UNITED STATES OF AMERICA, PETITIONER V. SAMMY G. DAILY AND FREDERIK A. FIGGE No. 90-1828 In The Supreme Court Of The United States October Term, 1990 The Solicitor General, On Behalf Of The United States, Petitions For A Writ Of Certiorari To Review The Judgment Of The United States Court Of Appeals For The Tenth Circuit In This Case. Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Tenth Circuit TABLE OF CONTENTS Question Presented Opinions below Jurisdiction Rules involved Statement Reasons for granting the petition Conclusion OPINIONS BELOW The opinion of the court of appeals (App., infra, 1a-47a) is reported at 921 F.2d 994. Its order denying rehearing (App., infra, 48a-53a) is reported at 921 F.2d 1013. JURISDICTION The judgment of the court of appeals was entered on December 10, 1990. A petition for rehearing was denied on March 1, 1991. App., infra, 48a, 53a. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). RULES INVOLVED Rule 30 of the Federal Rules of Criminal Procedure provides in pertinent part: At the close of the evidence or such earlier time during the trial as the court reasonably directs, any party may file written requests that the court instruct the jury on the law as set forth in the request. * * * The court shall inform counsel of its proposed action upon the requests prior to their arguments to the jury. * * * No party may assign as error any portion of the charge or omission therefrom unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which that party objects and the grounds of the objection. * * * Rule 52(b) of the Federal Rules of Criminal Procedure provides as follows: Plain errors or defects affecting substantial rights may be noticed although they were not brought to the attention of the court. QUESTION PRESENTED Whether it was plain error, or error at all, for the district court not to instruct the jury that evidence of a defendant's good character may give rise to a reasonable doubt as to guilt. STATEMENT After a jury trial in the United States District Court for the District of Kansas, respondents were convicted of conspiring to make false statements to a federal agency and to commit wire fraud, in violation of 18 U.S.C. 371, 1001, and 1343. /1/ Respondent Daily was sentenced to five years' imprisonment and a $10,000 fine, and respondent Figge was sentenced to three years' imprisonment and a $10,000 fine. The court of appeals reversed the convictions on the ground that the district court committed plain error by failing to instruct the jury that evidence of respondents' good character or reputation could give rise to a reasonable doubt as to their guilt. 1. The evidence at trial showed that respondents engaged in a complex scheme that involved the fraudulent procurement of loans from two financial institutions in Kansas. Respondents induced the two institutions, the Indian Springs State Bank (ISSB) and the Coronado Federal Savings and Loan (CFSL) to make loans to real estate partnerships headed by respondents and two other defendants. The ostensible purpose of the loans was to fund real estate investments in Hawaii. The defendants obtained the loans by promising that they would find purchasers for certificates of deposit from ISSB and CFSL in amounts greater than the amounts of the loans. App., infra, 3a-5a. Respondents told the limited partners in the real estate ventures that the partners did not have to invest any money of their own. The funds for the investments, respondents said, would be obtained directly from the loans made by ISSB and CFSL. App., infra, 3a-4a. Respondents represented to prospective investors that the investment involved negligible risk and that the profits would be high. At the time they made those representations, however, respondents knew that the real estate market in Hawaii was depressed, and respondents were in financial difficulty as a result of their own Hawaiian investments. Id. at 4a, 43a-46a nn. 18-19. Respondents arranged for falsified loan applications to be submitted to ISSB and CFSL on behalf of the investors. In some instances, repondents told investors to falsify their loan applications, and in other instances, respondents altered applications without the applicants' knowledge. App., infra, 44a-45a n.18. Respondent Daily also created false real estate appraisals that were used in connection with some of the limited partnerships, indicating that certain property was worth more than its actual appraised value. Id. at 45a n.18; 16 Tr. 4664, 4675-4677, 4704-4722. Much of the money lent by the banks to the limited partnerships was retained by respondents for their personal use. Many of the loans were not repaid, and respondents never transferred to the limited partnerships any of the real property that they purchased with the loans. App., infra, 43a-45a n.18. Some of the real estate purchased with the loan proceeds was pledged as collateral on another obligation and was eventually foreclosed upon. 14 Tr. 4114-4118. 