor and Dolgin. 34a Special Findings of the District Court Capanegro testified that he was retained by the union to represent Hevenor and Dolgin. However, Capanegro performed no services of any substance. I find that Capanegro submitted the items relating to Dolgin and Hevenor knowing that they were almost entirely statements of services which had not been ren- dered. Separate items were written for the two men in order to inflate the amount. These items were not good faith estimates of services to be performed. I find that Capanegro obtained payment of $2,075 which he knew he was not entitled to. Count 8 On January 13, 1972 Capanegro rendered a bill to Local 1101, which included the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: GIOSE FRANCO As and for all negotiations, conferences, advice appearances in Court in regard to Criminal charges with Giose Franco: 750.00” Capanegro received payment of this amount from Local 1101 on February i1, 1972. On or about January 11, 1972 Franco was asked to come to a police station. When he arrived, he was told it was a mistake, but was asked by the police if he would answer questions about some incident. Franco refused to answer questions, and the matter went no further. A relative of Franco, but not a lawyer, was present at the police station. Franco discussed the matter with a shop steward and with others at the union. He thought he would be re- ceiving advice about a false arrest action, but no one called him about this, and the idea was dropped. 35a Special Findings of the District Court Capanegro was told of the incident either by someone at the union, or possibly by Franco. However, other than receiving this information, Capanegro performed no services. I find that Capanegro submitted the Franco item knowing that it was almo.: entirely a statement of services which had not been rendered. This item was not a good faith estimate of services to be performed. I find that Capanegro obtained payment of $750 which he knew he was not entitled to. Count 9 Capanegro’s bill of January 13, 1972 to Local 1101 included the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: ROBERT ZAPPULLA As and for all negotiations, conferences in regard thereto; arrest for misde- meanor; Dismissal of same: $500.00” Capanegro received payment of this amount from Local 1101 on February 11, 1972. On January 7, 1972 Zappulla was involved in an incident relating to a telephone company truck. Zappulla was notified to appear at a police station. Before going to the station, he went to the union office, and was given the telephone number of Capanegro, whom he called. He toid Capanegro about the circumstances, and Capanegro told him to deny everything at the police station, and to call back if he needed more help. Later, the police took Zappulla to the station, but released him. There were no further proceedings, and there was no further con- sultation with Capanegro. Capanegro has testified that he made a telephone call to the police and negotiated Zappulla’s release. 36a Special Findings of the District Court I cannot find beyond a reasonable doubt that defend- ant either falsified this item or charged more than he thought he was entitled to. Count 10 Capanegro rendered a bill to Local 1101 dated Janu- ary 14, 1972 containing the following item: “FOR PRUTESSIONAL SERVICES RENDERED IN RE: JOHN HYLAND As and for all negotiations, conferences and advice in regard to Criminal Charges involving JOHN HYLAND; appearances at hearing dates; Appearances at trial and adjourned dates: 950.00” Capanegro received payment of this amount from Local 1101 on February 11, 1972. On or about January 10, 1972, while Hyland was on picket duty, he was struck by a telephone company truck. Hyland telephoned Carnivale, who had Capanegro call Hyland. Capanegro advised Hyland to go to the police station and make a report. Hyland went to the station and filled out a complaint form. Nothing came of the case. Capanegro’s expanation for this is that the driver of the truck could not be identified. Capanegro per- formed no further services after the telephone conversa- tion, except speaking briefly to Hyland at the Playboy Club, and possibly also at Capanegro’s office. I find that Capanegro submitted the Hyland item knowing that it was almost entirely a statement of serv- ices which had not been rendered. This item was not a good faith estimate of services to be performed. I find that Capanegro obtained payment of $950 which he knew he was not entitled to. 37a Special Findings of the District Court Count 11 On January 31, 1972 Capanegro rendered a bill to Local 1101, which included the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: JOSEPH CASSIDY As and for all negotiations