Opposition Brief — Schaut v. United States

Ts Supretne Court, U.S. |

Q JUN 23 1908 |

No. 85-1721 F, SPANIOly Je

JOSEPH CLERK

Jn the Supreme Court of the United § States

OCTOBER TERM, 1985

CHARLES DARE SCHAUT, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION °

CHARLES FRIED

Solicitor General

ROGER M. OLSEN

Assistant Attorney General

MICHAEL L. PAuP

ROBERT E. LINDSAY

ALAN HECHTKOPF

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

QUESTIONS PRESENTED

1. Whether the district court properly instructed the jury

on the issue of willfulness.

2. Whether the district court adequately instructed the

jury on petitioner's theory of defense.

3. Whether the district court abused its discretion in its

rulings on the admissibility of evidence and by giving the

jury limiting instructions as to certain defense evidence.

4. Whether the court of appeals properly held that the

Jencks Act, 18 U.S.C. 3500, did not entitle petitioner to the

entire report of an Internal Revenue Service special agent

who testified at trial.

(I)

Opinion below

Jurisdiction

Statement

Argument

Conclusion

TABLE OF CONTENTS

TABLE OF AUTHORITIES

Cases:

Bobsee Corp. v. United States,

Ee ae os nibh e 69566 00.006

Bower v. O’Hara, 759 F.2d 1117 ......

Brady v. Maryland, 373 U.S. 83 ......

Cooley v. United States, 501 F.2d 1249,

cert. denied, 419 U.S. 1123 .........

Dennis v. United States, 384 U.S. 855 .

Hamling v. United States, 418 U.S. 87 .

Scales v. United States, 367 U.S. 203 ..

United States v. Agurs, 427 U.S. 97 ...

United States v. Aitken, 755 F.2d 188 .

United States v. Burton, 737 F.2d

SEES PPL eee eee ee eee eee ee

United States v. Farris, 517 F.2d 226,

cert. denied, 423 U.S. 892 ..........

United States v. Gleason, 726 F.2d 385

United States v. Kraeger, 711 F.2d6 ..

(IIT)

See ee @6e 6264560990666 69 65 6 8 0.66 8 8 6 6

IV

Page

Cases—Continued:

United States v. Ming, 466 F.2d 1000,

cert. denied, 409 U.S. DED on ccc ssencccccscces 7

United States v. Park, 421 U.S. 658 ............ 5

United States v. Phillips, 775 F.2d

BE 6k cbs oe ERGD CLINE REED RORE RS SRO MCR EMS 3,4

United States v. Ross, 626 F.2d 77 ..........45. 7

Constitution, statutes and rules:

OLS. SE FRE EWE hoes ewe ccncesaness 6

Jencks Act:

SR US ov kas oe cocnscessakens aoe 8

fiat ae | irre ry ye err sr 8

Ee ee hos wh chee eee cennnewe 8,9

26 U.S.C. (Sepp. TE) TFOS nc ivesccsecvsscsvees 2

y Pik te Sey . ee eres 2

Fed. R. Evid. :

EE sc odd dn red Sead eens Ge cdasebenas 6

PP eee ere Pere eT Tee TT TT y 5

eka clk kame ke eaeeee 7

In the Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-1721

CHARLES DARE SCHAUT, PETITIONER

Vz.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. Al-A7) is

unreported.

JURISDICTION

The judgment of the court of appeals was entered on

August 20, 1985. A petition for rehearing was denied on

January 29, 1986(Pet. App. Bl). On March 18, 1986, Justice

Rehnquist extended the time for filing a petition for a writ

of certiorari to April 18, 1986. The petition was filed on

April 17, 1986. The jurisdiction of this Court is invoked

under 28 U.S.C. 1254(1).

STATEMENT

Following a jury trial in the United States District Court

for the District of Arizona, petitioner was convicted on two

counts of willfully failing to file income tax returns, in

(1)

2

violation of 26 U.S.C. (Supp. I) 7203, and one count of

willfully submitting to his employer a false employee with-

holding allowance certificate (Form W-4), in violation of 26

U.S.C. (Supp. II) 7205 (Pet. App. Al). He was sentenced to

consecutive terms of imprisonment totalling three years and

to fines totalling $20,500. Petitioner was also ordered to pay

the costs of the prosecution. CR 94.' The court of appeals

affirmed (Pet. App. Al-A7).

