U.S. v. Wall
| Decision Date | 27 October 2004 |
| Docket Number | No. 03-30987.,03-30987. |
| Citation | 389 F.3d 457 |
| Parties | UNITED STATES of America, Plaintiff-Appellant, v. Richard E. WALL, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Catherine M. Maraist (argued), Lyman Edgar Thornton, III, Asst. U.S. Atty., Baton Rouge, LA, for Plaintiff-Appellant.
Craig Frank Holthaus (argued), deGravelles, Palmintier, Holthaus & Fruge, Baton Rouge, LA, for Defendant-Appellee.
Appeal from United States District Court for the Middle District of Louisiana.
Before JOLLY, WIENER, and PICKERING, Circuit Judges.
Before the court is the government's appeal from the district court's order granting defendant Richard Wall's Fed.R.Crim.P. 33 motion for a new trial. We conclude that the district court abused its discretion when it granted the motion.
Wall was indicted on charges of conspiracy involving a scheme to defraud the state of Louisiana of the proper quality of steel for use in Louisiana Department of Transportation and Development (LADOTD) road construction projects. Wall was the regional sales manager for Inland Steel Company. He was charged with one count of conspiracy, eleven counts of mail fraud, and five counts of making false statements about the quality of steel provided by his company for highway projects.
The LADOTD maintains a Qualified Products List (QPL) for products that have been tested and approved for use in highway and road construction in Louisiana. This case focuses in particular on QPL 43 and products approved by LADOTD for use as steel culverts. The listing for QPL 43 included information about which companies had been approved to do certain processes on the approved product. Dow Chemical developed a laminate film to be applied to steel coils. Inland Steel manufactured this laminated steel product under the trade name of Blac-Klad. An outside processor, PreFinish Metals, laminated the steel coils for Inland Steel. LADOTD tested and approved Blac-Klad for use in steel culverts on highway projects. In fact, Blac-Klad, manufactured by Inland and laminated by PreFinish Metals, was the only product approved for such use. Caldwell Culvert Company used Blac-Klad, manufactured by Inland and laminated by PreFinish, to fabricate culverts used in highway construction projects in Louisiana.
According to the government, beginning in the late 1980s, Wall conspired with Caldwell's president Bill Lovelace and Caldwell's vice-presidents Keith Wingfield and Don Gee to use a polymer-coated steel product that was not approved by Louisiana. Inland also used an unapproved company, National Galvanizing, to galvanize steel coils that Inland then used to fabricate the laminated steel pipe. Additionally, Inland used an unapproved laminator, ACI, to apply the laminate film to the steel coils. A stencil was applied to these steel coils indicating certain information about the steel, such as the name of the sheet producer, brand name, specified thickness of metallic coated sheet, type of metallic coating, and type or thickness of polymer coating. The parties dispute on appeal whether it was required by LADOTD that the name of the laminator be included on the stencil. Regardless, the government presented evidence at trial indicating that Wall and his co-conspirators agreed to leave the name of the laminator off of the stencil. Presumably this was done because the substitute laminator, ACI, was not approved for laminating steel used in Louisiana highway projects.
The government also presented evidence that Wall and Lovelace conspired to purchase galvanized steel from Wheeling Steel, whose product had failed to meet LADOTD standards, and to have the coils laminated by ACI with the Blac-Klad name stenciled on the steel. The government presented evidence indicating that Caldwell sold over one million pounds of non-conforming culvert pursuant to the conspiracy. The parties further stipulated that Caldwell sold non-conforming culvert for use in Louisiana road projects.
As a result of a federal investigation, Inland project manager Roger McDowell pleaded guilty to misprision of a felony because he failed to report a fraud. Lovelace, Wingfield and Gee pleaded guilty to conspiracy to commit mail fraud.
Wall's trial began on February 25, 2002, and lasted for two weeks. Kirk Clement of the LADOTD testified for the government. According to Clement, Inland's Blac-Klad was the only steel product that met the state of Louisiana's qualifications for laminated steel. He also testified that Wheeling Steel had submitted samples of steel that had not met the state's specifications. Clement inspected steel on highway projects that was marked as Inland steel, but which in fact had been manufactured by Wheeling Steel. Clement communicated with Wall and his office on several occasions regarding Louisiana's specifications for laminated steel and the prohibition against deviating from these standards. After hearing rumors that Inland was using ACI instead of PreFinish Metals to laminate steel, Clement expressed his concerns directly to Wall. Wall reassured Clement that Inland was still using PreFinish as the laminator.
