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UNITED STATES v. LANNI

November 15, 1971

UNITED STATES of America
v.
Louis LANNI, Sr., Mary Maiale


Edward R. Becker, District Judge.


The opinion of the court was delivered by: BECKER

EDWARD R. BECKER, District Judge.

 I. PRELIMINARY STATEMENT

 Defendant Louis Lanni, Sr. ("Lanni"), Secretary-Treasurer of Teamsters Local 830, was convicted by a jury after a two-week trial of conspiracy and of violating section 302(b) of the Labor-Management Relations Act, 29 U.S.C. § 186(b) (1964). Section 302(b) makes it a crime for an employee representative or an officer or employee of a labor organization to receive or accept money from an employer whose employees he represents. *fn1" Defendant Mary Maiale ("Maiale"), Lanni's "girlfriend" *fn2" was convicted by the same jury of conspiracy. We have before us defendants' motion for judgment of acquittal, or, in the alternative, for a new trial. The principal, as well as most difficult question before us, is the propriety of the Court's charge to the jury as to the elements necessary to establish "receipt" by a labor leader of payments by an employer. This is apparently a case of first impression on the important question of whether or not it is necessary for the government to actually trace the funds into a labor leader's hands in order to sustain a conviction under section 302(b). Defendants have grounded their motion on a number of points in addition to the alleged error in the charge, and we will deal with each of them in this Opinion.

 II. THE FACTS OF RECORD

 Surprisingly, there is relatively little dispute between the parties as to most of the facts in the record. All of the witnesses who testified were put on by the government; Lanni and Maiale did not take the stand and did not offer any witnesses. The disputed areas emerge from the cross examination and closing arguments, and we will comment infra upon the crucial areas of dispute as to the facts. Since, in considering a motion for judgment of acquittal, the evidence must be viewed in the light most favorable to the government, Glasser v. United States, 315 U.S. 60, 80, 62 S. Ct. 457, 86 L. Ed. 680 (1942); United States v. Feldman, 425 F.2d 688 (3d Cir. 1970); United States v. Giuliano, 263 F.2d 582 (3d Cir. 1959), we will now set forth the facts adduced from the witness stand during the trial from which the jury could have made a finding of guilty.

 During the period from sometime prior to 1967 and up to and including August 1968, Joseph D'Agata ("D'Agata") was an officer of the D'Agata National Trucking Company ("D'Agata National"), which employed as drivers and helpers members of Teamsters Local 830. *fn3" At the time of the events in question, and for many years prior thereto, Lanni was Secretary-Treasurer of Local 830. D'Agata testified that in the latter part of 1966 his father wished to retire from the management of D'Agata National, which had been a family operation, and thereupon, D'Agata looked for a new investor in the company. D'Agata spoke with his attorney, Morris Goldman, of the Philadelphia Bar, who indicated that Maiale would be willing to invest in D'Agata National. There followed a meeting in Goldman's office, at which time Maiale agreed to invest approximately $33,000 in D'Agata National in return for a 25% stock ownership. Maiale was to be employed by D'Agata National as its bookkeeper at a salary of $150 a week. Lanni, according to D'Agata, took no part in these negotiations, but was aware that Maiale was to become an investor.

 Beginning on January 1, 1967, Maiale was in fact put on D'Agata National's payroll as a bookkeeper at $150 a week. *fn4" On April 1, 1967, Lanni, who was like a "father" to D'Agata, suggested that D'Agata and his brother should draw $50 a week more for their salary because business was better and because they "deserved it", and Maiale's weekly salary was also increased by $50 to $200. However, from the time of the first paycheck until the last paycheck on August 2, 1968 (a nineteen-month period), Maiale never performed any bookkeeping services for D'Agata National, or any other services, and never invested any money. Maiale did not even go to D'Agata National to pick up her check; it was mailed to her every Friday. She then deposited these checks into her own bank account. The payments were reported to the federal government on W-2 forms for the years 1967 and 1968. During this entire period, Maiale was employed as a full-time bookkeeper for Local 830's Health and Welfare Fund. Lanni was aware that Maiale performed no services for D'Agata National.

 While there finally came a time when D'Agata realized that Maiale was not going to invest in D'Agata National *fn5" and was not going to perform bookkeeping services, he nonetheless continued to send her a weekly check because during this period he had a good relationship with the union, business picked up, he got new customers, and because:

 
"I knew Mary was very close to Lou [Lanni], and I figured, you know, keep everything happy. I am not going to disturb nothing because I was doing good." (N.T. 142).