The evidence at trial established that petitioner, a pilot

with American Airlines (Pet. 4), had a gross income of

$72,210.01 for 1979 and $80,164.81 for 1980, consisting of

wages paid by his employer. His employer provided him

with wage and tax statements (Forms W-2) reflecting the

amounts he had been paid (Tr. 147; GX 3-1). Petitioner filed

income tax returns for the years 1966 through 1978; with the

exception of 1976, but did not file income tax returns for the

prosecution years 1979 and 1980 (Tr. 121-122, 123, 129-130;

GXs I-1, 1-2, 1-3, 2-1). He also failed to file tax returns for

the years 1981, 1982, and 1983 (Tr. 124; GX 1-4).

Petitioner received four notices from the Internal Revenue

Service (IRS) concerning his failure to file an income tax

return for 1979 (Tr. 125-126; GXs 1-5, 1-8). On May 22,

1981, he telephoned the IRS in Chicago in response to a

letter from the IRS requesting him to appear for an

appointment because he had not filed his 1979 return. Peti-

tioner claimed that he had filed a return in Chicago (Tr.

177-179; GX 19-1).

Evidence at trial also showed that, on May 29, 1981,

petitioner filed a withholding certificate (Form W-4) with

American Airlines on which he claimed total exemption

\Citations to the record are taken from the government's brief filed in

the court of appeals. “CR” references are to docket entries in the Clerk’s

record.

3

from income tax withholding (Tr. 149-150; GX 3-3). He

certified that he had incurred no income tax liability for the

preceding year and that he anticipated no income tax liabil-

ity for 1981. Evidence introduced by the prosecution

showed that, contrary to his representations to his em-

ployer, petitioner had incurred a tax liability for 1980 (Tr.

269-271, 274-275).

Petitioner defended on the ground that he had a good

faith belief that he was not required to file tax returns. He

testified at length about his asserted belief, based on his

study of the Constitution, the Diary of the Constitutional

Convention of 1787, portions of the Congressional Record,

and various court decisions, that his wages were not taxable.

Tr. 341-342, 344-346, 358, 360, 362-363.

ARGUMENT

The decision of the court of appeals is correct, it does not

conflict with any decision of any other court of appeals or of

this Court, and it presents no issue that warrants this Court’s

review.

1. Petitioner first contends (Pet. 9-12) that the trial court

improperly instructed the jury to apply an objective test to

determine the willfulness of petitioner’s conduct, instead of

a subjective test. The subjective test requires the jurors to

ascertain a defendant’s actual beliefs and intent. See United

States v. Phillips, 775 F.2d 262 (10th Cir. 1985); United

States vy. Aitken, 755 F.2d 188, 191-192 (1st Cir. 1985);

United States v. Burton, 737 F.2d 439, 441-443 (Sth Cir.

1984). Specifically, petitioner objects to a portion of the

trial court’s instruction defining “reasonable doubt” and a

portion of an instruction requiring an acquittal if peti-

tioner’s conduct was found to be the result of a good faith

misunderstanding of the requirements of the law. Petition-

er’s claim is groundless.

4

The trial court instructed the jury that the reasonable

doubt standard allowed “a guilty verdict if, but only if, you

find the evidence so convincing that an ordinary person

would be willing to make the most important decisions in

his or her own life on the basis of such evidence” (Tr.

913-914). Contrary to petitioner’s claim, this instruction in

no manner suggested that petitioner’s belief that his wages

were not taxable had to be objectively reasonable to negate

willfulness. The reference to an “ordinary person” referred

only to each juror’s assessment of the weight of the

evidence.

The court’s instruction on willfulness (Tr. 917-918),

moreover, clearly required the jury to apply a subjective test

wholly consistent with Phillips, Aitken, and Burton. The

court instructed the jury that “[t]he defendant’s conduct is

not willful if he acted through negligence, inadvert[e]nce,

justifiable excuse or mistake or due to his good faith misun-

derstanding of the requirements of the law” (Tr. 917). The

plain import of that instruction is that the jury must con-

sider petitioner's actual beliefs, not that petitioner’s beliefs

must be objectively reasonable. The court also instructed

the jury that it could consider “the reasonableness of the

defendant["}s beliefs in determining whether or not they

were held in good faith” (ibid.). That instruction, however,

did not convert the subjective standard into an objective

ove. While the instruction permitted the jury to consider the

reasonableness of petitioner’s asserted beliefs as one factor

in determining whether he actually held those beliefs in

good faith, the standard remained subjective. The instruc-

tion did not require that any good faith or mistake of law on

petitioner’s part must be objectively reasonable.’

