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Full Opinion
United States Court of Appeals
For the First Circuit
No. 99-1695
UNITED STATES OF AMERICA,
Appellee,
v.
GEORGE VAROUDAKIS,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Selya, Circuit Judge,
Lipez, Circuit Judge,
and Casellas,* District Judge.
Diana K. Lloyd, Assistant U.S. Attorney, with whom Donald
K. Stern, U.S. Attorney was on brief for appellee.
Kimberly Homan, with whom Sheketoff & Homan was on brief for
defendant, appellant.
December 5, 2000
* Of the District of Puerto Rico, sitting by designation.
LIPEZ, Circuit Judge. This case requires us to decide
a familiar but difficult issue about the admissibility of prior
bad act evidence under Federal Rules of Evidence 404(b) and 403.
The government alleged that defendant George Varoudakis, charged
with arson and conspiracy to commit arson in violation of 18
U.S.C. § 844(i) and 18 U.S.C. § 371, hired an acquaintance to
burn down his failing restaurant, Destinations, in order to
collect insurance proceeds. Following his conviction,
Varoudakis argues on appeal that the district court abused its
discretion by admitting evidence of a prior bad act, namely,
testimony by Varoudakis's long-time girlfriend and co-
conspirator in the Destinations arson, Cheryl Britt, that she
saw Varoudakis set fire to his leased car sixteen months before
the Destinations fire. We agree with Varoudakis that the
evidence should have been excluded under Rule 403, and that the
error was not harmless. Accordingly, we vacate the judgment.
I.
We recite the following undisputed facts or describe
the testimony of certain witnesses.
In 1991, George Varoudakis opened a restaurant and
night club called Destinations at One Congress Street in Boston.
The establishment's general manager was Cheryl Britt,
Varoudakis's girlfriend since the mid-1980s. Initially,
-2-
Destinations succeeded financially, but business declined about
a year after it opened. Varoudakis paid his suppliers cash on
delivery and owed his workers back wages. His landlord claimed
$600,000 in back rent and damages, and began eviction
proceedings in December 1994.
In late 1994, after several years of carrying insurance
that was inadequate under the terms of his lease, Varoudakis
increased the contents insurance coverage for Destinations to
$500,000 and bought business interruption insurance for
$100,000. Cheryl Britt testified that Varoudakis told her he
increased the insurance so he could burn the restaurant and
collect the insurance proceeds.
In January 1995, Varoudakis filed for bankruptcy for
One Congress Street, a corporation he controlled that owned
Destinations.1 In February, he filed for Destinations, a
separate company. Varoudakis initiated these filings under
Chapter 11, allowing reorganization by the debtor-in-possession.
In March, he filed for personal bankruptcy. Also in March, the
One Congress Street petition was voluntarily converted to
Chapter 7, which requires the debtor to transfer control to a
1Cheryl Britt was listed as the president, treasurer,
clerk, and director of Destinations, but testified that she had
no financial stake in the company and that Varoudakis controlled
it. The defendant did not dispute these facts.
-3-
bankruptcy trustee. On April 6, 1995, two days after the fire
at Destinations, the Destinations petition was voluntarily
converted to Chapter 7.
Britt testified that several weeks before the April
1995 fire, Varoudakis told her to stop paying Destinations's
bills. As a result, Britt did not pay the February 1995
insurance bill. On March 27, 1995, the insurance policy was
cancelled. At trial, Varoudakis relied on the cancellation to
contest the government's theory that he burned Destinations to
collect insurance. Britt, however, testified that Varoudakis
did not know the insurance was cancelled.
Also sometime in March, Varoudakis began moving sound
and lighting equipment from Destinations to a property he owned
in Everett. Several employees worked long hours loading the
equipment into trucks on the days and nights leading up to the
fire. According to Britt and others, the removal included a
drop-safe, tables, kitchen equipment, liquor, and paperwork.
More than $100,000 worth of equipment was removed.
Britt and her sister, Diane Casey, testified that at
the end of March 1995, Varoudakis hired Casey's boyfriend, Nick
Adams, to torch Destinations. Britt said that Varoudakis told
her to pay Adams $2,000 when the job was completed.
-4-
On the night of April 3, Varoudakis went to the
Foxwoods Casino with two friends. Britt and Casey testified
that he instructed Casey to switch shifts with Destinations's
scheduled night manager, Mansour Alrisheq, on the night of April
3 because Alrisheq did not know of the planned arson. Casey
also said Varoudakis told her to give Adams the keys to
Destinations.
Destinations burned on April 4, 1995. Investigators
determined that arson caused the fire. Varoudakis did not
dispute this finding at trial.
In the early morning of April 4, apparently believing
he had insurance, Varoudakis called his insurance agent from
Foxwoods to report the fire. Britt testified that when
Varoudakis learned that the fire damage to Destinations was not
extensive, he was furious with Adams for having botched the job.
