USCA1 Opinion
UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
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No. 94-2005
UNITED STATES OF AMERICA,
Appellant,
v.
WALTER L. LACHMAN, MAURICE H. SUBILIA, JR.,
FIBER MATERIALS, INC., MATERIALS INTERNATIONAL,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
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Before
Selya, Boudin and Stahl,
Circuit Judges.
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James D. Herbert, Assistant United States Attorney, with
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whom Donald K. Stern, United States Attorney, and Despena Fillios
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Billings, Assistant United States Attorney, were on brief for the
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United States.
Nicholas C. Theodorou with whom Anthony Mirenda, Michael
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Boudett, Foley, Hoag & Eliot, Bruce A. Singal and Ferriter,
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Scobbo, Sikora, Singal, Caruso & Rodophele were on joint brief
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for appellees.
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February 23, 1995
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BOUDIN, Circuit Judge. This is an interlocutory appeal
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by the government under 18 U.S.C. 3731 contesting an
evidentiary ruling made prior to trial in a criminal case.
In the challenged ruling, the district court excluded from
the government's case-in-chief 13 exhibits that the
government deems of great importance. Finding that the
district court did not abuse the discretion it possesses
under Fed. R. Evid. 403, we affirm.
I.
On July 8, 1993, a grand jury returned an indictment
charging that four named defendants conspired to (count I),
and did in fact (count II), violate the Export Administration
Act of 1979 ("the Export Act"), 50 U.S.C. App. 2410(a), and
its implementing regulations. The defendants were two
corporations--Fiber Materials, Inc., and its subsidiary
Materials International--and the two top executive officers
of the companies: Walter L. Lachman and Maurice H. Subilia.
The "facts" that follow largely reflect the government's
allegations (as yet unproved).
Fiber Materials has been engaged for 25 years in the
production of composite materials for industrial and
aerospace applications. Most of its business relates to
technology for the manufacture of carbon/carbon, a category
of materials that can be made to withstand intense heat and
pressure. Over two-thirds of Fiber Materials' work is for
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the U.S. military. Materials International markets its
parent company's materials, technologies and services
overseas.
One of the technologies in which Fiber Materials is
expert relates to the hot isostatic press; the press is a
complex piece of industrial equipment that contains an
internal cavity and uses high pressure gas or liquid to
subject materials to intense pressure and a furnace to
produce extreme heat. Carbon/carbon, when "densified" by
this process, becomes suitable for use in rocket components,
including ballistic missiles with nuclear capability. Fiber
Materials generally subcontracts the manufacture of equipment
such as the press to others but provides the expertise.
In 1984, the Indian government's Defense Research and
Development Laboratory ("the Indian Defense Laboratory")
issued a request for proposals to outfit a carbon/carbon
facility in India for use in rocket and missile development.
Fiber Materials won the bid and in 1985 signed a contract
with the Defense Laboratory. Among other things, the
contract called for Fiber Materials to supply a hot isostatic
press with a cavity 26 inches in diameter, and a control
panel for the press; such a panel contains controls to heat,
pressurize and otherwise operate the press.
Under the Export Act, various goods and technologies are
subject to different levels of export control for reasons of
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foreign policy, national security or scarcity. As one facet
of this regime, the Commerce Department maintains a list of
commodities that may not be exported without an individual
license. Item ECCN 1312A on this list, as the list existed
in the late 1980s, covered hot isostatic presses with a
cavity diameter of 5 inches or more and any "components,
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accessories and controls" that were "specially designed" for
such presses. Export to any country except Canada required a
license; and the stated reasons for the restriction were
"national security" and "nuclear non-proliferation." 15
C.F.R. 399.1, Supp. 1 (1988) (later revised and
renumbered).
In January 1987, Fiber Materials and the Indian Defense
Laboratory modified their contract to call for a hot
isostatic press with a cavity diameter of 4.9 inches and a
control panel for the press. According to the government,
Subilia wrote to the Indian Defense Laboratory to assure the
laboratory that the control panel to be supplied under the
new contract could in the future be used with a larger hot
isostatic press. In early 1987, the defendants were
allegedly told by the government that certain other items in
their contract, which required individual licenses, would
probably not be licensed because of security concerns.
