United States District Court, E.D. Tennessee, Knoxville Division
JORDAN, UNITED STATES DISTRICT JUDGE.
matter is before the Court on Chief Magistrate Judge Clifford
C. Shirley's Report and Recommendation [doc. 58],
Defendants' Joint Objections to the Report and
Recommendation [doc. 61], and the United States' Response
[doc. 64]. For the reasons herein, the Court will overrule
the objections and accept Judge Shirley's Report and
Recommendation in whole.
criminal action, the United States alleges that Protech Metal
Finishing, LLC (“Protech”)-an East Tennessee
company that specializes in applying plating to metal
parts-is a contractor or subcontractor to the Department of
Defense. [Superseding Indictment, doc. 35, at 1-2].
Specifically, the United States claims that the Department of
the Army awarded to Protech three military contracts, which
required Protech to apply nickel-plating finishes to
ammunition racks for use in battle tanks. [Id. at 2,
7]. According to the United States, Defendants knowingly
failed to follow the contractual specifications relating to
the nickel-plating finishes and tried, through various
deceptive acts, to conceal their failures to follow them.
[Id. at 7-9]. The United States also alleges that
Defendants instructed Protech's employees not to meet the
specifications and to conceal their failure to meet them.
[Id. at 8-9].
result, the United States charged Defendants with multiple
criminal offenses, including a Klein conspiracy
under 18 U.S.C. § 371, which comprises Count I of the
United States' Superseding Indictment. [Id. at
6-12]. As part of this conspiracy, the United States
maintains that Defendants (1) defrauded the Department of
Defense by providing it with racks that they knew did not
adhere to contractual specifications, (2) impaired and
impeded the Department of Defense from evaluating
Protech's contractual performance, and (3) impaired and
impeded the Environmental Protection Agency
(“EPA”) from enforcing statutes and regulations
concerning the storage of hazardous waste, which Protech
generated as a byproduct of its plating processes.
[Id. at 6-7, 9]. In response to the United
States' charge under § 371, Defendants moved to
dismiss Count I based on a twofold argument. First, they
maintain that the United States violates the doctrine of
duplicity because it alleges three distinct conspiracies in
Count I. [Defs.' Mot. to Dismiss, doc. 21, at 1-3].
Second, they contend that the type of conspiracy in this
case, a Klein conspiracy, is not chargeable under
§ 371. [Defs' Second Mot. to Dismiss, doc. 23, at
1-4]. In the alternative, Defendants move to strike
surplusage in Count I. [Defs.' Mot. to Strike, doc. 17,
conducting a hearing on Defendants' motions, Judge
Shirley concluded that the United States adequately alleges a
Klein conspiracy, that the allegations in Count I
are not duplicitous, and that Count I has no surplusage. [R
& R. at 2]. He therefore recommended that this Court
should deny Defendants' motions, with the exception of
permitting a special verdict form. [Id.]. Defendants
timely objected to Judge Shirley's recommendations. The
Court will now address their objections.
Standard of Review
reviewing a magistrate judge's recommendation on a
non-dispositive issue, the Court must accept that
recommendation unless it is clearly erroneous or contrary to
law. 28 U.S.C. § 636(b)(1)(A); Fed. R. Crim. P. 59(a).
If the magistrate judge's recommendation “leaves
the reviewing court with ‘a definite and firm
conviction that a mistake has been committed, '” it
is clearly erroneous or contrary to law. Tri-Star
Airlines, Inc. v. Willis Careen Corp. of L.A., 75
F.Supp.2d 835, 839 (W.D. Tenn. 1999) (quoting Heights
Cmty. Congress v. Hilltop Realty, Inc., 774 F.2d 135,
140 (6th Cir. 1985)). When reviewing a magistrate judge's
recommendation on a dispositive issue, on the other hand, the
Court conducts a de novo review of that recommendation. 28
U.S.C. § 636(b)(1); Fed. R. Crim. P. 59(b)(3). A de novo
review requires the Court “to give fresh consideration
to those issues to which specific objection has been made by
a party.” United States v. Raddatz, 447 U.S.
