518 F.3d 442 (6th Cir. 2008), 06-2324, United States v. Mabry

Docket Nº:Walter Ralph MABRY (06-2324); Anthony Michael (06-2327), Defendants-Appellants.
Citation:518 F.3d 442
Party Name:UNITED STATES of America, Plaintiff-Appellee, v.
Case Date:March 03, 2008
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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518 F.3d 442 (6th Cir. 2008)

UNITED STATES of America, Plaintiff-Appellee,

v.

Walter Ralph MABRY (06-2324); Anthony Michael (06-2327), Defendants-Appellants.

Nos. 06-2324, 06-2327.

United States Court of Appeals, Sixth Circuit.

March 3, 2008

Argued Oct. 24, 2007.

Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 04-80977-Bernard A. Friedman, Chief District Judge.

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[Copyrighted Material Omitted]

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COUNSEL

ARGUED:

James K. Robinson, Cadwalader, Wickersham & Taft, Washington, D.C., Christopher P. Yates, Yates, LaGrand & Denenfeld, Grand Rapids, Michigan, for Appellants.

Daniel R. Hurley, Assistant United States Attorney, Detroit, Michigan, for Appellee.

ON BRIEF:

James K. Robinson, Cadwalader, Wickersham & Taft, Washington, D.C., Christopher P. Yates, Yates, LaGrand & Denenfeld, Grand Rapids, Michigan, for Appellants.

Walter I. Kozar, David E. Morris, Assistant United States Attorneys, Detroit, Michigan, for Appellee.

Before: KEITH and ROGERS, Circuit Judges; ALDRICH, District Judge. [*]

OPINION

ANN ALDRICH, District Judge.

Defendants-Appellants Walter Ralph Mabry and Anthony Michael were convicted and sentenced for conspiring to solicit and obtain prohibited payments from union contractors, and for soliciting and obtaining such payments, in violation of the Taft-Hartley Act, 29 U.S.C. § 186. On appeal, Mabry and Michael argue that (1) the district court erred in ruling that the term "settlement" under 29 U.S.C. § 186(c)(2) is limited to settlements in the context of formal litigation or arbitration; (2) they are entitled to a judgment of acquittal because there was insufficient evidence presented at trial to support a finding that the exception to liability under 29 U.S.C. § 186(c)(3) should not apply; and (3) the district court engaged in unsupported judicial fact finding to arrive at Mabry' s sentence. For the reasons discussed below, we affirm the judgment of the district court on all counts, but recognize the possibility of a broader interpretation of "settlement" than that of the district court.

I. Background

A. Factual Background

At all times relevant, defendant-appellant Walter Ralph Mabry was the Executive Secretary-Treasurer of the Michigan Regional Council of Carpenters ("MRCC"), and defendant-appellant Anthony Michael was the President and Executive Director of MRCC, reporting directly to Mabry.

Around 1997 or 1998, Mabry decided to build a new house. Several contractors worked on the house, charging significantly less than the prevailing market rate. Of

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primary concern here is the carpentry work done by the Nelson Mill Company ("Nelson Mill"), a union contractor.1 In the Spring of 1998, Nelson Mill agreed to complete the interior trim work on Mabry's new house at cost. Nelson Mill began work on the house in August 1998 and presented Mabry with an invoice for $46,117.45 when completed. This amount did not include any indirect overhead or profit. Mabry and Michael complained to Nelson Mill about the amount of the bill and asked for a price reduction. Ultimately, Nelson Mill voided the first invoice and prepared a second one for $26,000, which Mabry paid in December 1999. As a result of accepting this lower amount, Nelson Mill suffered a substantial loss on the Mabry job.

B. Procedural Background

On November 29, 2004, a grand jury returned a two-count indictment against Mabry and Michael for (1) conspiracy to solicit and obtain prohibited payments from union contractors in the form of discounts on building materials, labor, and related costs in connection with construction of Mabry's house, in violation of 18 U.S.C. § 371; and (2) soliciting and obtaining a discount of approximately $20,000 from a union contractor in violation of 29 U.S.C. §§ 186(b)(1), (d)(2) and 18 U.S.C. §2.

