U.S. v. Thompson

• Decision Date: 20 April 2007
• Docket Number: No. 06-3676.,06-3676.
• Citation: 484 F.3d 877
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Georgia L. THOMPSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

484 F.3d 877

UNITED STATES of America, Plaintiff-Appellee, v. Georgia L. THOMPSON, Defendant-Appellant.

No. 06-3676.

United States Court of Appeals, Seventh Circuit.

Argued and Decided April 5, 2007.

Opinion Issued April 20, 2007.

Gregory J. Haanstad (argued), Office of the United States Attorney, Milwaukee, WI, for Plaintiff-Appellee.

Stephen P. Hurley (argued), Marcus J. Berghahn, Hurley, Burish & Stanton, Madison, WI, for Defendant-Appellant.

Before EASTERBROOK, Chief Judge, and BAUER and WOOD, Circuit Judges.

EASTERBROOK, Chief Judge.

In 2005 Wisconsin selected Adelman Travel Group as its travel agent for about 40% of its annual travel budget of $75 million. The selection came after an elaborate process presided over by Georgia Thompson, a section chief in the state's Bureau of Procurement. Statutes and regulations require procurement decisions to be made on the basis of cost and service rather than politics. Wis. Stat. §§ 16.70-16.78; Wis. Admin. Code § 10.08. Thompson steered the contract to Adelman Travel, the low bidder, even though other members of the selection group rated its rivals more highly. A jury convicted Thompson of violating 18 U.S.C. § 666 and § 1341. The prosecution's theory was that any politically motivated departure from state administrative rules is a federal crime, when either the mails or federal funds are involved. Thompson was sentenced to 18 months' imprisonment and compelled to begin serving that term while her appeal was pending. After concluding that Thompson is innocent, we reversed her conviction so that she could be released. This opinion is the explanation that our order of April 5 promised.

Adelman Travel was the low bidder, but a low price for lousy service is no bargain. Wisconsin's rules give price only a 25% weight (300 of 1200 points) in the selection process. About 58% (700 points) goes to service, which a working group evaluates subjectively based on written presentations. Adelman had the second-best score for service; Omega World Travel came in third. The combined price-and-service rating had Adelman in the lead. (Fox World Travel received the best service score but had a noncompetitive price.) The final 17% of the score (200 points) depends on the working group's assessment of oral presentations. These presentations (often dubbed "beauty contests" or "dog-and-pony shows" that may reward the flashiest PowerPoint slides) need not be related to either price or the pitchman's probable quality of service; why the state gives them any weight, independent of price or quality, is a mystery, but not one we need unravel. Adelman Travel must have made a bad presentation, for six of the seven members of the working group gave it poor marks (from a low of 120 points to a high of 165), while awarding Omega scores between 155 and 200. Thompson alone gave Adelman a higher score (185 for Adelman, 160 for Omega). Adelman Travel's disastrous oral presentation left Omega World Travel with the highest total score.

The prosecution's theory is that Omega should have received the contract on the spot but that for political reasons Thompson ordered a delay. Thompson told her colleagues that a decision for Omega, which is based on the East Coast, would not go over well with her boss, Pat Farley. A jury also could conclude that Thompson said something to the effect that for "political reasons" Adelman Travel had to get this contract. (Witnesses related different versions of what Thompson said, but in each account "politics" or "political" played some role.)

Thompson tried to engage in logrolling, offering to change her scores for bidders on other travel contracts if members of the working group would change their scores on this contract. Horse-trading proved to be unacceptable to the selection group, but a member other than Thompson suggested that the contract be rebid on a best-and-final basis, as state law permitted. Wis. Stat. § 16.72(2m)(e), (g). Adelman Travel reduced its price, which — keeping all other elements of the score constant — left Adelman and Omega with 1027 points apiece. The tie depended on rounding to the nearest whole number. Adelman Travel's score was 1026.6, while Omega World Travel's score was 1027.3. After Thompson (with her supervisors' consent) deemed the contest a draw — sensibly, as the difference was trivial compared to the amount of subjectivity and variance in the committee members' evaluations — Thompson employed a tie-breaking procedure, specified by state law, that gave weight to items not previously figured into the price comparison and declared Adelman Travel to be the winner.

