Reply Brief — RODGERS v. UNITED STATES (Nos. 79-1030, 79-1028, 1029)

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FILED 3

MAR 25 1980

IN THE | MICHAEL RODAK, JR. CLERK

Supreme Court of the United States

OcTOBER TERM, 1979

No. 79-1030

Harry W. Ropcers, II[T.,

Ernest N. Cory, JR.,

Petitioners,

v.

UNITED STATES OF AMERICA,

Respondent.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Fourth Circuit

PETITIONERS’ REPLY MEMORANDUM

A. RaAyMonpD RANDOLPH, JR.

THomas C, GREEN

RicHarD A. KAPLAN

SHarP, RANDOLPH & GREEN

Suite 501

1800 Massachusetts Avenue, N.W.

Washington, D.C. 20036

(202) 659-2400

Attorneys for Petitioner

Harry W. Rodgers, III

Wma. BraprorD REYNOLDS

SHaw, Pirrman, Ports &

TROWBRIDGE

1800 M Street, N.W.

Washington, D.C. 20036

(202) 331-4100

Attorney for Petitioner

Ernest N. Cory, Jr.

Press or Byron 8. Apams Parntina, Inc., Wasuineton, D. OC.

IN THE

Supreme Court of the United States

OcToBER TERM, 1979

No. 79-1030

Harry W. Ropoers, ITI,

Ernest N. Cory, JR.,

Petitioners,

Vv.

United States OF AMER'CA,

stespondent.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Fourth Circuit

PETITIONERS’ REPLY MEMORANDUM

1. In both this case and Bulluck v. Washington, 468

F.2d 1122 (D.C. Cir. 1972) (en banc), the order grant-

ing rehearing en banc ‘‘did not vacate the judgment

of the division” (tbid.). The equally-divided en banc

court in Bulluck held that it therefore had no power

to alter the outstanding gudgment of the panel. But

the equally-divided en banc court in this case exercised

that power by affirming petitioners’ convictions al-

though the judgment of the panel had set these aside.

We had supposed the conflict between these courts of

2

appeals was clear and direct, but the government says

there is ‘‘no merit’’ to. such a view.’

According to the government, it matters greatly that

the panel in Bulluck had affirmed the district court

while the panel here had reversed.’ But to accept that

proposition one would have to conelude not only that

Bulluck does not mean what it holds, but also that an

equally-split federal court has the power to affect a

judgment depending on what the judgment is and who

rendered it—a notion totally at odds with a century

and a half of federal adjudication.’

That history demonstrates one firm principle: no

ranmgen court, including an en banc court of appeals,

has the power to alter an outstanding judgment with-

out a majority vote.‘ The government says its position

adheres to that principle because “An equal division

of the en bane court of Sudieals means that a majority

of the judges to have passed upon the issue (including

the district judge) were in agreement with the ruling

from which the appeal was taken.’’* But the equal

—_-_--—

1 Brief in Opp., at p. 19 n.12.

.? Ibid. The government's idea apparently is that, despite Bulluck,

an equally-divided en banc District of Columbia Circuit might find

the power to affect an unvacated panel’s judgment of reversal

although the power is absent with respect to a panel’s judgment

of affirmance, We are left to wonder whether the power would be

present or lacking when the panel has affirmed in part and re-

versed in part, sustaining for example convictions on some counts

but reversing convictions on others.

° See our Petition (No. 79-1030), at pp. 16-18:

Brody henson ts ns RN lian ot a oped en

is why affirmance by an. equally-divided court is merely a declara-

tion of the deadlock, having no precedential value and having the

waa en

had never occurred.

"© Brief in Opp., at p.18.

EF

= See ch ON Sey eee Ago Sus Syed BAA Nt Wait OES ok lt

3

division means no such thing if, for example, the

panel’s majority in favor of reversal consisted of a

judge sitting by designation, as frequently occurs, In

that situation the government’s head-count would re-

sult in a tie if the vote of the trial judge were given

the same weight as a vote of a judge sitting on the

court of appeals; ° on the other hand, if one tallied only

the votes of judges who heard the case on appeal, there

would be a majority of one for reversal, yet the gov-

ernment would contend that the lower court judgment

should be affirmed. Furthermore, when an en bane

court of appeals splits evenly after a panel including

one or two judges sitting by designation unanimously

voted to set aside agency action upon direct review, the

‘‘majority” of judges who heard the case would favor

the panel decision. But under the government’s sub-

mission, the agency action would be allowed to stand

because the panel’s judgment was automatically va-

cated upon the grant of rehearing en banc.’

