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United States v. Kirsch

United States Court of Appeals, Second Circuit

September 12, 2018

United States of America, Appellee,
v.
Mark N. Kirsch Defendant-Appellant, Carl A. Larson, Michael J. Caggiano, Jeffrey C. Lennon, Gerald H. Franz, Jr., James L. Minter, III, Jeffrey A. Peterson, Kenneth Edbauer, George Dewald, Michael J. Eddy, Thomas Freedenberg, Gerald E. Bove, Defendants

          Argued: September 25, 2017

          Appeal from the United States District Court for the Western District of New York. No. 07-cr-00304 - William M. Skretny, Judge.

         Appeal from a judgment of conviction of the United States District Court for the Western District of New York (Skretny, J.). Mark N. Kirsch, a union local president, was convicted of racketeering conspiracy and Hobbs Act extortion conspiracy for his efforts to force non-union contractors to hire union members. On appeal, Kirsch contends that: (1) the Enmons exception to the Hobbs Act for the pursuit of lawful union objectives applies, requiring reversal of his Hobbs Act conspiracy conviction; (2) an Enmons-like exception exists with respect to New York Penal Law extortion, requiring reversal of his racketeering conviction based on state law predicate acts; (3) the wages that he was convicted of attempting to extort are not "property" capable of being extorted, requiring reversal of both convictions; (4) his Hobbs Act conspiracy conviction must be reversed because the Government failed to prove his involvement in the charged conspiracy; and (5) the district court erred in instructing the jury as to the required mental state for threats. We conclude that (1) an Enmons-like exception does not apply to New York Penal Law extortion; (2) the wages Kirsch attempted to extort were "property" capable of being extorted; (3) the district court's threat instruction was correct with respect to New York Penal Law extortion; but (4) the Government failed to prove Kirsch's involvement in the charged Hobbs Act conspiracy. Accordingly, we REVERSE the count of conviction for Hobbs Act conspiracy, AFFIRM the count of conviction for racketeering conspiracy, and REMAND for resentencing.

          Monica J. Richards, Assistant United States Attorney, for James P. Kennedy, Jr., United States Attorney for the Western District of New York, Buffalo, NY, for Appellee.

          Brian M. Melber, Personius Melber LLP, Buffalo, NY, for Defendant- Appellant.

          Before: Lohier and Droney, Circuit Judges, and Rakoff, District Judge. [**]

          DRONEY, CIRCUIT JUDGE.

         In 2016, Appellant Mark N. Kirsch was convicted of Hobbs Act extortion conspiracy and racketeering conspiracy based on predicate acts of New York Penal Law extortion violations. The jury concluded that Kirsch, the president of the local chapter of a labor union, used threats of violence and destruction of property in an attempt to force contractors to hire members of his union.

         On appeal, Kirsch argues that United States v. Enmons, 410 U.S. 396 (1973), shields him from Hobbs Act liability, requiring that his Hobbs Act conspiracy conviction be reversed. In Enmons, the Supreme Court held that a union official could not be convicted of Hobbs Act extortion if the official's conduct was undertaken in pursuit of "legitimate union objectives." Id. at 400. With respect to the racketeering conspiracy conviction, Kirsch contends that an Enmons- like exception exists under New York law that shields him from New York Penal Law extortion liability, also requiring the reversal of that count of conviction. He also maintains that (1) the property he was charged with extorting-wages and benefits for union members- was not "transferable," as required by Sekhar v. United States, 570 U.S. 729 (2013); (2) the Government presented insufficient evidence of his involvement in the charged Hobbs Act conspiracy; and (3) the district court's instructions regarding the required mental state for threats for the extortion charges were incorrect.

         We hold that (1) under New York Penal Law, there is no Enmons-like exception for extortion committed in pursuit of a legitimate labor objective; (2) the property Kirsch was convicted of extorting was "transferable" as required by Sekhar; (3) the district court's instructions with respect to extortion under the New York Penal Law were correct; but (4) the Government presented insufficient evidence of Kirsch's involvement in the charged Hobbs Act conspiracy. Because we hold that the government presented insufficient evidence to support the Hobbs Act conviction, we need not reach Kirsch's argument that Enmons shields him from Hobbs Act liability. As a result, Kirsch's conviction for racketeering conspiracy is affirmed, and his conviction for Hobbs Act extortion conspiracy is reversed.

         BACKGROUND

         Kirsch was the president and business manager of the International Union of Operating Engineers - Local 17 ("Local 17") from 1997 to 2008. Local 17 operated in the Buffalo, New York area. At trial, the government presented evidence that Kirsch instructed Local 17 members to "turn or burn" contractors who did not employ them, meaning that non-union contractors would have to hire Local 17 members ("turn") or the union would obstruct their work ("burn"). Union members, at the direction of Kirsch, picketed and blocked construction sites, threatened construction managers, tampered with equipment, and destroyed property.

