773 F.2d 477 (2nd Cir. 1985), 1150, United States v. Reed

Docket Nº:1150, Docket 85-1031.
Citation:773 F.2d 477
Party Name:UNITED STATES of America, Appellant, v. Thomas C. REED, Defendant-Appellee.
Case Date:September 30, 1985
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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773 F.2d 477 (2nd Cir. 1985)

UNITED STATES of America, Appellant,

v.

Thomas C. REED, Defendant-Appellee.

No. 1150, Docket 85-1031.

United States Court of Appeals, Second Circuit

September 30, 1985

Argued May 7, 1985.

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Paul Shechtman, Asst. U.S. Atty., S.D.N.Y., New York City (Benito Romano, Asst. U.S. Atty., Rudolph W. Giuliani, U.S. Atty., S.D.N.Y., New York City, of counsel), for appellant.

Edward M. Shaw, New York City (Michael J. Plishner, Daniel E. Casagrande, Stillman, Friedman & Shaw, P.C., New York City, McCutchen, Doyle, Brown & Enersen, San Francisco, Cal., of counsel), for defendant-appellee.

Before MESKILL, KEARSE and WINTER, Circuit Judges.

WINTER, Circuit Judge:

The United States appeals from an order dismissing for improper venue counts three and four of an indictment against Thomas Reed charging perjury and obstruction of justice in violation of 18 U.S.C. Secs. 1623, 1503 (1982). For reasons stated below, we reverse the dismissal of these counts and order their reinstatement in the Southern District of New York. 1

BACKGROUND

This criminal prosecution arises out of deposition testimony given by Reed in a civil action which was brought in March, 1981 in the Southern District of New York by sellers of Amax Inc. options. O'Connor & Associates v. Dean Witter Reynolds, Inc., No. 81 Civ. 1354 (S.D.N.Y. filed March 10, 1981). Reed is among the eighteen named defendants. The complaint alleged that Reed had engaged in illegal insider purchases of Amax call options and thus had defrauded those who sold these options to him. The inside information allegedly concerned a confidential merger proposal in which Standard Oil Company of California offered to purchase the outstanding shares of Amax stock for more than twice the market price. The complaint alleged that Reed learned about the merger negotiations from his father, a member of the Amax board. He and the other defendants are then alleged to have exploited this information to make an enormous profit on the purchase and sale of call options during the forty-eight hour period surrounding the takeover proposal.

Reed's deposition in the civil action was taken in San Francisco, apparently for his convenience. At the beginning of the deposition,

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counsel for the O'Connor plaintiffs stated that the deposition was "taken pursuant to notice and ... the applicable rules ... of the United States District Court for the Southern District of New York." Reed's counsel at this time also stated that "[w]e have agreed that the deposition will be taken and all exhibits to it will be held pursuant to the terms of the protective order previously entered by Judge Lasker in the [O'Connor] action." The transcript of Reed's deposition testimony was subsequently filed in the Southern District of New York.

In August, 1984, a four count indictment was returned against Reed in the Southern District. Counts one and two of the indictment charge that Reed committed securities and wire fraud by purchasing the Amax options on the basis of inside information received from his father. Counts three and four charge Reed with perjury, 18 U.S.C. Sec. 1623, and obstruction of justice, 18 U.S.C. Sec. 1503, arising out of the deposition testimony taken in the O'Connor civil action. Count three alleges that Reed perjured himself in the San Francisco deposition when he testified: (i) that he had discussed purchasing Amax options with a friend at a social gathering on March 1, 1981, the day before he is alleged to have spoken with his father; (ii) that he did not speak to his father on March 2, 1981; and (iii) that prior to his trading in the options, he was unaware of a special meeting of the Amax Board convened to consider the merger proposal. Count four charged obstruction of justice, alleging that handwritten, purportedly contemporaneous-with-the-trading notes that Reed presented and relied upon during the deposition were fraudulent post hoc creations designed to disguise his illegal trading. These notes were written in Virginia and California.