conferences, appearances in Court; preparation for Trial; appearance on trial dates and adjourned dates; trial of case: 1,375.00” Capanegro received payment of this amount from Local 1101 on February 24, 1972. Cassidy was arrested on January 14, 1972 in connec- tion with a strike-related disturbance. He was charged with disorderly conduct. Cassidy called the union from the police station. He was taken to court the day of the arrest and told to appear again January 26. There was no lawyer for Cassidy at the police station, and a court- - appointed lawyer represented him in the court proceed- ing on the day of the arrest. The union gave Cassidy Capanegro’s name. Cassidy conferred with Capanegro at his office. Capanegro agreed to represent Cassidy, but told Cassidy to get what- ever witnesses were available, and have them appear in court. Capanegro was in court with Cassidy on January 26. They waited about an hour to go before the judge. Cas- sidy telephoned the union from court about possible wit- nesses, but nothing came of this. When the matter came before the judge an ACD was granted, and that was the end of the case. A union member by the name of Jacob Adler was arrested along with Cassidy in connection with the same incident. His case was handled on January 26, 1972 38a Special Findings of the District Court in the same proceeding with the case of Cassidy. The two cases were in effect one. In the bill of January 31, 1972 Capanegro included a separate item for Adler as follows: “FOR PROFESSIONAL SERVICES RENDERED IN RE: JACOB ADLER As and for all negotiations, conferences appearances in Court; preparation for Trial; appearances on Trial Dates; and adjourned dates: 1,325.00” Capanegro received payment of this amownt on February 24, 1972. For some reason, the Adler item is not specifically included in the charges in the indictment. However, evi- dence about Adler was received as bearing on the Cassidy item. This is a situation in which Capanegro made a court appearance and achieved a successful disposition of a criminal case against union members. Nevertheless, I find that the description of services in the Cassidy item was intentionally exaggerated, by referring to multiple court appearances and an actual trial. Also the treat- ment of the Cassidy and Adler cases as two separate items was a device to inflate fees. I find that, by means of the bill in the Cassidy matter Capanegro knowingly obtained payment beyond what he was entitled to. Count 12 Capanegro’s bill of January 31, 1972 to Local 1101 contained the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: JOHN TOOMEY As and for all negotiations, conferences, appearances in Court; preparation for 39a Special Findings of the District Court trial on four Criminal Charges (mis- demeanors) to wit: Criminal Possession of stolen property; Criminal tamper- ing; Criminal Mischief and Larceny ; appearances on Trial dates and ad- journed dates; trial of case: 5,400.00” Capanegro received payment of this amount from Local 1101 on February 24, 1972. Toomey was arrested on January 19, 1972. He was at the Port Authority bus terminal and was caught break- ing pay telephone dials off the telephones. Toomey was held overnight and taken to court the next morning, where he was represented by a Legal Aid lawyer and given a date to return to court—January 26. The union referred. Toomey to Capanegro. Toomey conferred with Capanegro at his office. Capanegro met Toomey in court on January 26. Capanegro arranged to have the case disposed of by a plea of guilty to a charge of disorderly conduct and restitution of $12.00 in payment for the dials. Although this case again involves Capanegro’s repre- sentation and court appearance leading to disposition of a criminal case, I find that both the description of serv- ices and the amount of the bill are grossly exaggerated, and were done so intentionally in order to obtain a fee which Capanegro knew he was not entitled to. 40a Special Findings of the District Court Count 13 Capanegro’s January 31, 1972 bill to Local 1101 in- cluded the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: ANTHONY CALIFRA As and for all negotiations, conferences, appearances in Court; preparation for Trial; appearances on Trial dates and adjourned dates; trial of case: 1,550.00” Capanegro received payment of this amount from Local 1101 on February 24, 1972. Califra was arrested January 19, 1972 and charged with disorderly conduct in connection with a strike-re- lated incident. He was taken to the police station and told to appear in court February 7 for trial. Califra re- ported the problem to Carnivale, who called Capanegro. Califra also may have talked to Capanegro at this time. Capanegro appeared with Califra in court on February 7. After a brief appearance before the judge, the case was dismissed. The bill of January 31 recites certain services, such as court appearances and trial which had not been per- formed as of that time. However, as already indicated, Capanegro has advanced the theory that certain of the bills were good faith estimates of services to be per- formed, although, of course, they were not actually phrased as such. Giving Capanegro the benefit of every reasonable doubt, I find that the Government has not proved beyond such a reasonable doubt that the Califra item was not a good faith estimate of the kind Capanegro describes. 