Opposition Brief — Gas Pipe, Inc., et al., Petitioners v. United States

No. 21-183

In the Supreme Court of the United States

GAS PIPE, INC., ET AL., PETITIONERS

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

BRIAN H. FLETCHER

Acting Solicitor General

Counsel of Record

KENNETH A. POLITE, JR.

Assistant Attorney General

WILLIAM A. GLASER

Attorney

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTIONS PRESENTED

1. Whether petitioners violated 18 U.S.C. 371 by

conspiring “to defraud the United States” when they

conspired to impede the Food and Drug Administration’s functions of regulating drug labeling and approving new drugs.

2. Whether the court of appeals correctly determined that any error in the jury instructions regarding

the elements of felony drug misbranding under 21

U.S.C. 331, 333(a)(2), and 352, as relevant to the jury’s

finding of an additional basis for Section 371 liability,

was harmless beyond a reasonable doubt.

(I)

TABLE OF CONTENTS

Page

Opinions below .............................................................................. 1

Jurisdiction .................................................................................... 1

Statement ...................................................................................... 1

Argument....................................................................................... 6

Conclusion ................................................................................... 22

TABLE OF AUTHORITIES

Cases:

American Commc’ns Ass’n v. Douds, 339 U.S. 382

(1950) .................................................................................... 13

CSX Transp., Inc. v. McBride, 564 U.S. 685 (2011) ............. 9

Callanan v. United States, 364 U.S. 587 (1961) ................. 11

Clune v. United States, 159 U.S. 590 (1895) ....................... 11

Coplan v. United States, 571 U.S. 819 (2013) ....................... 9

Dennis v. United States, 384 U.S. 855 (1966) ........... 8, 10, 12

Flynn v. United States, cert. denied, No. 20-1129

(June 28, 2021)....................................................................... 9

Glasser v. United States, 315 U.S. 60 (1942) .............. 8, 9, 12

Haas v. Henkel, 216 U.S. 462 (1910) ........................ 7, 8, 9, 10

Hammerschmidt v. United States, 265 U.S. 182

(1924) ........................................................................ 7, 8, 9, 12

Hilton v. South Carolina Pub. Rys. Comm’n,

502 U.S. 197 (1991)................................................................ 9

John R. Sand & Gravel Co. v. United States,

552 U.S. 130 (2008)................................................................ 9

Johnson v. United States, 576 U.S. 591 (2015) ................... 12

Lorillard v. Pons, 434 U.S. 575 (1978) .................................. 9

Loughrin v. United States, 573 U.S. 351 (2014) ................. 10

Marinello v. United States, 138 S. Ct. 1101 (2018) .. 4, 13, 14

McNally v. United States, 483 U.S. 350 (1987) .................... 8

(III)

IV

Cases—Continued:

Page

Neder v. United States, 527 U.S. 1 (1999) ....16, 17, 19, 20, 21

Pasquantino v. United States, 544 U.S. 349 (2005) ........... 10

Patterson v. McLean Credit Union, 491 U.S. 164

(1989) ...................................................................................... 9

Skilling v. United States, 566 U.S. 956 (2012) .................... 19

Tanner v. United States, 483 U.S. 107 (1987)..................... 12

United States v. Aguilar, 515 U.S. 593 (1995) .................... 14

United States v. Atilla, 966 F.3d 118 (2d Cir. 2020) .......... 15

United States v. Barker Steel Co., 985 F.2d 1123

(1st Cir. 1993) ...................................................................... 13

United States v. Cessa, 785 F.3d 165 (5th Cir.),

cert. denied, 577 U.S. 993 (2015) ....................................... 17

United States v. Coplan, 703 F.3d 46 (2d Cir. 2012),

cert. denied, 571 U.S. 819 (2013) ....................................... 12

United States v. Flynn, 969 F.3d 873 (8th Cir. 2020),

cert. denied, No. 20-1129 (June 28, 2021) ......................... 15

United States v. Goldberg, 105 F.3d 770

(1st Cir. 1997) ...................................................................... 13

United States v. Herman, 997 F.3d 251

(5th Cir. 2021).................................................................. 5, 15

United States v. Miller, 767 F.3d 585 (6th Cir. 2014) ........ 19

United States v. Parlato, No. 15-CR-149, 2019 WL

988450 (W.D.N.Y. Mar. 1, 2019) ........................................ 15

United States v. Prigmore, 243 F.3d 1 (1st Cir. 2001)....... 19

United States v. Skilling, 638 F.3d 480 (5th Cir.