In March 1988, Materials International entered into a
contract with the Indian Defense Laboratory to have a hot
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isostatic press with a cavity diameter of 26 inches made by a
third party in Switzerland (which did not prohibit such
exports) and shipped directly to India. A month later,
defendants exported the original 4.9 inch press, along with
its control panel, from the United States to India without
seeking or receiving a Commerce Department license. A year
and a half later, the 26 inch press was sent from Switzerland
to India. In 1991 and 1992, defendants sent employees of
Fiber Materials to India to install the equipment and,
specifically, to connect the U.S.-made control panel to the
large Swiss-made hot isostatic press.
On July 8, 1993, the four defendants were indicted in
two counts for knowingly conspiring to violate, and knowing
violation of, the Export Act and its regulations. 15 U.S.C.
App. 2410(a). The commodity whose export was claimed to be
unlawful was not the 4.9 inch press but the control panel.
II.
Pretrial proceedings were extensive. In June 1994, the
district court set trial to begin on July 25 and ordered the
government to provide a list of proposed exhibits to
defendants by July 1. On July 1, the government filed a very
lengthy list of exhibits. On July 19, the defendants filed a
motion in limine aimed at excluding many of these exhibits
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relating to the alleged "end use" of the exported items for
missiles and nuclear weapons. The government then discarded
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many of its exhibits but opposed the exclusion of others
objected to by defendants. In the meantime trial was
deferred until August.
Perceiving that judgments about relevance might be
affected by the scienter instructions at trial, the district
court addressed that issue. With the government acquiescing,
the court ultimately adopted the defendants' theory of
intent: the court held that the "knowing[] violat[ion]"
requirement of 50 U.S.C. App. 2410(a) required the
government to prove that the defendants knew that the control
panel required an individual license. Compare United States
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v. Gregg, 829 F.2d 1430, 1437 (8th Cir. 1987) (imposing such
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a knowledge requirement) with United States v. Shetterly, 971
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F.2d 67, 73 (7th Cir. 1992) (rejecting it). This issue is
not before us, and we express no view upon it.
The district court held a hearing on August 3 and, in an
oral ruling, excluded 13 of the governments' exhibits from
use in its case-in-chief. As to nine other exhibits, the
court declined to rule before the exhibits were offered at
trial, but it expressed "intense skepticism" about admitting
some of them. The government voluntarily withdrew 21 other
challenged exhibits. Although the excluded exhibits number
13, they actually comprise four different collections, one of
which accounts for 10 of the exhibits:
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The first (gov. ex. EK) is a 121-page file belonging to
the Institute for Defense Analysis, a U.S. industry working
group that assists the Defense Department with its own
program to identify militarily critical technologies. The
defendant Subilia was a member of the group. The 121-page
file contained records of working group meetings in 1985.
The records indicate that at one meeting Subilia attended,
carbon/carbon was discussed and a copy of ECCN 1312A was
distributed. The file contains many references to munitions
and weapons, and considerable material relating to
commodities not at issue in this case.
The second file of excluded documents (gov. exs. DW
through EF) consists of 10 newspaper clippings found in the
files of Materials International. These articles discuss the
Indian government's "AGNI" missile program. None refer to
hot isostatic presses or their control panels. All but one
of the articles are dated in 1989, more than a year after the
export of the control panel in this case. Each of the 10
newspaper articles was designated as a separate exhibit.
The third (gov. ex. AA1 through 5) is a group of
documents comprising defendants' registrations and renewal
applications filed with the State Department. That
department maintains its own "munitions" list of controlled
exports, a list distinct from that of the Commerce
Department. The State Department list does not cover hot
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isostatic presses or their control panels. The defendants'
filings with the State Department pertained to their
activities as exporters of carbon/carbon. The documents do
identify the U.S. military as customers of Fiber Materials.