2. At trial, respondent Daily presented evidence of his good character. On cross-examination of government witness Miroslav Blazek, Daily's counsel elicited that Blazek believed Daily to be an honest person. 10 Tr. 2911. In the defense case, Daily called Eugene Burkhart to testify as a character witness. Burkhart, who was associated with Daily's real estate business in Hawaii, testified that he had known Daily for 13 or 14 years and thought he was honest. 18B Tr. 21-22. Daily himself testified about his 24-year Air Force career, noting that he had maintained a top secret security clearance, based on periodic investigations that concluded that he was "a reputable, upstanding man." 17A Tr. 10, 20-22. In response to that evidence, the prosecution called a state court judge from Hawaii who testified that, based on his conversations with approximately 25 people, he believed that Daily's reputation for honesty in the business community in Hawaii was bad. 18 Tr. 5535-5536. Respondent Figge also testified on his own behalf. He described his years of employment at Northrop Corporation, where he worked on military projects and had a security clearance. 18 Tr. 5406-5407. Figge also testified about his involvement in civic and community activities. 18 Tr. 5408-5411. In addition, Figge's accountant, Douglas James Young, testified that Figge had always supplied him with the tax-return information he requested. 18 Tr. 5369-5370. Respondents' defense was that they were the innocent victims of fraud committed by others and of a vindictive Federal Deposit Insurance Corporation, and that the government witnesses lacked credibility. See App., infra, 5a-6a; 19 Tr. 5808-5861 (closing argument of defense counsel). The evidence respecting respondents' character did not figure prominently in the trial. During closing argument, defense counsel mentioned the good-character evidence only briefly. 19 Tr. 5850-5851. Respondents included an instruction on character evidence as part of their package of 53 proposed jury instructions. The tendered instruction on character evidence stated, inter alia (App., infra, 38a-39a): Evidence of a defendant's reputation inconsistent with those traits of character ordinarily involved in the commission of the crime charged may give rise to a reasonable doubt, since the jury may think it improbable that a person of good character in respect of those traits would commit such a crime. The district court's proposed jury instructions did not include respondents' character evidence instruction. During the jury instruction conference, respondents' counsel made a general request for the district court to give all his proposed jury instructions. Counsel specifically objected to the failure to give two of the proposed instructions, but did not object to the failure to give the proposed instruction on character evidence. 19 Tr. 5743-5745. 3. At the conclusion of the two-month trial, the jury convicted both respondents of conspiracy to commit wire fraud, but acquitted them of the substantive wire fraud charges. App., infra, 42a. As one of 32 issues on appeal, respondents contended that the district court failed to give jury instructions on their theory of defense. They identified three proposed instructions that they claimed should have been given, one of which was the character evidence instruction. Resp. C.A. Br. 52-53. The court of appeals held that the evidence was sufficient to support respondents' convictions, App., infra, 42a-46a, and it rejected numerous other arguments made by respondents, see id. at 2a (summary of issues). The court, however, found prejudicial error in the district court's failure to give respondents' proposed character evidence instruction. Id. at 37a-42a. The court held that a defendant is entitled to such an instruction if evidence of good character has been presented and if it bears on a character trait relevant to the mens rea for the offense charged. Id. at 39a-40a. The court found those conditions satisfied in this case. Id. at 40a-42a. The court held that the error in not giving the requested instruction was prejudicial because this was a complex case in which the jury's three days of deliberation and the verdicts of acquittal on the substantive wire fraud charges showed that the jury "found its decisionmaking process to be difficult." Id. at 42a. The government petitioned for rehearing, contending that the court should have applied a plain error standard of review to the jury-instruction issue. The government argued that respondents had not preserved that issue for review, because they had not specifically objected to the district court's failure to give a character evidence instruction, as required by Rule 30 of the Federal Rules of Criminal Procedure. In its order denying rehearing, the court agreed that the plain error standard of review was applicable, because the submission by defense counsel of a collection