 D'Agata soon became known as "Lou Lanni's boy." During the period he was paying Maiale, Lanni and Maiale would go to D'Agata National's offices to visit D'Agata several times a week, whereas prior to 1967, they never came to see D'Agata.

 One of the significant factors in the sudden improvement of D'Agata National's business was the acquisition of a portion of the overflow beer hauling business of C. Schmidt & Sons, a major Philadelphia brewery. *fn6" According to the testimony of Charles McDevitt, Schmidt's Director of Transportation, Lanni called McDevitt in January or February of 1967 and told him to employ D'Agata's firm for its Wilmington deliveries, and to replace the firm it had previously used for these deliveries. McDevitt related that Schmidt's employed D'Agata National because Lanni, through his power over the union membership, was capable of shutting down its plant, and Schmidt's believed that he would be likely to do so if it did not accommodate his request. *fn7" McDevitt stated that, in the past, Lanni had shut down the plant by pulling the men off the platforms when Schmidt's refused to accede to his wishes.

 Francis J. Tomlinson, the business agent for Local 830 and a member of its executive board during the period from January 1967 through August 1968, testified to conversations he had overheard between Lanni and others at the Local's office and to certain events that occurred there. Every night when Lanni was ready to close the office, Lanni would call his chauffeur over and say, "Come on, John, let's take a ride down to D'Agata's and see what's happening." Sometimes Lanni would make comments such as:

 
"Come on, John, let's go down. I got to get some money. I am tired of promises. That's all I am getting out of him. His stories. I need 'tin' off of him tonight."

 Lanni's nightly routine continued for about five weeks in the beginning of 1967. Thereafter, Lanni would see Tony D'Roso, shop steward at D'Agata National, who would keep Lanni informed of every occurrence at D'Agata National. D'Roso would make a daily report to Lanni and visit the Local's hall two or three times a week. During one of the conversations between Lanni and D'Roso, D'Roso told Lanni that a driver had "flipped over" one of D'Agata National's trucks in New Jersey, whereupon Lanni replied:

 
"Jesus Christ, I told him to get rid of that bum. He is ruining us. Doesn't he know that all that equipment costs money? What does he think we do -- get all that equipment for nothing? That costs money."

 In order to establish Lanni's and Maiale's financial inter-dealings, the government introduced evidence that, in early 1968, while Maiale was still receiving payments from D'Agata National, she and Lanni went to Miama, Florida to purchase a condominium in an apartment building there. Mary Agnes Schwartz, the sales agent of the condominium seller, James T. Barnes Mortgage Co., testified that Lanni told her that the apartment would be titled in Maiale's name, but that, in order for Maiale to qualify for a mortgage on the property, he would transfer funds to Maiale's account in a local bank. A notation on the mortgage application stated, "Mr. Lanni is putting up equity for [apartment] 502. Mary Maiale." Lanni also inquired about the availability of free boat dock space at the condominium, and had Schwartz insert a clause into the purchase agreement giving the purchaser the exclusive right to dock the boat at no extra cost. However, Lanni, not Maiale, owned a boat. Maiale signed the purchase agreement and the mortgage, and gave Schwartz her check for $500 representing a deposit on the apartment. The defense conceded that Lanni and Maiale shared the apartment.

 One final point in connection with the Miami apartment was furnished by Tomlinson's testimony. Tomlinson testified that at the union's membership meeting in January 1969, shortly after Lanni had been elected to another term as Secretary-Treasurer of Local 830, Lanni took the stage, related how he had taken some union stewards down to his apartment in Miami, and said, "Tell the boys how you enjoyed your trip to Florida, how you enjoyed your victory trip down my place in Florida."