The fourth (gov. ex. AE) is the Indian Defense
Laboratory's 1984 request for proposals for the carbon/carbon
processing facility. This was the proposal for which Fiber
Materials submitted the winning bid; as earlier noted, the
original arrangement for a larger hot isostatic press was
modified in 1987 to call for one of 4.9 inches. The exhibit
indicates that the Indian carbon/carbon facility would be
used in connection with rocket and missile development.
The district court's reasons for excluding these
exhibits have to be discerned from the transcript of the
hearing on August 3, a hearing that embraced issues and
documents in addition to the 13 exhibits now in dispute. In
excluding the 121-page file, the court referred to Rule 403
and called the materials duplicative, redundant and
potentially misleading. The State Department registration
papers were described more briefly in the same terms. In
excluding the 1984 request for proposals, the district court
called it "preliminary."
We think that a fair reading of the transcript as a
whole indicates that the trial court thought that some of the
material in the 13 exhibits was irrelevant and some of
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marginal relevance; that it saw in the references to missiles
and nuclear weapons a potential for jury prejudice; and that
it was concerned also, in the case of the 121-page document
and the State Department materials, with a problem of jury
confusion because of the references to materials other than
the press and controls at issue and references to regimes
other than the Commerce Department licensing controls.
At the same time, in the course of the hearing, the
district court told the defense that the government would be
given some latitude to present to the jury the defendants'
"familiarity with the regime of regulation" and "the
resistance that the Government may have to allowing awards of
licenses in an area of some sensitivity." This, said the
court, followed from the defendants' own success in making
knowledge of the legal restrictions an element of the
government's case. The court concluded by warning that "I
haven't finally ruled on this issue."
On August 5, the government asked the district court to
reconsider its exclusion of the 13 exhibits and the court
denied the motion. The government then announced that it
would appeal the court's ruling, and the trial scheduled to
begin three days later was continued indefinitely. A further
request by the government to the district court to reconsider
its ruling also failed. This appeal ensued.
III.
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Certain types of exclusionary rulings in criminal cases
are commonly made before trial, such as rulings on the
validity of a search and seizure or the voluntariness of a
confession. In most other cases, judges are hesitant to rule
finally on evidentiary questions in advance of trial. The
role and importance of the disputed evidence, its fit with
other evidence in the case, and even the precise nature of
the evidence may all be affected by, or at least more clearly
understood within, the context of the trial itself.
At the same time, determining the admissibility of a
piece of evidence may sometimes require a potentially lengthy
factual inquiry (e.g., whether a new class of scientific
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evidence is admissible). Or the entire structure of the
case, and the parties' preparations, may turn on whether a
central piece of evidence is to be admitted. Thus, while
caution needs to be exercised, trial judges have discretion
to make purportedly final advance rulings to admit or exclude
evidence. We say "purportedly" because judges in ongoing
proceedings normally have some latitude to revisit their own
earlier rulings.
In this case, neither side disputes that the district
court was entitled to rule in limine on the 13 exhibits in
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question. The only question is whether the court abused its
discretion under Rule 403 in determining that these exhibits
should be excluded. The government admits that the standard
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of appellate review as to such rulings is deferential to the
district court, but says that discretion is not unlimited.
It is certainly true that essentially legal issues may be
embedded in such a decision; and we agree that even the
exercise of discretionary judgment is subject to outer
limits. See United States v. Roberts, 978 F.2d 17, 21 (1st
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Cir. 1992).
Rule 403 calls upon the district court to weigh the
probative value of evidence against the harms that it may
cause--unfair prejudice, confusion, misleading the jury,
delay or repetition--and to exclude the evidence if the
probative value is "substantially outweighed" by the harms.
The government does not argue that the trial judge misstated
Rule 403 or misunderstood the factors; rather, the claim is
that the court struck the wrong balance. One can start the
analysis at either end of the balance scale. In this case,
it is convenient to begin our discussion with the probative
value of the evidence in question.