It is on this ground—that the grant of rehearing en

banc ‘‘itself vacate[s] the panel decision’ *—that the

government’s entire argument rests. It is a ground re-

jected in Bulluck, it has no statutory basis,’ and the

government has offered not a single reason” why this

*The judge sitting on the court of appeals by designation, who

voted opposite of the district judge, would not be a member of the

equally-divided en banc court of appeals. See 28 U.S.C. § 46(c).

’ Brief in Opp., at pp. 18-19.

* Brief in Opp., at p. 18.

*See 28 U.S.C. §46(c). The government itself recognizes as

much earlier in its Brief i in Opposition (see p. 16).

1° The italicized quotation from Judge Waterman’s dissenting

opinion in Farrand Optical Co. v. United States, 317 F.2d 875,

4

should be the rule except to say that it is so." On the

other hand, we have pointed out” that a vote to grant

rehearing en banc cannot also be considered a vote to

vacate the panel’s judgment, which is essentially a

vote on the merits, as this Court recognized in Moody

v. Albermarle Paper Co., 417 U.S. 622, 627 (1974). Cir-

cuit judges in favor of the panel’s decision may never-

theless vote for rehearing en banc. Indeed, when an

equal division results, ole can usually assume with

assurance that at least one of the judges who made up

the majority voting for rehearing en banc agreed with

the panel’s disposition.

In the absence of an announced rule, there is thus no

basis to suppose that a majority of the active circuit

judges not only voted to grant en banc review but also

decided to set aside the panel’s judgment. The Fourth

Circuit, like most of the courts of appeals, has no such

rule, its order granting rehearing en banc did not va-

886 (2d Cir. 1972), at p. 18 of the government’s Brief in Opposi-

tion, says only that it is ‘‘obvious’’ that a grant of rehearing

en banc has this result.

1 The government states (Brief in Opp. p. 17 n.11) that in light

of his dissenting opinion in Drake Bakeries, Inc. v. Local 50, 294

F.2d 399 (2d Cir. 1961), aff’d on other grounds, 370 U.S. 254

(1962), when the equally-divided en banc court, by a 4-2 vote,

affirmed the district court rather than the panel, and his silence

when a somewhat different result occurred in Farrand Optical

v. Umted States, supra, Judge Friendly must have changed his

view concerning the effect of a tie vote. We think this demon-

strates only that Judge Friendly decided to adhere to the principle

of stare decisis, particularly since the deadlocked en banc court in

Farrand Optical sent the case back to the court of appeals panel

: consider the appellate issues it had not reached in its original

ecision.

12 See Petition (No. 79-1030), at p. 18.

4)

cate the panel’s decision and its tie vote therefore could

not affect that decision, which should have been

affirmed.

2. Insofar as the government’s case against these

petitioners depended upon non-disclosure of certain

beneficial owners of Marlboro Racetrack, we have pre-

viously explained our legal position that petitioners

did not thereby violate the mail fraud statute. Peti-

tion (79-1030), at pp. 19-26. Instead of addressing

the fundamental statutory construction question raised

in our petition, the government recounts the evidence

in an attempt to make it appear that the statutory is-

sue is not properly presented.

With respect to these petitioners, however, the mail

fraud issue cannot be dismissed as nothing but a factual

dispute about the weight of the evidence. The evidence

relating to this issue is not in dispute. As the Govern-

ment points out, petitioner Cory withheld from the

State Racing Commission the identities of Hess, Kov-

ens and the Rodgers brothers as beneficial owners

(Brief in Opp., at pp. 7, 33-34). It is not disputed that

he did so intentionally in responding to official inquir-

ies about the beneficial ownership of Marlboro Race-

track (Brief in Opp. at p. 34). In fact, petitioner Cory

explicitly advised Racing Commissioner Jackson that

he could not disclose the ownership interests of his

clients because of ethical constraints imposed on him

by the attorney-client relationship (Tr. 6205-07). He

thus reported these ownership interests in the names

of nominees, including himself as “ Attorney,’’ Petition

(79-1030), at p. 20, with the affirmative representation

that none of the beneficial owners of Marlboro Race-

track was involved in a criminal enterprise or book-

6°

making (7d. at 21). Not only was this the standard re-

porting practice that had long been acceptable to the

Maryland State Racing Commission (id. at 21-22), but

the Attorney General of the State had advised the Rac-

ing Commissioner not to insist on further disclosure

from petitioner Cory in light of the attorney-client re-

lationship (Tr. 6207).

