McDonnell v. United States and Arthur Andersen v. United States are remarkably similar Supreme Court reversals. In both cases, aggressive federal prosecutors pushed obviously dubious jury instructions on all-too-willing federal district judges. In Arthur Andersen, Enron Task Force prosecutors convinced Judge Melinda Harmon to alter her initial jury charge, defining the term "corruptly." Judge Harmon's charge was right out of the form book, based on the approved Fifth Circuit Pattern Criminal Jury Instruction. The Government's definition allowed conviction if the jury found that Andersen knowingly impeded governmental fact-finding in advising Enron's employees to follow Enron's document retention policy. The 5th Circuit Pattern's requirement that the defendant must have acted "dishonestly" was deleted by Judge Harmon and the jury was allowed to convict based on impeding alone. Thus, at the government's insistence, knowingly impeding the fact-finding function replaced knowingly and dishonestly subverting or undermining the fact-finding function. This effectively gutted the scienter element in contravention of the standard Pattern definition. Local observers were not surprised by Judge Harman's ruling. Her responses to government requests are typically described as Pavlovian. Judge James Spencer, the trial judge in McDonnell, is also an old pro-government hand. Generally well regarded, he was a military judge and career federal prosecutor prior to ascending the judicial throne. In McDonnell, the government's proposed jury instructions regarding "official act" flew in the face of the Supreme Court's Sun Diamond dicta. They were ridiculously expansive, with the potential to criminalize vast swaths of American political behavior. In both cases, Andersen and McDonnell, the Supreme Court unanimously reversed. In both cases, careful attention to the law, even-handedness, and a willingness to stand up to the government would have saved taxpayer dollars and prevented human suffering. Careful attention to the law, even-handedness, and a backbone. That's what we expect from an independent federal judiciary.
Category: Judicial Opinions
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The Supreme Court vacated and remanded the convictions from former Governor Robert McDonnell's case this morning in a unanimous decision, finding that "hosting an event, meeting with other officials, or speaking with interested parties is not, standing alone, a 'decision or action' within the meaning of section 201(a)(3), even if the event, meeting, or speech is related to a pending question or matter." (see here) In vacating the conviction and remanding it back to the district court, the Supreme Court gives the lower court an option:
- It can find insufficient evidence under the Court's standard – then the charges get dismissed.
- If the lower court finds sufficient evidence under the Court's standard – then the case gets reset for trial for a new jury to properly evaluate this case.
But there really is a third option here. If the lower court decides that there is sufficient evidence for a trial (which there doesn't seem to be), then the government can step in and say – enough is enough and dismiss this case. In the Supreme Court's opinion, it states – "[W]e cannot construe a criminal statute on the assumption that the Government will 'use it responsibly.'"
This is an opportunity for the government to step in and accept the Court's decision and be responsible. And the responsible thing to do here is dismiss!
There are many criminal acts occurring in society that warrant prosecution. Companies are in need of computer laws being enforced. Corruption is without doubt a problem and when someone takes money for doing a specific official act, then prosecution is needed.
But being a nice guy and listening to constituents, trying to promote their businesses, and sticking to one's campaign slogan – "Bob's for Jobs" – should not be crime.
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It was the last decision issued by the US Supreme Court this term, and an important one for many. The Supreme Court vacated and remanded former Virginia Governor Robert McDonnell's conviction (see here). It was a unanimous decision – a strong statement with which to end the Court's term. The key issue was what constitutes an "official act" to meet the bribery statute. The issue arose, as so many issues do, from the district court's giving of a jury instruction -
Chief Justice Roberts issued the 28 page decision vacating and remanding the lower court's decision –
- Setting up a meeting, hosting an event, or contacting officials – without more – is not an "official act".
- The Court uses a straightforward statutory definition analysis to define what constitutes an "official act".
- The precedent offered in Sun Diamond supports the Governor's arguments that "hosting an event, meeting with other officials, or speaking with interested parties is not, standing alone, a 'decision or action' within the meaning of section 201(a)(3), even if the event, meeting, or speech is related to a pending question or matter."
- "[S]omething more is required: section 201(a)(3) specifies that the public official must make a decision or take an action on that question or matter or agree to do so."
