Appeal from judgments entered by the District Court for the Southern District of New York, Leonard B. Sand, Judge, convicting defendants of conspiring and attempting to extort money in violation of the Hobbs Act. Reversed and remanded.
Before Oakes and Meskill, Circuit Judges, and Werker, District Judge.*fn*
George Zappola and Robert Melli appeal from judgments of the United States District Court for the Southern District of New York (Leonard B. Sand, Judge), convicting each of them following a jury trial of conspiring and attempting to extort money in violation of the Hobbs Act. 18 U.S.C. § 1951(a) and 18 U.S.C. § 2. The principal issue on appeal is whether the district court erred in quashing a subpoena of one of the victims of the attempted extortion on the ground that he was entitled to invoke the fifth amendment privilege against self-incrimination. Because we conclude that the district court's findings on this issue were error, and because we are unable to conclude that this error did not affect the jury's verdict, we reverse the convictions and remand for a new trial.
George Zappola and Robert Melli were the owners of M & R Repair, a company engaged in the business of repairing cargo containers. The evidence at trial tended to prove that Zappola and Melli through threats, fear and violence attempted to extort $40,000 from William Ross and John Marano, the owners of World Trade Transport, Inc., a New Jersey company involved in transporting cargo containers. Ross testified that the four men met at M & R Repair on June 6, 1977 at the request of George Zappola. He further testified that at this meeting, Zappola, with the approval of Melli, accused Ross and Marano of diverting about $38,000 worth of business from M & R. Although Marano tried to explain that World Trade was not responsible for M & R's loss of business, Zappola refused to believe him. Ross stated that during the meeting, Zappola brandished a loaded gun, fired a shot into the floor just beyond where Marano was sitting and hit Marano twice across the face, causing him to bleed. Ross also testified that about one week later, he and Marano met with Melli at a restaurant in New Jersey. At this meeting, Melli appeared "quite reasonable" and wanted to obtain World Trade's side of the story about the diversion of M & R's business. Ross further testified about a subsequent meeting of all of the four men at a restaurant in New York City at which time Zappola and Melli again accused Ross and Marano of diverting their business and demanded $40,000 to compensate for their losses. Ross stated that the day after this meeting, Marano delivered $1,000 to an individual by the name of Montella in an attempt to settle their dispute with M & R.
Marano who had been cooperating with the FBI since April of 1977, had agreed with the FBI on June 7, 1977 to tape subsequent meetings with Zappola and Melli if circumstances permitted. At trial, the government introduced five conversations taped by Marano while acting in his undercover capacity. The first was a telephone conversation between Marano and Melli which was recorded on June 22, 1977. The second was a conversation between Marano and Melli which took place in the restaurant of a Holiday Inn in New Jersey on June 22, 1977. The third was a telephone conversation between Marano and Zappola which was recorded on June 23, 1977. The fourth and fifth were telephone conversations between Marano and Zappola which were recorded on June 24, 1977.
Because Judge Sand ruled that Marano was entitled to invoke the fifth amendment privilege against self-incrimination as a complete shield to testifying in the case and further found that Marano would refuse to testify even if ordered to by the court, the government's evidence concerning the attempted extortion was presented through the testimony of Ross, several FBI agents, and the taped conversations between Marano and each of the defendants. The trial court, however, did not receive Marano's statements on the tapes or as related in Ross' testimony for the truth of their content. Rather, they were admitted primarily to demonstrate the context of statements made by other parties to the conversations.
The controversy concerning the unavailability of John Marano developed as follows. Initially, the government sought to have Marano testify at trial and served him with a subpoena to that end. Marano's attorney moved to quash this subpoena on the ground that his client had invoked the fifth amendment privilege against self-incrimination and would refuse to testify even if granted immunity. After an in camera hearing at which only Marano's counsel and the prosecutor were present, Judge Sand granted the application to quash. At the time of trial, an indictment in an unrelated case naming Marano as the sole defendant was pending.
Subsequently, Judge Sand ruled that Marano was unavailable as a witness under Fed.R.Evid. 804(a)(1) and (2), because he possessed a valid fifth amendment privilege and because his counsel had represented that he would refuse to testify even if ordered to by the court. The court made its ruling without summoning Marano to court for the purpose of inquiring into his claimed privilege and refusal to testify because of a security risk involved in bringing Marano to the courthouse.*fn1
During the proceedings concerning the government's subpoena of Marano, defendants had revealed their desire to also subpoena Marano as a witness. They later effected service on Marano by serving his attorney who had been authorized to accept service on his behalf. Marano's attorney nevertheless then moved to quash the subpoena on the same grounds as those raised in response to the government's subpoena of Marano.*fn2
At this juncture, the court decided to hold an in camera hearing in order to inquire of Marano the basis for his asserted privilege. Marano appeared at this hearing and, in a single response to all questions proposed by counsel for defendant Melli, stated that he would invoke his fifth amendment privilege.*fn3 When asked if his invocation of the privilege was based upon the fact that he presently was under indictment, Marano replied that he feared for his personal safety.
On the basis of Marano's responses, Judge Sand found that if Marano were called as a witness, "he would invoke the fifth amendment as a privilege against self-incrimination and that a valid basis would exist for such invocation." Judge Sand further found that Marano "has indicated that he would not testify even if ordered to do so." The court therefore granted the motion to quash.
On appeal, appellants assert that the district court erred in ruling that Marano was entitled to invoke his fifth amendment privilege as to conversations and meetings that occurred while he was acting in an undercover capacity for the government. They further contend that the district court erred when it permitted the government to introduce at trial many of Marano's statements for the purpose of placing statements of the defendants in context or to show what was said or to demonstrate Ross's state of mind. Although Judge Sand did not receive these statements for the truth of their content, defendants assert that the effect of the admission of these statements was to place inadmissible and highly prejudicial testimony before a jury that would be unable to sever its impermissible from its permissible use. According to appellants, the prejudicial effect of these statements was not overcome by Judge Sand's cautionary instructions to the ...