2011), cert. denied, 566 U.S. 956 (2012) ............................ 18

Statutes:

Act of June 25, 1948, ch. 645, 62 Stat. 701

(enacting 18 U.S.C. 371) ................................................. 9, 10

18 U.S.C. 371 ........................................................... passim

18 U.S.C. 1030(a)(6) ............................................................... 11

V

Statutes—Continued:

Page

18 U.S.C. 1030(c)(2)(A) .......................................................... 11

18 U.S.C. 1503(a) ................................................................... 14

18 U.S.C. 1923 ........................................................................ 11

20 U.S.C. 1097(a) ................................................................... 11

Federal Food, Drug, and Cosmetic Act,

21 U.S.C. 301 et seq. .............................................................. 6

21 U.S.C. 331 .................................................................. 2, 3

21 U.S.C. 333(a)(2)....................................2, 3, 6, 12, 16, 21

21 U.S.C. 352 .................................................................. 2, 3

Internal Revenue Code (26 U.S.C.):

Tit. 26 ................................................................................ 13

§ 7207 .......................................................................... 11

§ 7212 .......................................................................... 14

§ 7212(a) ................................................................ 13, 14

Tit. 18 ................................................................................ 13

18 U.S.C. 1030(a)(6) ................................................... 11

18 U.S.C. 1030(c)(2)(A) .............................................. 11

18 U.S.C. 1503(a) ....................................................... 14

18 U.S.C. 1923 ............................................................ 11

38 U.S.C. 1987(a) ................................................................... 11

42 U.S.C. 1307(a) ................................................................... 11

Rev. Stat. § 5440 (1901) ......................................................... 10

In the Supreme Court of the United States

No. 21-183

GAS PIPE, INC., ET AL., PETITIONERS

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-21a)

is reported at 997 F.3d 231. The orders of the district

court (Pet. App. 22a-39a) are unreported.

JURISDICTION

The judgment of the court of appeals was entered on

May 6, 2021. A petition for rehearing was denied on

June 17, 2021 (Pet. App. 40a-41a). The petition for a

writ of certiorari was filed on August 5, 2021. The jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

STATEMENT

Following a jury trial in the United States District

Court for the Northern District of Texas, petitioners

were convicted of violating 18 U.S.C. 371 by conspiring

both to defraud the Food and Drug Administration

(1)

2

(FDA) and to commit misbranding with intent to defraud or mislead, in violation of 21 U.S.C. 331, 333(a)(2),

and 352. Pet. App. 4a, 32a-33a. Petitioners Gerald

Shults and Amy Herrig were sentenced to 36 months of

imprisonment, to be followed by two years of supervised

release. Id. at 4a. Petitioners Gas Pipe, Inc., and Amy

Lynn, Inc., were each sentenced to a $25,000 fine. Ibid.

The court of appeals affirmed. Id. at 1a-21a.

1. Petitioners Shults and Herrig (Shults’s daughter)

owned and operated a chain of smoke shops in Texas

and New Mexico through their corporate entities, petitioners Gas Pipe, Inc., and Amy Lynn, Inc. Pet. App.

1a-2a & n.1. The stores sold “synthetic cannabinoid

products branded as ‘herbal incense,’ ‘potpourri,’ or

‘aroma therapy products,’ commonly known as ‘spice.’ ”

Id. at 2a. “Spice, when smoked, produces a stimulant,

depressant, or hallucinogenic effect on the central nervous system.” Ibid. “[T]he federal government has

scheduled various synthetic cannabinoids as illegal controlled substances.” Id. at 2a-3a. “But regardless of

whether a synthetic cannabinoid has been scheduled, it

may not be sold for human consumption absent FDA

approval and proper labeling.” Id. at 3a.

Petitioners were aware that it was “illegal” to sell

spice for human consumption without FDA oversight.

C.A. ROA 8838-8840. And although—as they stipulated

at trial—they knew that their products were intended

for human consumption, they labeled their products as

“not for human consumption.” Pet. App. 3a; C.A. ROA

8721, 10,049. They also labeled them, falsely, as “[100%]

synthetic cannabinoid free” and “50 state legal premium

potpourri,” and represented on labels that the substances were “[f]or aromatherapy” and did “not contain

any cannabinoids or controlled substances.” C.A. ROA

3

8743, 8756, 11,184-11,187. Between 2011 and 2014, petitioners sold more than two million units of spice that resulted in more than $40 million in revenue. Pet. App.

3a; C.A. ROA 9553-9554.

The Drug Enforcement Administration (DEA) began investigating petitioners’ spice sales in 2013. Pet.

App. 3a. DEA agents posing as customers made controlled purchases of more than 30 synthetic cannabinoid

products from petitioners’ Gas Pipe stores. Ibid. In

some purchases, agents also bought items used to

smoke spice, including smoking papers and a pipe. C.A.

ROA 8735-8736, 8744-8746, 8751, 8755. During one purchase, an agent asked whether “body flushing” products

would “work” with a particular product—“meaning, will

that particular stuff flush out the synthetic cannabinoids” to avoid a positive drug test—and the Gas Pipe

employee indicated that “so far everybody that used the

urinalysis stuff was good.” Id. at 8752-8753.

Laboratory testing confirmed that the spice obtained through these controlled purchases contained

various synthetic cannabinoids. Pet. App. 3a. In more

than half of the purchases, the spice contained a cannabinoid that had already been scheduled as a controlled

substance. C.A. ROA 8767.

