U.S. v. McLaughlin

• Decision Date: 20 October 2004
• Docket Number: No. 00-2550.,00-2550.
• Citation: 386 F.3d 547
• Parties: UNITED STATES of America v. Steven McLAUGHLIN, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

386 F.3d 547

UNITED STATES of America v. Steven McLAUGHLIN, Appellant.

No. 00-2550.

United States Court of Appeals, Third Circuit.

Submitted Under Third Circuit LAR 34.1(a) October 7, 2004.

Filed: October 20, 2004.

Appeal from the United States District Court for the Eastern District of Pennsylvania, Jan E. DuBois, J.

COPYRIGHT MATERIAL OMITTED

Stephen James Binhak, Key Biscayne, for Appellant.

Patrick L. Meehan, United States Attorney, Laurie Magid, Deputy United States Attorney for Policy and Appeals, Robert A. Zauzmer, Assistant United States Attorney Senior Appellate Counsel, Bea L. Witzleben, Assistant United States Attorney, Kathy A. Stark, Philadelphia, for Appellee.

Before SLOVITER, VAN ANTWERPEN and COWEN, Circuit Judges.

OPINION OF THE COURT

SLOVITER, Circuit Judge.

This is an appeal by Steven McLaughlin from his conviction and sentence following a jury trial on a superceding indictment charging him with conspiracy in violation of 18 U.S.C. § 371, multiple counts of stealing and embezzling union funds in violation of 29 U.S.C. § 501(c) and 18 U.S.C. § 2, one count of failing to disclose material facts in a report filed with the Secretary of the Department of Labor ("DOL") in violation of 29 U.S.C. §§ 431, 439(b), and perjury in violation of 18 U.S.C. § 1623.

The principal issue presented is whether the District Court erred by instructing the jury that materiality was a question of law, rather than fact, for purposes of 18 U.S.C. § 1623 and 29 U.S.C. § 439(b) and, if so, whether such error was harmless.¹

I.

McLaughlin served as President of the Eastern Montgomery County Area Local No. 2233 ("EMCAL"), an affiliate of the American Postal Worker's Union ("APWU"), from January 1992 until December 1994. APWU, a national labor union whose membership consists of various United States Postal Service employees, has five regional offices, which are further divided into approximately 1,300 geographically-based sections called "Locals." EMCAL is the Local for postal employees operating in Eastern Montgomery County, Pennsylvania.²

The Government presented evidence of McLaughlin's expenditures for car repairs, local hotel stays, and purchases of electronic equipment paid for by union funds on a charge card issued to McLaughlin and EMCAL. The Government argued that these purchases were for McLaughlin's personal benefit and hence not authorized under EMCAL's constitution. In addition, the Government attempted to prove that McLaughlin had embezzled from EMCAL by causing unauthorized payroll checks to be issued in his name and by causing EMCAL to overpay him for health insurance, life insurance, and retirement benefits. Finally, the Government also sought to prove that McLaughlin had filed a report, known in labor parlance as an "LM2 report," with the DOL in 1993 in which he had failed to disclose his receipt of certain benefits and reimbursements from EMCAL as required by law.

In his defense, McLaughlin testified that other individuals affiliated with EMCAL had also used the charge card, and introduced as Defense Exhibit 2 the customer's carbon copy of a receipt on EMCAL's charge card for a purchase at a Staples Office Supplies store with a signature purporting to be that of James Martello, an EMCAL executive. McLaughlin testified Martello had used the card and then had given him the receipt.

On cross-examination, the Government produced the merchant's copy of the receipt, identical except that it bore McLaughlin's signature rather than Martello's. On cross-examination, McLaughlin conceded that, apart from the disparate signatures, the two documents appeared identical.

The jury was unable to reach a unanimous verdict, the District Court declared a mistrial, and the grand jury returned a superceding indictment charging the same offenses as the original indictment with the addition of a perjury count based on McLaughlin's testimony regarding Martello's use of the charge card at Staples.

On the retrial, McLaughlin's counsel informed the Court that he was unable to locate the Staples receipt previously admitted as Defense Exhibit 2. The Court informed the parties that it had made and retained photocopies of all the exhibits, including Defense Exhibit 2, and McLaughlin's defense counsel stated that he would not object to the use of such a copy at the trial.

Before instructing the jury, the District Court advised the parties it intended to instruct the jury that the issues of materiality with respect to the perjury and false reporting charges were questions of law that it had decided in the United States' favor. Defense counsel objected, arguing that materiality was a question of fact for the jury. The District Court overruled this objection. With respect to the charge that McLaughlin had failed to disclose a material fact to the DOL, the District Court instructed the jury that:

The second element of the crime ... requires that the Government prove, beyond a reasonable doubt, that the LM2 report for 1993 contained false statements or representations of material facts or [ ]omitted material facts.