When interviewed about the fire in September 1995,
Varoudakis, who was not then a suspect, told investigators that
the fire might have been connected with the robbery of the
Destinations drop-safe, which held between $5,000 and $7,000,
and that a rival Greek club might be responsible. He also
mentioned Casey and Adams as suspects.
Cheryl Britt initially denied to investigators that
Varoudakis had hired Adams to set the fire. After she learned
-5-
that Varoudakis had accused Casey and Adams, and after
investigators told her she could be indicted, she implicated
Varoudakis. In the course of these discussions with
investigators in October 1995, Britt was promised immunity.
However, she lied about her involvement in the fire and her
relationship with Varoudakis to investigators and in two grand
jury appearances. The government did not revoke her immunity.
At Varoudakis's trial, Britt was one of the government's main
witnesses.
On February 10, 1999, after a thirteen-day trial, a
jury convicted Varoudakis of both arson and conspiracy to commit
arson. At the end of the second half-day of deliberations, the
jury wrote the court a note saying: "At this current time, we
are at an impasse. Could you tell us how to proceed." The court
told the jury to stop for the day and continue on the following
day. After another day and a half of deliberations, the jury
found Varoudakis guilty.
II.
At trial, the court allowed Cheryl Britt to testify
that in December 1993 she saw Varoudakis set fire to a Cadillac
he had leased. Britt said that Varoudakis parked the car on a
piece of property he owned in Everett and that he left in
another car to buy gasoline, with her as a passenger. When he
-6-
returned, he threw newspapers into the back of the Cadillac,
poured gasoline over them, and ignited the newspapers. Britt
said Varoudakis told her that he torched the car because the
lease had expired and he owed excess mileage charges, and that
he expected insurance to cover the loss. On cross-examination
of Britt, Varoudakis offered the car lease agreement to impeach
Britt's testimony that the lease had expired. The agreement
showed that the lease had 23 months remaining.2 Following
Britt's testimony, Officer Richard Gamby of the Everett Police
Department testified that he investigated the burning of a
Cadillac in December 1993 that matched Britt's description.
Varoudakis argues that the car fire evidence should not
have been admitted under Rule 404(b) because its sole purpose
was to demonstrate criminal propensity, or that the evidence
should not have been admitted under Rule 403 because its
probative value was substantially outweighed by its unfairly
prejudicial effect. The government responds that the car fire
evidence was properly admitted, or, if not, that its admission
was harmless error.
2 The lease showed that Varoudakis had leased the car for 36
months, and that at the time of the fire he had used 13 months
of that period. The lease allowed him to drive 45,000 miles
without further charge. There was no evidence of what the
mileage was at the time of the fire. The defense argued that it
was unlikely that Varoudakis would have driven 45,000 miles in
13 months.
-7-
We review the district court's determination that the
prior bad act evidence was admissible under 404(b) and 403 for
an abuse of discretion. See United States v. Balsam, 203 F.3d
72, 84 (1st Cir. 2000).
A. Standard for Admission under Federal Rule of Evidence 404(b)
Rule 404(b) provides that evidence of a defendant's
prior bad acts may not be admitted to prove his criminal
character or propensity to commit crimes of the sort for which
he is on trial.3 To admit evidence of prior bad acts, a trial
court must find that the evidence passes two tests. First, the
evidence must have "special relevance" to an issue in the case
such as intent or knowledge, and must not include "bad character
or propensity as a necessary link in the inferential chain."
United States v. Frankhauser, 80 F.3d 641, 648 (1st Cir. 1996).
Second, under Rule 403, evidence that is specially relevant may
still be excluded if its probative value is substantially
outweighed by the danger of unfair prejudice.
3 Rule 404(b) provides in relevant part:
Evidence of other crimes, wrongs, or acts is
not admissible to prove the character of a
person in order to show action in conformity
therewith. It may, however, be admissible
for other purposes, such as proof of motive,
opportunity, intent, preparation, plan,
knowledge, identity, or absence of mistake
or accident. . . .
Fed. R. Evid. 440(b).
-8-
As the text of Rule 404(b) indicates, prior bad act
evidence may be specially relevant if, for example, it goes to
the defendant's intent, knowledge, plan, absence of mistake, or
identity. Additionally, prior bad acts may be admitted in
conspiracy cases under 404(b) if they "explain the background,
formation, and development of the illegal relationship." United
States v. Escobar-De Jesus, 187 F.3d 148, 169 (1st Cir. 1999).
See also United States v. Prevatte, 16 F.3d 767, 775-76 (7th
Cir. 1994); United States v. Jones, 982 F.2d 380, 382-83 (9th
Cir. 1993); United States v. Passarella, 788 F.2d 377, 383-84
(6th Cir. 1986); United States v. Magnano, 543 F.2d 431, 435 (2d
Cir. 1976). We have focused on two factors to determine the
probative value of prior bad act evidence: "the remoteness in
time of the other act and the degree of resemblance to the crime
charged." Frankhauser, 80 F.3d at 648, quoting United States v.
Fields, 871 F.2d 188, 197 (1st Cir. 1989).