It is not a sufficient answer in these circumstances

for the government to assert simply that there was in-

tentional concealment of information in response to

official inquiries. That is conceded. However, the court

of appeals in United States v. Rabbit, 583 F.2d 1014,

1024 (8th Cir. 1978), clearly held that purposeful non-

disclosure was not reachable under the mail fraud

statute when the individual withholding information

was under no affirmative duty to disclose.** And that,

we submit, was the situation here. Petition (79-1030),

at pp. 23-25. Indeed, not only was there no affirmative

disclosure obligation, but also well-recognized ethical

constraints inherent in the attorney-client relationship

between petitioner Cory and the beneficial owners he

represented counselled against revealing their identi-

ties. To hold that such conduct violates the mail fraud

statute extends that criminal provision well beyond

any recognized bounds of statutory construction and

thus demands the attention of this Court.

3. Because the trial judge gave an instruction on

bribery with respect to two of the racketeering counts

(Counts 21 and 23), the government argues that the

** A majority of this Court has recently recognized the impor-

tance in a criminal context of establishing an affirmative duty to

disclose when the prosecution for fraud rests on evidence of non-

disclosure. Chiavella v. United States, No. 78-1202, 48 L.W. 4250

(March 18, 1980).

7

failure to include a bribery instruction in connection

with the mail fraud counts is of no material conse-

quence (Brief in Opp., at pp. 24-27). Insofar as peti-

tioners Rodgers and Cory are concerned, this position

is untenable.

Neither of these petitioners was indicted under

Count 21, and petitione. Cory was also not indicted

under Count 23." In its instructions, the district court

explicitly advised the jury that the charges given on

Counts 21 and 23 were meant to refer only to the de-

fendants named in those counts (Tr. 11481-82). There

is thus nothing to the government’s argument that the

bribery instruction in connection with the two racket-

eering counts was readily transferable (albeit sub

silento) to the mail fraud counts on which these peti-

tioners were indicted. |

Rather, in the circumstances of this case, the failure

to give a separate bribery instruction under the mail

fraud counts was clear error in regard to these peti-

tioners. As the government acknowledges, the theory

of the mail fraud prosecution “included bribery as one

of the ways in which fraud was committed’’ (Brief in

Opp., at pp. 25-26 n.19; emphasis in original). Thus, at

least with respect to one of the two theories advanced

by the prosecution, bribery was treated as an element

of the mail fraud offense.”* As such, the district court

was under an affirmative obligation to include an in-

14 While petitioner Rodgers was indicted under Count 23, the

district court entered a judgment of acquittal on this count. Peti-

tion (79-1028) App. 18a-19a n.3.

15 See United States v. Mandel, 591 F.2d 1347, 1365 (1979) ; see

also Judge Widener’s dissent below on rehearing en banc at 79-

1028 Pet. App. 5a-8a.

8

struction on bribery in its mail fraud charge even if not

requested to do so. L.g., United States v. Schmidt, 376

F.2d 751 (4th Cir.), certiorari denied, 389 U.S. 884

(1967). When, as here, such a request was made by the

defendants, the failure to give the instruction is re-

versible error. See Judge Widener’s dissent below on

rehearing en banc at Petition (79-1028) App. 8a-9a,

and the cases there cited.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

A. RAyMonp RANDOLPH, JR.

THOMAS C, GREEN

RicHarp A, KAPLAN

SHARP, RANDOLPH & GREEN

Suite 501

1800 Massachusetts Avenue, N.W.

Washington, D.C. 20036

(202) 659-2400

Attorneys for Petitioner

Harry W. Rodgers, III

Wo. Braprorp REYNOLDS

SuHaw, Pirrman, Ports &

TROWBRIDGE

1800 M Street, N.W.

Washington, D.C. 20036

(202) 331-4100

Attorney for Petitioner

Ernest N. Cory, Jr.

March 1980