The prosecutor contends that this episode played a role in the Bureau of Procurement's decision three months later to give Thompson a $1,000 raise in her annual salary. Post hoc ergo propter hoc is the name of a logical error, not a reason to infer causation. But Thompson does not contend that the evidence was insufficient to allow the jury to find that the raise was related to the travel contract, so we shall assume that this link has been established. The jury also learned that Craig Adelman, one of the principal owners and managers of Adelman Travel, supported Wisconsin's Governor and made contributions to his campaign both before and after Adelman Travel was selected for this contract. The prosecution does not contend, however, that any of these contributions was unlawful — they were properly disclosed, and no quid pro quo was entailed. There is not so much as a whiff of a kickback or any similar impropriety. Nor does the prosecution contend that Thompson knew or cared about these contributions.

What, then, were the "political" considerations to which Thompson referred? We may assume that Thompson learned that her boss preferred Adelman Travel to Omega World Travel, and Thompson knew that Farley held a political rather than a civil-service appointment. But why was Adelman Travel the favored bidder?

One possibility is that Farley knew about, and sought to reward, Craig Adelman's past and potential financial support of the Governor. If that was Farley's motive, then the selection was open to question under O'Hare Truck Service, Inc. v. Northlake, 518 U.S. 712, 116 S.Ct. 2353, 135 L.Ed.2d 874 (1996), and Board of County Commissioners v. Umbehr, 518 U.S. 668, 116 S.Ct. 2361, 135 L.Ed.2d 843 (1996), which hold that the first amendment limits the extent to which political support of office holders may justify the withholding of public contracts. But these decisions do not say that the Constitution forbids all politically motivated contracting practices — and they certainly do not hold that any error in implementing the Supreme Court's multi-factor-balancing approach is a crime.

Perhaps, however, Farley favored Adelman Travel because it was cheaper. This would be a political position in the best sense of that term. Many a person runs for office on a platform of cutting the cost of government. Bureaucrats may call a preference for low price over high levels of service a form of "political interference" with their operations (especially when it is state employees who may suffer inconvenience in order to save the taxpayers' money), but no party has a monopoly on opposing gold-plated wastebaskets and other excesses. Low prices may advance the public interest even if they discomfit public employees, and recognition that driving down the cost of government is good politics for incumbents does not transgress any federal statute of which we are aware.

Still another possibility is that Farley (and thus Thompson) sought to favor a local firm over one from another state. The Supreme Court has held that states, as market participants, may buy preferentially from their own citizens. See, e.g., White v. Massachusetts Council of Construction Employers, Inc., 460 U.S. 204, 103 S.Ct. 1042, 75 L.Ed.2d 1 (1983); Reeves, Inc. v. Stake, 447 U.S. 429, 100 S.Ct. 2271, 65 L.Ed.2d 244 (1980). A preference for in-state suppliers who can vote, over competitors who can't, may be smart politics. Again no federal statute regulates such behavior, let alone declares it to be a felony. Wisconsin law specifies a preference for domestic bidders, though only when the out-of-state bidder hales from a jurisdiction that favors its own citizens in procurement decisions. Wis. Stat. § 16.75(1)(a) ¶ 2.

The evidence of record would not permit a jury to find beyond a reasonable doubt which of these three "political" reasons was Farley's, let alone whether Farley's reason also was Thompson's — for Thompson may have been trying to be a faithful subordinate without questioning her boss's bona fides. Nor was the jury asked to determine Thompson's motive. The United States maintains that Thompson's objective is irrelevant. It is enough, the prosecutor insists, that Thompson deflected the decision from the one that should have been made under the administrative process. When coupled with a personal benefit (the raise), such a deflection is criminal under federal law, the United States insists. In other words, the prosecutor's argument is that any public employee's knowing deviation from state procurement rules is a federal felony, no matter why the employee chose to bend the rules, as long as the employee gains in the process. (In stating the argument this way, we are assuming that the jury could and did find beyond a reasonable doubt that Thompson knew that the state's procurement rules entitled Omega World Travel to the contract, given her fellow employees' favorable view of Omega's oral presentation.)

Thompson was convicted of violating two federal statutes, and we start with § 666. This statute applies to entities that receive more than $10,000 annually from the federal government, as Wisconsin does. (The state's annual travel budget alone includes about $18 million in federal contributions.) Under this statute,

(a) Whoever ...

(1) being an agent of an organization, or of a State, local, or Indian tribal...