Appeal from the United States District Court for the Northern District of Illinois, Eastern Division - No. 73 CR 249 Richard B. Austin, Judge.
Fairchild, Chief Judge, Swygert, Cummings, Pell, Stevens, Sprecher, Tone and Bauer, Circuit Judges. Sprecher, Circuit Judge, dissenting. Swygert, Circuit Judge, dissenting. Pell, Circuit Judge, dissenting.
Count III of the indictment*fn1 charged that on December 8, 1970, appellant did obstruct, delay and affect commerce as defined in the Hobbs Act*fn2 by extorting $3,000 from a person named Allen.*fn3 The government proved that defendant received the $3,000 and that he did not oppose a subsequent zoning change authorizing the construction of an animal hospital. However, no such hospital was ever built. Therefore, there is no evidence that either the zoning change or the payment had any effect whatsoever, either favorable or unfavorable, on interstate commerce. The question presented is whether the federal statute reaches this extortion.
The question is novel and significant. The extraordinary growth of federal criminal litigation poses a serious threat to the quality of federal justice; moreover, this growth may not only reflect but also contribute to the continuing transfer of power from the several states to the national government. Since we have no desire to accelerate this trend unnecessarily, we approach the question with a special regard for appellant's claim that the federal prosecutor has overreached the proper limits of his jurisdiction. The importance of the issue merited the fresh consideration of the court sitting en banc. It should be decided neither by simple extrapolation from the precedents on which the government relies nor by merely distinguishing the cases which have not yet carried us this far.
We first restate the essential facts and then explain why we believe that a fair consideration of the statutory purpose and its constitutional predicate require that the district court judgment be affirmed.
In September, 1970, William Harris planned to build an animal hospital on property located in the 13th ward of the City of Chicago. As then zoned, such a use of the land was prohibited. Harris therefore paid $5,500 to Al C. Allen, who had acquired a reputation as "the zoning man";*fn4 Allen talked to defendant Staszcuk, who was then serving as alderman of the 13th ward; on September 15, 1970, an amendatory ordinance was introduced in the City Council.
On December 8, 1970, the zoning man paid the alderman $3,000. On that date the alderman participated in the public hearing on the proposed ordinance, questioning objectors and, at least implicitly, supporting the proposal. Following the public hearing on December 8, pursuant to customary procedure, the zoning committee deferred action on the matter. A few weeks later, on January 27, 1971, the ordinance was approved by the committee and adopted by the City Council. Harris was thereafter free to construct his animal hospital.
In March, Harris received bids from three contractors. For reasons not explained in the record, however, the veterinarian apparently changed his plans and the hospital was never built. Instead, Harris improved his property with construction that would have been permitted before the zoning ordinance was amended.
The estimator for one of the three contractors testified that in his judgment construction of the animal hospital would have required the use of components manufactured outside of the State of Illinois.*fn5 Neither of the other bidders testified. The nexus between the extortion and interstate commerce may therefore be described thusly: the extortion eliminated the alderman's possible opposition to the removal of a restriction which prevented Harris from building the hospital; if Harris had not changed his plans, the construction of the hospital would have involved the use of out-of-state materials. The jury found this nexus sufficient under the trial court's instructions on the commerce issue.*fn6 A panel of this court originally concluded that it was too tenuous and reversed the conviction on Count III. After reargument and reconsideration we now affirm that conviction.
The present form of the statute is a codification of a 1946 enactment, the Hobbs Act, which amended the so-called "Federal Anti-racketeering Act of 1934."*fn7 The 1946 amendment was intended to encompass the conduct held to be beyond the reach of the 1934 Act by the Supreme Court in United States v. Local 807, 315 U.S. 521, 62 S. Ct. 642, 86 L. Ed. 1004.*fn8 It was a broadening amendment concerned primarily with the proper differentiation between "legitimate" labor activity and labor "racketeering." It is, therefore, appropriate to consider the legislative purpose in enacting the 1934 Act in addressing the issue presented by this case.
That purpose was described in Judge Learned Hand's opinion for the majority of the Circuit Court of Appeals in the Local 807 case as follows:
In conclusion we may add that a consideration of the evil at which Congress was aiming, seems to us to confirm the construction we are putting upon what it said. For a number of years before 1934 -- at least in the City of New York -- the levy of blackmail upon industry, especially upon relatively small shops, had become very serious, and the local authorities either would not, or could not, check it. The courts were powerless, because the witnesses were terrorized and could not be protected if they told what they knew; the public felt themselves at the mercy of organized gangs of bandits and became much wrought up over the situation. It was, at least primarily, to check such Camorras that Congress passed this measure.
United States v. Local 807, 118 F.2d 684, 687-688 (2d Cir. 1941).
A description of the statute as designed to eliminate the "levy of blackmail upon industry, especially upon relatively small shops," casts a revelatory light on the problem presented by this case. An effective prohibition against blackmail must be broad enough to include the case in which the tribute is paid*fn9 as well as the one in which a victim is harmed for refusing to submit. Since the payment would normally enable the business to continue without interruption,*fn10 the inference is inescapable that Congress was as much concerned with the threatened impact of the prohibited conduct as with its actual effect.
Moreover, congressional concern was not merely a matter of providing federal protection to each of the "relatively small shops" being victimized, but rather reflected the legislative judgment that these entrepreneurs, in the aggregate, represented a component of industry of sufficient importance to merit federal protection. The concern which gave rise to the statute is marketwide. Thus, although enforcement necessarily proceeds on a case-by-case basis, our evaluation of both the intent of Congress and its power to implement that intent, requires more than a consideration of the consequences of the particular transaction disclosed by this record; it requires an identification of the consequences of the class of transactions of which this is but one example.*fn11
The statute is not regulatory in character but instead is intended to remove artificial restraints on the free flow of goods. The elimination of "blackmail upon industry" can have no inhibitory effect on interstate commerce; it can only facilitate the operation of a free economy. Like the Sherman Act, which is broadly directed against private regulation of the free market, and which has been construed as an exercise by Congress of "all the power it possessed" to prevent restraints on commercial competition, see Apex Hosiery Co. v. Leader, 310 U.S. 469, 495, 84 L. Ed. 1311, 60 S. Ct. 982, and Atlantic Cleaners & Dyers ...