B. Applying Rule 404(b)
1. The Court's Ruling
Immediately before the opening statements of counsel,
in response to a motion in limine filed by the defendant to
exclude the car fire evidence, the court ruled that Britt's
testimony about the car fire would be admissible to show
Varoudakis's "plan, knowledge, and intent" in relation to
-9-
whether he "knowingly participated in a common scheme to
defraud." In support of this rationale, the court cited the
government's allegations that Varoudakis committed both the car
fire and the Destinations arson "for a financial motive" and
with "one of the same conspirators [Britt]."
The court cited United States v. Gonzalez-Sanchez, 825
F.2d 572 (1st Cir.), cert. denied, 484 U.S. 989 (1987), as
authority for its ruling. In Gonzalez-Sanchez, the defendants,
who were gang members, were convicted of an October 1981 arson.
The trial court admitted prior bad act evidence primarily
concerning two other recent fires. Like the arson charged, both
fires had also destroyed businesses owned by the defendants and
insured by the same insurance company. These fires occurred
just two months and six months before the October 1981 fire. In
upholding the court's decision to admit the evidence, we said:
"The issue at trial was not just whether [defendant] Latorre
committed arson. The broader issue was whether Latorre knowingly
participated in a common scheme to defraud." Id. at 581.
There are important differences between the facts
supporting a common scheme rationale in Gonzalez-Sanchez and
this case. Unlike the recurring fires in Gonzalez-Sanchez--
three arsons of business properties in six months--Britt's
testimony does not suggest a plan connecting the car fire to the
-10-
Destinations fire. In United States v. Lynn, 856 F.2d 430 (1st
Cir. 1988), we held that evidence of a prior conviction for
marijuana was not admissible to show a common plan or scheme
connected to the defendant's instant prosecution for marijuana
distribution because there was no evidence that the previous
offense "leads in a progression" to the second. Id. at 435.
Similarly here, no evidence suggests that "a continuing or
connected scheme" linked the car fire and the Destinations fire.
Id.
The district court also saw the car fire evidence as
specially relevant to the Destinations fire on the ground that
Britt acted as Varoudakis's co-conspirator in both instances.
The court was correct that prior bad act evidence is admissible
to prove conspiracy in cases "where the earlier crime involved
the same participants as the charged crime." United States v.
Hadfield, 918 F.2d 987, 994 (1st Cir. 1990), citing United
States v. Flores-Perez, 849 F.2d 1, 7 (1st Cir. 1988). See also
Gonzalez-Sanchez, 825 F.2d at 581 ("the evidence of Latorre's
involvement with the same people in past arson and fraud schemes
is especially probative of the issue whether he was an innocent
'tool' of others or a knowing participant in the conspiracy").
Britt, however, did not "participate" in the car fire
as a co-conspirator. According to her testimony, and there was
-11-
no contrary evidence, she was a witness who went along for the
ride. By contrast, she testified that she helped Varoudakis with
the Destinations fire, removing restaurant equipment and paying
Adams for his work. Her lack of participation in the car fire
distinguishes this aspect of the case from Gonzalez-Sanchez, in
which the defendant and his fellow gang members played the same
roles in committing the prior arsons as they did in the arson
for which the defendant was charged.
Finally, the court said that the car fire was specially
relevant to Varoudakis's motive to commit the Destinations fire
because, in both instances, he allegedly committed arson to
alleviate a financial burden by collecting insurance proceeds.
Unlike knowledge and intent, motive is not an element of the
crime that the government must prove. For that reason, proof of
motive must be offered to show some other element, for example,
that the crime was committed, the identity of the accused, or
the accused's requisite mental state. See 22 Charles A. Wright
and & Kenneth A. Graham, Jr., Federal Practice and Procedure, §
5240 (1978).
When prior bad act evidence is offered to prove a
motive for the crime, "courts must be on guard to prevent the
motive label from being used to smuggle forbidden evidence of
propensity to the jury." Id. That is the problem here. As
-12-
proof of motive, the car fire testimony is offered as
circumstantial evidence that Varoudakis committed the
Destinations fire. It involves an inference of propensity as "a
necessary link in the inferential chain." Frankhauser, 80 F.3d
at 648. Put most simply, the government argues that
Varoudakisâs commission of the car fire arson in response to
financial stress makes it more likely that he committed the
restaurant arson in response to financial stress. Contrast this
forbidden inference with the permissible inference to be drawn
in a case in which the prior bad act--say, a botched robbery by
the defendant that was frustrated by the ineptitude of his
cohort--provided the motive for the defendantâs subsequent
assault on his cohort. There the prior bad act would provide
circumstantial evidence of the commission of the assault without
the involvement of any propensity inference.
In a case that also involved arson of a restaurant
owned by the defendant, the Eleventh Circuit excluded evidence
that the defendant, in a separate incident, threatened to "burn
out" a tenant after she did not pay a full month's rent. See
United States v. Utter, 97 F.3d 509, 514 (11th Cir. 1996) As in
this case, the government argued that the tenant's testimony
-13-
would show "how the defendant reacts to financial stress." Id.4
The court rejected this rationale, stating: "This is the type of
character and propensity evidence prohibited by Rule 404(b)."