of requested jury instructions does not preserve for appellate review the failure to give a particular instruction found in the collection. App., infra, 49a-50a. Nevertheless, the court held that the failure to give the requested character evidence instruction constituted plain error. App., infra, 53a. /2/ REASONS FOR GRANTING THE PETITION The decision of the court of appeals in this case is contrary to this Court's decisions on the plain error doctrine and squarely conflicts with decisions of several other circuits, which have refused to find plain error in a district court's failure to give a special instruction on character evidence. The decision in this case also conflicts with court of appeals decisions holding that even when the claim is preserved for review, it is not error for a district court to decline to give a special instruction on character evidence, as long as the evidence is submitted to the jury and counsel is permitted to argue its relevance in closing argument. Character evidence is frequently presented in criminal trials, and it is important that the courts and the parties know what rules apply to instructions on character evidence. The decision in this case marks a sharp departure from the principles of plain error as applied to character evidence instructions, and it exacerbates a disagreement among courts as to whether and when special instructions on character evidence are required. If allowed to stand, the decision will foster uncertainty in large numbers of cases with respect to the need for character evidence instructions, both when such instructions have been requested and when they have not. 1. Rule 30 of the Federal Rules of Criminal Procedure requires a party to make a specific objection to the court's refusal to give a requested instruction in order to preserve the issue for appeal. Acknowledging that requirement, the court of appeals nevertheless held that no specific objection was required in this case, because the failure to give a character evidence instruction was plain error within the meaning of Fed. R. Crim. P. 52(b). The court of appeals attempted to limit its plain error holding to "the particular circumstances of the issues at this trial." App., infra, 49a-50a. It pointed in particular to three factors: (1) respondents were convicted of a crime of dishonesty; (2) they had presented "substantial" character evidence; and (3) they were acquitted on the substantive charges after the jury deliberated for three days. Id. at 50a-53a. Those circumstances, however, are not at all unusual, and the court's plain error holding is therefore quite broad. Character evidence is commonly offered in white collar fraud and false statement cases, because the defendants in such cases are often persons who do not have a community reputation as criminals. As to the amount of character evidence at issue, the evidence in this case was actually quite thin compared to the evidence that is typically offered when a defendant decides to put his character in issue. /3/ In addition, complex fraud-type cases are often difficult for juries, and it is not unusual for cases of that sort to result in lengthy deliberations and divided verdicts. /4/ What is more, the length of the jury's deliberations and the fact that the jury acquitted the defendants on some counts cannot reasonably be considered in the plain error calculus, because those factors are not known to the district court at the time it decides how to instruct the jury. Those factors therefore cannot put a court on notice at the time it prepares its instructions that it should give character evidence instructions even if the defendant does not specifically request them or object to their omission. The effect of the decision below is to create a broad and ill-defined exception to the requirements of Rule 30 as they apply to character evidence instructions. The exception created by the court of appeals offers little guidance to a district court that must decide whether to give a special character evidence instruction, and it is certain to generate appellate litigation whenever a district court fails to give such an instruction in a case in which some character evidence was introduced. Because of the large number of instructional issues typically presented to a district court at the conclusion of a complex fraud trial, the creation of a broad plain error rule for character evidence is certain to create a trap for unwary -- or even reasonably wary -- district courts. That trap, in turn, will result in a number of retrials of complex cases even when defense counsel did not regard the point of reversal as sufficiently important to bring it to the attention of the district judge. 