?Notably, the instruction at issue here is similar to one given by the

court in Cooley v. United States, 501 F.2d 1249, 1253 n.4 (9th Cir.

1974), cert. denied, 419 U.S. 1123 (1975), which the Aitken court

considered to be subjective in nature. 755 F.2d at 192.

5

2. Petitioner next asserts (Pet. 12-14) that the district

court improperly rejected jury instructions that set forth

petitioner’s theory of defense. As the court of appeals

pointed out (Pet. App. A7), however, petitioner’s “only

theory of defense was that he acted under a good faith belief

that wages were not income and that he therefore was not

required to file income tax returns. The issue of good faith

was fairly and adequately covered in the willfulness instruc-

tion given by the court.” Absent a showing that the rejected

instruction was not adequately covered by the instructions

given by the court, petitioner’s complaint lacks merit and

presents no issue warranting the Court’s review. See United

States v. Park, 421 U.S. 658, 675 (1975).

3. Petitioner also contends (Pet. 14-19) that the district

court abused its discretion in its rulings on the admissibility

of evidence and in giving the jury limiting instructions with

respect to certain defense evidence. Petitioner argues that

the court’s rulings and instructions demonstrate that the

court applied a “double standard of relevance,” admitting

prosecution evidence while excluding defense evidence. The

court of appeals properly rejected these contentions (Pet.

App. A4-A6).

The trial court did not abuse its discretion either in ad-

mitting evidence submitted by the prosecution or in exclud-

ing certain evidence offered by petitioner. The trial court

properly admitted prosecution evidence concerning peti-

tioner’s taxpaying history because, as the court of appeals

held (Pet. App. A4-A5), that evidence was relevant to peti-

tioner’s knowledge, intent, and absence of mistake; it was

therefore admissible pursuant to Fed. R. Evid. 404(b). See,

e.g., United States y. Farris, 517 F.2d 226, 229 (7th Cir.),

cert. denied, 423 U.S. 892 (1975).° As the court of appeals

*Believing, incorrectly, that petitioner had stipulated to the admissi-

bility of evidence of his failure to file state income tax returns for 1979

and 1980, the court of appeals did not address petitioner's objection to

6

held (Pet. App. A5), the district court was also correct in its

rulings excluding certain defense evidence. First, the district

court properly excluded books and documents that peti-

tioner claimed he had relied upon in forming his belief that

he was not required to file tax returns “because they con-

tained statements of law not within the province of the jury”

(ibid.). See, e.g., United States v. Burton, 737 F. 2d at

443-444; United States v. Gleason, 726 F.2d 385, 388 (8th

Cir. 1984); United States v. Kraeger, 711 F.2d 6, 7-8 (2d Cir.

1983). Second, the court properly exercised its discretion in

excluding a series of letters petitioner wrote to the IRS and

the Secretary of the Treasury in late 1981 and 1982, on the

ground that they were cumulative and therefore excludable

pursuant to Fed. R. Evid. 403 (Pet. App. A5). See Hamling

v. United States, 418 U.S. 87, 127 (1974).‘ Third, the court

correctly excluded defense testimony concerning letters and -

conversations between a witness and third parties (Tr. 737-

743) and testimony asserting that wages are not income and

that the Sixteenth Amendment does not authorize a tax on

wages (Tr. 753-779, 784-790). That evidence, as the court

held, “involved inadmissible hearsay, was more prejudicial

than probative, included legal conclusions beyond the pro-

vince of the jury, or was irrelevant to[petitioner’s] defense of

that evidence (Pet. App. A4; Pet. 15 n.*). Because, however, the court

rejected on the merits petitioner’s similar objection to evidence of his

failure to file state returns for 1981 through 1983, the court’s mistaken

reliance on the stipulation was harmless.

‘Notably, the trial court allowed petitioner to read into tae record

those materials on which ke claimed to have relied; it permitted him to

testify as to his understanding of the law; and it instructed the jury on the

issue of good faith (Tr. 337, 359-360, 374, 405, 416, 419).

7

good faith” (Pet. App. A6).° Petitioner has failed to show

that any of those evidentiary rulings was erroneous, much

less that any of them presents an important issue requiring

this Court’s resolution.

Equally without merit is petitioner’s objection (Pet. 7-8,

15) to limiting instructions given by the district court during

petitioner’s testimony and that of another defense witness.