Id. See also Lynn, 856 F.2d at 436. For the same reason, we
find error in the district court's financial motive rationale.
2. The Britt-Varoudakis Relationship
There is, however, a proper rationale for admitting the
car fire evidence under 404(b) that differs subtly, but
importantly, from the district court's rationale that Britt was
a co-conspirator in both fires. The government urges on appeal
that the car fire evidence was properly admitted because it
demonstrates the background and formation of the conspiratorial
relationship between Varoudakis and Britt during the planning
for and commission of the Destinations fire.
In United States v. Escobar-De Jesus, 187 F.3d 148, 169
(1st Cir. 1999), we said that prior bad act evidence is
4
The court also noted that the prior bad act evidence
related "only to [Utter's] threat to use fire" not arson for the
purpose of collecting insurance, for which Utter was charged.
See Utter, 97 F.3d at 513. As we have noted, Britt testified
that Varoudakis set the car fire to collect insurance, and the
government offers the testimony to show motive on that basis.
However, this distinction between the cases does not affect the
relevance to our case of the Utter courtâs conclusion that the
"threat" evidence should have been excluded. In both cases, the
prior bad act evidence is specially relevant to the defendant's
commission of the crime alleged only if criminal propensity is
inferred.
-14-
admissible "to help the jury understand the basis for the co-
conspirators' relationship of mutual trust." Id. See also
United States v. Love, 134 F.3d 595, 603 (4th Cir. 1998); United
States v. Pipola, 83 F.3d 556, 565-66 (2d Cir. 1996); United
States v. Rosa, 11 F.3d 315, 334 (2d Cir. 1993); United States
v. Diaz, 994 F.2d 393, 395 (7th Cir. 1993). The district court
in Escobar-De Jesus admitted evidence about an uncharged heroin
deal between the defendant, who was charged with other drug-
related crimes, and one of his co-conspirators. We reasoned
that the heroin purchase "was relevant and admissible because it
helped to explain the history between [co-conspirators]
Rodriguez and Escobar," whose relationship "was directly in
issue and material to the case." Escobar-De Jesus, 187 F.3d at
169.
Cheryl Britt's relationship with George Varoudakis was
similarly material to the conspiracy case against him. Britt
testified to the key facts that Varoudakis hired Nick Adams to
torch Destinations and that he believed he still had insurance
when the arson took place. Britt's testimony also refuted
Varoudakis's alibi, and his claim that he removed the sound
system and other equipment for a legitimate purpose.
Britt knew these things because Varoudakis trusted her.
Her testimony that he allowed her to watch him torch his
-15-
Cadillac demonstrated that trust. It also demonstrated
Varoudakis's willingness to involve her in some way in his
illegal acts. Like the prior bad act evidence admitted in
Escobar-De Jesus, Britt's car fire testimony helped explain the
nature of their relationship.
The defense argues that the prior bad act evidence
should not be admissible to show the background and formation of
Britt's relationship with Varoudakis because Varoudakis did not
dispute that he and Britt were long-time intimates. At first
blush, this argument seems plausible. However, we have held
that evidence of prior bad acts may be probative even when it is
relevant to an issue that the defendant does not contest. For
example, such evidence may be admitted to show knowledge or
intent when the defense is a general denial of the charges, see
United States v. Oppon, 863 F.2d 141, 146 (1st Cir. 1988), or a
claim of mistaken identity, see United States v. Ferrer-Cruz,
899 F.2d 135, 138 (1st Cir. 1990). After all, the fact that the
defendant does not contest the issue for which the prior bad act
evidence is offered does not, "by itself, remove those issues
from the case." Id.
We conclude, therefore, that the car fire evidence is
specially relevant under Rule 404(b) to Varoudakis's
relationship with Britt because it shows that he trusted her so
-16-
much that he was willing to commit a crime in her presence.5 We
further conclude, however, that the contention that the
government did not need the car fire evidence to prove the close
relationship between Britt and Varoudakis remains a pertinent
question in the Rule 403 analysis, which requires weighing the
evidence's probative value against its unfairly prejudicial
effect. See United States v. Gilbert, 229 F.3d 15,24 (1st Cir.
2000).
C. Rule 403
Prior bad act evidence that surmounts the bar of Rule
404(b) may still be inadmissible under Rule 403. This rule
requires the trial court to exclude the evidence if its
probative value is substantially outweighed by "the danger of
unfair prejudice." Fed. R. Evid. 403. Otherwise relevant
evidence may also be excluded if its probative value is
substantially outweighed by "confusion of the issues, or
misleading [of] the jury, or by considerations of undue delay,
waste of time, or needless presentation of cumulative evidence."
Id.
5
Since the car fire took place only sixteen months before
the Destinations arson, the two events are also sufficiently
proximate in time to warrant admission under 404(b). See
Hadfield, 918 F.2d at 994 (convictions that occurred five years
before the charged crime were sufficiently proximate in time);
Frankhauser, 80 F.3d 641, 649 (seven year span between prior bad
act and charged crime did not render evidence inadmissible).