4la Special Findings of the District Court Count 14 Capanegro’s bill of January 31, 1972 to Local 1101 contained the following item: “FOR PROFESSIONAL SERVICES RENDERED MICHAEL BLOCK As and for all negotiations, conferences, appearances in Court; preparation for trial; appearances on Trial dates and adjourned dates; trial of case: Crim- inal Mischief, 1st degree: 1,725.00” Capanegro received payment of this amount from Local 1101 on February 24, 1972. Block was arrested January 20, 1972 in connection with a strike-related incident. He was taken to a police station and told to appear in court January 27. Block described the situation to a shop steward at the union. He was referred to Capanegro, and they conferred at Capanegro’s office. Capanegro gave Block an affidavit to present in court seeking an adjournment, which was granted. Following that there was a second adjourn- ment, and the matter was finally set for March 24. On the latter date Capanegro appeared with Block. No one from the telephone company was present, and the judge dismissed the case. My remarks in connection with Count 18 apply here. I cannot find beyond a reasonable doubt that the Block item was not a good faith estimate of services to be per- formed. 42a Special Findings of the District Court Counts 15, 16 and 17 Capanegro’s January 31, 1972 bill to Local 1101 con- tained the following three items: “FOR PROFESSIONAL SERVICES RENDERED IN RE: ROBERT NERI As and for ali negotiations, confer- ences, advice, appearances in Court in regard to Criminal charges; prepara- tion of trial; appearances on Trial dates and adjourned dates; dismissal of same; 1,850.00 “FOR PROFESSIONAL SERVICES RENDERED IN RE: THEODORE WALLEN As and for all’ negotiatious, confer- ences; preparation for trial; appear- ances on trial dates; & adjourned dates; dismissal of same: 2,000.00 “FOR PROFESSIONAL SERVICES RENDERED IN RE: STEVEN DZUBAY As and for all negotiations, confer- ences; advice; appearances in Court in regard to Criminal charges; prepara- tion of Trial; appearances on Trial dates; and adjourned dates; dismissal of same: $1,850.00” Capanegro was paid these amounts by Local 1101 on February 24, 1972. Neri and Wallen were members of Local 1102, located on Staten Island. Dzubay was a member of Local 1101. On January 12, 1972 all three were arrested for dis- orderly conduct in a demonstration near a telephone com- pany building. They were taken to a police station and told to appear in court January 17, 1972. 43a Special Findings of the District Court Wallen and Neri called an official of Local 1102, who said that he would arrange for a lawyer. On January 17 the three men, and witnesses they brought, appeared in court. Capanegro appeared to represent them. None of the men had spoken to Capanegro prior to the court appearance. Capanegro was apparently retained by Local 1101 as a result of discussions between Local 1101 and Local 1102. While waiting in court, Capanegro interviewed Neri, Wallen and Qzubay, and also their witnesses. At an initial appearance before the judge, Capanegro asked to have the case dismissed, but this was not done. There was a wait of about two hours. In a second appearance before the judge, the Assistant District Attorney agreed to have the case dismissed, and the judge granted an ACD. Capanegro billed separately for Neri, Wallen and Dzubay, although there was basically only one case. I find that the separate itemization and the description of services was intentionally calculated to collect a grossly exaggerated total fee of $5700, which Capanegro knew he was not entitled to. Count 18 On February 17, 1972 Capanegro submitted a bill to Local 1101, which included the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: PETER O’NEAL As and for all negotiations, confer- ences, appearances in Court, prepara- tion for trial appearances on ad- journed dates; trial of case: $1,450.00” Capanegro received payment of this amount from Local 1101 on February 29, 1972. 