Reed moved to dismiss all four counts of his indictment. He argued that the first two counts failed to state crimes since Reed did not owe a duty of disclosure to the option sellers and did not have a fiduciary relationship with Amax Corporation. He further claimed that counts three and four should be dismissed for lack of venue.

Judge Ward, in an extensive opinion, 601 F.Supp. 685 (S.D.N.Y.1985), denied the motion to dismiss counts one and two. However, he dismissed the perjury count on the ground that venue for perjury lies only in the district in which the oath was taken. He dismissed the obstruction of justice count on the ground that venue lies only in the district in which the acts constituting the obstruction occurred.

The district judge believed that his rulings were compelled by two prior decisions of this court, United States ex rel. Starr v. Mulligan, 59 F.2d 200 (2d Cir.1932), and United States v. Brothman, 191 F.2d 70 (2d Cir.1951). In addition, he examined the language and legislative history of the two statutes, the conflicting authorities of several decisions in other circuits, and the policies underlying a criminal defendant's constitutional right to venue in the place where the crime was committed. He concluded from that examination that venue in the Southern District was improper "even in the absence of binding second circuit authority."

The government appeals from the dismissal of counts three and four for improper venue, and trial of the remaining charges has been stayed pending disposition of this appeal. We reverse.

DISCUSSION

A general discussion of underlying constitutional policies is in order before examining the law of venue as it relates to the individual counts. Fed.R.Crim.P. 18 2 provides that venue in federal criminal prosecutions lies in the district in which the alleged crime was committed. This rule

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was derived from the constitutional venue provisions. See U.S. Const. art. III, Sec. 2, cl. 3; U.S. Const. amend. VI ("the State and district wherein the crime shall have been committed"). While these statements clearly establish certain rights, they are often of precious little aid in explaining how the locus of a crime is to be determined. Consequently, Congress usually appends a venue provision to criminal statutes, which provides a method of fixing the place or places of prosecution. See Abrams, Conspiracy and Multi-Venue in Federal Criminal Prosecutions: The Crime Committed Formula, 9 UCLA L.Rev. 751, 816 (1962). However, since neither the perjury nor obstruction of justice statute contains such a provision, a court entertaining a challenge to venue must determine "the locality of the offense." Armour Packing Co. v. United States, 209 U.S. 56, 76, 28 S.Ct. 428, 433, 52 L.Ed. 681 (1908).

We note at the outset an analytical flaw that has plagued analysis in this area. Both courts and commentators have tended to construe the constitutional venue requirement as fixing a single proper situs for trial. It is clear, however, where the acts constituting the crime and the nature of the crime charged implicate more than one location, the constitution does not command a single exclusive venue. The constitution requires only that the venue chosen be determined from the nature of the crime charged as well as from the location of the act or acts constituting it, and that it not be contrary to an explicit policy underlying venue law. 3

While it has been stated that questions of venue in criminal cases "raise deep issues of public policy in the light of which legislation must be construed," United States v. Johnson, 323 U.S. 273, 276, 65 S.Ct. 249, 250, 89 L.Ed. 236 (1944), the precise policies to be furthered by venue law are not clearly defined. Although the concept of a right to trial in the vicinage was so highly regarded as to appear twice in the Constitution, the Supreme Court has yet to articulate a coherent definition of the underlying policies. In United States v. Cores, 356 U.S. 405, 407, 410, 78 S.Ct. 875, 877, 879, 2 L.Ed.2d 873 (1958), it stated that the venue provisions were intended to protect defendants against the unfairness and hardship of prosecution in places remote from their homes. But in Johnston v. United States, 351 U.S. 215, 76 S.Ct. 739, 100 L.Ed. 1097 (1956), the policy was said to fix the site of the trial not at the defendant's home but in the vicinage of the crime. Id. at 220-21, 76 S.Ct. at 742-43. This lack of definition was noted by Justice Harlan in his dissent in Travis v. United States, 364 U.S. 631, 81 S.Ct. 358, 5 L.Ed.2d 340 (1961). He argued there that the "basic policy of the Sixth Amendment" would be best served by holding trial where the...

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