2. Petitioners and nine other co-defendants were

charged with conspiracy to (a) “defraud the United

States Food and Drug Administration * * * for the purpose of impeding, impairing, obstructing, and defeating

[its] lawful governmental functions of regulating drug

labeling and approving new drugs” and (b) “introduc[e]

or deliver[] an adulterated or misbranded drug into interstate commerce with the intent to defraud or mislead” (felony misbranding), in violation of 21 U.S.C. 331,

333(a)(2), and 352—all in violation of 18 U.S.C. 371

4

(Count 1). C.A. ROA 430-442; Pet. App. 4a. Petitioners

were also charged with conspiracy to commit mail

and wire fraud (Count 2), “assorted controlled

substance-related offenses,” and conspiracy to commit

money laundering. Pet. App. 4a & n.3. The government

dismissed Count 2 before trial, and the jury acquitted

petitioners on the remaining counts. Id. at 4a.

Before trial, the district court denied petitioners’

motion to strike the conspiracy allegations in Count 1.

See Pet. App. 22a-30a; C.A. ROA 3845. The court rejected petitioners’ argument that the charged conspiracy to defraud the FDA was deficient, which relied on

this Court’s interpretation of a different statute in

Marinello v. United States, 138 S. Ct. 1101 (2018), to

advance the theory that Section 371 required the government to charge a “nexus” between petitioners’ conduct and a specific FDA investigation or audit. Pet.

App. 28a-29a; C.A. ROA 3849-3853. The court also denied petitioners’ motion for judgment of acquittal at the

close of the government’s case and their renewed motion at the close of all the evidence. C.A. ROA 46854691, 9839, 10,016.

Petitioners then requested a Marinello-type jury instruction that would require the jury to find “a nexus

between [their] agreement and a particular administrative proceeding” that was “pending” or “reasonably

foreseeable” at the time of the agreement. C.A. ROA

4349. Petitioners also requested an instruction reflecting their view that the felony-misbranding provision

contained a “materiality requirement.” Id. at 10,029.

The district court declined to give either instruction.

Id. at 10,028, 10,031. The court did, however, instruct

the jury that, to find guilt on the misbranding alternative on Count 1, it must find that a defendant “mis-

5

labeled the drug” and, “by such mislabeling, intended to

defraud or mislead.” Id. at 5787.

The jury found petitioners guilty on Count 1. Pet.

App. 2a. In a special verdict form, the jury unanimously

found that petitioners violated Section 371 both by conspiring to defraud the FDA and conspiring to commit

felony misbranding.

Id. at 18a; see C.A. ROA

5811-5812. The district court rejected petitioners’

post-verdict motion for judgment of acquittal. Pet. App.

31a-38a. The district court sentenced petitioners Shults

and Herrig to 36 months of imprisonment, to be followed by two years of supervised release. Id. at 4a. The

court imposed a $25,000 fine on each of the corporate

petitioners, Gas Pipe, Inc., and Amy Lynn, Inc. Ibid.

3. The court of appeals affirmed. Pet. App. 1a-21a.

Although petitioners argued that “the word ‘defraud,’

as used in 18 U.S.C. § 371” in reference to conspiracies

against the government is limited to instances where a

defendant has “cheat[ed] the Government out of property or money,” petitioners “acknowledge[d]” that their

argument was foreclosed by “a long line of Supreme

Court and circuit precedent hold[ing] otherwise.” Id. at

5a.

The court of appeals also rejected petitioners’ suggestion to “extend [the] rule announced in Marinello”

to require the government to “show a ‘nexus’ between

the defendant’s conduct and a pending or reasonably

foreseeable” administrative proceeding. Pet. App. 6a.

The court relied on a prior circuit decision in which it

had observed that Marinello interpreted a statutory element in the Internal Revenue Code—obstruction of

“the due administration of” that Code—that “does not

exist in and has no bearing on [Section] 371.” United

States v. Herman, 997 F.3d 251, 274 (5th Cir. 2021); see

6

Pet. App. 6a. The court accordingly declined to “extend

the Marinello nexus requirement to [Section] 371’s defraud clause.” Pet. App. 6a.

The court of appeals additionally rejected petitioners’ claim that their convictions should be reversed

based on the district court’s asserted error in omitting

a materiality element from the jury instructions regarding misbranding under Section 333(a)(2). Pet. App.

7a-12a. The court of appeals observed that the “text and

structure” of the Federal Food, Drug, and Cosmetic

Act, 21 U.S.C. 301 et seq., “cast doubt as to whether

* * * [Section] 333(a)(2)’s felony misbranding offense”

should be interpreted to include a materiality element,

id. at 9a n.5, but the court did not resolve that issue, id.

at 9a. “Assuming without deciding that materiality is

an element of [Section] 333(a)(2)’s felony misbranding

offense,” the court explained that “any error was harmless” because a “review of the record” shows “beyond a

reasonable doubt” that “the jury would have concluded

that [petitioners’] misbranding tended to influence, or

was capable of influencing, the FDA’s decisionmaking.”

Id. at 9a-10a. The court then found it unnecessary to

resolve petitioners’ sufficiency-of-the-evidence challenge to the alternative felony-misbranding basis for

conviction on Count 1. Id. at 18a.

