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Critical thinking skills The ability to understand the structure of an argument and apply a set of evaluative criteria to assess its merits.
Legal reasoning is like other reasoning in some ways and different in others. When people, including lawyers and judges, reason, they do so for a purpose. Some problem or dilemma bothers them. The stimulus that gets them
thinking is the issue. It is stated as a question because it is a call for action. It requires them to do something, to think about answers.
For instance, in our Legal Environment of Business course, we are interested in such issues as:
1. Under the National Labor Relations Act, when are union organizers permitted to enter an employer’s property?
2. Do petroleum firms have liability for the environmental and economic effects of oil spills?
3. Must a business fulfill a contract when the contract is made with an unlicensed contractor in a state requiring that all contractors be licensed?
These questions have several possible answers. Which one should you choose? Critical thinking and ethical reasoning moves us toward better choices. Some of your answers could get you into trouble; others could advance your purpose. Each answer is called a conclusion. The conclusion is a position or stance on an issue, the take-away that the person giving you advice wants you to believe.
Business firms encounter legal conclusions in the form of laws or court decisions and in the advice they receive from people with formal legal training. As businesses learn about and react to decisions or conclusions made by courts, they have two primary methods of response:
1. Memorize the conclusions or rules of law as a guide for future business decisions.
2. Make judgments about the quality of the conclusions.
This book encourages you to do both. What is unique about this text is its practical approach to evaluating legal reasoning. This approach is based on using critical thinking skills to understand and evaluate the law as it affects business.
There are many forms of critical thinking, but they all share one characteristic: They focus on the quality of someone’s reasoning. Critical thinking is active; it challenges each of us to form judgments about the quality of the link between someone’s reasons and conclusions. In particular, we will be focusing on the link between a court’s reasons and its conclusions.
A Critical Thinking Model
You will learn critical thinking by practicing it. This text will tutor you, but your efforts are the key to your skill as a critical thinker. Because people often learn best by example, we will introduce you to critical thinking by demonstrating it in a model that you can easily follow.
United States of America v. Martha Stewart and Peter Bacanovic
United States District Court for the Southern District of New York, 2004 U.S. Dist. LEXIS 12538
Defendants Martha Stewart and Peter Bacanovic were both convicted of conspiracy, making false statements, and obstruction of an agency proceeding, following Stewart’s sale of 3,928 shares of ImClone stock on December 27, 2001. Stewart sold all of her ImClone stock after Bacanovic, Stewart’s stockbroker at Merrill Lynch, informed Stewart that the CEO of ImClone, Samuel Waksal, was trying to sell his company stock. On December 28, 2001, ImClone announced that the Food and Drug Administration (FDA) had not approved the company’s cancer-fighting drug Erbitux. Thereafter, the Securities and Exchange Commission (SEC) and the United States Attorney’s Office for the Southern District of New York began investigations into the trading of ImClone stock, including investigations of Stewart and Bacanovic. Following Stewart’s and Bacanovic’s criminal convictions, the defendants filed a motion for a new trial, alleging that expert witness Lawrence F. Stewart, director of the Forensic Services Division of the United States Secret Service, had committed perjury in his testimony on behalf of the prosecution. As the “national expert for ink analysis,” Lawrence Stewart testified about the reliability of defendant Bacanovic’s personal documents that contained information about Martha Stewart’s investments in ImClone.
Rule 33 provides: “Upon the defendant’s motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires.” However, “in the interest of according finality to a jury’s verdict, a motion for a new trial based on previously-undiscovered evidence is ordinarily ‘not favored and should be granted only with great caution.’” In most situations, therefore, “relief is justified under Rule 33 only if the newly-discovered evidence could not have been discovered, exercising due diligence, before or during trial, and that evidence ‘is so material and non-cumulative that its admission would probably lead to an acquittal.’”
But the mere fact that a witness committed perjury is insufficient, standing alone, to warrant relief under Rule 33. “Whether the introduction of perjured testimony requires a new trial initially depends on the extent to which the prosecution was aware of the alleged perjury. To prevent prosecutorial misconduct, a conviction obtained when the prosecution’s case includes testimony that was known or should have been known to be perjured must be reversed if there is any reasonable likelihood that the perjured testimony influenced the jury.” When the Government is unaware of the perjury at the time of trial, “a new trial is warranted only if the testimony was material and ‘the court [is left] with a firm belief that but for the perjured testimony, the defendant would most likely not have been convicted.’”
