United States v. Varlack, 348

• Decision Date: 25 August 1955
• Docket Number: No. 348,Docket 23606.,348
• Citation: 225 F.2d 665
• Parties: UNITED STATES of America, Appellee, v. Henry Gregory VARLACK, Samuel Kavalauskas and David Bernard Roche, Defendants-Appellants, and James Thomas Moock, Clifford Carter and Lawrence Wagner, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

225 F.2d 665 (1955)

UNITED STATES of America, Appellee, v. Henry Gregory VARLACK, Samuel Kavalauskas and David Bernard Roche, Defendants-Appellants, and James Thomas Moock, Clifford Carter and Lawrence Wagner, Defendants.

No. 348, Docket 23606.

United States Court of Appeals Second Circuit.

Argued June 15, 1955.

Decided August 25, 1955.

J. Edward Lumbard, U. S., Atty., for the Southern District of New York, New York City (Peter M. Brown, New York City, of counsel), for appellee.

John T. Sullivan, New York City (Vine H. Smith, Brooklyn, N. Y., and Arthur J. Cilento, New York City, of counsel), for defendants-appellants, Varlack and Kavalauskas.

Waldman & Waldman, New York City (Louis Waldman, Seymour M. Waldman and Martin Markson, New York City, of counsel), for defendant-appellant Roche.

Before CLARK, Chief Judge, and MEDINA and HINCKS, Circuit Judges.

MEDINA, Circuit Judge.

This appeal by defendants Varlack, Kavalauskas and Roche raises various questions relative to the validity and interpretation of 18 U.S.C. § 1951, commonly referred to as the Hobbs Act or the Anti-Racketeering statute. The indictment contained two counts, the first charging all three with conspiring to obstruct, delay and affect commerce and the movement of articles and commodities in commerce by extortion, specifically, by using their positions in the International Longshoremen's Association to obtain property from the American Sugar Refining Company by the wrongful use of threatened force and fear, in that they threatened to cause and prolong work stoppages in the unloading of raw sugar from ocean going vessels at a pier owned and operated by the company in the port of Philadelphia, Pennsylvania, unless payments were made; and the second, charging defendant Roche with the offense of obstructing, delaying and affecting commerce and the movement of articles and commodities in commerce by extorting from an agent and representative of the American Sugar Refining Company, a sum of money, the payment of which was induced by the wrongful use of threatened force and fear. Roche was acquitted on the first count and found guilty on the second; Varlack and Kavalauskas were found guilty as charged.

All three defendants assert that the evidence adduced at the trial was insufficient to support the jury verdicts. The position taken by the defendants here, as was their defense at the trial, is predicated primarily upon the claim that there had been no extortion, but rather that the agents and representatives of the American Sugar Refining Company, the alleged victim of the extortion, had sought to bribe these defendants in their capacities as labor officials, in order to avoid labor strife which was expected to, and did, result from proposed reductions in the labor force occasioned by mechanical innovations introduced by the company at its Philadelphia pier to facilitate the unloading of ships bringing sugar from the Caribbean.

The factual background out of which this prosecution arose is simple. In conjunction with the completion of its newly constructed pier adjoining its Philadelphia refinery, the American Sugar Refining Company, sometime in 1951, prepared to introduce certain mechanical devices for the unloading of raw sugar from its ships. Prior to this time, the sugar, both in bags and in bulk, was unloaded by hand. It became quite apparent that the new methods which the company contemplated introducing would effect a substantial reduction in the labor force necessary to unload the sugar, and, although it claimed the exclusive right under its agreement with the International Longshoremen's Association to determine the manpower necessary to unload the ships, the company saw fit to discuss the prospective change in manpower needs with the local representatives of the union. At the outset of the talks, defendants Varlack and Kavalauskas, the local labor delegates and "leaders" representing the longshoremen, took the position that they would not accede to any reduction in work force regardless of the terms of the contract and admonished the company's representatives that they had better "cooperate" or there would be "trouble." Shortly thereafter, Varlack and Kavalauskas, when asked what they meant when they used the word "cooperation" stated: "Well, we mean this, that you give each of us $2,500 and each of us a Chevrolet car, and that you place each of us on the payroll at $50 a week". When these demands were refused by the company representatives, these two defendants stated that a ship carrying raw sugar in bags, which was expected to arrive shortly, would not unload "unless we are taken care of." The company consented to pay Varlack and Kavalauskas $1,000 each and the ship was unloaded without any difficulty.

