People v. Dioguardi
8 N.Y.2d 260, 203 N.Y.S.2d 870, 168 N.E.2d 683 (1960)
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Rule of Law:
A person commits extortion by obtaining property through the wrongful use of fear, even if the person did not initially create the fear, so long as they exploit the victim's pre-existing fear and convey, through words or innuendo, that they possess the power to remove or continue the cause of that fear in exchange for payment.
Facts:
- The Kerin family, who owned nonunion stationery companies, faced organizational efforts from four different unions.
- A picket line from Teamster Local 138 appeared at the Kerin companies' shipping entrance, which some truck drivers refused to cross, threatening to shut down the business.
- The Kerins' attorney, William Coogan, was put in contact with John McNamara, a powerful Teamsters official, to help resolve the multi-union conflict.
- McNamara privately suggested to Coogan that the problem could be solved for a payment of $5,000 to $10,000 and later introduced the idea of hiring Equitable Research Associates, a company run by Johnny Dioguardi.
- In a meeting with the Kerin officers, McNamara proposed a deal: the companies would join his union (Local 295), pay a $3,500 lump sum to Equitable, and retain Equitable for $200 per month as a 'labor consultant.'
- McNamara assured the Kerins that if they agreed, the picket line would be gone by the following Monday and they would have 'labor peace,' implying their troubles would continue if they did not pay.
- Fearing their business would be forced to close, the Kerin officers agreed to the deal. The picket line disappeared the next business day.
- The Kerin companies ultimately paid $4,700 to Equitable, which provided no consulting services; the money was almost immediately withdrawn by Dioguardi as personal salary.
Procedural Posture:
- Defendants John McNamara and Johnny Dioguardi were indicted for extortion and conspiracy to commit extortion.
- Following a trial in the court of first instance, a jury convicted the defendants on both counts.
- The defendants, as appellants, appealed their convictions to the Appellate Division, an intermediate appellate court.
- The Appellate Division reversed the convictions, dismissed the indictment, and ordered the defendants discharged from custody.
- The People, as appellant, appealed the reversal to the Court of Appeals, the highest court in New York.
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Issue:
Does a person commit extortion by exploiting a victim's pre-existing fear of economic harm and implying they have the power to either continue or remove the source of that harm in exchange for payment, even if they did not create the initial source of fear?
Opinions:
Majority - Froessel, J.
Yes. A person commits extortion when they wrongfully use a victim's fear of economic loss to obtain property, regardless of whether they created the initial fear. The crime is committed if the defendant successfully persuades the victim that they have the power to remove or continue the cause of that fear and uses that purported power to exact a payment. The court found that the defendants exploited the Kerin officers' pre-existing fear that the picket line would destroy their business. McNamara, through innuendo and suggestion, conveyed that he controlled the situation and that payment to Dioguardi's company, Equitable, was the only way to remove the picket and guarantee 'labor peace.' The fact that the picket line disappeared immediately after the agreement was made, but before any written contract was signed, served as proof of their actual control. The court distinguished this from bribery, which involves a voluntary payment to influence an official act, whereas extortion is characterized by duress and compulsion—the victim makes a choice between the lesser of two evils.
Analysis:
This decision significantly clarifies the scope of extortion in New York, particularly in the context of labor racketeering. It establishes that the crime is not limited to threats of future harm initiated by the defendant but also includes the exploitation of a pre-existing fear. The court's emphasis on threats conveyed by 'innuendo or suggestion' broadens the evidentiary basis for proving extortion, as prosecutors do not need to show an explicit threat. Furthermore, the case provides a crucial analytical framework for distinguishing extortion from bribery, defining extortion by the element of compulsion and the victim's duress, which has become a foundational concept in prosecuting similar cases.
