Unites States v. Hazelwood, et al.
No. 18-6023/6101/6102, 2020 WL 6336133, (6th Cir. Oct. 29, 2020)
Decided: October 29, 2020
The Sixth Circuit reversed and remanded Defendants Mark Hazelwood, Scott Wombold and Heather Jones’ convictions for a wire and mail fraud conspiracy to defraud customers of Pilot Flying J (“Pilot”). The appellate court found the district court abused its discretion by improperly admitting “deeply offensive” character evidence of one of the Defendants, warning of the prejudices created by admitting propensity character evidence that speaks to one’s personal beliefs, rather than the elements of the crime.
The defendants were upper-level management employees at Pilot, which operates hundreds of truck stops throughout the United States and sells billions of gallons of diesel fuel to its customers. The government charged dozens of Pilot employees with conspiracy to defraud customers by means of deceptive selling practices, alleging that from 2008-2013 Pilot’s direct sales team engaged in fraudulent practices. The trial lasted over twenty-seven days, and the government called almost thirty witnesses in the presentation of its case. On appeal, the defendants argued their convictions should be overturned because of improper rebuttal character evidence presented by the government.
During trial, multiple defense witnesses took the stand and spoke about the character of Mr. Hazelwood, Pilot’s president and head of the direct-sales division. Most responded that Mr. Hazelwood was a good business man. The government then filed a motion to introduce rebuttal character evidence. It argued that this evidence directly disputed Mr. Hazelwood’s contention that he was a good business man and would not intend to commit fraud. Specifically, the government wished to introduce undercover recordings of Mr. Hazelwood captured after a management team meeting, off company property, while he was watching a sporting event, and drinking alcohol with other Pilot employees. The recordings contained Mr. Hazelwood using highly offensive profanities, racial slurs, and bigotry. Defendants objected on three grounds, (1) Mr. Hazelwood had not put his character at issue, (2) the recordings were irrelevant, and (3) the recordings were highly prejudicial. The district court ruled in favor of the government stating that the recordings were not character evidence because “a reasonable person could look at this line of questioning as not necessarily or primarily character in nature.” The jury returned a guilty verdict and the defendants appealed. On appeal, the defendants argued that the recordings were improperly admitted under Federal Rules of Evidence 401, 404(a), 405, 404(b). Moreover, they argued that the trial court abused its discretion under Rule 403 in failing to recognize that unfair prejudice of the tapes would substantially outweigh any probative value in the fraud case. The Sixth Court agreed.
First, the Sixth Circuit disagreed with the district court’s Rule 401 relevancy analysis. The broad standard under this Rule allows for the admission of evidence if it tends to make a fact of consequence more or less probable. In a criminal case, a fact is of consequence if it makes it more or less likely that the defendant committed the charged conduct. The Sixth Circuit held that the recordings were not relevant to any of the elements of the charged offenses and that one’s character flaw is not necessarily relevant as to whether someone is a good or bad business man.
Second, the Court rejected the district court’s finding that the evidence was proper rebuttal character evidence under Rules 404(a)(2)(A) and 405. Even if Mr. Hazelwood “opened the door” to a “pertinent” trait, that trait was his business judgment, not his misguided personal beliefs. Rule 405 allows inquiry into prior acts only through testimony about a defendant’s “reputation” or “opinion,” and does not allow for extrinsic evidence of specific instances of conduct. The Court found the recordings to be extrinsic evidence offered to prove specific instances of Hazelwood’s bad conduct. Alternatively, the government could have questioned witnesses about the comments made by Mr. Hazelwood, but the Court found that playing the audiotapes was improper.
Third, the Sixth Circuit held that it was an abuse of discretion to admit this evidence as an exception to the general ban on propensity character evidence under Rule 404(b). Character evidence may be admissible for purposes other than propensity, such as “proving motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident.” The government argued that its purpose was to prove that since Hazelwood was reckless enough to say such offensive things, then he was reckless enough to commit fraud and risk Pilot’s reputation. The Court did not find this argument persuasive, and found the recordings were not admissible due to the risk that the jury will convict for crimes other than those charged. Old Chief v. United States, 519 U.S. 172, 180–82 (1997) (quoting United States v. Moccia, 681 F.2d 61, 63 (1st Cir. 1982)).
Finally, pursuant to Rule 403, the Court held that the introduction of these tapes obviously prejudiced all the defendants. The jury therefore reached a verdict based on emotions instead of evidence. United States v. Asher, 910 F.3d 854, 861 (6th Cir. 2018) (citing Old Chief, 519 U.S. at 180). As the Court correctly notes, nearly anyone would form a negative opinion of a person who hold the views expressed by Mr. Hazelwood.
This appellate opinion highlights the importance of Rule 403, and further clarifies that extrinsic character evidence is inadmissible when there is a high risk of prejudice and likelihood that the jury will convict based on the defendant’s character flaws instead of the crime charged.[1]
[1] Dissenting opinion by Judge Bernice Bouie Donald stated the recordings were relevant because: (1) they demonstrated Mr. Hazelwood’s business judgement, (2) spoke to an essential element of the good faith defense, (3) they were related to defendant’s state of mind. Judge Donald wrote that no clear error was committed by the district court by finding prejudice did not substantially outweigh probative value of recordings.