As the arrival of the first ship carrying sugar in bulk became imminent, Varlack and Kavalauskas made further demands, both in New York and in Philadelphia, and they indicated that unless their demands were met there would be "no unloading of sugar in bulk." About a week before the cargo of bulk sugar reached Philadelphia, the company representatives were informed by the business agent of the local union that he had attended a meeting in the office of Joseph P. Ryan, President of the International Longshoremen's Association, in New York, at which Ryan had said that "the ship will not discharge with less than 31 men per gang." The next day, September 12, 1951, Varlack and Kavalauskas demanded and were paid $1,500 to attend a prize fight in New York with other union delegates.

At this juncture, in the midst of negotiations with the union representatives, the company executives were told to contact Ryan in New York and that "whatever he decides the union will abide by." It is against this background that Roche enters the case, as the conference with Ryan in New York resulted in Ryan's designating Roche to go down to Philadelphia and settle the matter.

Before the difficulties were resolved, a strike was called and the pier was shut down. After the deadlock had persisted for several days, Roche spoke to one of the company representatives and made the statement that the situation looked "very serious" and that he did not believe the company would be able to break the strike "unless something is passed around." The company offered Roche $1,000 and this was rejected, Roche indicating that it was too small a sum. Finally, the company offered $7,500, $2,500 for Roche and $5,000 for Ryan, to be paid immediately after the termination of the work stoppage, and Roche indicated that these terms were acceptable.

Several days later, Varlack and Kavalauskas demanded money for "other delegates" and indicated that if it was paid, work would resume and the differences would be submitted to arbitration. The company acceded and the work stoppage ended. The next day, Roche was paid the $7,500.

There was accordingly substantial evidence from which the jury might have inferred that defendants seized upon the opportunity presented by the longshoremen's hostility to the company's introduction of technological improvements on its pier, to line their own pockets by implanting in the minds of the company officials the idea that unless and until the tribute demanded was paid to the defendants, the company's ships would not be unloaded. Whether these defendants did, in fact, have complete control over the members of the local is of little moment so long as there was evidence to support the jury's finding that the defendants' actions and words were intended to and did put the company officials, from whom the tribute was exacted, in fear that the failure to comply with the defendants' demands would result in work stoppages and in the indefinite prolongation of any work stoppages which had already occurred or might occur.

It is unnecessary to elaborate further on the voluminous proofs adduced during the course of an 8-day trial. Suffice it to say that there was sufficient evidence to warrant the submission of the questions of fact and of credibility to the jury.

The next major contention made by appellants is that the Hobbs Act, under which this prosecution was brought, does not proscribe situations in which the pressure brought upon the prospective payee is fear of economic loss, but rather, was intended to apply solely to cases involving violence, force, or threats of physical injury to person or property and fear of such injury. An elaborate effort is made to bolster this view by alluding to statements made by various members of the Congress during the course of the debates which preceded the passage of the Hobbs Act. These statements and the committee hearings disclosed a congressional awareness of the inadequacy of the earlier legislation which the Supreme Court, in United States v. Local 807, 1942, 315 U.S. 521, 62 S.Ct. 642, 86 L.Ed. 1004, declared had excluded from the scope of its proscription certain terrorist activities of various Teamsters locals, the purpose of which was to require employers to use only union personnel to do certain jobs or to require that wages be paid to such personnel even if the employers chose not to avail themselves of the services proffered. The Congress evidently believed that the exemption given labor under the prior act, as construed by the Supreme Court, was too broad and that some restraints were necessary to deter labor groups, as well as others, from engaging in such practices. Undoubtedly, the elements of violence present in the Local 807 case were a significant part of the background against which the Hobbs Act must be interpreted. It is equally clear that it was not the intention of the Congress to interfere with the exertion of peaceful economic pressures by a union through the medium of strikes to achieve legitimate labor objectives. But it does not follow from either or both of these premises that only violence or threats of violence are covered by the Act and that the Act is not violated when union...