 In addition to showing Lanni's and Maiale's close personal relationship and their interrelationship concerning the Miami apartment, the government introduced evidence to show that the two defendants had had other business dealings and that in them Maiale was a "straw man" for Lanni. Over the defendants' objection, and subject to a limiting instruction in the charge (see pp. 1080, 1081 infra), the testimony of one Carl Maier was introduced. Maier, a partner in a garage business, testified that in July 1967, one of his partners, Lewis Bertucci, introduced him to Lanni and to Gordon Grubb, the latter being President of Local 830, for the purpose of discussing formation of a truck leasing company. Together with Maier, Grubb and Lanni agreed to be the principals in the corporation, and they were each to receive one-third of the stock. Shortly thereafter, a second meeting was arranged at the office of Morris Goldman, Esq., who had previously arranged the meeting between Maiale and D'Agata, for the purpose of drawing up the formal documents. Maiale was present at the meeting, along with Goldman, Lanni, Grubb and Maier, and when the documents were signed and the corporation formed, the shareholders were Maier, Maiale (holding Lanni's interest) and Linda Nawrocki (Grubb's daughter, holding Grubb's interest). It was decided at that time that Maiale would do nothing in the corporation other than be one of the check signers. Maier also testified that in August 1967, he again met with Lanni and Grubb (Maiale, Bertucci and attorney Goldman were present), this time to discuss the possibility of forming a realty company, and that someone at the meeting indicated that, while Maiale would become a shareholder of record, she would act solely as a "straw name" in the corporation. *fn8"

 In the government's view, the foregoing facts permitted the jury to conclude that Maiale served solely as a "straw man" for Lanni in Lanni's business and financial arrangements, and that Maiale received the $16,300 from D'Agata National for Lanni's use or benefit, including the purchase of their shared Florida apartment. Maier's testimony and the testimony pertaining to the Florida apartment were used to show that what was nominally Maiale's was, in reality, Lanni's. The government advanced the testimony concerning Lanni's and Maiale's visits to D'Agata, and Lanni's daily conversations with D'Agata National's shop steward as corroborative of Lanni's personal and financial interest in D'Agata National. The testimony of McDevitt and D'Agata was offered to show Lanni's modus operandi for benefiting D'Agata National after Maiale was placed upon its payroll, i.e., use of the tremendous power that Lanni had over the Teamsters in Local 830 to coerce Schmidt's to employ D'Agata National for overflow hauling.

 During the summer of 1968, D'Agata National began to experience a loss of customers. Of particular concern was the loss of the Schmidt's business. The government and the defense differ as to the reasons for the loss of the Schmidt's business. However, there is evidence in the record that the reason for Schmidt's decision to drop D'Agata National was a telephone call received by McDevitt from Lanni telling him to stop loading D'Agata National and to start using another trucking company instead. McDevitt testified that he desired to continue using D'Agata National because its service and rates were good, but Lanni threatened to shut down Schmidt's and prevent the Teamsters from loading at Schmidt's platform; as a result, McDevitt was forced to comply with Lanni's request. After learning of this, D'Agata threatened to obtain an injunction against Schmidt's. Schmidt's lawyers then contacted D'Agata and Lanni, and it was finally agreed that D'Agata National would be able to haul from Schmidt's brewery for five of its long-standing customers, but that D'Agata National would still not be given any of Schmidt's regular overflow business. Although Lanni signified to McDevitt that he did not care which hauling company Schmidt's used, as long as it was not D'Agata's, Schmidt's started using Pflaumer's trucking company, after Pflaumer showed Schmidt's what purported to be an I.C.C. approved tariff. This tariff proved to be spurious, having never been approved by the I.C.C.; yet, even after the discovery of the spurious tariff, Schmidt's continued to use Pflaumer's company and pay higher rates because it could not use D'Agata for fear of a shutdown.

 Tomlinson confirmed McDevitt's testimony and related certain events preceding the Schmidt's termination. During the summer of 1968, one Donnelly, an employee of Schmidt's at its Norristown brewery, became involved in an argument with D'Agata and D'Agata threatened to kill him. Schmidt's thereupon stopped loading D'Agata National's trucks at Norristown, and within a day or so, also stopped loading its trucks at its main plant in Philadelphia. Schmidt's refused to tell D'Agata why it would not load his firm's trucks, but suggested he get in touch with the union. D'Agata called the union and spoke to Tomlinson, who told him that the drivers would not load his firm's trucks unless he gave them a raise. When D'Agata agreed to the raise, Tomlinson told him that the drivers would no longer deliver straight to the terminals and that D'Agata would have to change drivers and put in new drivers before entering the terminals. Thus, D'Agata National would have to pay two shifts of drivers to conduct the same operation that was previously conducted with one shift of drivers. The practical effect of this demand was to double D'Agata National's labor costs, and to threaten the firm's survival. Tomlinson testified that he was under instructions from Lanni, who was in Florida at the time, to provoke the drivers into striking D'Agata National, and that he knew that by ordering the drivers not to deliver directly to the terminals, D'Agata National's business would be "crippled". McDevitt testified that the Donnelly incident had nothing to do with D'Agata's trouble with Schmidt's. He stated that the incident was resolved within a very short period of time during which D'Agata apologized to Donnelly.

