THOMAS A. LAUBACK, PETITIONER V. UNITED STATES OF AMERICA No. 89-5952 In The Supreme Court Of The United States October Term, 1989 On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Sixth Circuit Brief For The United States In Opposition OPINIONS BELOW The initial opinion of the court of appeals (Pet. App. 12a-23a) is reported at 869 F.2d 965. The supplemental opinion of the court of appeals on petition for rehearing (Pet. App. 8a-11a) is reported at 884 F.2d 924. The opinion of the district court (Pet. App. 1a-7a) is not reported. JURISDICTION The judgment of the court of appeals was entered on September 7, 1989. The petition for a writ of certiorari was filed on November 6, 1989. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTIONS PRESENTED 1. Whether the reversal of the conspiracy conviction of petitioner's sole co-conspirator on a ground other than insufficiency of the evidence requires the reversal of petitioner's conspiracy conviction as well. 2. Whether the district court erred in conditionally admitting statements subject to the government's showing that the statements were admissible as co-conspirator declarations. STATEMENT Following a jury trial in the United States District Court for the Southern District of Ohio, petitioner and his co-defendant Heller Boling were convicted of conspiring to commit mail and wire fraud, in violation of 18 U.S.C. 371. Petitioner and Boling were also convicted on numerous substantive mail and wire fraud counts, in violation of 18 U.S.C. 1341 and 1343. Petitioner was sentenced to consecutive terms of one year's imprisonment on the conspiracy count and on two of the substantive counts. On the remaining counts, the court suspended imposition of sentence in favor of five years' probation. After reversing Boling's convictions on all counts, the court of appeals initially affirmed petitioner's convictions on the substantive counts but reversed his conspiracy conviction. On rehearing, the court reinstated petitioner's conspiracy conviction. 1. The evidence at trial showed that petitioner was the President of DuraSeal, Inc., a company organized for the purpose of selling "asphalt sealer" dealerships to investors for between $10,000 and $40,000. Boling was one of petitioner's principal salespersons. Together, they sold more than 100 dealerships. Petitioner and Boling defrauded these investors by misrepresenting company plans to begin franchising, by falsely stating the success rate of other DuraSeal dealers, and by failing to give investors the promised training and equipment that was needed to operate their dealerships. Pet. App. 2a-5a. Fifty-one DuraSeal dealers testified at trial regarding promises and representations made to them by petitioner, Boling, and other salesmen. The district court conditionally admitted that evidence subject to the government's showing by a preponderance of the evidence that the statements were admissible as co-conspirator declarations. At the conclusion of the government's case, the district court ruled that all the statements were admissible. The court found that "substantially all of the statements" were not hearsay because they were not offered to prove the truth of the matters asserted. Instead, the statements were offered merely to show that petitioner and his salesmen had made false representations to potential investors. Pet. App. 1a-2a. The court also found the statements to be admissible under the co-conspirator exception to the hearsay rule. Pet. App. 3a-7a. The court found that the government established by a preponderance that petitioner was a member of a conspiracy, and that the statements were made during the course of and in furtherance of that conspiracy. Ibid. 2. The court of appeals upheld the admission into evidence of statements made by Boling and other salesmen to DuraSeal investors. The court found no error in admitting these statements before the conspiracy was established, because the necessary proof was ultimately adduced. Moreover, the court held that because Boling and the other salesmen were petitioner's employees, their statements were also admissible under Federal Rule of Evidence 801(d)(2)(D) as "a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship." Pet. App. 22a. The court also found the evidence sufficient to sustain the convictions of petitioner and Boling on all counts. Pet. App. 20a-21a. With respect to the conspiracy count, the court specifically held that "the jury could have found that (petitioner) and Boling violated the federal conspiracy statute." Id. at 21a. The court of appeals nevertheless reversed Boling's convictions on all counts and remanded for a new trial on the ground that her attorney, who had previously represented petitioner, suffered from a conflict of interest. Pet. App. 17a-20a. The court then held that the reversal of Boling's conspiracy conviction required the reversal of petitioner's conspiracy conviction as well. Describing the reversal as a "windfall" for petitioner, the court explained that reversal was necessary because the "law requires that it takes at least two persons to commit conspiracy." Id. at 21a. The court further stated that should either petitioner or Boling be found not guilty of conspiracy at the retrial, "the conviction of the other may not be upheld." Ibid. On rehearing, the court of appeals reinstated petitioner's conspiracy conviction. Pet. App. 8a-11a. The court observed that it had already determined that "the evidence viewed 'in a light most favorable to the government' warranted the jury's finding (petitioner) guilty 'on all counts.'" Pet. App. 11a. The court thus held that even if Boling is acquitted at her retrial, that acquittal will not undermine petitioner's conviction, which was obtained at a separate trial. ARGUMENT 1. Petitioner contends (Pet. 4-9) that the reversal of Boling's conviction on the conspiracy count requires that his conspiracy conviction be reversed as well. But petitioner does not dispute that the verdict of guilty against both defendants on the conspiracy count was supported by sufficient evidence. Nor does he allege that the error that infected Boling's conviction tainted his conviction. /1/ In these circumstances, there is no legal basis for setting aside petitioner's conviction. Rather than pointing to an error in the proceedings that requires a new trial on the conspiracy