-17-
The district court's determination on this issue merits
great deference on appeal. See Hadfield, 918 F.2d at 995.
Nonetheless, we find that in this case the district court erred
in finding that the car fire evidence was admissible under Rule
403.
Under Rule 403's weighing test, "it is only unfair
prejudice which must be avoided." United States v. Rodriguez-
Estrada, 877 F.2d 153, 156 (1st Cir. 1989). We stress "unfair"
because "[b]y design, all evidence is meant to be prejudicial."
Id. Usually, courts use the term "unfair prejudice" for
evidence that invites the jury to render a verdict on an
improper emotional basis. For example, we have upheld the
exclusion of prior bad act evidence in part because it was
"undeniably explosive," Gilbert, 229 F.3d at 26. We are also
cautious when the prior act is a "shocking or heinous crime
likely to inflame the jury." United States v. Mocchia, 681 F.2d
61, 64 (1st Cir. 1982).
As the district court noted, the car fire evidence is
not particularly shocking. There is little danger that it
swayed the jury toward a conviction on an emotional basis. But
Rule 403 also protects defendants from unfair prejudice
-18-
resulting from criminal propensity evidence.6 As the Supreme
Court has stated, improper grounds under Rule 403 "certainly
include . . . generalizing a defendant's earlier bad act into
bad character and taking that as raising the odds that he did
the later bad act now charged." Old Chief v. United States, 519
U.S. 172, 180 (1997).
To be sure, all prior bad act evidence involves some
potential for an improper propensity inference. That is why,
under Rule 404(b), the possibility that a jury may infer
something negative about a defendant's character or propensity
to commit crime does not make the evidence inadmissible unless
no permissible inference may also be drawn. See Ferrer-Cruz,
899 F.2d at 138. Under Rule 403, however, that risk of an
improper criminal propensity inference should be considered in
light of the totality of the circumstances, including the
government's need for the evidence given other available
testimony, to prove the issue identified pursuant to the 404(b)
special relevance analysis. See Old Chief, 519 U.S. at 184
("what counts as the Rule 403 'probative value' of an item of
6 The drafters of Rule 403 expected "unfair prejudice" to
have multiple meanings. "'Unfair prejudice' within its context
means an undue tendency to suggest decision on an improper
basis, commonly, though not necessarily, an emotional one."
Advisory Committee's Notes on Fed. Rule. Evid. 403, 28
U.S.C.App., at 860 (emphasis added).
-19-
evidence, as distinct from its Rule 401 'relevance,' may be
calculated by comparing evidentiary alternatives").7
Here is the crux of our analysis. "The prejudice to
an opponent can be said to be 'unfair' when the proponent of the
evidence could prove the fact by other, non-prejudicial
evidence." Wright & Graham, supra, § 5214. Doubts about the
probative value of prior bad acts evidence are thus "compounded"
when prosecutors have other evidence available, "rendering
negligible their need to show intent by the prior bad acts."
Lynn, 856 F.2d at 436; see also Wright & Graham, supra, § 5250
("The probative value of any particular bit of evidence is
obviously affected by the scarcity or abundance of other
evidence on the same point.").
Our recent holding in Gilbert incorporated the
understanding of Rule 403 unfair prejudice that we articulate
here. In that case, we affirmed on interlocutory appeal a
district court's decision to exclude a variety of prior bad act
evidence. We cited as factors the risk that the jury would
infer criminal propensity, and the government's lack of need for
the evidence. See Gilbert, 229 F.3d at 26 ("we simply do not
7
Rule 401 defines relevant evidence as evidence having "any
tendency to make the existence of any fact that is of
consequence to the determination of the action more probable or
less probable than it would be without the evidence." Fed. R.
Evid. Rule 401.
-20-
see how the jury could regard the [prior bad act] evidence as
specially relevant without drawing a forbidden inference of
criminal propensity . . . . [W]e do not find particularly
compelling the government's argument that it has a strong need
for this evidence").
There is clearly a tension between Rules 404(b) and
403. The more similar the prior bad act evidence is to the
charged crime, the more likely it is to be deemed relevant under
404(b). Yet the more the prior bad act resembles the crime, the
more likely it is that the jury will infer that a defendant who
committed the prior bad act would be likely to commit the crime
charged. See United States v. Beechum, 582 F.2d 898, 915 n.20
(5th Cir. 1978) ("the more closely the extrinsic offense
resembles the charged offense, the greater the prejudice to the
defendant"). This is precisely the kind of inference that Rule
403 guards against. See Lynn, 856 F.2d at 436 ("The ordinary
inference here would seem very close to the inference the Rule
was designed to avoid.").
