U.S. v. Hughes Aircraft Co., Inc.

• Decision Date: 28 April 1994
• Docket Number: No. 92-50681,92-50681
• Citation: 20 F.3d 974
• Parties: 39 Cont.Cas.Fed. (CCH) P 76,645 UNITED STATES of America, Plaintiff-Appellee, v. HUGHES AIRCRAFT CO., INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 974

20 F.3d 974

39 Cont.Cas.Fed. (CCH) P 76,645

UNITED STATES of America, Plaintiff-Appellee, v. HUGHES AIRCRAFT CO., INC., Defendant-Appellant.

No. 92-50681.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Dec. 6, 1993.

Decided March 28, 1994.

Amended April 28, 1994.

Gary Feess, Quinn Emanuel Urquhart & Oliver, Los Angeles, CA, for defendant-appellant.

George B. Newhouse, Jr., Asst. U.S. Atty., Los Angeles, CA, for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California, William Matthew Byrne, Jr., District Judge, Presiding.

Before: TANG, D.W. NELSON, and LEAVY, Circuit Judges.

PER CURIAM:

Hughes Aircraft Co., Inc. ("Hughes") appeals from its conviction and sentence for conspiring to defraud and make false statements to the federal government. We affirm.

FACTS AND PRIOR PROCEEDINGS

Hughes contracted with the United States to manufacture microelectronic circuits, known as "hybrids," which are used as components in weapons defense systems. The contracts required Hughes to perform a series of tests on each hybrid. As the hybrids made their way through the testing process, they were accompanied by paperwork indicating what tests had been performed, the results of those tests, and the identity of the operator of the testing equipment.

Hughes's former employee, Donald LaRue ("LaRue"), was a supervisor responsible for ensuring the accuracy of the hybrid testing process. LaRue arranged for the paperwork to indicate falsely that all tests had been performed and that each hybrid had passed each test. When LaRue's subordinates called his actions to the attention of LaRue's supervisors, the supervisors did nothing about it. Instead, they responded that LaRue's decisions were his own and were not to be questioned by his subordinates.

Hughes and LaRue were charged with one count of conspiracy to defraud and make false statements to the United States in violation of 18 U.S.C. Sec. 371, ¹ and two counts of making false statements in furtherance of that conspiracy in violation of 18 U.S.C. Sec. 1001. ² LaRue was acquitted on all counts.

Hughes was convicted of the conspiracy charge, but acquitted of the other two charges. ³ Hughes appeals from both its conviction and fine of $3.5 million

ANALYSIS

I. Conviction

A. Standard of Review

Hughes raises several arguments in support of the contention that its conviction under Sec. 371 must be overturned as a matter of law. Because these arguments present pure questions of law, we review them de novo. See Anderson v. United States, 966 F.2d 487, 489 (9th Cir.1992).

B. Discussion

1. Inconsistent Verdicts

Hughes first argues that it must be acquitted as a matter of law because the same jury that convicted Hughes acquitted its "indispensable co-conspirator," LaRue, of the identical charges on identical evidence. Hughes bases its argument on three Supreme Court cases from the 1930's and 1940's, ⁴ arguing that they provide an exception to the general rule that inconsistency of jury verdicts is not a ground for reversal. See Dunn v. United States, 284 U.S. 390, 393, 52 S.Ct. 189, 190, 76 L.Ed. 356 (1932); United States v. Powell, 469 U.S. 57, 64-65, 105 S.Ct. 471, 476, 83 L.Ed.2d 461 (1984). According to Hughes, the post-Dunn Supreme Court cases indicate that the inconsistent verdict rule applies only to situations involving inconsistencies in multiple verdicts against a single defendant, not inconsistencies in multiple verdicts against multiple defendants. Controlling Ninth Circuit precedent precludes us from adopting such a rule.

In United States v. Valles-Valencia, 811 F.2d 1232 (9th Cir.), as amended by 823 F.2d 381 (1987), the defendant argued that, because his sole co-conspirator was acquitted, his own conviction for conspiracy was impossible as a matter of law. Initially we agreed and stated "the acquittal of all but one of the conspirators signifies that the jury found no agreement to act, and the remaining conspirator cannot have [conspired with himself] since '[c]onspiracy requires a plurality of actors....' " 811 F.2d at 1239 (quoting United States v. Wright, 742 F.2d 1215, 1224 (9th Cir.1984)). In response to the subsequent Supreme Court decision in Powell, however, we amended our ruling, stating that

[I]nconsistent verdicts can just as easily be the result of jury lenity as a determination of the facts. Thus, the acquittal of all conspirators but one does not necessarily indicate that the jury found no agreement to act. Moreover, the Court has rejected a rule that would allow criminal defendants to challenge inconsistent verdicts on the ground that in their case the verdict was

not the product of lenity, but of some error that worked against them. The fact that the conflict in this case involves charges against different defendants, rather than different charges against the same defendant does not affect the rationale