On September 19, 2005, Mabry and Michael moved for severance of the two counts, arguing that the exception under 29 U.S.C. § 186(c)(2) applied to the second count. The district court denied the motion for severance, but declared that § 186(c)(2) applied to the informal resolution of the Nelson Mill payment dispute. The Government subsequently filed a motion for reconsideration, arguing that "settlement" under § 186(c)(2) must relate to ongoing litigation or arbitration. On November 17, 2005, the district court granted the Government's motion, holding that

[§] 186(c)(2) applies only if the parties have reached a resolution of a dispute or claim through the adjudicative process, meaning by a judgment of a court or an arbitrator's award. Section 186(c)(2) offers no protective refuge for any parties that resolve a dispute through independent, informal negotiations held solely between the parties themselves.

United States v. Mabry, No. 04-CR-80977, 2005 U.S. Dist. LEXIS 39609, at *20 (E.D. Mich. Nov. 17, 2005).

Following conviction by a jury on both counts, Mabry and Michael moved for judgment of acquittal pursuant to Rule 29 on the basis that the exception under § 186(c)(3) should have applied because the Government failed to present sufficient evidence at trial showing that the transactions were not at the prevailing market price. The district court denied their motions on June 1, 2006.

A sentencing hearing was held on September 25, 2006. Mabry was sentenced to concurrent 24-month terms of imprisonment, followed by a three-year term of supervised release, with the condition that he hold no union position. He was also fined $50,000 plus a $200 special assessment. Michael was sentenced to two concurrent one-year-and-one-day terms of imprisonment, followed by a two-year term of supervised release during which he was prohibited from holding a union position. He was fined $3,000, plus a $200 special assessment.

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II. Meaning of "settlement" under 29 U.S.C. § 186(c)(2)

We review issues of statutory interpretation de novo. United States v. Wagner, 382 F.3d 598, 606-07 (6th Cir. 2004).

Payments between employers and union officials are outlawed by the Taft-Hartley Act, 29 U.S.C. § 186 (2006). However, certain payments between employers and union officials are exempted, including the:

payment or delivery of any money or other thing of value in satisfaction of a judgment of any court or a decision or award of an arbitrator or impartial chairman or in compromise, adjustment, settlement, or release of any claim, complaint, grievance, or dispute in the absence of fraud or duress;

29 U.S.C. § 186(c)(2) (2006) (emphasis added). At issue here is whether the term "settlement" under § 186(c)(2) applies to the informal resolution of the Nelson Mill payment dispute.

Mabry asserts that because he paid $26,000 to Nelson Mill in "settlement" of a dispute over the costs of labor and materials, he is exempted from criminal liability pursuant to § 186(c)(2). He asserts that the "or" before "in compromise" is disjunctive, meaning that the word "settlement" applies to settlements made outside the context of formal litigation or arbitration. The Government offers a narrower reading of "settlement," arguing that the term should be limited to settlement of an actual controversy that was filed and pending in court, or presented to an arbitrator or impartial adjudicator.2

Although we decline to construe the term as narrowly as the Government urges, based upon the purpose, statutory scheme, and language of 29 U.S.C. § 186, "settlement" cannot be construed so broadly as to include the informal resolution of the Nelson Mill payment dispute.

One of the purposes of enacting § 186 was to combat the corruption of the collective bargaining process that occurs when a union employer gives something of value to a union representative. Arroyo v. United States, 359 U.S. 419, 425-26, 79 S.Ct. 864, 3 L.Ed.2d 915 (1959). This purpose would be undermined if employers and union officials could simply enter into informal agreements, later dispute these agreements, and then make payments in "settlement" of the dispute. To allow such "settlements" to qualify under § 186(c)(2) would nullify "the proscriptive effect of the statute . . . since every payment by an employer to a union could be characterized as a settlement of a claim or demand made by the union." International Longshoremen's Ass'n v. Seatrain Lines, Inc., 326 F.2d 916, 919-20 (2d Cir. 1964).

Consistent with its purpose of protecting the integrity of the collective bargaining...

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