44a Special Findings of the District Court O’Neal was involved in a strike-related incident on January 27, 1972. He was arrested on February 2 while he was in court watching the trial of Bruce Whyte, an- other union member. Whyte was being represented by Capanegro. O’Neal told Capanegro about his arrest and had a brief conversation with Capanegro in the court building that day. O’Neal was told to be in court on his own case February 23. He obtained an affidavit from Capanegro’s office on which an adjournment was obtained to March 13, 1972. Capanegro appeared with O’Neal in court on March 18, at which time Capanegro talked to the Assistant District Attorney and appeared before the judge. The judge granted an ACD. My remarks in connection with Count 13 apply here. I cannot find beyond a reasonable doubt that the O’Neal item was not a good faith estimate ef services to be performed. Count 19 Capanegro’s bill of February 17, 1972 to Local 1101 contained the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: PEOPLE V. ROBERT POMPOSELLO As and for all negotiations, conferences, appearances in Court; appearances on adjourned dates; preparation for trial; Conferences with witnesses for trial of ease: (Assault in the 3rd degree) 1,850.00” Capanegro received payment of this amount from Local 1101 on February 29, 1972. Pomposello became involved in an incident with another telephone company employee on January 18, 1972. On January 23 he was asked to go to the police station, where he was arrested and charged with third degree assault. He was told to appear in court on February 2. 45a Special Findings of the District Court Someone at Local 1101 gave Capanegro’s name to Pomposello. Pomposello conferred with Capanegro at his office. The court hearing was adjourned to March 8. Pomposello and Capanegro appeared in court on March 8 and, against Capanegro’s advice, Pomposello pleaded guilty to a reduced charge of harassment. Pomposello was given a conditional discharge. My remarks in connection with Count 13 apply here. I cannot find beyond a reasonable doubt that the Pom- posello item was not a good faith estimate of services to be performed. Count 20 Capanegro’s bill of February 17, 1972 included the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: PEOPLE V. WALTER JASZCZUK As and for all negotiations, conferences, counselling, and advice in regard to pend- ing charges which may be lodged against him: 250.00” Capanegro received payment of this amount from Local 1101 on February 29, 1972. Jaszcezuk was called by the police for questioning in connection with a strike-related criminal matter. He was given Capanegro’s number by the union. Jaszezuk went to the police station, was questioned, and no charges or other proceedings resulted. Jaszczuk testified that, prior to and after the trip to the police station, he spoke to Capanegro’s secretary. Capanegro believes that Jaszezuk spoke to him personally. I cannot find beyond a reasonable doubt that Capanegro billed more than he thought he was entitled to. 46a Special Findings of the District Court Count 21 Capanegro’s February 17, 1972 biil to Local 1101 in- cluded the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: PEOPLE V. WARREN LOPEZ As and for all negotiations, conferences, advice, appearances in Court in regard to Criminal charges: 750.00” Capanegro received payment of this amount from Local 1101 on February 29, 1972. Toward the end of the strike Juan Lopez was involved in a scuffle with a telephone company foreman. He went to a police station because he heard that a complaint was filed against him. However, none had been, and he went home. He obtained Capanegro’s telephone number from the union, and called Capanegro. He described the inci- dent to Capanegro, who told him that, if the police came, Lopez should have his wife answer the door or otherwise try to avoid arrest. Capanegro said to call back if in- deed Lopez was picked up. Nothing further happened in the matter, and Lopez never spoke to Capanegro again. I find that Capanegro submitted the Lopez item know- ing that it was almost entirely a statement of services which had not been rendered. This item was not a good faith estimate of services to be performed. I find that Capanegro obtained payment of $750.00 which he knew he was not entitled to. Count 22 Capanegro’s bill of February 17, 1972 to Local 1101 included the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: PEOPLE V. MICHAEL ANTO- NUCCI 47a Special Findings of the District Court As and for all negotiations, conferences, advice, appearances in Court in regard to Criminal Charges: 875.00” Capanegro received payment of this amount from Local 1101 on February 29, 1972. On January 23, 1972 Antonucci got in a fight with a friend, which had nothing to do with the strike. A union official, Fitzgerald, heard that