James Smith, Inland's Manager of Coated Products, testified that in the late 1980s, Inland began using an outside company, National Galvanizing, to galvanize Inland steel. He testified that Wall was aware of this substitution, which would have been contrary to Louisiana specifications, and that Wall knew of Louisiana's specifications regarding the steel product. He also testified that Wall was aware that Louisiana's specifications required PreFinish Metals to laminate Blac-Klad.
On the third day of trial, Roger McDowell, a former section manager for Inland, testified that Wall and his staff orchestrated the use of ACI to coat steel manufactured by Inland in violation of Louisiana's specifications that approved only PreFinish to laminate the steel. He also testified that Wall conspired to have the stencil on the steel altered. McDowell discussed his concerns with Wall about these deviations and the continued filling of Blac-Klad orders. McDowell testified that he attended a meeting around November 1993 with Wall, William Ristau (the general manager of Inland), and Richard Hartwig (McDowell's supervisor) to discuss these objections. McDowell's testimony regarding this meeting was the focal point of the district court's decision to grant a new trial.
McDowell testified that at this meeting he voiced concerns about the laminator's name being removed from the steel stencil. He further testified that Wall, Ristau, and Hartwig decided to fill Caldwell's order for Blac-Klad without the name of the laminator on the stencil despite McDowell's objections. Some time shortly after this meeting, on November 8, 1993, McDowell drafted a memorandum to Wall, with a copy to Hartwig and others, in which he wrote "[p]er our discussion, Caldwell will accept a deviation to the State of Louisiana specification requiring a processing route of Inland materials through PreFinish Metals ... The customer [Caldwell] insists that the Blac-Klad coils DO NOT reference the new coil coater in our stenciling." (emphasis in original). Defense counsel cross-examined McDowell extensively regarding the alleged meeting and the fact that entries in his daily planner did not mention this meeting.
Bryan Stephens, who worked at Inland's Coated Products Division in the 1990s, testified that Inland used National Galvanizing to galvanize steel and ACI to laminate steel. Stephens also testified that Inland put its name on invoices for steel shipped to Caldwell, although the steel actually had been manufactured by Wheeling Steel. Stephens testified that he had discussions with Wall about using ACI instead of PreFinish because Inland was having difficulty getting Blac-Klad to Caldwell in a timely fashion. According to Stephens, Wall told him that steel would be purchased from Wheeling to meet Caldwell's needs. Stephens testified that Wall had the authority to make this purchasing decision. He further stated that it was common knowledge at Inland that Blac-Klad was the only product approved for Louisiana highway projects.
Bill Lovelace, former president of Caldwell, testified that in approximately 1992, Wall informed him that Inland could no longer galvanize its own steel and that it had begun sending steel to National Galvanizing instead. He further testified that National Galvanizing's product had not been approved by the state of Louisiana. Beginning in 1992-93, Lovelace and Wall discussed PreFinish's unwillingness to continue laminating Inland's Blac-Klad product. Thus, Wall substituted ACI as the laminator in place of PreFinish. When Lovelace asked Inland to take care of the problem with the stencil, i.e. the name of the laminator, he had several discussions with Wall. Wall assured Lovelace that Inland would take care of the stencil problem. Lovelace testified that he and Wall first attempted to purchase steel from Wheeling Steel, but Wheeling refused to sell to Inland. Consequently, Lovelace and Wall arranged to have Caldwell buy its steel directly from Wheeling and send it to Inland. Inland then took the steel from Wheeling and sent it to ACI for lamination. Lovelace testified that Wall knew that the steel in question was intended for use in Louisiana road construction projects and that Wall was familiar with Louisiana's specifications for steel.
Don Gee, a former vice-president for Caldwell, testified that Lovelace and Wall arranged to purchase steel from National Galvanizing to meet Caldwell's demands for steel in the fabrication of culverts for Louisiana highway construction projects.1 Gee also provided to LADOTD for approval a sample of Inland steel, laminated by PreFinish, but intentionally mislabeled as Wheeling steel, laminated by ACI. Gee testified that Wall was unaware of...
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