Opposition Brief — Leone v. United States

7

pletes the assets of a business engaged in interstate

commerce conclusively establishes the effect on com-

merce requirement—was incorrectly applied here in

light of the plumbers’ testimony that the payments they

made to [petitioners] did not in fact affect their ability to

engage in interstate commerce.” Jd. at 12. The court of

appeals rejected petitioners’ challenges to both the jury

instructions and the sufficiency of the evidence. Jd. at

12-22.

The court of appeals first reviewed its decisions over

the past 30 years, in which it had repeatedly approved

the “depletion of assets” method of proving an effect on

commerce under the Hobbs Act. See Pet. App. 13-17.

The court noted the intent of Congress, in enacting the

Hobbs Act, to exercise its full constitutional authority to

penalize interference with interstate commerce. See id.

at 15 (citing Stirone v. United States, 361 U.S. 212, 215

(1960)). Based on its review of prior decisions, the court

of appeals found “little doubt that [the court’s] prece-

dent supports the District Court’s use of ‘potential’ ef-

fect and its formulation of the depletion of assets theory

in the jury instructions.” /d. at 17.

The court of appeals rejected petitioners’ contention

that this Court’s decisions in United States v. Lopez, 514

U.S. 549 (1995), United States v. Morrison, 529 U.S. 598

(2000), and Jones v. United States, 529 U.S. 848 (2000),

required a different result. See Pet. App. 19-20. The

court noted that it had “already rejected the argument

that Lopez and its progeny require proof of a ‘substan-

tial effect’ on commerce in an individual case in order to

show a Hobbs Act violation.” Jbid. The court further

explained that, so long as the cumulative impact on in-

terstate commerce of many Hobbs Act violations is sub-

stantial, the statute is a constitutional exercise of Con-

8

gress’s Commerce Clause power, notwithstanding the de

minimis effect on commerce of the defendant’s conduct

in an individual case. /d. at 20 (citing Lopez, 514 US. at

558-559).

The court of appeals also concluded that the evidence

in this case was “more than sufficient” to show the re-

quired impact on commerce. Pet. App. 22. The court

noted the “ample evidence that * * * each [petitioner]

took payments from plumbers who were engaged in in-

terstate commerce, i.e., who purchased supplies made

out-of-state.” bid. The court of appeals also rejected

numerous other challenges to petitioners’ convictions,

see 2d. at 22-54, but it vacated each petitioner’s sentence

and remanded for resentencing in accordance with this

Court’s decision in Booker, id. at 54-55.

ARGUMENT

Petitioners contend (05-111 Pet. 6-28; 05-5412 Pet. 7-

22) that the district court incorrectly instructed the jury

on the interstate-commerce element of their Hobbs Act

extortion offenses by allowing a potential effect on inter-

state commerce to suffice. They argue that conviction

for a substantive Hobbs Act violation requires proof of

an actual effect on commerce in the individual case. The

court of appeals’ decision approving the depletion-of-

assets theory as a valid basis of showing that an extor-

tion affected interstate commerce is correct and consis-

tent with the holdings of this Court and of other circuits

that have addressed the issue. Even if the question pre-

sented otherwise warranted this Court’s review, this

case would be an unsuitable vehicle to consider it be-

cause petitioners’ own proposed jury instructions en-

dorsed the depletion-of-assets theory of Hobbs Act lia-

bility, and because any error in the instructions on that

| 9

|

- theory is harmless beyond a reasonable doubt. Further

review is therefore not warranted.

1. Petitioners’ claim that the jury instruction ap-

proved by the court of appeals is inconsistent with the

text of the Hobbs Act lacks merit.

a. The Hobbs Act makes it a federal crime to com-

mit an act of extortion (or attempt or conspire to-do so)

that “in any way or degree obstructs, delays, or affects

commerce or the movement of any article or commodity

in commerce.” 18 U.S.C. 1951(a). That broad jurisdic-

tional language demonstrates “a purpose to-use all the

constitutional power Congress has to punish interfer-

ence with interstate commerce by extortion, robbery

or physical violence.” Stirone, 361 U.S. at 215; see

Scheidler v. National Organization for Women, Inc.,

537 U.S. 393, 408 (2003).

. Both before and after this Court’s decision in United

States v. Lopez, 514 U.S. 549 (1995), the Hobbs Act has

been uniformly construed to prohibit the illegal interfer-

ence in any manner whatever with interstate commerce,

even when the effect of such interference or attempted

interference is slight. As the Second Circuit has ex-

plained:

_ Our cases have long recognized that the jurisdic-

tional requirement of the Hobbs Act may be satisfied

‘by a showing of a very slight effect on interstate

‘commerce. * * *

_* * * We now expressly hold that Lopez did not

raise the jurisdictional hurdle for bringing a Hobbs

Act prosecution. * * * [OJur sister Circuits that have

addressed this question have all so held.

10

United States v. Farrish, 122 F.3d 146, 148 (2d Cir.

1997) (brackets and internal quotation marks omitted),

cert. denied, 522 U.S. 1118 (1998).

In keeping with that analysis, courts of appeals have

consistently upheld Hobbs Act convictions where acts of

robbery depleted the assets of commercial enterprises.

See, e.g., United States v. Curtis, 344 F.3d 1057, 1070

(10th Cir. 2003) (robberies of stores and restaurants),

cert. denied, 540 U.S. 1157 (2004); United States v.

Gray, 260 F.3d 1267, 1272-1277 (11th Cir. 2001) (robbery

of restaurant), cert. denied, 536 U.S. 963 (2002); United

States v. Smith, 182 F.3d 452, 454, 456-457 (6th Cir.

1999) (robberies of grocery and party stores), cert. de-

nied, 530 U.S. 1206 (2000); United States v. Arena, 180

F.3d 380, 389-391 (2d Cir. 1999) (robbery of medical fa-

cilities), cert. denied, 531 U.S. 811 (2000); United States

v. Vong, 171 F.3d 648, 654 (8th Cir. 1999) (robbery of

jewelry stores); United States v. Hebert, 131 F.3d 514,

518, 520-524 (5th Cir. 1997) (robberies of bank, restau-

rant, and liquor stores), cert. denied, 523 U.S. 1101

(1998); United States v. Harrington, 108 F.3d 1460,

1468-1469 (D.C. Cir. 1997) (robbery of restaurant);

United States v. Atcheson, 94 F.3d 1237, 1243 (9th Cir.

1996) (robbery of Automatic Teller Machine (ATM)

cards and use of ATMs to withdraw cash), cert. denied,

519 U.S. 1156 (1997).

b. Contrary to petitioners’ contention (05-111 Pet.

11-16; 05-5412 Pet. 11-15), the depletion-of-assets theory

is fully consistent with the text of the Hobbs Act. This

Court has long recognized that the broad language of

the Act, which forbids extortion or robbery that “in any

way or degree obstructs, delays, or affects commerce,”

18 U.S.C. 1951(a), reflects Congress’s intent to exercise

the full scope of its power under the Commerce Clause.

: 11

Stirone, 361 U.S. at 215. When robbery or extortion

depletes the assets of a business entity, thereby dimin-

ishing its capacity to purchase goods or services in inter-

state markets, the criminal conduct is properly charac-

terized as “affect{ing]” commerce, whether or not the

victimized enterprise is shown to have forgone any par-

ticular purchase. Indeed, even if it were undisputed in

a particular case that the victimized business’s purchas-

ing decisions were not altered by the loss of funds, the

business would be required to account for that loss in

some other manner—e.g., by passing the cost along to its

customers through increased prices, or by accepting a

diminution of its profits—and any such -response would

itself qualify as an effect on commerce.*

Contrary to petitioners’ contention (05-111 Pet. 15; 05-5412 Pet.