Normally, in order to have probative value, evidence
must be "relevant" under Fed. R. Evid. P. 401, that is, it
must tend to make an issue in the case ("a fact of
consequence") more or less likely than would be so without
the evidence. United States v. Tavares, 21 F.3d 1, 5 (1st
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Cir. 1994) (en banc). Other factors that may bear on
probative value are the importance of the issue and the force
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of the evidence. 22 C. Wright & K. Graham, Federal Practice
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and Procedure 5214 (1978). In this case, the government's
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most difficult problem throughout has been explaining why and
how the exhibits in question are relevant to an issue in the
case.
The core of the charges in the indictment are that the
defendants knowingly agreed to, and did in fact, export a
commodity that requires an individual license without
obtaining such a license. A commodity requires such a
license if it appears on the Commerce Department list of such
commodities. See 50 U.S.C. App. 2403(b), 24049(a); 15
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C.F.R. 372.2(b)(1) (1988). The listed item in question--a
specially designed control panel--is described primarily in
terms of its relationship to another, technically described
item (a hot isostatic press with a cavity of 5 inches or
more). The end use of the products to be made by the control
panel and press is not an explicit element in the definition.
By contrast, the most prominent feature of the exhibits
in question--and the aspect most objected to by defendants--
is their tendency to show that the control panel might well
be used to foster the development of weaponry including
nuclear missiles. This is the gist of the 10 newspaper
clippings concerning the Indian government's AGNI missile
program. Military uses of the carbon/carbon materials
produced by the hot isostatic press are one subject of the
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121-page file. The State Department registration papers
serve to associate Fiber Materials with military projects.
The 1984 request for proposals suggest that the original
larger press was sought for missile development.
The government seeks to connect the offense with the
exhibits primarily by arguing that the evidence helps to show
scienter. The government here has acquiesced in a stringent,
and relatively rare, instruction that--to make out a
violation--the defendants must not only have known what they
did, but also have known that it was forbidden. Where the
offense is one grounded in technical regulations and the
conduct not inherently likely to be unlawful--the legal tag
is malum prohibitum--this burden will often be a heavy one
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for the government.
Although the government's brief does not spell out the
connections systematically, we think that such a scienter
requirement might arguably make portions of the exhibits in
question relevant in several different ways. The broadest
utility would be to suggest that, knowing of the potential
military use of the press and the Indian government's
interest in such a use, the defendants had more reason in
prudence, and were therefore more likely in fact, to have
reviewed and considered the general state of the law and the
specific regulations governing the export of the commodity.
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Of course, a jury might assume that a company in the
business of high-tech developments and their export would
make itself aware of the pertinent export regulations. But
the government is expected to prove each separate element of
the offense beyond a reasonable doubt; and where knowledge
must be proved by inference, the government is quite right
not to take a casual view of its burden. The skull-and-
crossbones insignia on the medicine bottle does not prove
that the defendant read the small print instructions; but it
does tend to increase the likelihood.
Two other, more specific uses have been suggested by the
government for certain materials in the exhibits: to show, in
the case of one page in the 121-page compilation, that
Subilia was given a copy of item ECCN 1312A; and to indicate,
by showing who signed the State Department registration
papers, which persons in the corporate defendants took
responsibility for compliance. These uses, however, could be
satisfied by far less the full offerings made by the
government--the item page in the former case and the
signature page in the latter, together with context
testimony.
Lastly, the government's brief suggests or implies that
the exhibits (especially the news clippings and the 1984
request for proposals)--by implicating the likely military
end uses of the larger press and control panel--support a
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double proposition: that the Commerce Department would not
have granted a license for the control panel in this case if
a license had been sought, and that the defendants (being
aware of the exhibits) knew this to be true. This argument
raises the subtlest problem in the case.
The defendants say indignantly (and correctly) that the
crime charged relates to exporting listed commodities without
a license, not to exporting commodities that the government
would decline to license. Put differently, if a commodity is
not listed, its export does not violate this statute no
matter how vehemently the government objects to its export or
how swiftly it would deny a license if asked. The
government's opening brief is so framed as to invite this
response and to make it difficult to tell what other, more
defensible use of the double inference might be available.