 The defendants, in their theory of the case, accept the incontrovertible fact of Maiale's receipt of $16,300 from D'Agata National. They argue, however, that these payments were made in connection with a legitimate business arrangement between D'Agata and Maiale which soured and was never consummated. They contend that Lanni never received any of the money and that there was no agreement among Lanni, Maiale and D'Agata that the funds were to be received by Lanni. Defendants reason that the government's case is founded essentially upon D'Agata's beliefs (1) that by paying Maiale, he would curry favor with Lanni; and (2) that D'Agata National would consequently benefit in the form of better labor relations and more business because shippers prefer to deal with truckers who are blessed with good labor relations and therefore are less likely to suffer interruptions in service. Defendants say that these beliefs (and motives) may well have been corrupt; however they submit that such facts and circumstances do not add up to an agreement to violate section 302 of the Labor-Management Relations Act.

 Having outlined the facts of record, we come to the Court's interpretation of section 302 as reflected by its charge to the jury. We will then turn to the question of whether the record facts make out a sufficient case to sustain a conviction and to the other assignments of error.

 III. THE COURT'S CHARGE AS TO THE ELEMENTS NECESSARY TO ESTABLISH RECEIPT UNDER SECTION 302 OF THE LABOR-MANAGEMENT RELATIONS ACT

 A. Introduction

 The government did not prove and did not attempt to prove by direct evidence that Lanni received any money from D'Agata National. The government and the defense disagreed on what the Court's charge on "receipt" should be, and on whether there was enough evidence on the question of receipt to go to the jury. The defendants contended that, under the Act, the government would not make out a case until it showed actual receipt by Lanni, i.e., the money in his hands, and they urged the Court to charge accordingly. The government sought what we refer to as a Hobbs Act charge (see pp. 1071-1072 infra) to the effect that if Lanni had directed or suggested that D'Agata National make payment to Maiale, the jury could convict regardless of actual receipt by or benefit to Lanni himself.

 During the course of the trial, we carefully examined the legislative history in an attempt to assess the intent of Congress in enacting and amending section 302. As the record reflects, we engaged in lengthy colloquies with counsel to get the benefit of their views on the subject. While the determination was not a simple one, we formulated a charge which lies in middle ground but which is, in point of fact, a good deal closer to what Lanni and Maiale sought than what the government sought. In formulating the charge, we heeded the common-sense principle, particularly apposite in this case, that the Court must give the jury guidance by relating its instructions to the actual facts of the case, rather than merely stating the law in the abstract. See Choy v. Bouchelle, 436 F.2d 319 (3d Cir. 1970); McNello v. John B. Kelly, Inc., 283 F.2d 96 (3d Cir. 1960).

 B. The Language of the Act and the Language of the Charge

 Section 302 of the Labor-Management Relations Act, 29 U.S.C. § 186 (1964) states in pertinent part:

 
"(a) It shall be unlawful for any employer * * * to pay * * * any money or other thing of value --
 
(1) to any representative of any of his employees who are employed in an industry affecting commerce; or
 
* * *
 
(4) to any officer or employee of a labor organization engaged in an industry affecting commerce with intent to influence him in respect to any of his actions, decisions, or duties as a representative of employees or as such officer or employee of such labor organization.
 
(b)(1) It shall be unlawful for any person to * * * receive, or accept * * * any payment, loan or, delivery of any money or other thing of value prohibited by subsection (a) of this section."

 In construing this section of the Labor-Management Relations Act, as it applied to the receipt of funds by a labor leader, the Court charged the jury as follows:

 
"However, the crucial question again is what is meant by receiving or accepting the money.
 
Now, I instruct you that if based upon the direct and circumstantial evidence in this case you find beyond a reasonable doubt that Mr. Lanni actually received or accepted in his possession the sums paid by D'Agata to Miss Maiale, then that aspect of the Labor-Management Relations Act which requires acceptance or receipt has been met. And you may, if all other requisites of proof under the Act as I will define them to you have been met, you can make a finding of guilt. If you find based on all the evidence and beyond a reasonable doubt that Mr. Lanni actually received or accepted in his possession these sums paid by D'Agata to Maiale, then that aspect of the Act is met.
 