ARGUMENT

Petitioners contend (Pet. 14-24) that the prohibition

in 18 U.S.C. 371 against conspiring “to defraud the

United States, or any agency thereof in any manner or

for any purpose” is limited to conspiracies that either

involve “cheat[ing] the government out of money or

property” or have a nexus to a particularized governmental proceeding. The court of appeals correctly rejected that contention, which is inconsistent with over a

7

century of this Court’s precedent. The courts of appeals

are not divided on the issue, petitioners offer no sound

reason for the Court to revisit it, and this Court has recently declined to review it. Moreover, this case would

be a poor vehicle to examine that question given that

petitioners’ convictions under Section 371 do not rest on

the statute’s “defraud” clause alone.

Petitioners also assert that review is warranted to

clarify “how harmless-error analysis works in cases of

instructional error where the defendant contested the

omitted (or misdescribed) element.” Pet. 24. Petitioners rest that assertion on a misinterpretation of the

court of appeals’ decision, which considered all the record evidence. The decision does not conflict with decisions from any other circuit. And in any event, even had

the court of appeals failed to review the entirety of the

record, any instructional error would be harmless under

the standard petitioners identify.

1. a. Section 371 makes it a crime to “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.” 18 U.S.C. 371. The

“defraud clause” of the statute has a long history, and

as this Court explained when analyzing Section 371’s

predecessor, it includes “any conspiracy for the purpose

of impairing, obstructing or defeating the lawful function of any department of [g]overnment.” Haas v. Henkel, 216 U.S. 462, 479 (1910). And the Court reaffirmed

in Hammerschmidt v. United States, 265 U.S. 182

(1924), that the provision covers fraudulent conduct undertaken with a “purpose and effect to defeat a lawful

function of the [g]overnment and injure others,” so long

as it involves “fraud.” Id. at 187. “To conspire to defraud the United States,” the Court explained, “means

8

primarily to cheat the [g]overnment out of property or

money, but it also means to interfere with or obstruct

one of its lawful governmental functions by deceit, craft

or trickery, or at least by means that are dishonest.” Id.

at 188.

Subsequent decisions of this Court have repeatedly

recognized and reaffirmed the construction of the conspiracy statute’s defraud clause adopted in Haas and

Hammerschmidt. See, e.g., Glasser v. United States,

315 U.S. 60, 66 (1942) (“The indictment charges that the

United States was defrauded by depriving it of its lawful governmental functions by dishonest means; it is settled that this is a ‘defrauding’ within the meaning of

[Section] 37 of the Criminal Code.”) (citation omitted);

Dennis v. United States, 384 U.S. 855, 861 (1966) (“It

has long been established that this statutory language

[in the defraud clause of Section 371] * * * reaches ‘any

conspiracy for the purpose of impairing, obstructing or

defeating the lawful function of any department of Government’ ”) (quoting Haas, 216 U.S. at 479); McNally v.

United States, 483 U.S. 350, 359 n.8 (1987) (explaining

that Haas and Glasser “held that [Section] 371 reaches

conspiracies other than those directed at property interests”).

b. Petitioners do not dispute that their convictions

under the defraud clause are valid under Haas, Hammerschmidt, and other precedents of this Court. Nor

do they contend that the outcome of this case would

have been different in any other circuit. Instead, they

suggest that this Court should grant certiorari and

overturn over a century of well-established law, asserting (Pet. 15-20) that this Court’s longstanding interpretation of Section 371 “cannot be reconciled with [the

statute’s] text, structure, or history.” Pet. 15. Peti-

9

tioners’ arguments lack merit, and this Court has previously declined to grant certiorari in response to similar requests.

See Flynn v. United States, No.

20-1129 (June 28, 2021); Coplan v. United States, 571

U.S. 819 (2013) (No. 12-1299). It should follow the same

course here.

As a threshold matter, revisiting that issue “would ill

serve the goals of ‘stability’ and ‘predictability’ that the

doctrine of statutory stare decisis aims to ensure.” CSX

Transp., Inc. v. McBride, 564 U.S. 685, 699 (2011) (quoting Hilton v. South Carolina Pub. Rys. Comm’n, 502

U.S. 197, 202 (1991)). As this Court has frequently recognized, “stare decisis in respect to statutory interpretation has ‘special force,’ for ‘Congress remains free to

alter what [the Court has] done.’ ” John R. Sand &

Gravel Co. v. United States, 552 U.S. 130, 139 (2008)

(quoting Patterson v. McLean Credit Union, 491 U.S.

164, 172-173 (1989)). Moreover, petitioners’ attempt to

relitigate this Court’s early twentieth-century precedents is misplaced given that Congress long ago

adopted the definition that those precedents provided.

When Congress codified the current conspiracy statute in 1948, see Act of June 25, 1948, ch. 645, 62 Stat.

701 (enacting 18 U.S.C. 371), this Court’s interpretation

of the phrase “defraud the United States in any manner

or for any purpose” was already well-established. See

Haas, 216 U.S. at 479-480; Hammerschmidt, 265 U.S.

at 187-188; Glasser, 315 U.S. at 66. By incorporating

that language into Section 371, Congress manifested its

intent to incorporate the preexisting definition provided

by this Court’s decisions. “Congress is presumed to be

aware of an administrative or judicial interpretation of

a statute and to adopt that interpretation when it reenacts a statute without change.” Lorillard v. Pons, 434

10

U.S. 575, 580 (1978). Congress made no relevant

change; if anything, it broadened the language of Section 371—which prohibits conspiring “to defraud the

United States, or any agency thereof in any manner or

for any purpose,” 18 U.S.C. 371 (emphasis added)—

since Haas was decided. See Haas, 216 U.S. at 479

(quoting Rev. Stat. § 5440 (1901), which did not then

specifically refer to agencies). Congress’s adoption of

this Court’s definition of the defraud clause refutes petitioners’ contention that that definition is inconsistent

with Section 371’s “text” and “history.” Pet. 15.

c. Petitioners’ other objections to this Court’s

well-established precedent regarding the conspiracy

statute’s defraud clause likewise lack merit.