D. Applying Rule 403
The government primarily used the car fire evidence
to cast Varoudakis as an arsonist. In its opening statement,
the government said the following: "Now, the Defendant knew very
well how to plan an arson because this wasn't the first arson he
-21-
had planned." Although Rule 404(b) permits the admission of
prior bad acts evidence as proof of plan, we have already
concluded that no common plan or scheme linked the car fire and
the Destinations fire. See supra. In reality, this opening
statement underscored Varoudakis's criminal propensity to burn
Destinations because of the car fire. In questioning Britt
about the car fire, the government did not stress the
development of her relationship with Varoudakis, a proper
rationale for admission under 404(b). Instead, Britt's
testimony focused on the facts of the car fire and Varoudakis's
statement to her that he burned the car to collect insurance
coverage.
Moreover, as in Gilbert, the probative value of the car
fire evidence was minimal. The government did not need the car
fire to demonstrate the close nature of Varoudakis's
relationship with Britt. Britt testified that she and
Varoudakis began a romantic relationship in about 1985, and that
they lived together for six years, beginning in about 1989, in
an apartment that Varoudakis helped Britt purchase. Britt said
Varoudakis bought her jewelry and furniture and took her on
expensive vacations.
Britt also testified that she allowed him to list her
as the president, treasurer, clerk, and director of
-22-
Destinations, a corporation in which she had no financial
interest. She said she knew about Varoudakis's long-running
dispute over rental payments with the Destinations landlord.
Because her name was on the Destinations incorporation papers,
she wrote the rent checks. As she said at trial: "Me and George
[Varoudakis] [sic] communicated a lot if something came up."
Britt also testified that she heard Varoudakis's discussions
with a potential buyer for Destinations. She signed the
Destinations bankruptcy petition.
The government also did not need the car fire evidence
to prove Varoudakis's knowledge or intent relating to the
Destinations arson. Varoudakis denied setting the fire at all,
rather than arguing that he burned Destinations unknowingly or
unintentionally. There was no evidence suggesting that
Varoudakis was an innocent "tool" of others in the arson
conspiracy like the defendant in Gonzalez-Sanchez, 825 F.2d at
581. The absence of a dispute on these issues weighs against
admitting the evidence under 403. See Gilbert, 229 F.3d at 24
(citing as a factor weighing in favor of exclusion that "four of
the five issues adduced by the government in support of
admitting the [prior bad act] evidence do not appear to be much
in dispute in this case."); Lynn, 856 F.2d at 437 n. 15 ("While
we do not undermine the government's substantial burden of
-23-
proof, we do note that in this instance, 'intent, while
technically at issue, [was] not really in dispute,' greatly
reducing any need for the jury to know of the previous
conviction.") (footnote omitted).
We recognize that our 403 analysis must "evaluate the
trial court's decision from its perspective when it had to rule
and not indulge in review by hindsight." Old Chief, 519 U.S. at
183 n.6. At the start of the trial, the district court denied
Varoudakis's motion in limine to exclude the car fire evidence.
When the government began to ask Britt about the car fire on
direct examination, Varoudakis objected. The court overruled
him, relying on its ruling on the motion in limine. The court's
decision to allow the evidence at this point followed Britt's
other testimony about her close relationship with Varoudakis.
Britt had already said that she and Varoudakis had lived
together for six years; that she was listed on the Destinations
incorporation papers; that she knew about Varoudakis's fight
with his landlord; that she wrote the rent checks for
Destinations; and that she and Varoudakis "communicated a lot if
something came up."8 This testimony revealed that the government
did not need the car fire evidence to establish Brittâs close
8
Other details about Britt's personal relationship with
Varoudakis came out during the cross-examination that followed
Britt's direct testimony.
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relationship with Varoudakis, the only legitimate purpose of the
evidence under 404(b). The absence of any other special
relevance under 404(b), including those cited by the court and
the government, was also discernible at this juncture. The
propensity danger of the evidence was unmistakable. Thus the
probative value of the car fire evidence was substantially
outweighed by the danger of unfair prejudice at the time the
district court admitted it.9 That ruling was erroneous.
We add two further observations. First, given the
nature of appellate review, with its restrictions to the cold
record, we rarely reverse a district court's judgment about the
admissibility of prior bad act evidence pursuant to the weighing
analysis of Rule 403. Indeed, as we have said repeatedly,
"[o]nly in exceptional circumstances will we reverse the
exercise of a district court's informed discretion vis a vis the
relative weighing of probative value and unfairly prejudicial
effect." United States v. Griffin, 818 F.2d 97, 101-02 (1st
9 To better position the court to evaluate the government's
need for the prior bad act evidence it seeks to offer, the
Second Circuit has ruled that the determination about whether to
admit the evidence to show knowledge or intent "should await the
conclusion of the defendant's case and should be aimed at a
specifically identified issue." United States v. Figueroa, 618
F.2d 934, 939 (2d Cir. 1980). We mention this practice because
such an ordering of the proof, though not required in this
circuit, occasionally may prove to be a useful tool for trial
judges.
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Cir. 1987). We reiterate our commitment to that principle.
Here, however, we have the exceptional case that requires us to
intervene.