However, I also instruct you that the requirements of Section 186 of the Labor-Management Relations Act concerning acceptance and receipt by an employee representative or officer of a labor organization are also met, if, based upon the evidence in the case, you find beyond a reasonable doubt that money paid by an employer is received or accepted by someone who is the agent, intermediary, go-between or front for the employee representative or officer of a labor organization.
 
Now, in order, however, for one to be an agent, intermediary, go-between or front, it is essential that the parties to the transaction contemplate that the agent, intermediary, go-between or front is to receive the payments on behalf of the employee representative or labor union officer, with the further contemplation that the monies be available to or transmitted like a conduit to the employee representative or labor union officer, or that the parties contemplate that the money be received and held for his use.
 
In this case, therefore, in order to meet the acceptance and receipt aspect of Section 186, you must find from all of the evidence and beyond a reasonable doubt that the monies paid by D'Agata National to Mary Maiale were paid to her as agent, intermediary, go-between or front for Mr. Lanni. In order for you so to conclude, and that is, in order for you to conclude that she was an agent, intermediary, go-between or front for Mr. Lanni, you must first find beyond a reasonable doubt that Mr. D'Agata, Miss Maiale and Mr. Lanni contemplated that Miss Maiale was receiving payments on behalf of Mr. Lanni in contemplation that the monies be available to him or be transmitted to him like through a conduit; or that Mr. D'Agata, Miss Maiale and Mr. Lanni contemplated that the monies be received and held by Miss Maiale for Mr. Lanni's use. And if you so find beyond a reasonable doubt -- well, let me say this: If you so find beyond a reasonable doubt, then the acceptance and receipt provisions of 186 are met. And if you do not so find beyond a reasonable doubt, then you must find the defendants not guilty."

 C. The Legislative History

 The Labor-Management Relations Act of 1947 (the Taft-Hartley Act), 29 U.S.C. § 141 et seq. (1964), was enacted by Congress as an amendment to the then existing National Labor Relations Act (the Wagner Act). Taft-Hartley was passed in response to congressional concern over the growing power of labor unions and numerous strikes and secondary boycotts which had then occurred throughout the nation. Section 302, which restricted and prohibited employer payments to unions, arose specifically out of congressional response to a strike the previous year by the United Mine Workers Union, in which the union demanded from the employers that a tax of ten cents a ton on coal be paid to the union for indiscriminate use in its so-called welfare funds. See S. Rep. No. 105, 80th Cong., 1st Sess. 52 (1947); 93 Cong. Rec. 4876 (1947) (remarks of Senator Taft).

 While payments to union welfare funds, which had been used as "war chests " in the event of a strike, was one reason for passage of section 302, the Supreme Court's opinion in United States v. Ryan, 350 U.S. 299, 76 S. Ct. 400, 100 L. Ed. 335 (1956), indicates that section 302 was also meant by Congress to be a broad prohibition against employer bribes to union officials. Mr. Justice Clark, speaking for the Court, stated, inter alia:

 
"Nor can it be contended that in this legislation Congress was aiming solely at the welfare fund problem. Such a suggestion is supported neither by the legislative history nor the structure of the section. The arrangement of § 302 is such that the only reference to welfare funds is contained in § 302(c)(5). If Congress intended to deal with that problem alone, it could have done so directly, without writing a broad prohibition in subsections (a) and (b) and five specific exceptions thereto in subsection (c), only the last of which covers welfare funds. As the statute reads, it appears to be a criminal provision, malum prohibitum, which outlaws all payments, with stated exceptions, between employer and representative. * * * As passed by the House of Representatives, the Hartley Bill forbade employer contributions to union welfare funds, and made it an unfair labor practice to give favors to 'any person in a position of trust in a labor organization * * *.' H.R. 3020, 80th Cong., 1st Sess., § 8(a)(2). The scope of this bill was enlarged when it reached the Senate to include, in the words of Senator Taft, a 'case where the union representative is shaking down the employer * * *.' 93 Cong. Rec. 4746. The resulting Senate amendment made it criminal both for the employer and the 'representative' of employees to engage in such practices." Id. at 305, 76 S. Ct. at 404.
 
"strengthens section 302 of the Labor-Management Relations Act by making it applicable to all forms of extortion and bribery in labor-management relations some of which may slip through the present law." S. Rep. No. 187, 86th Cong., 1st Sess. 13 ...

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