Petitioners first contend (Pet. 16) that Haas’s reading of the defraud clause “ignores” the “implications” of

Section 371’s clause barring conspiracies to commit offenses against the United States. See also Pet. 20-22.

This Court has already explained, however, that the fact

that a defendant’s conduct also violates a specific statute “does not, in and of itself, make the conspiracyto-defraud clause of [Section] 371 unavailable to the

prosecution.” Dennis, 384 U.S. at 864. That accords

with this Court’s general observation that even “substantial” “overlap” is “not uncommon in criminal statutes.” Loughrin v. United States, 573 U.S. 351, 358 n.4

(2014); see Pasquantino v. United States, 544 U.S. 349,

358 n.4 (2005).

Petitioners relatedly suggest (Pet. 17-18) that a 1948

amendment to the statute’s offenses clause, which specified lesser penalties for conspiracies to commit misdemeanors, Act of June 25, 1948, ch. 645, 62 Stat. 701 (enacting 18 U.S.C. 371), implicitly altered the longstanding construction of the government-fraud clause. But

11

the unchanged text of the government-fraud clause,

against the well-developed interpretive backdrop of this

Court’s interpretation of that text, belies petitioners’

suggestion of such an oblique amendment.

Furthermore, to the extent that petitioners would

characterize (Pet. 18) use of the government-fraud

clause in cases where defendants conspire to commit a

misdemeanor as an “end run” around purported statutory limitations, their proposal to limit the defraud

clause to “attempt[s] to cheat the government out of

money or property,” Pet. 14, would have the same feature. Congress punishes as misdemeanors multiple offenses that involve fraud targeting government property. See, e.g., 18 U.S.C. 1030(a)(6) and (c)(2)(A) (fraud

involving government computers); 18 U.S.C. 1923

(fraudulent receipt of payments to employees in “missing” status) (emphasis omitted); 20 U.S.C. 1097(a) (student loan fraud not exceeding $200); 26 U.S.C. 7207

(fraudulent tax returns); 38 U.S.C. 1987(a) (presenting

fraudulent papers related to government life insurance); 42 U.S.C. 1307(a) (false statements relating to

Social Security). Nor, in any event, is such a result

problematic, given that this Court has long recognized

Congress may punish a conspiracy to commit an offense

more severely than the underlying offense. See Clune

v. United States, 159 U.S. 590, 595 (1895) (upholding

provisions imposing two years’ imprisonment for a conspiracy to commit an offense that carried only a $100

fine). As the Court has observed, a “collective criminal

agreement * * * presents a greater potential threat to

the public than individual delicts.” Callanan v. United

States, 364 U.S. 587, 593 (1961). And any supposed

problem is moreover absent from this case where the

jury found by special verdict that petitioners conspired

12

to commit felony misbranding, punishable under 21

U.S.C. 333(a)(2). C.A. ROA 5812.

Finally, petitioners contend that this Court’s longstanding interpretation of the defraud clause is “so

standardless that it invites arbitrary enforcement” and

is thus unconstitutionally vague. Pet. 19 (quoting Johnson v. United States, 576 U.S. 591, 595 (2015)). But as

this Court has clearly explained, the clause applies to

conspiracies to “cheat the government out of property

or money” and “to interfere with or obstruct one of its

lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest.” Hammerschmidt, 265 U.S. at 188. And while observing that

the “broad language of the general conspiracy statute”

requires indictments to “be scrutinized carefully,” Dennis, 384 U.S. at 860, the Court itself has applied that

test in multiple cases. See Tanner v. United States, 483

U.S. 107, 128 (1987); Dennis, 384 U.S. at 861; Glasser,

315 U.S. at 66.

The contours of the defraud clause have been defined

for nearly a century—at least since this Court clarified

in 1924 that the clause requires “deceit or trickery,” rather than mere “open defiance” of a law, Hammerschmidt, 265 U.S. at 187, 189—and by 1942, the Court

could say that “it [wa]s settled” that the general conspiracy statute applied to “depriving [the government]

of its lawful governmental functions by dishonest means.”

Glasser, 315 U.S. at 66; see Dennis, 384 U.S. at 861 (observing that interpretation had “long been established”). And none of the lower-court decisions identified by the petitioners (Pet. 18-19) suggests, let alone

holds, that this Court’s broad interpretation of the

clause is unconstitutionally vague. See United States v.