- "[A]n 'official act' is a decision or action on a 'question, matter, cause, suit, proceeding or controversy."
- The government's "expansive interpretation" of what is an "official act" raises significant constitutional concerns.
- "[W]e cannot construe a criminal statute on the assumption that the Government will "use it responsibly."
- The Court notes three deficiencies in the district court's instructions from this case.
- The Court sends it back to the district court to determine if there is sufficient evidence to meet the Supreme Court's definition of "official act" and if the district court finds that there is – a new trial should be held using this standard.
More commentary to follow on whether this case should be retried. This case was tried by Hank Asbill (Jones Day).
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See also Lyle Denniston, Scotus Blog here; David Debold (Scotusblog) here.
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Yes, The Supreme Court's opinion here looks at whether RICO has extraterritorial application in the civil context. And in that regard it limits its extraterritorial application. But there is some important language in this opinion for both civil and criminal practitioners, especially since much of RICO is premised on a criminal statute, and all of RICO is located in Title 18, the Criminal Code.
- There has been much confusion as to whether one should look at the predicate acts or the enterprise in determining extraterritoriality and the Court provides significant guidance here.
- In deciding RICO's extraterritorial application, the Court divides it into two issues: a) "do RICO's substantive prohibitions, contained in sec. 1962, apply to conduct, that occurs in foreign countries;" b) "does RICO's private cause of action, contained in sec 1964(c) apply to injuries that are suffered in foreign countries?" It is this first issue that one needs to examine for criminal cases.
- The Court reaffirms in statutory construction the premise that there is "presumption against extraterritoriality."
- The Court describes the two-step process – "Morrison and Kiobel reflect a two-step framework for analyzing extraterritoriality issues. At the first step, we ask whether the presumption against extraterritoriality has been rebutted—that is, whether the statute gives a clear, affirmative indication that it applies extraterritorially. We must ask this question regardless of whether the statute in question regulates conduct, affords relief, or merely confers jurisdiction. If the statute is not extraterritorial, then at the second step we determine whether the case involves a domestic application of the statute, and we do this by looking to the statute’s 'focus.' If the conduct relevant to the statute’s focus occurred in the United States, then the case involves a permissible domestic application even if other conduct occurred abroad; but if the conduct relevant to the focus occurred in a foreign country, then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U. S. territory."
- The Court says to look first at the predicate act, asking - is it one that applies extraterritorially ("Although a number of RICO predicates have extraterritorial effect, many do not.")
- With respect to 1962 (b) and (c) the Court states, "[w]e therefore conclude that RICO applies to some foreign racketeering activity. A violation of sec. 1962 may be based on a pattern of racketeering that includes predicate offenses committed abroad, provided that each of those offenses violates a predicate statute that is itself extraterritorial."
- With respect to 1962(a) the Court states, "arguably sec 1962(a) extends only to domestic uses of the income."
- In dicta, with respect to 1962(d), the conspiracy section, the Court states, "[w]e therefore decline to reach this issue, and assume without deciding that sec 1962(d)'s extraterritoriality tracks that of the provision underlying the alleged conspiracy."
- The Court is less focused on whether the enterprise element is domestically based. But it does note that "[e]nterprises whose activities lack that anchor to U.S. commerce cannot sustain a RICO conviction."
The language in this case provides important guidance for criminal practitioners on the extraterritoriality of RICO, and clearly it provides strong arguments that not all of RICO applies abroad.
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The Supreme Court ruled today in Taylor v. United States, examining the interstate commerce element of the Hobbs Act. Although it provided a broad interpretation, it limited the decision to "cases in which the defendant targets drug dealers for the purpose of stealing drugs or proceeds." The Court explicitly states that it "did not resolve what the Government must prove to establish Hobbs Act robbery where some other type of business or victim is targeted."
A strong dissent by Justice Thomas argued that there should be a showing that the "defendant's robbery itself affected interstates commerce."
What this opinion means for white collar cases is that a strict interpretation of interstate commerce should be argued in these cases, with a requirement that there be a showing beyond a reasonable doubt that the accused acts affected interstate commerce.