2. This Court has emphasized that the plain error doctrine of Fed. R. Crim. P. 52(b) is to be invoked quite sparingly. It is designed to correct only "'particularly egregious errors,' those errors that 'seriously affect the fairness, integrity or public reputation of judicial proceedings.'" United States v. Young, 470 U.S. 1, 15-16 (1985), quoting United States v. Atkinson, 297 U.S. 157, 160 (1936) and United States v. Frady, 456 U.S. 152, 163 (1982); see also Henderson v. Kibbe, 431 U.S. 145 (1977); Namet v. United States, 373 U.S. 179 (1963). The omission of a special instruction on character evidence cannot be said to be an egregious error affecting the basic fairness of the trial, at least where the defendant has been allowed to introduce his character evidence and argue its significance to the jury. The jury in this case was instructed to consider all the evidence in determining guilt or innocence (App., infra, 56a); that evidence included the testimony concerning respondents' character. Nothing in the instructions suggested that the jury should disregard the character evidence, or give it any less weight than other evidence. Moreover, no limitation was placed on respondents' right to emphasize the character evidence in closing argument. In fact, although counsel for respondents was free to make whatever use he wished of the character evidence in his closing argument, he mentioned it only briefly. The minor role that counsel assigned to the character evidence at trial and in argument (as well as in his appellate brief) is powerful evidence that the issue was not pivotal to respondents' defense and that the omission of a special character evidence instruction did not result in a fundamentally unfair trial and thus did not constitute plain error. 3. The decision in this case conflicts with decisions of four other circuits, which have held that the failure to give a special instruction on character evidence is not plain error. See United States v. Watson, 894 F.2d 1345, 1349-1350 (D.C. Cir. 1990); United States v. Marquardt, 786 F.2d 771, 782-784 (7th Cir. 1986); United States v. Previte, 648 F.2d 73, 83-84 (1st Cir. 1981); United States v. Dozois, 438 F.2d 531 (9th Cir. 1971). Even though each of those courts requires a special instruction on character evidence upon timely request, all of them found that the failure to give a character evidence instruction was not plain error, at least absent some indication that the omission of the instruction "probably changed the outcome of the trial." Watson, 894 F.2d at 1350; see Marquardt, 786 F.2d at 784; Previte, 648 F.2d at 84. The only other case in which any court of appeals has found plain error in the failure to give a character evidence instruction is Logan v. United States, 717 F.2d 84 (3d Cir. 1983). /5/ The Logan court carefully qualified its holding, by noting two unusual features of the case. First, the defendant "alerted the district court to the issue of character evidence throughout the trial and made clear to the district court that he wished a charge on the legal effect of character evidence, even though his request was incorrectly worded." 717 F.2d at 92. Second, the defense case "turned entirely on the defendant's credibility," since the case was essentially a swearing contest between the defendant and his alleged accomplice. Ibid. The circumstances of Logan are a far cry from respondents' case. Respondents' counsel did not specifically call the character evidence instruction to the district court's attention, but merely included it in a large collection of requested instructions. Moreover, character evidence was anything but a central issue in respondents' trial: there was hardly any character evidence introduced, and the character evidence was barely mentioned during closing arguments. See United States v. Krapp, 815 F.2d 1183, 1188 (8th Cir.), cert. denied, 484 U.S. 860 (1987); Previte, 648 F.2d at 83. Finally, unlike in Logan, the evidence in respondents' case did not come down to a simple credibility contest between the defendants and a key government witness, but was based in major part on documentary evidence. See Marquardt, 786 F.2d at 784. 4. The courts of appeals are also in conflict on a subsidiary question: whether it is error for a district court to refuse to give a special character evidence instruction, even when the defendant properly raises and preserves an objection to the district court's action. The Fifth and Eighth Circuits have held that no specific instruction on character evidence is required, as long as the jury is permitted to consider character evidence for whatever bearing it may have on the defendant's guilt and the defense is permitted to discuss the relevance of that evidence in closing argument. United States v. Hunt, 794 F.2d 1095 (5th Cir. 1986); United States v. Krapp, 815 F.2d 1183 (8th Cir.), cert. denied, 484 U.S. 860 (1987). Each of those cases, like this one, involved a crime of dishonesty. Hunt was a prosecution for fraudulent credit card solicitation, in violation of 18 U.S.C. 1341, and Krapp was a prosecution of a postal official for making false record entries with intent to defraud the United