Coplan, 703 F.3d 46, 61-62 (2d Cir. 2012), cert. denied,

13

571 U.S. 819 (2013); United States v. Goldberg, 105 F.3d

770, 775 (1st Cir. 1997); United States v. Barker Steel

Co., Inc., 985 F.2d 1123, 1129-1132 (1st Cir. 1993); see

also American Commc’ns Ass’n v. Douds, 339 U.S. 382,

412 (1950) (focusing on whether a statute gave “fair notice to those to whom [it] is directed,” rather than the

statutory terms’ “breadth,” in evaluating vagueness

challenge).

d. Petitioners suggest (Pet. 22-23) “[a]lternatively”

that this Court should read into Section 371 a requirement for “a nexus between the defendant’s conduct and

a pending or reasonably foreseeable proceeding,” as the

Court did with a different statute in Marinello v.

United States, 138 S. Ct. 1101 (2018). That suggestion

lacks merit.

As an initial matter, the premise of that argument—

that Section 371 is vague or has been interpreted too

broadly—is incorrect, as explained above. Section 371

does not require the addition of an atextual limitation to

“remedy ‘[a] lack of fair warning and related kinds of

unfairness,’ ” Pet. 23 (quoting Marinello, 138 S. Ct. at

1108), obviating petitioners’ request to disturb a century of precedent by extending Marinello to this context. But even assuming petitioners had presented a

sound reason for this Court to reexamine its construction of Section 371, Marinello does not support engrafting the “nexus” requirement found in different statutory language in Title 26 onto conspiracies to defraud

the United States under Title 18.

In Marinello, the Court examined the “Omnibus

Clause” in 26 U.S.C. 7212(a), a tax provision, which proscribes “corruptly or by force or threats of force * * *

obstruct[ing] or imped[ing], or endeavor[ing] to obstruct or impede, the due administration of” the Tax

14

Code. 26 U.S.C. 7212(a). This Court construed the

phrase “due administration of [the Tax Code],” to “refer[] to specific interference with targeted governmental tax-related proceedings, such as a particular investigation or audit,” not “routine administrative procedures” like tax-return processing. Marinello, 138 S. Ct.

at 1104 (first set of brackets in original). And the Court

located Section 7212(a)’s nexus requirement in that provision’s language, context, and legislative history—

none of which apply to Section 371. See, e.g., Marinello,

138 S. Ct. at 1106 (reasoning that “the whole phrase—

the due administration of the Tax Code—is best viewed

* * * as referring to only some of those acts or to some

separable parts of an institution or business”).

That phrase has no analogue in Section 371’s prohibition on defrauding federal agencies. The Court in

Marinello emphasized that “statutory context confirms

that [due administration of the Tax Code] refers to specific, targeted acts of administration,” because it serves

as a “catchall” for the obstructive conduct set forth elsewhere in Section 7212 “refer[ring] to corrupt or forceful

actions taken against individual identifiable persons or

property.” 138 S. Ct. at 1106-1107 (citation omitted).

Section 371 does not share those features, nor does it

mirror the “similarly worded criminal statute” prohibiting obstruction of justice, 18 U.S.C. 1503(a), whose

limitation to specific judicial proceedings this Court

found instructive in Marinello. 138 S. Ct. at 1105-1106

(discussing United States v. Aguilar, 515 U.S. 593

(1995)). And this Court’s review of Section 7212’s legislative history, which focused on protecting IRS agents,

is equally inapposite here. See Marinello, 138 S. Ct. at

1107. Indeed, Section 371’s statutory history manifests

Congress’s intent to codify this Court’s longstanding

15

interpretation of its language as a broad prohibition

against deceptive obstruction of government functions.

See p. 9-10, supra.

Accordingly, every court of appeals to consider the

issue has recognized that Marinello does not apply to

conspiracies to defraud the United States under Section

371. See United States v. Herman, 997 F.3d 251, 273274 (5th Cir. 2021) (explaining that Marinello “lives in

a separate vein of law” and did not “did not address,

cite, or analogize to 18 U.S.C. § 371 or Hammerschmidt

and its progeny”); United States v. Flynn, 969 F.3d 873,

879 (8th Cir. 2020), cert. denied, No. 20-1129 (June 28,

2021) (observing that, unlike the statute in Marinello,

“the broad language in [Section] 371 makes no reference to the ‘due administration [of the Internal Revenue

Code]’ ”) (second set of brackets in original); United

States v. Atilla, 966 F.3d 118, 131 (2d Cir. 2020) (“Marinello is * * * wholly unrelated to [Section] 371’s defraud clause”); see also United States v. Parlato, No.

15-CR-149, 2019 WL 988450, at *2 (W.D.N.Y. Mar. 1,

2019) (observing that “the language and scope of the

statutes are different,” and “declin[ing] to apply Marinello to a statute it did not consider”). That judicial consensus does not warrant this Court’s review.

e. Even if the longstanding and uniform interpretation of Section 371’s defraud clause warranted reconsideration, this case would be an unsuitable vehicle for it.

Because the jury found petitioners guilty under Section

371 for conspiring both under the defraud clause and

the offense clause, petitioners would have to overturn

the jury’s finding regarding the offense clause in order

to obtain any potential relief on remand. And as explained below, the challenge petitioners raise in connection with the offense clause in their petition lacks merit.