a warrant was out for Antonucci’s arrest and told this to Capanegro. Capanegro spoke to Antonucci at the union office. However, Anto- nucci told Capanegro that he had his own lawyer. Anto- nucci’s lawyer was named Schwartz. Capanegro per- formed no services in the case, and never communicated with Schwartz. I find that Capanegro submitted the Antonucci item knowing that it was almost entirely a statement of services which had not been rendered. This item was not a good faith estimate of services to be performed. I find that Capanegro obtained payment of $875 which he knew he was not entitled to. Count 23 Capanegro’s bill of February 17, 1972 to Local 1101 included the following item: : | “FOR PROFESSIONAL SERVICES RENDERED IN RE: JACK RUSSEK As and for Conferences, Negotiations and Appearances at Hearing, Appeerance at arraignment for charges invoiving Jack Russek; legal advice in regard thereto 675.00” Capanegro received payment of this amount from Local 1101 on February 29, 1972. 48a Special Findings of the District Court On January 25, 1972 Russek was in a picket line in front of a telephone company garage. He was asked to move by the driver of a truck. When Russek did not move, the truck hit or brushed against Russek. Russek went to a police station and complained. Russek was told to appear in court on March 3. He called the union and was told to speak to Capanegro. He talked to Capa- negro on the telephone for a few minutes. Capanegro told him that the Assistant District Attorney would handle the case. Russek had no further communication with Capanegro. Russek went to court alone on March 3 and dropped the charge. I find that Capanegro submitted the Russek item knowing that it was almost entirely a statement of services which had not been rendered. This item was not a good faith estimate of services to be performed. I find that Capanegro obtained payment of $675 which he knew he was not entitled to. Count 24 Capanegro’s bill of February 17, 1972 to Local 1101 included the following item: “FOR PROFESSIONAL SERVICES RENDERED IN RE: JOSEPH McALEER As and for all negotiations, confer- ences, appearances in Court; prepara- tion for trial; conference with wit- nesses and with client; appearances on trial dates and adjourned dates; trial of case; (Felony and Misdemeanor) $4,500.00” Capanegro received payment of this amount from Local 1101 on February 29, 1972. On Jafiuary 31, 1972 McAleer was involved in a fight in a picket line. During the evening after the fight 49a Special Findings of the District Court McAleer was at a union meeting, and heard that the police were looking for him. He spoke to Capanegro briefly and told Capanegro that he expected to be arrested. McAleer went alone to the police station where he was arrested. He was released on bail. On February 3 McAleer met with Capanegro and discussed the case. Capanegro said that the case looked bad. After this meeting McAleer decided he did not want Capanegro to represent him, and retained another lawyer by the name of Friedman. McAleer told this to Carnivale, but not to Capanegro. However, McAleer did not request any services from Capanegro prior to the date of Capa- negro’s bill, or ever. The union paid a retainer to Friedman of $1,000 at the outset of Friedman’s services. In August 1972 Friedman made a written motion to dismiss the case, which was granted. By this time Capanegro was corresponding with Friedman in a con- trived effort to act as “co-counsel” for the purpose of justifying Capanegro’s undeserved fee of $4,500. Fried- man billed the union an additional $1,500 for his own services, which bill he sent to Capanegro. Capanegro paid this bil! out of his own funds. This left Capanegro with a net of $3,000, none of which he refunded to the union. Capanegro knowingly billed for services he had not performed. This was not the case of a good faith esti- mate of services to be performed. At the very least, Capanegro should have refunded the $4500 to Local 1101 when he learned that Friedman was in the case, which was no later than mid-March. Capanegro’s payment of $1500 to Friedman still left Capanegro with $3000 which he knew he was not entitled to. 50a Special Findings of the District Court Conclusion Within the meaning of 29 U.S.C. §501(c), I find that Local 1101 was a labor organization and that Capa- negro was employed by it. As to all counts on which I have found Capanegro guilty, I find that he unlawfully and willfully embezzled, stole, abstracted, or converted to his use funds of Local 1101 in violation of the statute. Dated: New York, New York July 19, 1977 /s/ THOMAS P. GRIESA THOMAS P. GRIESA U.S.D.J. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_1470%3A1. Public record. Not legal advice.