U.S. v. Harding

• Decision Date: 29 September 1977
• Docket Number: No. 77-5030,77-5030
• Citation: 563 F.2d 299
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Don B. HARDING, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 299

563 F.2d 299

UNITED STATES of America, Plaintiff-Appellee, v. Don B. HARDING, Defendant-Appellant.

No. 77-5030.

United States Court of Appeals Sixth Circuit.

Argued June 13, 1977.

Decided Sept. 29, 1977.

Edward A. Kizer, Goff, Canale, Kizer & Cribbs, Memphis, Tenn., Howard F. Butler, Nashville, Tenn., for defendant-appellant.

Thomas F. Turley, Jr., U. S. Atty., W. Hickman Ewing, Jr., Memphis, Tenn., for plaintiff-appellee.

Before PHILLIPS, Chief Judge, ENGEL, Circuit Judge, and FREEMAN, Senior District Judge.^*

RALPH M. FREEMAN, Senior District Judge.

Appellant Don B. Harding, urging this Court to re-examine the scope of the statute under which he was convicted, challenges the application of 18 U.S.C. § 1951, commonly known as the Hobbs Act, to his allegedly criminal activity.

Harding was the executive director of the Tennessee Real Estate Commission, one function of which is to issue licenses to real estate brokers and affiliate brokers. Harding, as executive director, was the office manager of the Commission office located in Nashville, Tennessee. He was not a member of the Commission itself and therefore had no authority or discretion to issue licenses.

In January, 1976, Harding received a letter from Brenda Kaye Johnson, a licensed affiliate broker who had just failed in her third attempt to pass the Tennessee real estate brokers' licensing examination. Ms. Johnson wrote to Harding because his name appeared on the letter which had notified her of her failure, and she wanted to discuss the matter with him. Harding's secretary telephoned Ms. Johnson and arranged for a meeting between Harding and Ms. Johnson at the Hyatt Regency Hotel in Memphis in mid-February, 1976. At that meeting, Harding suggested that he could assist Ms. Johnson in passing her brokers' exam by selling her a copy of the questions and answers for $300. Although Ms. Johnson agreed to that arrangement, she reported the incident to the FBI, who then enlisted her cooperation in investigating Harding's activities. They tape recorded a conversation during which Harding arranged another meeting with Ms. Johnson, and also tape recorded the meeting at which Ms. Johnson paid him $300 supplied by the FBI in exchange for the brokers' exam.

In furtherance of the investigation into Harding's misconduct, the FBI contacted Donald Nasca, who had also twice failed the Tennessee real estate brokers' examination. Nasca cooperated with the FBI in sending Harding a letter similar to Ms. Johnson's requesting assistance in passing the brokers' examination. Harding then called Nasca and offered to sell him a copy of the exam. In April, 1976, Nasca met with Harding in Jackson, Tennessee, and gave him money provided by the FBI to purchase the exam; he also tape recorded the entire transaction.

The sole question on appeal in this case is whether Harding's conduct is cognizable as extortion under the terms of the Hobbs Act, 18 U.S.C. § 1951. The statute provides as follows:

(a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires to do so, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both.

(b) As used in this section

(2) The term "extortion" means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.

(3) The term "commerce" means commerce within the District of Columbia, or any Territory or Possession of the United States; all commerce between any point in a State, Territory, Possession, or the District of Columbia and any point outside thereof; all commerce between points within the same State through any place outside such State; and all other commerce over which the United States has jurisdiction.

The defendant raises two issues concerning the scope of the Hobbs Act. First, defendant claims that the offending transactions were not shown to have the requisite effect on interstate commerce. Secondly, defendant suggests that his activity does not constitute the obtaining of property "under color of official right" because he in fact had no power to issue a broker's license and the other parties involved did not believe he had such power. As part of this contention defendant suggests that his conduct was never intended to be encompassed within the scope of the Hobbs Act because it involves common law bribery rather than extortion as defined in the statute.