15), acceptance of the depletion-of-assets theory, and of potential

impacts on interstate commerce as sufficient to establish the Hobbs

Act’s commerce nexus, does not render the Act’s jurisdictional element

a “nullity or mere surplusage.” The courts of appeals that have

endorsed the depletion-of-assets theory have nevertheless overturned

Hobbs Act convictions, typically when the victim was an individual

rather than a commercial entity, after finding that the impact on

commerce was too attenuated or speculative to establish the Act’s

jurisdictional element. See United States v. Perrotta, 313 F.3d 33, 36-

40 (2d Cir. 2002) (reversing Hobbs Act conviction for extortion of

individual where only commerce nexus was victim’s employment by

company engaged in interstate commerce); United States v. Peterson,

236 F.3d 848, 851-857 (7th Cir. 2001) (reversing Hobbs Act conviction

for robbery of marijuana dealer in absence of showing that victim’s

drug business was interstate in nature); United States v. Wang, 222

F.3d 234, 237-240 (6th Cir. 2000) (reversing Hobbs Act conviction for

robbery of individual in private home); United States v. Quigley, 53

F.3d 909, 910-911 (8th Cir. 1995) (reversing conviction for robbery of

individuals on their way to purchase beer at a convenience store);

United States v. Collins, 40 F.3d 95, 99-101 (5th Cir. 1994) (reversing

Hobbs Act conviction for robbery of individual where only asserted

12

2. Petitioners’ claim of a circuit conflict on the

meaning of the Hobbs Act lacks merit and does not war-

rant review.

a. As the Third Circuit secopninel: see Pet. App. 17-

19 n.3 (citing cases), the courts of appeals agree that the

depletion-of-assets theory is a valid method of proving

the interstate-commerce element of a Hobbs Act charge.

The gravamen of that theory is that, if a commercial

entity regularly makes purchases in interstate com-

merce, a jury may properly infer that reduction of the

business’s funds through robbery or extortion may re-

duce its capacity to engage in its usual interstate trans-

actions, thereby establishing the requisite effect on in-

terstate commerce, whether or not the proof at trial

identifies any particular purchase that the business has

forgone. See, e.g., United States v. Bailey, 227 F.3d 792,

798 (7th Cir. 2000) (under depletion-of-assets theory,

“the government shows that commerce is affected when

an enterprise, which either is actively engaged in inter-

state commerce or customarily purchases items in inter-

state commerce, has its assets depleted through extor-

tion, thereby curtailing the victim’s potential as a pur-

chaser of such goods”) (citations and internal quotation

marks omitted).

Petitioners’ claimed circuit conflict (see 05-111 Pet.

7-8; 05-5412 Pet. 8-9) on the sufficiency of a potential

effect on commerce under the Hobbs Act is more seman-

tic than real. Those courts that have made statements

suggesting that a potential effect on commerce is not

commerce nexus was interference with victim’s ability to attend a

business meeting and make cellular phone calls), cert. denied, 514 U.S.

1121 (1995); United States v. Buffey, 899 F.2d 1402, 1403-1407 (4th Cir.

1990) (reversing Hobbs Act conviction for conspiracy to extort small

amount of money from a wealthy individual).

13

sufficient have nevertheless endorsed the depletion-of-

assets theory, and each of them has rendered other deci-

sions that support the proposition that proof of a poten-

tial impact on commerce will suffice.

Petitioners rely (05-111 Pet. 7; 05-5412 Pet. 8) on

United States v. Williams, 308 F.3d 833, 837-838 (2002),

in which the Eighth Circuit held that the district court

had erred by instructing the jury that it could find the

defendant guilty based on a probable or potential effect

on commerce. The court in that case nevertheless af-

firmed the Hobbs Act conviction, finding the error

harmless where uncontroverted evidence supported the

conclusion that there were actual effects on commerce

from the robbery of a taxicab driver. /d. at 838. Ina

prior case, moreover, the Eighth Circuit stated that,

“{ajlthough a probability of affecting commerce is suffi-

cient in some cases, like extortion cases involving the

depletion-of-assets theory, the probability must be real-

istic rather than merely speculative.” United States v.

Quigley, 53 F.3d 909, 910 (8th Cir. 1995). Thus, for

eases like this one—extortion cases involving the

depletion-of-assets theory—the Eighth Circuit has

found a showing of a potential or probable effect on com-

merce sufficient to satisfy the statute. Any inconsis-

tency between the views expressed in Williams and

Quigley is appropriately resolved by the Eighth Circuit

rather than by this Court. See Wisniewski v. United

States, 353 U.S. 901, 902 (1957) (per curiam). :

Petitioners also rely (05-111 Pet. 8; 05-5412 Pet. 9) on

the Sixth Circuit’s statement in United States v.