Second, although we do not reach the conclusion that
we must intervene on the basis of hindsight, we do reach it with
advantages unavailable to the district court. In ruling on a
defendant's motion in limine before trial, courts do not have
the benefit of context--how the prior bad act evidence relates
to the evidence actually presented by the prosecution during its
case in chief. When defendants renew their objection to prior
bad act evidence offered by the prosecution during trial, as
they usually must to preserve their objection to its
admissibility,10 courts do not have the time we have on appeal to
assess critically the 404(b) boilerplate formula for admission
of the evidence often invoked by the prosecution.
By contrast, the prosecution does have these
advantages of context and time. Before trial, the prosecution
10
Rule 404(b) requires the prosecution to provide
reasonable notice of prior bad act evidence at the defendant's
request. See Fed. R. Evid. 404(b). Varoudakis responded to the
government's notice by filing a motion in limine to exclude the
car fire evidence. He renewed his objection when the government
began to question Britt about the car fire at trial, as
required. See Gill v. Thomas, 83 F.3d 547, 540-41 (1st Cir.
1996) (party whose in limine motion to exclude evidence is
denied must, to preserve issue for appeal, renew objection when
evidence is offered at trial).
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generally knows the totality of its case and how the prior bad
act evidence fits into it. The prosecution also has the time to
analyze rigorously whether the exceptions to Rule 404(b),11 and
the limitations of Rule 403, apply to the facts. The failure to
engage in that analysis
leads to the needless complications we find in this case and
others. See United States v. Rodriguez-Cardona, 924 F.2d 1148,
1153 (1st Cir. 1991) ("[T]he government here attempted to render
the rule [of excluding prior bad act evidence] a minor
exception. This practice is inconsistent with the fair
administration of justice. We notice that this is a recurrent
problem.") (footnote omitted); United States v. Simon, 842 F.2d
552, 556 (1st Cir. 1988) (Torruella, J., concurring) ("Almost
any excuse or far-fetched theory is made to fit within [Rule
404(b)'s] truly exceptional language.").
In oft-quoted language, Justice Jackson explained why
our rules of evidence are so wary of propensity evidence:
11
Because of its many exceptions to the general statement
that prior bad act evidence should not be admitted, Rule 404(b)
is sometimes understood as one of inclusion, and sometimes as
one of exclusion. See Wright & Graham, supra, § 5239. We
ourselves have used both formulations. Compare United States v.
Rodriguez-Cardona, 924 F.2d 1148, 1153 (1st Cir. 1991) ("Rule
404(b) is a rule of exclusion.") with United States v. Carty,
993 F.2d 1005, 1011 (1st Cir. 1993) ("Rule 404(b) is a rule of
inclusion".). Whatever the proper formulation, the exceptions
must not swallow the rule.
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The State may not show defendant's prior
trouble with the law, specific criminal
acts, or ill name among his neighbors, even
though such facts might logically be
persuasive that he is by propensity a
probable perpetrator of the crime. The
inquiry is not rejected because character is
irrelevant; on the contrary, it is said to
weigh too much with the jury and to so
overpersuade them as to prejudge one with a
bad general record and deny him a fair
opportunity to defend against a particular
charge.
Michelson v. United States, 334 U.S. 469, 475-76 (1948)
(footnotes omitted) (quoted approvingly in Old Chief, 519 U.S.
at 181). Despite the fairness implications of the prosecution's
use of prior bad act evidence, the prosecution too often pushes
the limits of admissibility of this evidence, knowing its
propensity power and gambling that the time constraints on the
trial court, the court's broad discretion, the elasticity of
Rule 404(b), and the harmless error rule of the appellate court,
will save it from the consequences of overreaching. That is not
always a good gamble.
E. Harmless Error12
12
Varoudakis did not ask the district court to give a
limiting instruction about the car fire evidence at the time the
evidence was offered or before the jury charge, and no
instruction was given. When the defendant does not ask for a
limiting instruction, but later objects to its absence, we
review the district court's failure to issue one sua sponte for
plain error. See United States v. Carty, 993 F.2d 1005, 1011
n.9 (1st Cir. 1993). That praxis, however, does not mean that
we apply the plain error standard to the court's decision to
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Admission of prior bad act evidence is harmless "only
if it is 'highly probable' that the error did not contribute to
the verdict." United States v. Aguilar-Aranceta, 58 F.3d 796,
802 (1st Cir. 1995). To make this determination, we must
conclude "with fair assurance, after pondering all that happened
without stripping the erroneous action from the whole, that the
[jurors'] judgment was not substantially swayed by the error."
United States v. Williams, 985 F.2d 634, 638 (1st Cir. 1993),
quoting United States v. Burke, 948 F.2d 23, 27 (1st Cir. 1991).
We cannot so conclude in this case.
The car fire evidence led to testimony by Officer Gamby
that bolstered the credibility of Britt, the key government
admit prior bad act evidence over the objection of the
defendant, even though that evidence would have justified a
limiting instruction if the defendant had sought it. Varoudakis
did not have to ask for a limiting instruction if he determined
that the lack of one operated in his favor. See Malik, 928 F.2d
at 23 ("Counsel might well have concluded that, in the context
of the trial, such an instruction would not prove very helpful.
