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UNITED STATES v. WOODRUFF

August 22, 1996

UNITED STATES OF AMERICA, Plaintiff,
v.
KEVIN PAUL WOODRUFF, et al., Defendant.



The opinion of the court was delivered by: WALKER

 Pending before the court is defendant's FRCrP 29 motion for judgment of acquittal. On May 23, 1996, the court issued a tentative decision granting defendant's motion. The court also invited the parties to submit further memoranda in light of that tentative decision and ordered them to appear for a hearing on July 2, 1996. At that hearing, the government, in addition to addressing the merits of the court's tentative decision, requested leave to file a motion to detain defendant pending appeal of the court's order. Briefing on the government's detention motion was completed August 2, 1996. For the reasons described below, the court now GRANTS defendant's motion for acquittal and GRANTS the government's motion to detain defendant pending appeal.

 I

 In United States v Lopez, 514 U.S. 549, 131 L. Ed. 2d 626, 115 S. Ct. 1624 (1995), the United States Supreme Court, for the first time in two generations, struck down an act of Congress as falling outside the outer limit of Congress' power under the Commerce Clause. In so doing, the Court reaffirmed the importance of the dual-sovereign nature of our system of government:

 
In the compound republic of America, the power surrendered by the people is first divided between two distinct governments, and then the portion allotted to each subdivided among distinct and separate departments. Hence a double security arises to the rights of the people. The different governments will control each other, at the same time that each will be controlled by itself.

 Id at 1638 (Kennedy, J. and O'Connor, J., concurring) (quoting The Federalist No 51, p 323 (J. Madison) (C. Rossiter ed 1961)); see also Gregory v Ashcroft, 501 U.S. 452, 458-59, 115 L. Ed. 2d 410, 111 S. Ct. 2395 (1991) ("Just as the separation and independence of the coordinate branches of the Federal Government serve to prevent the accumulation of excessive power in any one branch, a healthy balance of power between the States and the Federal Government will reduce the risk of tyranny and abuse from either front. * * * In the tension between federal and state power lies the promise of liberty."); New York v United States, 505 U.S. 144, 181, 120 L. Ed. 2d 120, 112 S. Ct. 2408 (1992) ("The Constitution divides authority between federal and state governments for the protection of individuals. State sovereignty is not just an end in itself: Rather, federalism secures to citizens the liberties that derive from the diffusion of sovereign power.") (internal quotation omitted).

 In their concurring opinion, Justices Kennedy and O'Connor further reviewed the important motivations underlying protection of these fundamental precepts of federalism:

 
The theory that two governments accord more liberty than one requires for its realization two distinct and discernible lines of political accountability: one between the citizens and the Federal Government; the second between the citizens and the States. If, as Madison expected, the federal and state governments are to control each other, see The Federalist No. 51, and hold each other in check by competing for the affections of the people, see The Federalist No. 46, those citizens must have some means of knowing which of the two governments to hold accountable for the failure to perform a given function. 'Federalism serves to assign political responsibility, not to obscure it.' FTC v Ticor Title Ins Co, 504 U.S. 621, 636, 119 L. Ed. 2d 410, 112 S. Ct. 2169 (1992). Were the Federal Government to take over the regulation of entire areas of traditional state concern, areas having nothing to do with the regulation of commercial activities, the boundaries between the spheres of federal and state authority would blur and political responsibility would be illusory. The resultant inability to hold either branch of the government answerable to the citizens is far more dangerous even than devolving too much authority to the remote central power.

 It is the responsibility of all officers of the government to respect this constitutional design. Id at 1639 (citing Public Citizen v Department of Justice, 491 U.S. 440, 466, 105 L. Ed. 2d 377, 109 S. Ct. 2558 (1989)). As it did in Lopez, the judiciary must act "when one or the other level of Government has tipped the scales too far," as the "federal balance is too essential a part of our constitutional structure and plays too vital a role in securing freedom for [a court] to admit inability to intervene." Id.