823 F.2d at 381-82 (internal quotation and citation omitted).

The Supreme Court's decision in Powell supports this extension of the application of the Dunn rule insulating inconsistent jury verdicts from appellate review. "[T]he Government's inability to invoke review, the general reluctance to inquire into the workings of the jury, and the possible exercise of lenity--suggest that the best course to take is simply to insulate jury verdicts from review on [inconsistency] ground." Powell, 469 U.S. at 68-69, 105 S.Ct. at 479. Contrary to Hughes's contentions, this Circuit has not recognized a post-Powell exception to the Dunn rule. ⁵ Accordingly, the conviction of one co-conspirator is valid even when all the other co-conspirators are acquitted.

2. Respondeat Superior

Hughes next argues that it is entitled to a judgment of acquittal because the evidence against it and LaRue was identical, yet one was convicted while the other was acquitted. ⁶ This argument is predicated on the assumption that LaRue was the sole employee for whose actions Hughes could be found vicariously guilty and that the evidence against each of the two defendants was necessarily identical. However, some of the evidence of conspiracy was offered against Hughes alone. Moreover, as this evidence indicates, the jury could have found Hughes guilty based on the actions or omissions of its supervisors and employees other than LaRue. As Hughes's assumption that the facts against both defendants were identical is erroneous, and no other facts support its argument, we reject this contention.

3. Statutory Construction

Hughes's third argument is that the plain language of 18 U.S.C. Sec. 371, which states that if "two or more persons conspire ... each" may be punished, prevents its conviction because it is legally impossible for a party to conspire with itself. Hughes argues that, because it is vicariously liable for each of its employees, a conspiracy between employees would necessitate a finding that Hughes conspired with itself. We reject this creative construction. The statutory language does not exclude criminal liability for a corporation simply because its employees are the actual conspirators. To rule otherwise

would effectively insulate all corporations from liability for conspiracies involving only employees acting on behalf of that corporation. We hold that a corporation may be liable under Sec. 371 for conspiracies entered into by its agents and employees. See United States v. Peters, 732 F.2d 1004, 1008 (1st Cir.1984)

Nonetheless, Hughes argues that the statute is ambiguous and that the rule of lenity compels a reversal of its conviction. See United States v. LeCoe, 936 F.2d 398, 402 (9th Cir.1991). However, the Supreme Court recently explained that "[t]his maxim of statutory construction ... cannot dictate an implausible interpretation of a statute, nor one at odds with the generally accepted contemporary meaning of a term." Taylor v. United States, 495 U.S. 575, 596, 110 S.Ct. 2143, 2157, 109 L.Ed.2d 607 (1990). Moreover, the rule of lenity is not " 'to be used in complete disregard of the purpose of the legislature.' " Perrin v. United States, 444 U.S. 37, 49 n. 13, 100 S.Ct. 311, 317 n. 13, 62 L.Ed.2d 199 (1979) (quoting United States v. Culbert, 435 U.S. 371, 379, 98 S.Ct. 1112, 1116, 55 L.Ed.2d 349 (1978)). Because the interpretation offered by Hughes is implausible and would undermine the purpose of the statute, we reject it.

4. The Intracorporate Conspiracy Doctrine in Antitrust Law

Hughes also contends that we should extend the reach of the intracorporate conspiracy doctrine in antitrust law, which holds that a conspiracy requires "an agreement among two or more persons or distinct business entities." Calculators Hawaii, Inc. v. Brandt Inc., 724 F.2d 1332, 1336 (9th Cir.1983). See also Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984); Harvey v. Fearless Farris Wholesale Inc., 589 F.2d 451, 455 (9th Cir.1979). While this doctrine has been extended by some circuits to civil rights cases, see e.g. Buschi v. Kirven, 775 F.2d 1240, 1251 (4th Cir.1985); Dombrowski v. Dowling, 459 F.2d 190, 196 (7th Cir.1972), other circuits have declined to do so, see e.g. Dussouy v. Gulf Coast Invest. Corp., 660 F.2d 594, 603 (5th Cir.1981), and we have reserved the issue. See Portman v. County of Santa Clara, 995 F.2d 898, 910 (9th Cir.1993) (listing cases).

However, this doctrine has never been applied to criminal cases. As the First Circuit noted, "There is a world of difference between invoking the fiction of corporate personality to subject a corporation to civil liability for acts of its agents and invoking it to shield a corporation or its agents from criminal liability where its agents acted on its behalf." Peters, 732 F.2d at 1008 n. 7. Every other circuit to address the issue has come to the same conclusion. See United States v. Ames Sintering Co., 927 F.2d 232, 236 (6th Cir.1990); United States v. Stevens, 909 F.2d 431, 432 (11th Cir.1990); United...