The government's reply brief, however, offers (in a
lengthy footnote) two rebuttal arguments. One is that
defendants' knowledge that a license would likely be refused
helps, as part of a pattern of other evidence, to show that
the defendants' failure to apply for the license was out of
design and not a mistake of law. The other is that the known
intended end use has some bearing on the purpose for which
the control panel was designed and thus on whether it was
"specially designed" for use with a larger press; this last
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argument, needless to say, turns partly on how the phrase
"specially designed" is to be read.
Against these arguments for relevance must be set two
major concerns voiced by the district court. The first
involves the likelihood of undue prejudice, which the
district judge summed up by saying that he would not allow
this to become a missile case. Evidence is not unduly
prejudicial merely because it tends toward conviction; most
useful evidence for the government does that. The concern is
with any pronounced tendency of evidence to lead the jury,
often for emotional reasons, to desire to convict a defendant
for reasons other than the defendant's guilt. United States
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v. Moccia, 681 F.2d 61, 63 (1st Cir. 1982).
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In this case the district court had every reason to be
alert to this possibility. The government's disputed
exhibits (apart from the State Department papers) tend to
suggest that the defendants knew that they were aiding a
project to develop missile technology for the Indian
government. We can ignore, for present purposes, the
arguable chronological flaw in relying on the nine clippings
that post-date the exports in question (and the government's
interesting counter-argument). The 1984 request for
proposals, the 121-page compilation and the earliest press
clipping are potent enough.
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A jury, conscious of the risks of nuclear proliferation
and of U.S. government efforts to halt it, could easily
regard the defendants' alleged conduct as highly unattractive
even if it turned out to be technically legal. Other aspects
of the defendants' conduct (the 4.9 inch figure, the export
from Switzerland) could reinforce the adverse impression.
Any effort to dwell at length on the Indian government's
nuclear missile program and potential use of the press and
control panel in this case risks throwing gasoline on a
flickering flame. A judge would be blind not to see this
danger and to fear it.
Prejudice is not the only threat. There is also a
potential for confusing and misleading the jury. Quite apart
from prejudice, there is a risk that an undue emphasis on the
end use of the exported commodities could divert the jury's
attention from whether the commodity is listed and known to
be so, to whether the commodity is to be used for military
purposes. This deflection might seem like a gross error,
fairly easy to guard against in the instructions so far as
confusion is concerned (prejudice is a different matter); but
it is not the only problem.
As our discussion has already shown, the government is
interested in proving the known and intended military uses
not only to support its skull-and-crossbones theory of
heightened awareness but also to show that the government
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would have denied a license. This, in turn, invokes
arguments as to how this alleged fact--at first seemingly
irrelevant to the offense of not asking for a required
license--may help the government show scienter and even help
it show why the control panel should be deemed a listed
commodity. These arguments, raised tersely in the government
reply brief, may or may not have some basis in law and logic.
What is clear is that ample opportunity exists for jury
confusion if exhibits are justified and used in order to show
that the government would not have issued a license. It
would be quite a task to explain to a jury that this "fact"
is not an element in the violation but merely part of a
subtle and debatable chain of inferences designed to use this
license denial to show scienter and, more doubtfully, the
character of the control panel. We ourselves have had some
difficulty disentangling the government's theory of the
offense from these more recherche relevance arguments.
What we have said so far is that the district court was
balancing claims in which there was weight on both sides of
the scale. The evidence in question has some relevance--most
clearly on the skull-and-crossbones theory; but (putting
aside the single document page quoting item ECCN 1312A) it is
not direct evidence of knowledge of the law. At the same
time, the risks of undue prejudice are quite evident; and
risks of confusion are real too, especially if the government
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is allowed to develop and argue some of its more subtle and
questionable inferences. This dual threat of prejudice and
confusion is alone enough to lend support to the district
court's decision.