 It is with these principles in mind that the court reluctantly finds itself compelled to intervene to correct an imbalance in the scales of power. The Hobbs Act, 18 USC § 1951(a), makes criminal the conduct of anyone who "in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion * * * ." As should be clear from the plain language of this statute, Congress did not intend to reach, nor did it purport to reach, every robbery and extortion. In just the same way, the Framers did not intend that federal authority under the Commerce Clause reach all business transactions and certainly not all non-business activities which affect commerce in some incidental fashion. While the court does not suggest that the Hobbs Act was beyond the authority of Congress to enact, the court concludes that the government's prosecution of this case under the Hobbs Act fails to respect the constitutional limits applicable to the Hobbs Act. Implicit in every prosecution under the Hobbs Act is the government's determination that the conduct of the defendant is the proper subject of federal action. The court believes that this determination under the facts at hand is incorrect.

 II

 A

 This case arises out of events occurring between March 1 and March 29, 1991. The government's evidence at trial proved that defendant robbed three jewelry stores and attempted to rob a fourth one. All four stores were located in three counties of northern California.

 The first robbery occurred on or about March 1, 1991, when defendant robbed Mark Areias Jewelers in Aptos, California. As a result of the robbery, the store lost approximately $ 200,000 worth of jewelry and was unable to conduct business for three days. Although the store purchased at least 50% of its inventory from out of state, it served mostly local customers. Nicolle Callahan, a witness for the government, testified that the robbery caused no change in the way the store dealt with out-of-state suppliers and that the store still purchases the same amount of its merchandise from out of state.

 On March 12, 1991, defendant robbed Shreve & Co. Jewelers in Walnut Creek, California, resulting in the loss of approximately $ 300,000 worth of jewelry. The store had to replace the stolen jewelry and was shut down for one day after the robbery. At trial, Peter Fogel, former president of Shreve & Co., testified that at least 90% of the jewelry in the Walnut Creek store came from out of state. Fogel also testified that his company did not reduce its inventory or change its out-of-state buying practices as a result of the robbery. The store's clientele was comprised mainly of local residents. Shreve & Co. operates in California but was at the time owned by a company headquartered in Minneapolis, Minnesota.

 On March 29, 1991, defendant attempted to rob Sam Bloch Jewelers in Hayward, California. Although the store did not lose any inventory, it was closed for one or two days and was unable to conduct business during that time. At trial, Nathan Stone, the owner, testified that the store purchased 75%-80% of its jewelry from out of state, but that most of its customers and operations were local.

 Defendant, on the same day of the attempted robbery at Sam Bloch, robbed Golden Treasures Jewelers in Montclair, California. The owner of the store, Arthur Oppenheimer, testified that he lost approximately $ 118,000 in jewelry, 75% of which he had handmade. According to Oppenheimer, Golden Treasures was closed for business for a few days due to the robbery and has still not fully recovered the loss. Oppenheimer testified that, as a result of the robbery, he could not conduct business as usual for quite some time after the robbery because he did not have the necessary parts to manufacture the jewelry sold in his store.

 On August 20, 1993, defendant was indicted on four counts of interfering with commerce by robbery under the Hobbs Act, 18 USC § 1951. During the course of trial, defendant moved for judgment of acquittal pursuant to FRCrP 29. The court reserved decision until after the jury had reached a verdict. On January 29, 1996, the jury convicted the defendant on all four counts. Thereafter, defendant timely renewed his motion for judgment of acquittal contending that the government's evidence was insufficient to sustain a conviction under the Hobbs Act.

 B

 The test for determining whether to grant a motion under FRCrP 29 is whether, viewing the evidence in the light most favorable to the government, there was relevant evidence at trial from which the jury could reasonably find the defendant guilty beyond a reasonable doubt. United States v Pinkney, 15 F.3d 825, 826 (9th Cir 1994). If the court reserves decision on a motion for judgment of acquittal, the court must decide the motion on the basis of the evidence at the time the ruling was reserved. FRCrP 29(c).

 C

 Defendant's participation in the three robberies and one attempted robbery at bar is not wholly free from doubt. None of the persons in the jewelry stores at the time was able to identify defendant as a participant. Some of them did provide a general description that could match that of defendant, but each admitted uncertainty on the point. The government, therefore, sought to establish the fact of defendant's participation by two lines of evidence. First, the government introduced the testimony of an accomplice who participated in the three robberies and one attempted robbery and told the jury that defendant did, as well. Second, the government produced DNA evidence that linked defendant to a blood sample left on an automobile used in the Sam Bloch attempted robbery and on a glove found near the scene of the Golden Treasures robbery.