States, in violation of 18 U.S.C. 2073. In each case, the defendant presented character witnesses and was free to argue the effect of the character evidence to the jury, but the court refused to give a special character instruction similar to the one sought by respondents here. And in each case the court of appeals found that the district court did not abuse its discretion by refusing to give such an instruction, even over a proper objection. Hunt, 794 F.2d at 1098-1099; Krapp, 815 F.2d at 1187-1188. Other circuits, including the court below, have concluded that some specific character instruction must be given upon request, but they have reached varying conclusions about the contents of such an instruction. In particular, the courts have disagreed about whether the jury must be instructed that character evidence, standing alone, may give rise to a reasonable doubt of guilt. See Spangler v. United States, 487 U.S. 1224 (1988) (White, J., dissenting from denial of certiorari). /6/ A special instruction that evidence of good character may give rise to a reasonable doubt unjustifiably singles out one type of evidence for special consideration by the jury. The court's instructions should instead treat character evidence like all other evidence properly before the jury: they should neither restrict the jury's authority to consider such evidence, nor suggest that it is inherently more probative than other kinds of relevant evidence. An instruction of the sort given in this case, directing the jury to consider all the evidence in determining whether the government has proved guilt beyond a reasonable doubt (App., infra, 56a), ensures that character evidence will be considered along with other evidence, but not assigned some artificial prominence in the jury's deliberations. /7/ Nothing in the Constitution or in any statute or rule requires a special instruction on character evidence. Nor is there anything in the rationale underlying the admission of character evidence to justify such an instruction. To the contrary, an instruction that singles out character evidence for special treatment is both misleading and potentially confusing. As the court stated in Nash v. United States, 54 F.2d 1006, 1007 (2d Cir.) (Learned Hand, J.), cert. denied, 285 U.S. 556 (1932), "evidence of good character is to be used like any other, once it gets before the jury, and the less they are told about the grounds for its admission, or what they shall do with it, the more likely they are to use it sensibly." To give a special instruction on character evidence creates a risk that the jurors may believe that even though they find the defendant guilty beyond a reasonable doubt, the apparent inconsistency between the criminal act and the defendant's reputation or character requires or justifies a verdict of acquittal, which is entirely contrary to the principles of our law. See United States v. Burke, 781 F.2d 1234, 1239 (7th Cir. 1985) ("People of impeccable reputation may commit crimes, and when they are charged with crime the question is whether they did it, not whether they enjoy a high social standing."). The view that a special character evidence instruction must be given upon timely request derives principally from dictum in this Court's decision in Michelson v. United States, 335 U.S. 469 (1948). In that case, the defendant presented evidence of his good character through the testimony of several witnesses who were familiar with the defendant's reputation as a law-abiding citizen. The government cross-examined those witnesses by asking if they had heard that the defendant had been arrested for receiving stolen goods. In concluding that this type of cross-examination was proper, the Court observed in passing that character evidence "is sometimes valuable to a defendant for this Court has held that such testimony alone, in some circumstances, may be enough to raise a reasonable doubt of guilt and that in the federal courts a jury in a proper case should be so instructed." 335 U.S. at 476. That passing statement in Michelson was clearly not essential to the Court's judgment or even pertinent to the rationale of its decision. /8/ The conflict among the courts of appeals as to whether a special instruction on character evidence must be given and, if so, what it must contain reflects what is in effect a debate among the circuits as to whether the dictum from Michelson correctly states the law and whether the failure to follow its dictates constitutes plain error. Because character evidence issues arise frequently in criminal cases and because there is widespread disagreement among the lower courts as to when a special character evidence instruction should be given, with or without a proper objection, this is an appropriate case for plenary review by this Court. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. KENNETH W. STARR Solicitor General ROBERT S. MUELLER, III Assistant Attorney General WILLIAM C. BRYSON Deputy Solicitor General HARRIET S. SHAPIRO Assistant to the Solicitor General RICHARD A. FRIEDMAN Attorney MAY 1991 /1/ Respondents were acquitted on the substantive wire fraud counts in which they were charged. At the time of trial, two of their co-defendants were fugitives; the other co-defendant pleaded guilty on the first day of trial. App., infra, 3a n.1. /2/ One member of the panel voted to grant rehearing, and one circuit judge voted to grant rehearing en banc. App., infra, 53a. /3/ Character evidence is typically introduced through a series of disinterested witnesses who give their opinions as to pertinent aspects of the defendant's character or testify to the defendant's reputation for those traits in the community. See Fed. R. Evid. 405. In this case, Figge's character evidence was limited to his own testimony about his security clearance, his testimony about his civic activities, and his accountant's testimony that he had not known Figge to withhold tax information. Daily's character evidence was not much stronger, consisting of his own testimony about his military service and the testimony of two of his business associates who said they believed Daily was honest. /4/ In any event, it is debatable whether the jury had any special difficulty with this case. Three days is not an especially long period of deliberations after a two-month trial, and the jury's divided verdict may simply reflect the clear distinction in the weight of the evidence as to the conspiracy and substantive counts. While the evidence of respondents' involvement in the conspiracy was quite strong, the substantive wire fraud counts were based on interstate wire transfers of funds to ISSB and CFSL for the purchase of certificates of deposit. The acquittals on the substantive counts may be explained by the fact that neither respondent was tied directly to the false representations that were made to induce the purchase of certificates of deposit from ISSB and CFSL. /5/ The Fifth Circuit, in Darland v. United States, 626 F.2d 1235, 1237 (1980), held that "where the character evidence offered affects a trait relevant to the crime charged, to deny introduction of such evidence and to refuse an appropriate charge to the jury constitutes both plain error and an error affecting substantial rights." The opinion in that case makes clear, however, that the court's focus was on the exclusion of the proffered character evidence; there is no indication that, if the evidence had been admitted, the court would have found plain error in the failure to give a specific instruction on character evidence. A later decision of the Fifth Circuit confirms that reading of Darland. See United States v. Hunt, 794 F.2d 1095, 1099 (1986). /6/ Most of the courts that have required some kind of character evidence instruction on proper request have held that the "standing alone" instruction is unnecessary or even improper, because it has the potential to mislead the jury. See, e.g., United States v. Broadwell, 870 F.2d 595, 609 (11th Cir.), cert. denied, 493 U.S. 840 (1989); United States v. Huddleston, 811 F.2d 974, 977 (6th Cir. 1987), aff'd on other grounds, 485 U.S. 681 (1988); United States v. Burke, 781 F.2d 1234, 1237-1242 (7th Cir. 1985); United States v. Logan, 717 F.2d 84, 88-91 (3d Cir. 1983); United States v. Winter, 663 F.2d 1120, 1146-1148 (1st Cir. 1981), cert. denied, 460 U.S. 1011 (1983); United States v. Foley, 598 F.2d 1323, 1336-1337 (4th Cir. 1979), cert. denied, 444 U.S. 1043 (1980); Carbo v. United States, 314 F.2d 718, 746 (9th Cir. 1963), cert. denied, 377 U.S. 953 (1964). Other courts require such an instruction, at least in certain cases. See, e.g., United States v. Lewis, 482 F.2d 632, 637 (D.C. Cir. 1973); United States v. Cramer, 447 F.2d 210, 219 (2d Cir. 1971), cert. denied, 404 U.S. 1024 (1972). The Tenth Circuit does not require a "standing alone" instruction when defendants do not rely solely on good character evidence, see Oertle v. United States, 370 F.2d 719 (1966), cert. denied, 387 U.S. 943 (1967), and respondents did not request that type of instruction in this case. /7/ Of course, if defense counsel believes, in a particular case, that character evidence is pivotal to the defense, he is free in closing argument to direct the jury's attention to that evidence -- just as he may stress any particularly weighty evidence -- and to argue to the jury that it creates a reasonable doubt of defendant's guilt. /8/ The Court in Michelson cited in support of its dictum the decision in Edgington v. United States, 164 U.S. 361 (1896), but nothing in Edgington requires a special jury instruction on character evidence. Although the Court there stated that character evidence may create a reasonable doubt in the minds of the jurors, the Court did not suggest that the jury must be instructed to that effect. See 164 U.S. at 365-367; United States v. Burke, 781 F.2d at 1241. APPENDIX