The statute itself provides in subsection (a) that "(w)hoever in any way or degree obstructs, delays, or affects commerce . . . by robbery or extortion . . . shall be (guilty of a felony)." (emphasis added). Many courts have considered whether the showing of a minimal effect on interstate commerce will satisfy the requirements of the Act, and all have agreed that it will. In United States v. Staszcuk, 517 F.2d 53 (7th Cir.), cert. denied, 423 U.S. 837, 96 S.Ct. 65, 46 L.Ed.2d 56 (1975), the Seventh Circuit held en banc that federal jurisdiction under the Hobbs Act was satisfied by showing that at the time of the offense there was a realistic probability that the robbery or extortion would have affected interstate commerce. This was an expansion of their earlier holding in United States v. DeMet, 486 F.2d 816, 821-22 (7th Cir. 1973), cert. denied, 416 U.S. 969, 94 S.Ct. 1991, 40 L.Ed.2d 558 (1974); and United States v. Braasch, 505 F.2d 139, 147 (7th Cir. 1974), cert. denied, 421 U.S. 910, 95 S.Ct. 1562, 43 L.Ed.2d 775 (1975), that "(b)ecause Congress has seen fit to exercise its full power under the commerce clause, extortionate conduct having an arguably de minimus effect on commerce may nevertheless be punished." The Third Circuit, in United States v. Mazzei, 521 F.2d 639, 642-43 (3rd Cir.), cert. denied, 423 U.S. 1014, 96 S.Ct. 446, 46 L.Ed.2d 385 (1975) held that the depletion of assets of a firm which conducts interstate activities creates an effect on commerce sufficient to satisfy the Hobbs Act despite the local character of the particular extortionate transaction. The de minimus rule was also applied in United States v. Hathaway, 534 F.2d 386 (1st Cir.), cert. denied, 429 U.S. 819, 97 S.Ct. 64, 50 L.Ed.2d 79 (1976); and United States v. Brown, 540 F.2d 364 (8th Cir. 1976).

This Court agrees with the de minimus rule applied by the other Circuits. The Act itself suggests that no more than a minimal effect on interstate commerce need be shown, and the case law is entirely consistent with that language. Moreover, the Court is satisfied that the Government proofs on the issue of interstate commerce meet the requirements of the Hobbs Act.

John Palmer, a real estate broker from Memphis, testified that Tennessee real estate transactions frequently involve purchasers from other states, that real estate listings in Memphis newspapers are widely circulated in Arkansas and Mississippi, and that Tennessee brokers are regulated by the federal government with respect to various housing and loan programs.

Mr. Nasca, who purchased a copy of the exam from Mr. Harding, testified that extensive advertising of Tennessee real estate listings was directed to out-of-state customers, that brokers often made use of a service named Inter-Community Relocation Service, which involves real estate companies in every city of the country, and that fifty percent of the business done by his firm involved people being transferred in and out of Memphis.

Under the facts as described above, the Government clearly established that the extortionate transactions affected interstate commerce. Defendant's argument that the de minimus rule creates an unwarranted incursion into the sphere of state criminal law ignores the language and intent of the statute itself. The jurisdictional requirement concerning interstate commerce is satisfied by the facts of this case.

Defendant's contention that his conduct did not constitute extortion as defined by the Act has also been heavily litigated. While this Court agrees with the other courts which have considered the issue and decided that conduct similar to that of Mr. Harding's is cognizable under the Hobbs Act, a few additional words of explanation seem in order.

The statute defines extortion as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right." An examination of the legislative history of the Hobbs Act helps to add content to that definition. The precursor of the Hobbs Act was the Anti-Racketeering Act of 1934.¹ That Act did not use the word "extortion" to define the proscribed conduct, but rather used the descriptive terminology of the common law offense.²

While the Act was passed without formal debate, the House and Senate Reports ³ both indicate the intent of the legislation. The Senate Report stated:

The accompanying proposed statute is designed to avoid many of the embarrassing limitations in the wording and interpretation of the Sherman Act, and to extend Federal jurisdiction over all restraints of any commerce within the scope of the Federal Government's constitutional powers. Such restraints if accompanied by extortion, violence, coercion, or intimidation, are made felonies, whether the restraints are in form of conspiracies or not. The proposed statute also makes it a felony to do any act "affecting" or "burdening" such trade or commerce if accompanied by extortion, violence, coercion, or intimidation.

The provisions of the proposed statute are limited so as not to include the usual activities of capitalistic combinations, bona fide labor unions, and ordinary business practices which are not accompanied by manifestations of racketeering.

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