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2. In connection with the jury’s finding that petitioners alternatively violated Section 371’s offense clause by

conspiring to engage in felony misbranding, petitioners

contend (Pet. 24) that this Court’s review is warranted

to clarify “how harmless-error analysis works in cases

of instructional error where the defendant contested

the omitted (or misdescribed) element.” According to

petitioners, “[m]ost courts consider all of the evidence

at trial” when determining whether the error was harmless, whereas “the Fifth Circuit regularly considers

only the strength of the government’s evidence.” Pet.

26. But petitioners misstate the Fifth Circuit’s approach, which is consistent with Neder v. United States,

527 U.S. 1 (1999), and does not conflict with decisions of

other circuits.

a. Neder held that the failure to submit an element

of an offense to a jury “is an error that is subject to

harmless-error analysis.” 527 U.S. at 15. The Court explained that such an omission is harmless where it is

“clear beyond a reasonable doubt that a rational jury

would have found the defendant guilty absent the error.” Id. at 18. In Neder, this Court found the omission

of a materiality element harmless because the “evidence

supporting materiality was so overwhelming” that the

defendant did not even argue that his false statements

were immaterial. Id. at 16. But it recognized that an

error would not be harmless beyond a reasonable doubt

“where the defendant contested the omitted element

and raised evidence sufficient to support a contrary

finding.” Id. at 19.

The court of appeals here faithfully applied the

Neder standard to petitioners’ claim that the felony misbranding provision, Section 333(a)(2), contains a materiality element that the district court omitted from the

17

jury instructions. The court recounted Neder’s standard, observing that it could find the omission of a materiality element harmless if, “after a thorough examination of the record, [it was] able to conclude beyond a

reasonable doubt that the jury verdict would have been

the same absent the error.” Pet. App. 10a (brackets and

internal quotations omitted) (quoting United States v.

Cessa, 785 F.3d 165, 186 (5th Cir.), cert. denied, 577 U.S.

993 (2015), and citing Neder, 527 U.S. at 19). And the

court explained that its “review of the record shows, beyond a reasonable doubt, that the jury would have concluded that [petitioners’] misbranding” was material

because it “tended to influence, or was capable of influencing, the FDA’s decisionmaking.” Ibid.

Nothing in the decision below supports petitioners’

assertion (Pet. 28) that the court of appeals considered

only “the government’s evidence, standing alone,” and

“never considered whether a jury viewing the record as

a whole might have acquitted.” On the contrary, the

court recognized that Neder requires a “thorough examination of the record” and stated that its harmlesserror finding was based on its “review of the record”

and the “evidence presented at trial.” Pet. App. 10a (internal quotation marks omitted). Although it highlighted the testimony of two government witnesses, id.

at 10a-11a, it never suggested that it was considering

only the government’s evidence or disregarding the defense case. And nothing in Neder suggests that a court

of appeals must recite every piece of evidence it considers as part of a harmless-error analysis.

Moreover, contrary to petitioners’ suggestion, Pet.

24, 26, 31, they never “contested” the issue of materiality at trial or elicited any evidence that their representations were immaterial. See C.A. ROA 9854-9949,

18

9964-10009, 10,015-10,016 (defense case). Instead, petitioners “contested” materiality only “on appeal” by

pointing to purported “holes in the government’s case.”

Pet. 31 (citing Pet. C.A. Br. 79). Although they allege

that the court of appeals “did not consider * * * substantial evidence that spice’s labeling did not affect consumer decision making,” Pet. 30, any such evidence

would in no way undercut the testimony of multiple witnesses that the mislabeling was material to FDA regulation, see Pet. App. 10a-11a. Because petitioners offered no evidence to rebut materiality—and now invoke

only evidence that the government itself elicited during

its case-in-chief—they cannot show that the court of appeals somehow disregarded relevant evidence in making its harmlessness determination.

Petitioners also cite (Pet. 28) United States v. Skilling, 638 F.3d 480 (5th Cir. 2011), cert. denied, 566 U.S.

956 (2012), in support of their claim that the Fifth Circuit “regularly considers only the strength of the government’s evidence and never asks whether” the “record as a whole” could have resulted in a rational jury

acquitting absent the error. Pet. 26. Skilling does not

support that claim. The Fifth Circuit there expressly

recounted Neder’s statement that an error is not harmless “[i]f the defendant ‘raised evidence sufficient to

support a contrary finding.’ ” Skilling, 638 F.3d at 482

(quoting Neder, 527 U.S. at 19). It then carefully considered both the government’s evidence and the defendant’s contrary evidence before concluding that the

evidence on a valid theory of guilt was “overwhelming.”

Id. at 483-488. And when the defendant in Skilling

sought this Court’s review, alleging an improper application of Neder, this Court denied certiorari. Skilling

v. United States, 566 U.S. 956 (2012); see Br. in Opp.,

19

Skilling v. United States, No. 11-674, 2012 WL 988699,

at *7-*12 (Mar. 12, 2012).