         Kirsch was charged with multiple counts of unlawful conduct with respect to numerous contractors. However, after the jury's verdict and his motion for judgment of acquittal was granted in part, Kirsch remains convicted only of Racketeering Conspiracy (18 U.S.C. § 1962(d)) under Count 1 for his role in attempting to extort two contractors-Ontario Specialty Contracting ("OSC") and Earth Tech-and Hobbs Act extortion conspiracy (18 U.S.C. § 1951(a)) under Count 2 with respect to conduct directed at a third contractor, Amstar Painting ("Amstar").[1] Accordingly, we limit our review to those two counts of conviction and the circumstances involving those three contractors. We briefly summarize the evidence presented at trial as to those contractors.[2]

         I. OSC

         OSC is an environmental contractor that provides soil remediation services. In June 2005, OSC began a project at the waterfront in Buffalo to prepare the site for later construction. Before such construction could begin, OSC was tasked with excavating contaminated material and transporting it to a disposal facility.

         Before the contract was awarded to OSC, a Local 17 representative invited the owner of OSC, Jon Williams, to have lunch with him and Kirsch. Williams testified at trial that at the meeting, Kirsch stated that if OSC did not use Local 17 members for the project, OSC would not "get the project, and if [it] did get the project, [it]'d never get it done." Gov't App. 15. Despite Kirsch's demand that OSC employ Local 17 members, OSC refused. At a meeting before the project's ceremonial ground-breaking, Kirsch again threatened to stop the project. Local 17 then began picketing the site. During the picketing, Local 17 members prevented trucks from entering or leaving the worksite, and placed metal "stars" to puncture truck tires in the entranceway of the worksite. Additionally, on multiple occasions, OSC workers discovered upon arrival in the morning that padlocks on the entrances to the site had been tampered with so that they could not be unlocked.[3]

         II. EARTH TECH

         In 2005, Earth Tech, also an environmental remediation company, entered into a $10 million contract to remove contaminated soil from a school in the Buffalo area. When Earth Tech refused to sign an agreement to hire Local 17 workers, Local 17 members began picketing the job site. In addition, Local 17 members blocked entrances to the site and placed metal stars and roofing nails by its entrance to damage tires of vehicles. As a result of this conduct, Earth Tech obtained an injunction to prevent further disruption at the worksite. When an Earth Tech project manager notified the picketers of the injunction, one of the Local 17 members threatened him. Later, as the project manager was leaving for the night, his car was surrounded by picketers; about an hour passed before he was permitted to leave.

         III. AMSTAR

         In September of 2003, Amstar, a painting contractor, was involved in a bridge rehabilitation project in Buffalo. After the project had begun, a Local 17 member, Edward Perkins, asked John Lignos, the vice president of Amstar, to assign a Local 17 worker to operate a compressor at the job site. The compressor did not actually require an operator, as "operating" it simply required turning it on in the morning and turning it off at the end of the day.[4] Lignos refused to hire a Local 17 member for that purpose.

         When the Amstar employees arrived on the morning after Lignos told Perkins he would not hire a Local 17 member, they discovered that the diesel fuel line in the compressor had been cut, causing diesel fuel to spill into the asphalt, resulting in substantial cleanup and repair costs.

         PROCEDURAL HISTORY

         On December 18, 2007, a grand jury in the United States District Court for the Western District of New York indicted five members of Local 17-not including Kirsch-on charges of Hobbs Act extortion and conspiracy. On April 1, 2008, the grand jury returned a superseding indictment, adding additional counts and additional defendants, including Kirsch. A second superseding indictment-the operative indictment at trial-was returned on January 10, 2012. It included racketeering conspiracy and Hobbs Act extortion conspiracy charges.

         Kirsch and his codefendants moved to dismiss the indictment, arguing-as relevant here-that the alleged threatening and violent conduct was undertaken to achieve legitimate union objectives and thus could not constitute extortion under either the Hobbs Act or New York Penal Law. See Enmons, 410 U.S. at 400.[5] The district court concluded that Enmons did not shield Kirsch and his codefendants from liability, and denied the motion to dismiss.

         Shortly after the Supreme Court decided Sekhar, and still before trial, Kirsch and his codefendants again moved to dismiss the indictment. Their second motion argued that the property that the indictment alleged was extorted was not "transferable," as required for Hobbs Act extortion by Sekhar. See Sekhar, 570 U.S. at 734. The district court concluded that while certain of the forms of property that the indictment alleged was extorted failed to satisfy Sekhar, two other forms of property alleged in the indictment satisfied Sekhar. The district court denied the motion to dismiss as to those two types of property.

         After the motion was granted in part and denied in part, only the following two types of property remained charged in the indictment:

• "Property of construction contractors consisting of wages and benefits to be paid pursuant to labor contracts with Local 17 at construction projects in Western New York."
• "Property of construction contractors consisting of wages and employee benefit contributions paid or to be paid by said contractors for unwanted, unnecessary, and superfluous labor."