count, petitioner argues that he is entitled to a reversal simply because his co-conspirator's conviction was reversed. The cases on which he relies do not require that result. Most of those cases simply require the reversal of the conviction of the sole remaining co-conspirator where the convictions of all other conspirators are vacated because of insufficient evidence. See, e.g., Hartzel v. United States, 322 U.S. 680, 682 n.3 (1944); Morrison v. California, 291 U.S. 82, 93 (1934); Gebardi v. United States, 287 U.S. 112, 123 (1932); United States v. Figueroa, 720 F.2d 1239, 1247 (11th Cir. 1983); United States v. Williams, 503 F.2d 50 (6th Cir. 1974). Only Feder v. United States, 257 F. 694, 697 (2d Cir. 1919), purports to adopt the rule that "if a new trial be given to one after a conviction for conspiracy, it is given to all who were found guilty." /2/ But the Second Circuit has since made it clear that Feder applies only if the error requiring a new trial of one conspirator is so "substantial" that neither co-conspirator could have been fairly tried. United States v. Tomaiolo, 249 F.2d 683, 696 (2d Cir. 1957). Petitioner does not allege that he was prejudiced by the conflict of interest that tainted Boling's conviction, and therefore he would not be entitled to reversal of his conspiracy conviction even in the Second Circuit. Other cases cited by petitioner stand for the proposition that where all conspirators but one are acquitted in a joint trial, the conviction of the one cannot stand. See, e.g., United States v. Hopkins, 716 F.2d 739 (10th Cir. 1982), vacated, 744 F.2d 716, 718 (1984) (en banc); United States v. Sheikh, 654 F.2d 1057, 1062-1064 (5th Cir. 1981), cert. denied, 455 U.S. 991 (1982). See also United States v. Morales, 677 F.2d 1, 3 (1st Cir. 1982) (dictum). But those cases have no application here since the verdict was consistent -- the jury convicted both petitioner and Boling on the conspiracy charge. Moreover, that line of cases depends on the legal argument that inconsistent verdicts require that the verdicts on all counts be vacated, even those on which the jury convicted. That legal argument, however, has been undermined by this Court's subsequent decision in United States v. Powell, 469 U.S. 57, 69 (1984), in which the Court held that there is no exception to the rule allowing inconsistent jury verdicts, and that defendants are not entitled to reversal on all counts when the jury reaches logically inconsistent results on different counts within the same indictment. Accord United States v. Andrews, 850 F.2d 1557 (11th Cir. 1988) (en banc) (allowing inconsistent conspiracy verdicts), cert. denied, 109 S. Ct. 842 (1989); United States v. Valles-Valencia, 823 F.2d 381 (9th Cir. 1987) (same). See also United States v. Dakins, 872 F.2d 1061, 1065-1066 (D.C. Cir. 1989); United States v. Espinosa-Cerpa, 630 F.2d 328, 330-333 (5th Cir. 1980); Government of Virgin Islands v. Hoheb, 777 F.2d 138, 142-143 (3d Cir. 1985) (concurring opinion). Finally, the possibility that Boling could be acquitted in a retrial does not undermine petitioner's conviction, because the acquittal would not occur in the same trial. The courts have held that when one co-conspirator is acquitted in a separate trial, the acquittal does not require that a co-conspirator's conviction, obtained in a previous trial, be vacated. United States v. Irvin, 787 F.2d 1506, 1512-1513 (11th Cir. 1986); United States v. Espinosa-Cerpa, supra, 630 F.2d at 330-333. See Standefer v. United States, 447 U.S. 10 (1980) (the doctrine of nonmutual collateral estoppel does not apply in criminal cases). In short, the reversal of Boling's conspiracy conviction provides no basis for granting petitioner a new trial. 2. Petitioner contends (Pet. 9-16) that the district court erred in allowing the DuraSeal dealers to testify regarding statements made by Boling and the other salesmen without requiring the government first to prove the admissibility of those statements as co-conspirator declarations. But as the courts below held, the salesmen's statements were not hearsay because they were not admitted to prove the truth of the matters asserted (see Fed. R. Evid. 801(c)), and they were independently admissible as statements made by petitioner's employees on matters within the scope of their employment (see Fed. R. Evid. 801(d)(2)(D)). Accordingly, no preliminary proof of a conspiracy was needed to support their admissibility. In any event, Rule 104(b) of the Federal Rules of Evidence specifically allows the trial court to admit statements "subject to * * * the introduction of evidence sufficient to support a finding" of the facts necessary to establish the statements' relevancy and admissibility. The order of proof for establishing the admissibility of co-conspirator declarations is a matter committed to the discretion of the district court, and the defendant has no right to a pretrial ruling on the question of admissibility. United States v. Hernandez, 829 F.2d 988, 994 (10th Cir. 1987), cert. denied, 108 S. Ct. 1486 (1988); United States v. Ammar, 714 F.2d 238, 246-247 (3d Cir.), cert. denied, 464 U.S. 936 (1983); United States v. Nichols, 695 F.2d 86, 90 (5th Cir. 1982). Moreover, whatever the preferred method of admitting co-conspirator declarations, petitioner was not prejudiced by the procedure employed here, since the court found that the government had proved, by a preponderance of the evidence, that petitioner was a member of the conspiracy and that the statements were made in furtherance of the conspiracy. See Bourjaily v. United States, 438 U.S. 171, 175-176 (1987). CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. KENNETH W. STARR Solicitor General EDWARD S.G. DENNIS, JR. Assistant Attorney General PATTY MERKAMP STEMLER Attorney JANUARY 1990 /1/ The court reversed Boling's conviction because her attorney had also represented petitioner and his loyalty therefore may have been divided. In other words, the court believed that the attorney may have sacrificed Boling's interests to protect petitioner. Accordingly, to the extent that the conflict of interest had any effect on petitioner, it benefited him. /2/ Alkon v. United States, 163 F. 810, 811 (1st Cir. 1908), on which petitioner also relies, refers to this rule in dictum only. The conviction of the co-conspirator in that case was not disturbed.