 After considering this evidence, the jury resolved the doubt about defendant's participation against him. The court does not question the soundness of this conclusion and believes that whatever doubt may exist about defendant's participation, it is not a reasonable one. Rather, the troublesome issue is whether the government proved the nexus between the defendant's actions and interstate commerce necessary to support a conviction under the Hobbs Act.

 D

 As noted earlier, the Hobbs Act makes criminal the conduct of anyone who "in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion * * * ." Commerce under the Hobbs Act is defined as follows:

 
Commerce within the District of Columbia, or any Territory or possession of the United States; all commerce between any point in a State, Territory, Possession, or the District of Columbia and any point outside thereof; all commerce between points within the same State through any place outside of such State; and all other commerce over which the United States has jurisdiction.

 18 USC § 1951(b)(3). Thus, an essential element of the crime is that the robbery obstruct, delay or affect interstate commerce. Like all other elements of the offense, this jurisdictional element must be proved to the jury beyond a reasonable doubt, United States v Nukida, 8 F.3d 665, 669-73 (9th Cir 1993). As will be discussed more fully below, fashioning and applying this element also presents a question of law for the court, the answer to which may be found, in part, in the constitutional principles that delimit the reach of federal criminal prosecutions.

 Defendant's first argument for judgment of acquittal is that the Hobbs Act does not apply to local robberies and that the government's proof only establishes that the jewelry stores involved in this case were local businesses not involved in interstate commerce. Specifically, defendant contends that the legislative history of the Hobbs Act establishes that Congress did not intend to make all robberies federal crimes. Instead, defendant argues that the Act was passed as a means "to close the gaps in existing federal laws and to render more difficult the activities of predatory criminal gangs of the Kelly and Dillinger types." Defendant's Motion for Judgment of Acquittal at 5.

 Defendant's second argument is that the Supreme Court's recent decision in United States v Lopez, 514 U.S. 549, 131 L. Ed. 2d 626, 115 S. Ct. 1624 (1995), invalidates Ninth Circuit precedent holding that the government need only show a de minimis effect on commerce to support a conviction under the Hobbs Act. Defendant argues that Lopez and its Ninth Circuit progeny, United States v Pappadopoulos, 64 F.3d 522 (9th Cir 1995), require the government in this case to show a substantial effect on commerce to support a conviction under the Hobbs Act, which, defendant contends, it has not done.

 In its opposition to the defendant's motion for judgment of acquittal, the government argues that Congress intended to reach all conduct within the express terms of the Hobbs Act, including the robberies at bar. Furthermore, the government argues that Lopez and Pappadopoulos are inapplicable and that the Ninth Circuit's de minimis effect on interstate commerce standard still applies. The government also finds support in the Supreme Court's holding in Stirone v United States, 361 U.S. 212, 215, 4 L. Ed. 2d 252, 80 S. Ct. 270 (1960), in which the Court stated that the Hobbs Act was to be accorded substantial breadth in application.

 To address these arguments, the court will first review the history of the Hobbs Act itself and pre-Lopez authority from the controlling jurisdictions, and then turn to Lopez and Pappadopoulos.

 III

 A

 The present codification of the Hobbs Act does not make its genesis and motivating purpose as clear as might be hoped. The present form of the statute is a codification of a 1946 enactment which amended the Federal Anti-Racketeering Act of 1934. The Anti-Racketeering Act had been aimed at the "activities of predatory criminal gangs of the Kelly and Dillinger types." 91 Cong Rec 11848; see also Evans v United States, 504 U.S. 255, 261, 119 L. Ed. 2d 57, 112 S. Ct. 1881 (1992); United States v Local 807, 315 U.S. 521, 535, 86 L. Ed. 1004, 62 S. Ct. 642 (1942). *fn1" The multistate character of these types of criminal activities was thought to justify the exertion of the federal government's jurisdiction through the commerce power. 91 Cong Rec 11909-10 (1945); Investigation of So-Called Rackets: Hearings on S 489, 73rd Cong., 2nd Sess. 4, 81 (1934).