Our discussion thus far has not touched upon the
government's need for this evidence and the closely related
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question of alternatives available to it. In applying Rule
403, it is plainly pertinent whether a litigant has some
alternative way to establish a fact that involves no (or at
least a lesser) risk of prejudice or confusion. 22 Wright &
Graham, supra, 5214 (citing cases). But here, in an
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interlocutory appeal, we do not know very much about how else
the government might at trial seek to establish the
defendants' knowledge of the regulatory regime and the finer
shades of its likely interpretation.
What we do know is that the district court thought that
the government did have some less dangerous, if perhaps less
potent, means of establishing the defendants' familiarity
with the regulations and with the delicacy of their position.
As already noted, the court said that it was prepared to give
the government some leeway in this area. One can hardly
doubt that some evidence is available: merely as an example,
the selection of a 4.9 inch figure for the press pretty much
shows that someone in the organization knew about item ECCN
1312A.
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We think that the district court further showed a wise
flexibility in two other respects. It limited its exclusion
of the 13 exhibits in question to the government's case-in-
chief, knowing that positions taken or testimony offered by
the defense might warrant the court in relaxing the ban for
purposes of cross-examination or rebuttal. On a substantial
number of other exhibits objected to by defendants, the court
reserved its ruling, most likely until the evidence is
actually offered at trial. The court's exclusion of 13
exhibits certainly did not reflect a heavy-handed and
inflexible constraint.
We turn finally to a narrow concern that bolsters the
district court's decision on one remaining open point. In
the 121-page file a copy appears of item ECCN 1312A itself.
Unlike much of the excluded material, this page is directly
pertinent to the knowledge of at least one individual
defendant as to the existence of this item, and one might
think that this part of the exhibit ought to have made it
through the filter. The government mentions the page but
lays no special stress upon it. Perhaps it does not expect
the defendants to deny that they were aware of the
regulations.
The district court expressed concern that this exhibit
as a whole was a jumble of material, some rather patently
unrelated to anything in this case. The government had, and
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presumably still has, the option of identifying specific
pieces of information in the exhibit and urging that they be
considered separately from the rest. Without generalizing
too broadly, it is normally the case that this kind of
segregation is the job of counsel and not an already burdened
district judge. See Brooks v. Chrysler Corp., 786 F.2d 1191,
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1199 (D.C. Cir.), cert. denied, 479 U.S. 853 (1986).
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We conclude that the district court had an ample basis
under Rule 403 for excluding the 13 exhibits in question. We
commend the trial judge's thoughtful approach to the problems
presented and his efforts to balance the legitimate interests
on both side. The government may on reflection think that it
has cause to be grateful to the district court--both for
eliminating possible errors that could infect a trial and,
hopefully, for forcing the government to consider its
theories of the offense and of relevance with somewhat
greater precision before they are exposed to a jury.
IV.
Problems that can be treated with some confidence in
context are often very difficult to solve before other pieces
of the puzzle have been assembled. This, as we have said, is
why district courts are often hesitant to decide evidentiary
questions before trial. A like difficulty arises for an
appellate court where, as here, an interlocutory appeal
brings to the court only a part of the case. Thus, our task
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might be simplified if we could speak with assurance about
the standard of scienter or, for that matter, the definition
of "specially designed."
But these are not issues that have been briefed in this
court, we have not sought to address them, and nothing in
this opinion should be taken to suggest any view whatever as
to how those issues should be resolved. Similarly, we stress
again that what we have taken to be facts depends almost
entirely on the indictment and other descriptions of what the
government thinks it can prove. Any assertions of "fact" in
this opinion, including descriptions of documents or the
inferences to be drawn from them, are without prejudice to
what the trial may show or what may emerge after more context
has been supplied.
All that we hold is that the district court did not
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abuse its discretion in excluding at this time from the
government's case in chief the 13 disputed exhibits, each
taken as a whole. Within very broad limits, the district
court is free to reexamine its position on any issue as the
case develops. See generally United States v. Uccio, 940
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F.2d 753, 758 (2d Cir. 1991). We say this not to suggest any
disagreement whatever with the district court's rulings but
simply to underscore the limits on what this court has
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decided.
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With these stipulations, the order under review
excluding the 13 exhibits is affirmed.
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