667, 675 (1980) (quotation omitted). In doing so, the Court
reaches “the ultimate determination of the
matter” through its own judicial discretion.
Id. at 675-676. After its review, it “may
accept, reject, or modify, in whole or in part, the findings
or recommendations made by the magistrate judge.” 28
U.S.C. § 636(b)(1).
U.S.C. § 371 is the federal general conspiracy
statute-in contrast to other federal conspiracy statutes that
deal with specific types of conspiracies, like the RICO
conspiracy statute under 18 U.S.C. § 1962(d)-and it
proscribes a conspiracy (1) to commit an offense against the
United States or (2) to defraud the United States:
If two or more persons conspire either to commit any offense
against the United States, or to defraud the United States,
or any agency thereof in any manner or for any purpose, and
one or more of such persons do any act to effect the object
of the conspiracy, each shall be fined under this title or
imprisoned not more than five years, or both.
18 U.S.C. § 371. The statute's first clause is known
as the “offense clause, ” whereas the
statute's second clause is known as the “defraud
clause.” See United States v. Minarik, 875
F.2d 1186, 1186-87 (6th Cir. 1989) (“The statute is
written in the disjunctive in order to criminalize two
categories of conduct: conspiracies to commit offenses
specifically defined elsewhere in the federal criminal code,
and conspiracies to defraud the United States.”). In
the defraud clause, Congress never defined the phrase
“to defraud the United States.”
Defendants' First Objection
initial objection strikes at the relationship between §
371's defraud clause and a doctrine known as the
“Klein conspiracy doctrine,
” a body of federal precedent in which
courts have held that the term “to defraud” under
§ 371 requires a broader definition than that same term
requires in its common-law form. See United States v.
Collins, 78 F.3d 1021, 1037 (6th Cir. 1996). Defendants
contend that courts, at common law, have historically viewed
the infinitive verb “to defraud” to mean the
deprivation of money or property by some dishonest means.
[Defs.' Br. Klein Conspiracy, doc. 25-1, at 2].
They argue that the words “to defraud” in §
371 ought to receive its traditional meaning because Congress
chose not to define it. [Id. at 18]; see Evans
v. United States, 504 U.S. 255, 259 (1992) (“It is
a familiar ‘maxim that a statutory term is generally
presumed to have its common-law meaning.” (quotation
omitted)); but see Circuit City Stores, Inc. v.
Adams, 532 U.S. 105, 115 (2001) (“Canons of
construction need not be conclusive and are often countered,
of course, by some maxim pointing in a different
direction.”); Karl N. Llewellyn, Remarks on the
Theory of Appellate Decision and the Rules or Canons of About
How Statutes Are to Be Construed, 3 Vand. L. Rev. 395,
399 (1950) (launching a now-famous attack against judicial
canons of statutory interpretation and noting that for each
canon of statutory interpretation, an opposite canon exists
and “lead[s] in [a] happily variant
of applying this common-law definition to § 371-a
definition that would limit the statute's reach to fraud
resulting in the deprivation of money or property- courts
have relied on the Klein conspiracy doctrine to
construe the term “to defraud” more much broadly
so that it includes “any interference with a
lawful governmental function by dishonest means.”
[Defs.' Br. Klein Conspiracy at 2 (emphasis
added)]. Defendants claim that courts, in adopting this
definition under the Klein conspiracy doctrine, have
transgressed their authority by enshrining into case law
“a common law crime, created by the courts rather than
Congress.” [Id. at 16-17 (quotation omitted)].
Defendants therefore urge the Court to dismiss Count I of the
superseding indictment. Because they challenge the
superseding indictment's sufficiency, they raise a
dispositive issue, see, e.g., United States v.