 The present incarnation of the Hobbs Act was enacted soon after the close of World War II when Congress responded to a loophole in the legislation as it had been interpreted by the Supreme Court. The Anti-Racketeering Act had proscribed, in connection with interstate commerce, the exaction of valuable consideration by force, violence or coercion, "not including, however, the payment of wages by a bona-fide employer to a bona-fide employee." Federal Anti-Racketeering Act of 1934, § 2, 48 Stat 979. This exception had been added by Congress after objections were raised by labor groups who felt the bill might restrict their activities. United States v Local 807, 315 U.S. 521, 529, 86 L. Ed. 1004, 62 S. Ct. 642 (1942).

 In United States v Local 807, however, the wage exception in the Anti-Racketeering Act led to the acquittal of union members who conspired to use and did use violence and threats to obtain an amount of money equal to a day's work from out-of-state truck drivers delivering shipments into New York. These union members failed to offer to work, or refused to work for the money when asked to do so. Id at 526.

 The Hobbs Act was designed primarily to undo the wage exception and thereby make the type of racketeering activity in Local 807 a federal crime even if committed by labor unions. 91 Cong. Rec. 11843, 11844, 11911. Congress' intent in passing the Hobbs Act was thus to amend the Anti-Racketeering act to ensure protection of the persons who use the highways in interstate commerce from highway robbery, id at 11843, and was an effort to purge organized labor of the type of gangster activity which the Anti-Racketeering Act was intended to deter more generally. Id at 11843; see also Evans, 504 U.S. at 261. Congress found that state laws were inadequate because the labor union racketeering of the type evident in Local 807 occurred across state lines and involved politically influential groups that local law enforcement officers were wary of prosecuting. Id at 11843. Accordingly, even as amended, Congress' original intent to deter professional gangsterism, as embodied in the Anti-Racketeering Act, remained embedded in the new statutory enactment. Id. at 11911; see also United States v Green, 350 U.S. 415, 418-20, 100 L. Ed. 494, 76 S. Ct. 522 (1956). The legislative histories of the Anti-Racketeering Act and Hobbs Act, taken together, thus demonstrate that Congress' intent was to enable the federal government to prosecute that species of robberies that local law enforcement had been unable effectively to pursue due its multistate nature and the ability of the perpetrators to elude effective enforcement by state and local officials.

 B

 Despite the legislative background to the Hobbs Act, prosecutions under it soon moved beyond prototypical "gangster" criminal activities. Challenges to application of the Hobbs Act ensued. In Stirone v United States, 361 U.S. 212, 4 L. Ed. 2d 252, 80 S. Ct. 270 (1960), the defendant was charged with and convicted of unlawfully interfering with interstate commerce in violation of the Hobbs Act. At issue was whether the indictment had charged defendant with the offense with which he was convicted. Id at 213. The indictment had charged defendant with interfering, by way of extortion, with the interstate transport of sand into Pennsylvania from other states. At trial, however, the government was permitted to introduce evidence of additional interference with interstate commerce, in the form of steel shipments from the plant which was to be constructed, in part, from concrete made from the sand at issue. Id at 214.

 The Court stated that the Hobbs Act "speaks in broad language, manifesting a purpose to use all the constitutional power Congress has to punish interference with interstate commerce by extortion, robbery or physical violence," and "outlaws such interference 'in any way or degree.'" Id at 215 (quoting 18 USC § 1951(a)). The Court noted that had the victim not complied with defendant's demands, the interstate shipment of sand to the plant would have slackened or stopped, and that "it was to free commerce from such destructive burdens that the Hobbs Act was passed." Id.

 The Court nevertheless reversed the conviction. The Court stated as follows:

 
There are two essential elements of a Hobbs Act crime: interference with commerce and extortion. Both elements have to be charged. Neither is surplusage and neither can be treated as surplusage. The charge that interstate commerce is affected is critical since the Federal Government's jurisdiction of this crime rests only on that interference. It follows that when only one kind ...

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