Nor does the decision below conflict, as petitioners

claim (Pet. 26-27), with United States v. Prigmore, 243

F.3d 1 (1st Cir. 2001), or United States v. Miller, 767

F.3d 585 (6th Cir. 2014). In Prigmore, the court determined that, although the evidence was “more than sufficient to permit a retrial on a properly formulated theory,” it was not “so one-sided as to render harmless the

underlying instructional error.” 243 F.3d at 22. In Miller, “considerable evidence” supported the defendants’

theory, and the district court had remarked that it

might be “impossible” to prove the mental state that the

court of appeals held was required. 767 F.3d at 599-600

(internal quotation marks omitted). Nothing in those

fact-specific decisions conflicts with the fact-specific decision in this case, which, as explained above, considered

“the record” as a whole before finding the asserted error harmless. Pet. App. 10a.

b. In any event, this case would be a poor vehicle for

reviewing the court of appeals’ application of the

harmless-error standard.

First, even if petitioners were correct that the court

of appeals failed to consider “the record as a whole,”

Pet. 28, the error would still be harmless because that

record makes clear beyond a reasonable doubt that the

jury would have found petitioners’ mislabeling conduct

satisfied any materiality requirement. A misrepresentation is material if it has “a natural tendency to influence, or is capable of influencing,” a decisionmaker.

Neder, 527 U.S. at 16 (brackets and citation omitted).

The evidence overwhelmingly showed that petitioners’

mislabeling of their spice had a natural tendency to influence the FDA and government investigators.

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One of petitioners’ spice suppliers testified that he

labeled his product “Not for Human Consumption” because that was “the only way that we could sell it to the

public. If it was stated for human consumption, it would

be subject to FDA regulations.” Pet. App. 10a-11a (emphasis omitted). A former Gas Pipe store manager testified that petitioners sold spice as “herbal incense” or

“potpourri” even though “[i]t really wasn’t” and that

such terminology was “important” to petitioners Shults

and Herrig “[b]ecause of the legality of what spice was.”

Id. at 11a (brackets in original). The store manager testified that Shults and Herrig “didn’t want to sell [spice]

as a consumable because it would have to go through the

FDA.” Ibid. (emphasis omitted; brackets in original).

The government’s FDA witness confirmed as much,

testifying that “the FDA is supposed to know everything that’s on the market,” C.A. ROA 9799; that synthetic cannabinoids are “drugs” when “intended for human consumption,” id. at 9794; and that over-the-counter

drugs must be labeled with the ingredients, directions

for use, and warnings, id. at 9795. Petitioners were

highly aware of FDA regulations, subscribing to the

Federal Register and “keeping a close eye on” what

substances were banned. C.A. ROA 8992-8993, 11,276.

Thus, the entire scheme of mislabeling the spice as “not

for human consumption” was to falsely indicate to regulators and investigators that the products were not

subject to FDA regulation.

Petitioners point out that the FDA witness “never

suggested that the government was actually misled in

any respect.” Pet. 30-31. But that disregards the materiality standard, which asks whether a false statement

is “capable of influencing” a decisionmaker. Neder, 527

U.S. at 16 (emphasis added). The government need not

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show “reliance” on the misrepresentation to prove materiality. Id. at 24-25. Regardless of whether the FDA

was actually deceived by the mislabeling, the false

statements that the spice products were “not for human

consumption” and were 100% “synthetic cannabinoid

free,” C.A. ROA 8890, were capable of influencing government investigators on the lookout for unapproved or

mislabeled drugs being sold for human consumption.

In addition, and contrary to petitioners’ assertion

(Pet. 30), the mislabeling could have influenced petitioners’ customers. Even if customers were not capable of

being misled by the “Not for Human Consumption” language, the labels contained other false statements with

a natural tendency to influence consumers. Many of the

products were labeled as “100 percent synthetic cannabinoid free” and “50 state legal premium potpourri,”

C.A. ROA 8743, 8890, or represented that they did “not

contain any cannabinoids or controlled substances,” id.

at 8756, even though they contained synthetic cannabinoids that were controlled substances at the time of

sale, see id. at 8743, 8756-8759, 8914. Those false claims

were capable of influencing customers by making them

believe they were buying products with different ingredients or products that were legal. Because the record

as a whole proved beyond a reasonable doubt that the

petitioners’ labeling misrepresentations were material,

requiring the court of appeals to conduct a renewed

harmless-error analysis would not lead to a different result.

Second, this case is a poor vehicle for review because

the court of appeals did not actually resolve—and petitioners do not ask this Court to resolve—whether Section 333(a)(2)’s misbranding provision contains a materiality element. See Pet. App. 9a-10a. The court ob-

22

served that the “text and structure” of the Federal

Food, Drug, and Cosmetic Act “cast doubt” on whether

Neder’s materiality analysis “extends to [Section]

333(a)(2)’s felony misbranding offense,” id. at 9a n.5,

but did not address that issue in this case where it found

any error to be harmless, see id. at 9a-10a. The issue is

outside the questions presented here, and because the

court of appeals could potentially affirm on that alternative basis on remand, review of the court of appeals’

harmless-error determination might not affect the

ultimate outcome in this case. And the dispositive nature of the issue is even more doubtful in light of the

alternative finding of guilt under Section 371’s

government-fraud clause. No further review is warranted.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

BRIAN H. FLETCHER

Acting Solicitor General

KENNETH A. POLITE, JR.

Assistant Attorney General

WILLIAM A. GLASER

Attorney

OCTOBER 2021