In any event, whether a party wishes such an instruction, or
wishes to forego the instruction (thereby calling less attention
to the statement) is primarily a matter for counsel to decide at
trial."). Varoudakis did not forfeit his right to challenge
admission of the car fire evidence under a harmless error
standard by not asking for a limiting instruction. Similarly,
contrary to the government's argument, Varoudakis did not
forfeit a harmless error argument by not objecting repeatedly to
every question or statement of the prosecution about the car
fire. Varoudakis renewed his motion in limine objection to the
car fire evidence when Britt began to testify about the car fire
at the trial. No more was necessary.
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witness.13 Officer Gamby confirmed Brittâs car fire account by
testifying that he investigated the burning of a car that
matched Brittâs description in terms of date, location, and make
of vehicle. In its closing statement, the government said of
Britt and her sister Diane Casey: "And when you consider their
testimony, consider corroborating evidence . . . evidence that
confirms, confirms what they say." The government then
highlighted Gambyâs testimony as an example of such
corroboration for Britt. Without the car fire evidence, the
government would not have had this opportunity to show an
independent, neutral source verifying Britt's truthfulness and
accuracy, and thereby enhancing her credibility generally.
In addition, when we "assess the record as a whole,"
as harmless error analysis requires, United States v. Santana,
175 F.3d 57, 66 (1st Cir. 1999), quoting Morgan v. Hall, 569
F.2d 1161, 1166 (1st Cir. 1978), we cannot say that the
governmentâs case was "so overwhelming as to overshadow the
prejudicial effect" of the prior bad act evidence. Santana, 175
F.3d at 67. As the trial court observed, the governmentâs case
13
Britt alone testified that Varoudakis believed he still
had insurance when the arson took place, and that he had no
intention of opening a restaurant at the Everett property, and
thus had no legitimate reason for removing equipment from
Destinations before the fire. Britt also refuted Varoudakis's
alibi by testifying that it was preplanned. Britt and Casey
testified that Varoudakis hired Adams to burn Destinations.
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against Varoudakis would have been largely circumstantial had
Britt been discredited.14
Finally, the three-day length of the jury
deliberations, and the juryâs note to the trial court that it
was "at an impasse" at the end of the second half-day, weigh
against a finding of harmless error. Lengthy deliberations
suggest a difficult case. See Santana, 175 F.3d at 67; United
States v. Ottersburg, 76 F.3d 137, 140 (7th Cir. 1996) ("The
length of the juryâs deliberations makes clear that this case
was not an easy one."); Gibson v. Clanon, 633 F.2d 851, 855 (9th
Cir. 1980) ("The stateâs case against [the defendants] is a
strong one. Nevertheless, if the jury had readily accepted [the]
eyewitness testimony it seems unlikely that they would have
deliberated for so long to reach a verdict.").
14 The government had shown that Varoudakis suddenly
increased his insurance, after years of inadequate coverage,
five months before the fire. His phone call to his insurance
agent immediately after learning that the fire had occurred
apparently demonstrated that he did not know that his failure to
pay his bills had interrupted his coverage. Witnesses also
testified that Varoudakis directed the removal of hundreds of
thousands of dollars worth of equipment from Destinations in the
weeks before the fire. The defense, on the other hand, showed
that Varoudakis was bankrupt at the time of the arson. It
produced witnesses who said the restaurant looked functional
when they entered it after the fire. There was also testimony
that while the Everett property into which Varoudakis said he
moved the Destinations equipment was far from ready to open for
business, substantial renovations had begun. Varoudakis himself
did not testify at trial.
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In some cases, the jury may deliberate for an extended
period not because of indecision, but in "a diligent and
conscientious attempt to evaluate the evidence, and to verify
the testimony of different witnesses and to come to a careful
and reasoned decision." Clark v. Moran, 942 F.2d 24, 32-33 (1st
Cir. 1991). In this case, however, the juryâs "impasse" note
reveals uncertainty about Varoudakisâs guilt. See Medina v.
Barnes, 71 F.3d 363, 369 (10th Cir. 1995) (jurorsâ indication
that they might be unable to reach a unanimous verdict weighed
in favor of finding prejudice). The interplay between
uncertainty and propensity evidence is particularly troublesome.
As then-Judge Breyer put it:
"Although ... 'propensity evidence' is relevant, the risk that
a
jury will convict for crimes other than those charged--or that,
uncertain of guilt, it will convict anyway because a bad person
deserves punishment--creates a prejudicial effect that outweighs
ordinary relevance." Moccia, 681 F.2d at 63. That risk
occurred here with the admission of the car fire evidence. We
cannot deem that admission harmless.15
Judgment vacated. Remanded for further proceedings.
15In light of this disposition, we do not reach the two
other issues raised by Varoudakis relating to a limit on the
cross-examination of Cheryl Britt and to sentencing.
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