Since [United States v.] Wallach, the Second Circuit has noted that even when the prosecution knew a witness was committing perjury, “where independent evidence supports a defendant’s conviction, the subsequent discovery that a witness’s testimony at trial was perjured will not warrant a new trial.”
Defendants have failed to demonstrate that the prosecution knew or should have known of Lawrence’s perjury. However, even under the stricter prejudice standard applicable when the Government is aware of a witness’s perjury, defendants’ motions fail. There is no reasonable likelihood that knowledge by the jury that Lawrence lied about his participation in the ink tests and whether he was aware of a book proposal could have affected the verdict.
The verdict, the nature of Lawrence’s perjury, and the corroboration that Lawrence’s substantive testimony received from the defense’s expert demonstrate that Lawrence’s misrepresentations could have had no effect on defendants’ convictions.
First, the jury found that the Government did not satisfy its burden of proof on the charges to which Lawrence’s testimony was relevant. Defendants do not dispute that Bacanovic was acquitted of the charge of making and using a false document, and that none of the false statement and perjury specifications concerning the existence of the $60 agreement were found by the jury to have been proved beyond a reasonable doubt.… In other words, the jury convicted defendants of lies that had nothing to do with the $60 agreement. The outcome would have been no different had Lawrence’s entire testimony been rejected by the jury, or had Lawrence not testified at all.
Defendants argue that acquittal on some charges does not establish that the jury completely disregarded Lawrence’s testimony. They contend that the $60 agreement constituted Stewart and Bacanovic’s core defense and that the “@60” notation was evidence which supported that defense; thus, to the extent that awareness of Lawrence’s perjury could have caused the jury to discredit his testimony and have greater confidence in the existence of the agreement and the validity of the notation, the jury would have been more willing to believe defendants’ version of the events.
This argument is wholly speculative and logically flawed. The existence of the $60 agreement would not have exonerated defendants. It would not have been inconsistent for the jury to find that defendants did make the $60 agreement, but that the agreement was not the reason for the sale. Defendants do not persuasively explain how knowledge of Lawrence’s lies could have made the jury more likely to believe that the agreement was the reason for the sale.
As an initial matter, defendants overstate the importance of the $60 agreement to this prosecution. That a $60 agreement was the reason for Stewart’s sale was only one of many lies defendants were charged with telling investigators to conceal that Stewart sold her stock because of Bacanovic’s tip.
In addition to the substantial basis for concluding that the jury’s decision could not have been affected by the revelation of Lawrence’s misrepresentations, ample evidence unrelated to the $60 agreement or to Lawrence’s testimony supports defendants’ convictions.
The testimony of Faneuil, Perret, and Pasternak supports the jury’s determinations that Stewart lied when she told investigators that she did not recall being informed of Waksal’s trading on December
Finally, Faneuil’s testimony supports the jury’s determination that Stewart lied when she claimed not to have spoken with Bacanovic about the Government investigation into ImClone trading or Stewart’s ImClone trade (Specifications Six and Seven of Count Three). Faneuil stated that Bacanovic repeatedly told him in January 2002 and afterward that Bacanovic had spoken to Stewart and that everyone was “on the same page.”
But defendants fail to explain how the revelation of this perjury—if in fact it is perjury—could have affected the verdict. Defendants cannot escape the fact that the jury acquitted Bacanovic of Count Five and both defendants of making false statements relating to the existence of the $60 agreement, and the fact that ample evidence supports the charges of which the jury convicted defendants.
1. Martha Stewart sold 3,928 shares of her ImClone stock on December 27, 2001.
2. On December 28, 2001, ImClone announced the FDA’s rejection of its new cancer-fighting drug, which caused the company’s stock to lose value.
3. Stewart and Bacanovic were convicted of conspiracy, making false statements, and obstruction of an agency proceeding.
4. Expert witness Lawrence Stewart was accused of perjuring himself in the testimony he gave prior to the defendants’ conviction.
5. According to a federal rule and case law, perjury of a witness could constitute grounds for a new trial.
We should never evaluate until we first understand the argument being made.ntive testimony received from the defense’s expert demonstrate that Lawrence’s misrepresentations could have had no effect on defendants’ convictions.
This argument is wholly speculative and logically flawed. The existence of the $60 agreement would not have exonerated defendants. It would not have been inconsistent for the jury to find that defendants did make the $60 agreement, but that the agreement was not the reason f