Tigner, No. 2:15-cr-20043-JTF-dkv, 2016 WL 320994, at *1
(W.D. Tenn. Jan. 25, 2016); Brown v. United States,
187 F.Supp.2d 887, 895 (E.D. Mich. 2002), which the Court
reviews through the prism of the de novo standard.
the backdrop of Defendants' arguments, Defendants
concede-as they must-that the Klein conspiracy
doctrine is “well-settled common law, ” and they
admit that “this Court is bound by controlling Sixth
Circuit precedent in this matter.” [Defs.' Mot. to
Dismiss at 3]. Indeed, the Sixth Circuit has acknowledged
that the words “to defraud” in § 371 have
“very broad meaning” and “extend beyond
[their] common law usage and include interference or
obstruction of a lawful governmental function ‘by
deceit, craft or treachery or at least by means that are
dishonest.'” Collins, 78 F.3d at 1037
(quotation omitted)); see United States v. Thompson,
366 F.2d 167, 170 (6th Cir. 1966) (“It has long been
established that [§ 371's] statutory language is not
confined to fraud as that term has been defined in the common
law.” (quoting Dennis v. United States, 384
U.S. 855, 861 (1966))). In fact, Defendants recognize that
every federal circuit adheres to the Klein
conspiracy doctrine. [Defs.' Br. Klein
Conspiracy at 10-11].
what is more, the Supreme Court has hardly been mum about its
impression of the Klein conspiracy doctrine-it too
has followed the doctrine through its own lineage of
precedent. Dennis, 384 U.S. at 860-61; Lutwak v.
United States, 344 U.S. 604, 608-10 (1953); Glasser
v. United States, 315 U.S. 60, 66 (1942);
Hammerschmidt v. United States, 265 U.S. 182, 188
(1924); Haas v. Henkel, 216 U.S. 462, 479 (1910);
see McNally v. United States, 483 U.S. 350, 358 n.8
(1987) (“‘[A] statute which . . . has for its
object the protection of the individual property rights of
the members of the civic body, is one thing; a statute which
has for its object the protection and welfare of the
government alone . . . [is] quite another.' Section 371
is a statute aimed at protecting the Federal Government
alone[.]” (quotation omitted)); Tanner v. United
States, 483 U.S. 107, 128 (1987) (noting that “we
have repeatedly stated” that § 371 is
broad enough to cover “any conspiracy for the purpose
of impairing, obstructing, or defeating the lawful function
of any department of Government” (emphasis added)
(internal quotation marks and quotation omitted)); United
States v. Coplan, 703 F.3d 46, 62 (2d Cir. 2012)
(inviting the Supreme Court to reconsider the viability of
the Klein conspiracy doctrine, but without success),
cert. denied, 134 S.Ct. 71 (2013).
Defendants are well aware, this Court and all district courts
in this circuit are limited in their decision-making
abilities by the doctrine of stare decisis, the
“‘venerable principle' that a prior published
decision remains controlling unless overturned by an
inconsistent decision of the United States Supreme Court or
by [the Sixth Circuit] sitting en banc.”
Brown v. United States, 462 F.3d 609, 620 (6th Cir.
2006) (Graham, J., dissenting) (quotation omitted); see
Michigan v. Bay Mills Indian Cmty., 134 S.Ct. 2024, 2036
(2014) (stating that “stare decisis is a
foundation stone of the rule of law”); Welch v.
Tex. Dep't of Highways & Pub. Transp., 483 U.S.
468, 478-79 (1987) (recognizing that “[t]he rule of law
depends in large part on adherence to the doctrine of
stare decisis, ” because it is “a
natural evolution from the very nature of our
institutions” (internal quotation marks and quotation
omitted)); United States v. Hunt, 278 F. App'x
491, 500 (6th Cir. 2008) (stating that the Sixth
Circuit's published decisions “must be
followed” by district courts, in keeping with stare
decisis (emphasis added)). Although the Klein
conspiracy doctrine has ...