Those instructions properly limited the testimony by exclud-

ing legal conclusions and inadmissible hearsay. The instruc-

tions also properly advised the jury that the testimony was

relevant only to petitioner’s intent, and not to the truth of

the matters asserted. Contrary to petitioner’s claim, the

district court never suggested to the jury that the court

doubted that petitioner had acted in good faith.

Petitioner also asserts (Pet. 18), without citation of any

supporting authority, that the district court erred in permit-

ting the prosecutor to use summary charts during closing

argument. That contention, too, lacks merit. It is entirely

proper for a trial court to allow the use of charts during

argument where, as here, the charts are based on admitted

evidence (IRS records and Forms W-2 reflecting petitioner’s

filing history for the years 1966 through 1978 and peti-

tioner’s gross wages in 1979 and 1980). See Fed. R. Evid.

1006; see also Bower v. O’Hara, 759 F.2d 1117, 1127 (3d

‘There is no merit to petitioner’s claim (Pet. 7, 15) that the district

court imposed a double standard of relevance by allowing the prosecu-

tion to introduce evidence of petitioner’s conduct both before and after

the date of his offenses while not allowing the defense to introduce

evidence of certain actions after the date the criminal investigation

began. Petitioner has failed to demonstrate that any of the excluded

evidence was relevant to his state of mind when he committed his

offenses. Except for evidence of similar acts tending to show criminal

intent, evidence of a taxpayer’s subsequent conduct is generally immate-

rial to the issue of willfulness. United States v. Ming, 466 F.2d 1000,

1005 (7th Cir. 1972), cert. denied, 409 U.S. 915 (1972); United States v.

Ross, 626 F.2d 77, 81-82 (9th Cir. 1980).

8

Cir. 1985); Bobsee Corp. v. United States, 411 F.2d 231,

240-241 (Sth Cir. 1969).

4. Finally, petitioner contends (Pet. 19-20) that the court

of appeals erred in determining that petitioner was not

entitled under the Jencks Act, 18 U.S.C. 3500, to the entire

report of an IRS special agent who testified at trial. One

week before trial, the government provided petitioner with a

copy of the special agent’s report, from which matter unre-

lated to the agent’s expected testimony on direct examina-

tion had been excised (Tr. 238). Pursuant to the Jencks Act,

petitioner moved for production of the entire report after

the agent had completed his testimony on direct examina-

tion (Tr. 237-238; see 18 U.S.C. 3500(a)). The government

responded that the excised portions of the report did not

relate to the agent’s direct testimony. As permitted by the

Jencks Act, 18 U.S.C. 3500(c), the government then submit- ~

ted the report to the district court for in camera inspection

(Tr. 239). The court denied petitioner’s request for addi-

tional disclosure of the agent’s report on the ground that no

exculpatory information had been withheld (Tr. 242). On

appeal, the court of appeals held that although the district

court appeared to have erroneously limited its review to

exculpatory material producible under Brady v. Maryland,

373 U.S. 83 (1963), any error was harmless because, in the

court of appeals’ view (Pet. App. A6), “the redacted por-

tions of the report [did not] contain * * * material produci-

ble under the Jencks Act.”

]

Petitioner contends (Pet. 19-20) that the court of appeals

ruling conflicts with this Court’s pronouncement in Dennis

v. United States, 384 U.S. 855, 875 (1966) (footnote omit-

ted); that “[t]he determination of what may be useful to the

defense can properly and effectively be made only by an

advocate.” See also Scales v. United States, 367 U.S. 203,

258 (1961). Petitioner, however, misapprehends the import

of the court of appeals’ ruling. The court of appeals did not

es ee ea

9

pass on the “useful[ness]” of the excised portion of the

report, but rather considered its materiality as a matter of

law, a task that is expressly committed to the court in such

cases. See 18 U.S.C. 3500(c) (“the court shall excise the

portions * * * which do not relate to the subject matter of

the testimony of the witness” ). In any event, even with

regard to alleged exculpatory materials, the court may

properly play a role in determining whether particular

information is pctentially exculpatory, in the course of

deciding whether the prosecution must provide the evidence

to the defense. See United States v. Agurs,427 U.S. 97, 106

(1976). It was therefore entirely proper for the district court

and the court of appeals to rule on the materiality of the

excluded portions of the special agent’s report.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

CHARLES FRIED

Solicitor General

ROGER M. OLSEN

Assistant Attorney General

MICHAEL L. PAUP

ROBERT E. LINDSAY

ALAN HECHTKOPF

Attorneys

JUNE 1986

DO}J-1986-06