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A few weeks ago, in United States v Nesbeth (15 CR-18, EDNY, May 24, 2016) Judge Frederic Block wrote an important opinion on the effect of post-conviction collateral consequences on one convicted of a felony, and as a result of such consequences imposed a one-year probation sentence on a woman convicted of importing cocaine. He wrote that "sufficient attention has not been paid at sentencing by me and lawyers – both prosecutors and defense counsel – as well as by the Probation Department to the collateral consequences facing a convicted defendant." He went on to a history of collateral consequences, efforts at reform, and the breadth of post-conviction statutory and regulatory collateral consequences. He noted the "broad range of collateral consequences that serve no useful purpose other than to punish criminal defendants after they have completed their court-imposed sentences."
The opinion is a call for reform, for mitigation of sentences because of such additional punishment, and for increased awareness of collateral consequences by all participants in the sentencing process. Judge Block specifically called for probation officers "to assess and apprise the court, prior to sentencing, of the likely collateral consequences facing a convicted defendant."
Judge Block recognized an apparent Circuit split as to whether collateral consequences may be a mitigating factor in sentencing. The Sixth, Seventh, Tenth and Eleventh Circuit seemingly have found that collateral consequences may not be considered, while the Second and Fourth Circuits appear to have found that they may. I believe that under 18 USC 3553(a) they may, especially when atypical, be considered.
White-collar defendants obviously face not only the usual collateral consequences applicable to all convicted felons, but often also special ones such as loss of licenses or other professional bars. I personally have had limited success in appealing to judges to mitigate sentences against white-collar defendants because of collateral consequences. Many judges feel that that to consider those factors would favor the rich and well-educated over the poor and less-educated. To be sure, as Judge Block's opinion demonstrates, the poor and less-educated too suffer from such collateral consequences.
Defense lawyers should, as Judge Block writes, be aware of such consequences in order to set them forth as mitigating factors at sentencing. Such knowledge is also necessary to inform defendants of these consequences so that they may make an educated decision whether to plead guilty. As indicated by the flurry of defendants who have claimed they were unaware that their guilty pleas would subject them to deportation, lawyers historically may not have focused on collateral consequences.
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In Luis v. United States, the Supreme Court held that pretrial restraint of untainted assets needed by a criminal defendant to retain counsel of choice violates the Sixth Amendment. But what about pretrial restraint of untainted assets not needed to hire counsel? The Fourth Circuit, alone among federal circuits, permits pretrial restraint of untainted substitute assets, subject to Sixth Amendment concerns. In United States v. Chamberlain, in the Eastern District of North Carolina, the government moved for a post-indictment pretrial restraining order against the defendant's untainted substitute asset pursuant to 21 U.S.C. Section 853(e). Both the defendant and government agreed that the untainted asset in question, a parcel of land, was not needed by Chamberlain in order to secure criminal defense counsel. The defendant opposed the government's motion, arguing that Justice Breyer's language/analysis in Section II.B.1. of Luis foreclosed pretrial restraint of any substitute asset under Section 853, in effect overruling Fourth Circuit precedent. The government maintained that Luis was inapplicable since Chamberlain raised no Sixth Amendment issue. Judge Mack Howard sided with the government. "While the undersigned agrees that the Supreme Court may in fact interpret Section 853 in this way in the future, it has not yet ruled on this issue and has not upset applicable Fourth Circuit precedents governing the instant question presented before this court." Steve West was on the briefs for the government and Elliot Abrams (Cheshire Parker Schneider & Bryan) and Tommy Manning (Manning Law Firm) were on the briefs for Chamberlain. According to Abrams, this all matters at a practical level for the criminal defense bar:
Consider the facts of Luis. There the government established probable cause to believe that the defendant obtained more in illegal proceeds than she currently possesses.
Under Luis, she can use her innocent/substitute assets to pay her attorneys a reasonable fee. But under Billman and its progeny the relation-back doctrine of 853(c) applies to all of those innocent/substitute assets such that, if she is convicted, the government’s ownership interest in all of her assets will be deemed to have vested before she paid her attorneys.
Therefore, if she is convicted, the government can forfeit all funds paid for legal services, despite that a court authorized those payments under the Sixth Amendment.
Section 853(n) does not help because the lawyer’s right vested after the property became forfeitable and because the lawyer had reason to believe that the property was subject to forfeiture. And since forfeiture is mandatory, the court could not exempt those funds from forfeiture.