I instruct you, as a matter of law, that statements on the 1993 LM2 report of expenses, including reimbursed expenses, which must be set forth on Schedule 9 of the report are material facts under the statute. I instruct you on that as a matter of law. So you need not concern yourself with the issue of materiality.

Supp. App. at 1030. Similarly, with respect to the 18 U.S.C. § 1623 charge, the District Court instructed:

The question whether the alleged false testimony was material is a question of law for me to decide. It is not a question of fact for you, the jury, to determine.

And I instruct you that the matters as to which it is charged that defendant, Steven McLaughlin made false statements... were material to the proceedings before the court. Thus, you need not decide the question of materiality.

Supp. App. at 1037. Thereafter, the jury convicted McLaughlin on all charged counts.

Following the sentencing hearing, the Court sentenced McLaughlin to serve a total period of incarceration of twenty-four months. In addition, the District Court imposed a total of three years supervised release, restitution in the amount of $18,000, and a special assessment of $1,050.³

This appeal followed.

II.

We generally review jury instructions under the abuse of discretion standard. Appellate review, however, is plenary when the question is whether a district court's instructions misstated the law. Walden v. Georgia-Pacific Corp., 126 F.3d 506, 513 (3d Cir.1997).

A.

In United States v. Gaudin, 515 U.S. 506, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995), the Supreme Court of the United States held that "materiality" is an element of 18 U.S.C. § 1001 ("makes any materially false, fictitious, or fraudulent statement"), and thus, under the Fifth and Sixth Amendments, materiality is a question that must be determined by a jury rather than a judge in an 18 U.S.C. § 1001 proceeding. Two years later, relying on its decision in Gaudin, the Court in Johnson v. United States, 520 U.S. 461, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997), held that materiality is an element of 18 U.S.C. § 1623 ("knowingly makes any false material declaration"), and therefore, it is a question for the jury. Based on these precedents, we conclude that the District Court's instruction removing from the jury the issue of materiality in its consideration of McLaughlin's violation of 18 U.S.C. § 1623 was an error of law.

In contrast to 18 U.S.C. § 1623, neither the Supreme Court nor this court has decided whether materiality is an element of 29 U.S.C. § 439(b). That statute provides:

Any person ... who knowingly fails to disclose a material fact, in any document [or] report ... required under ... this subchapter shall be fined not more than $10,000 or imprisoned for not more than one year, or both.

29 U.S.C. § 439(b) (emphasis added). As is true respecting 18 U.S.C. § 1623 and 18 U.S.C. § 1001, the statutory text of 29 U.S.C. § 439(b) expressly requires that the fact allegedly withheld be "material." Compare Johnson, 520 U.S. at 465, 117 S.Ct. 1544 ("The statutory text expressly requires that the false declaration be `material.' Gaudin therefore dictates that materiality be decided by the jury, not the court."), with United States v. Wells, 519 U.S. 482, 489-91, 117 S.Ct. 921, 137 L.Ed.2d 107 (1997) (holding that "materiality" is not element of 18 U.S.C. § 1014, a statute that does not contain materiality requirement in text). In other words, the logic of Gaudin and Johnson compels a finding that materiality is an element of 29 U.S.C. § 439(b). See United States v. W. Indies Transp., Inc., 127 F.3d 299, 305 (3d Cir.1997) ("Failure to submit the issue of materiality to the jury was error.... That Gaudin involved perjury under 18 U.S.C. § 1001 rather than 18 U.S.C. § 1546, the relevant statute here, is not significant given the identical character of the materiality element in both perjury statutes.") (emphasis added).

In sum, "materiality" is an element of both 29 U.S.C. § 439(b) and 18 U.S.C. § 1623. Thus, the District Court's decision to resolve the issue as a matter of law, rather than submitting it to the jury as a question of fact, violated McLaughlin's rights under the Fifth and Sixth Amendments. The instructions, therefore, were in error.

B.

Rule 52(a) of the Federal Rules of Criminal Procedure, which governs direct appeals from judgments of conviction in the federal system, provides that "[a]ny error, defect, irregularity or variance that does not affect substantial rights must be disregarded." Although Rule 52(a), by its terms, applies to all errors where a proper objection is made at trial, the Supreme Court has recognized a limited class of fundamental constitutional errors that "defy analysis by `harmless error' standards." Arizona v. Fulminante, 499 U.S. 279, 309, 111 S.Ct. 1246, 113 L.Ed.2d 302 (1991). Errors of that type are so intrinsically...