         Kirsch's App. 373.

         The New York state extortion predicate racketeering acts in Count 1 (identified as Racketeering Acts 4B and 5B) defined the property extorted in the first of these ways; Racketeering Acts 4A and 5A of Count 1, and Count 2 (Hobbs Act conspiracy) defined the property in the second manner.

         Kirsch and four of his codefendants proceeded to trial. The codefendants were acquitted of all charges. Kirsch, however, was convicted of racketeering conspiracy (Count 1) and Hobbs Act conspiracy (Count 2).[6] With respect to Count 1, the jury found that Kirsch committed Racketeering Act 4, subparts A and B-attempted extortion of OSC in violation of the Hobbs Act and New York Penal Law, respectively-and Racketeering Act 5, subparts A and B- attempted extortion of Earth Tech in violation of the Hobbs Act and New York Penal Law, respectively.

         After the verdict, Kirsch moved for a judgment of acquittal (or a new trial) on all the counts of which he was convicted. With respect to Racketeering Acts 4A and 5A (based on Hobbs Act extortion) of Count 1 (racketeering conspiracy) and Count 2 (Hobbs Act extortion conspiracy), Kirsch argued that the Government had not presented sufficient evidence that he had attempted to extort "wages and benefits to be paid . . . for unwanted, unnecessary, and superfluous labor." Kirsch's App. 435. Unlike in his motion to dismiss, he did not argue that Enmons shielded his conduct; rather, he argued that the Government chose to define the property related to the Hobbs Act violations as "wages and benefits to be paid . . . for unwanted, unnecessary, and superfluous labor," and had not proven attempted extortion of such property.[7] Kirsch's argument was that Local 17's goal had been to replace non-union laborers with Local 17 laborers who would perform actual and necessary work, and that the labor therefore would not be "superfluous." The district court agreed with this argument as applied to Racketeering Acts 4A and 5A of Count 1, and entered a judgment of acquittal with respect to those Hobbs Act- based racketeering acts.[8] But as to Racketeering Acts 4B and 5B of Count 1, which alleged predicate act violations of New York extortion statutes, the district court denied the motion for judgment of acquittal. For those racketeering acts, the Government defined the property not as "superfluous" labor, but rather as "wages and benefits to be paid pursuant to labor contracts with Local 17." Kirsch's App. 373. The district court concluded that the Government proved that Kirsch attempted to extort such wages and benefits. As to Count 2 (Hobbs Act extortion conspiracy), the district court concluded that the Amstar incident constituted an attempt to extort wages for labor that would have been superfluous-as the indictment charged-and denied the motion with respect to that count.

         After the district court's decision on the post-trial motions, but before Kirsch's sentencing, the Supreme Court issued its decision in Elonis v. United States, 135 S.Ct. 2001 (2015). Kirsch filed a motion for a new trial based on Elonis, arguing that the district court's instructions regarding threats, which focused on the perception of the recipient rather than the intent of the maker of the threats, were improper under Elonis. The district court denied that motion.

         Kirsch was sentenced to 36 months' imprisonment on Count 1, and 36 months' imprisonment on Count 2, with the sentences to run concurrently, followed by two years of supervised release. He was also ordered to pay a total of $198, 121.50 in restitution to OSC and Amstar.

         DISCUSSION

         I. NO ENMONS-LIKE EXCEPTION EXISTS UNDER NEW YORK PENAL LAW

         As to Count 1, following the district court's decision on the post-trial motions, only the two predicate acts based on New York Penal Law extortion violations remained to support a racketeering violation under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). RICO provides that "[i]t shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity . . . to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce." 18 U.S.C. § 1962(a). Racketeering under 18 U.S.C. § 1962 requires a "pattern of racketeering activity," id. § 1962(a), which requires the Government to prove at least two acts of racketeering activity committed within ten years of one another, id. § 1961(5). Those acts are defined to include a number of criminal offenses under both state and federal law. See id. § 1961(1). As relevant here, "racketeering activity" includes Hobbs Act extortion, as well as "any act or threat involving . . . extortion . . . chargeable under State law and punishable by imprisonment for more than one year." Id. § 1961(1)(A)-(B). Kirsch argues that an Enmons-like exception exists under New York Penal Law and that as a result he could not be convicted of extortion based on those predicate acts because his conduct was committed in pursuit of a lawful union objective. He challenges the denial of his pre-trial motion to dismiss on this ground.[9]

         We review de novo the denial of a motion to dismiss the indictment. United States v. Yannotti, 541 F.3d 112, 121 (2d Cir. 2008).

         We hold that no Enmons-like exception applies to the extortion provisions of the New York Penal Law. But before we examine the current New York statutes (i.e., those in effect at the time of the ...


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