This would create the same Sixth Amendment problem that Luis solved—people being unable to use their innocent assets to hire counsel. It would also force lawyers to take such cases on contingency, which is ethically improper.
Here are the government and defense briefs and Judge Howard's opinion. U.S. v. Chamberlain – Gov Application Restraining Order, U.S. v. Chamberlain – Response in Opposition to Gov Motion for Restraining Order, U.S. v. Chamberlain-Government's Reply Memorandum, U.S. v. Chamberlain-Defendant's Sur-Reply, U.S. v. Chamberlain-Order Granting Government's Motion.
Judge Howard's Order is being appealed to the Fourth Circuit.
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As every veteran litigator knows, who the trial judge is not only a major determinant in the ultimate result of a case, but a major factor in how unpleasant and difficult the lawyer's life will be. There are judges, I suspect fewer than in the past, who are so biased to defendants and hostile to their lawyers, more often to defense lawyers than prosecutors, that the case is a nightmare for the lawyers (and obviously their clients). Reversals of judges for intemperate and biased conduct toward lawyers, or even the generally meaningless criticisms in cases that are not reversed, are rare. Defense lawyers, therefore, rejoice when one of those decisions is issued by an appellate court.
Last week, the Ninth Circuit in an unpublished opinion, United States v. Onyeabor, 13-50431 (April 27, 2016), reversed a conviction by a jury before Central District of California Judge Manuel Real primarily because the judge's remarks "devastated the defense, projected an appearance of hostility to the defense, and went far beyond the court's supervisory role" so that they "revealed such a high degree of antagonism as to make fair judgment impossible." This is not the first time the court has admonished Judge Real, who in 2006 was the subject of a Congressional investigation which considered but did not vote impeachment.
Almost every state has a judicial conduct commission which on occasion removes unfit judges. These commissions generally consist of a combination of judges, lawyers, and laypeople. There is no direct federal analog, although there is a somewhat clumsy apparatus whereby the judiciary itself may impose sanctions and recommend that Congress consider impeachment. Sanctions on federal judges for abusing lawyers and litigants are, to my knowledge, virtually non-existent. Although a federal judge apparently may be removed for beating a spouse (as Alabama District Judge Mark Fuller likely would have, had he not resigned) , he or she will likely not be sanctioned at all for beating up lawyers and defendants.
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The United States Supreme Court accepted cert this morning in Shaw v. United States here. In 2014 the Court had looked at section 1344(2) of the bank fraud statute. (Loughrin v. United States). In contrast to Loughrin, this new case examines subsection (1), specifically the "scheme to defraud a financial institution" and whether it requires proof of a specific intent not only to deceive. The case comes from the 9th Circuit where the court examined the question of "whether that means the government must prove the defendant intended the bank to be the principal financial victim of the fraud." The Ninth Circuit held that although there needs to be an intent to defraud the bank under section 1, there is no requirement that the bank "be the intended financial victim of the fraud." Other circuits, however, have "held that risk of financial loss to the bank is an element that must be proven under section 1344(1). Stay tuned…
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The DC Circuit Court of Appeals, Hon. Srinivasan, vacated the district court order in the Fokker case finding that these "determinations are for the Executive – not the courts – to make." The case arose "from the interplay between the operation of a DPA and the running of time limitations under the Speedy Trial Act." The Court of Appeals held "that the Act confers no authority in a court to withhold exclusion of time pursuant to a DPA based on concerns that the government should bring different charges or should charge different defendants." Some key quotes from the decision –
"The Constitution allocates primacy in criminal charging decisions to the Executive Branch."
"It has long been settled that the Judiciary generally lacks authority to second-guess those Executive determinations, much less to impose its own charging preferences."
"Nothing in the statute's terms or structure suggests any intention to subvert those constitutionally rooted principles so as to enable the Judiciary to second-guess the Executive's exercise of discretion over the initiation and dismissal of criminal charges."
"The context of a DPA is markedly different. Unlike a plea agreement – and more like a dismissal under Rule 48(a) – a DPA involves no formal judicial action imposing or adopting its terms."
Opinion here.
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MattBray.net 