DiCarlantonio, 870 F.2d 1058, 1061, cert. denied, 493

U.S. 933 (1989), that “a substantive Hobbs Act violation

requires an actual effect on interstate commerce.” More

recently, however, the Sixth Circuit has approved the

14

depletion-of-assets theory, as well as the view that a

“realistic probability” of an effect on commerce will suf-

fice. See United States v. Turner, 272 F.3d 380, 385 n.2

(2001) (government can establish the requisite de

minimis effect on commerce by proving depletion of the

victim’s assets, thereby showing a reduction of the po-

tential interstate purchasing power of the business);

United States v. Wang, 222 F.3d 234, 237 (6th Cir. 2000)

(no requirement of actual effect on commerce; realistic

probability of effect on commerce will satisfy Hobbs

Act). Those more recent statements suggest that the

Sixth Circuit would not disagree with the Third Circuit’s

disposition of this case. Here again, any tension among

the Sixth Circuit’s Hobbs Act cases is appropriately re-

solved by the court of appeals itself. Wisniewski, 353

U.S. at 902.

Petitioners also rely (05-111 Pet. 8; 05-5412 Pet. 8-9)

on two decisions of the Eleventh Circuit. That court has

stated that a potential impact is sufficient in attempt or

conspiracy prosecutions, but that a substantive offense

requires an “actual, de minimis” effect. United States v.

Carcione, 272 F.3d 1297, 1300-1301 n.5 (11th Cir. 2001);

see United States v. Le, 256 F.3d 1229, 1232 (11th Cir.

2001), cert. denied, 534 U.S. 1145 (2002). In other deci-

sions, however, the Eleventh Circuit has repeatedly ap-

proved the depletion-of-assets theory, and-it-has stated

that the Hobbs Act was intended to protect commerce

from effects that are “direct or indirect, actual or poten-

tial, beneficial or adverse.” Gray, 260 F.3d at 1276; see

United States v. Rodriguez, 218 F.3d 1243, 1244 (11th

Cir. 2000), cert. denied, 531 U.S. 1099 (2001); United

States v. Kaplan, 171 F.3d 1351, 1357 (11th Cir.) (en

banc), cert. denied, 528 U.S. 928 (1999). It is therefore

far from clear that the Eleventh Circuit would disap-

15

prove the interstate-commerce instruction given at peti-

tioners’ trial under the circumstances of this case.

b. Even if the nature of the commerce nexus re-

quired to establish criminal liability under the Hobbs

Act otherwise warranted clarification by the Court, this

case would provide an unsuitable vehicle for resolution

of the interpretive question. In the district court, peti-

tioners did not request an instruction that the govern-

ment was required to prove an “actual” effect on inter-

state commerce, nor did they question the propriety of

the depletion-of-assets theory. To the contrary, peti-

tioner O’Malley specifically requested an instruction

stating that “[iJnterstate commerce is affected when an

enterprise which purchases goods in interstate com-

merce has assets depleted by extortion. The govern-

ment needs to prove the realistic probability of asset

depletion in order to prove an effect on interstate com-

merce.” O’Malley C.A. Br. 3... Other petitioners joined

in that request. See Jackson C©.A. Br. 24, 26; Tursi C.A.

Br. 56. Absent a contemporaneous request for the sort

of interstate-commerce instruction that petitioners now

argue should have been given, the question presented

does not warrant this Court’s review.

c. Even apart from the theory that the depletion of

assets caused by the extortionate payments reduced the

victimized plumbers’ capacity to make interstate pur-

chases, the evidence at trial—which the jury necessarily

accepted in finding petitioners guilty—establishes an

alternative basis for finding the Hobbs Act’s commerce

element to be satisfied. “There was ample evidence at

trial that plumbers paid inspectors in order to ensure

timely and favorable inspections, and to prevent unfa-

vorable treatment or harassment by inspectors.” Pet.

App. 7-8 (footnote omitted). By making the unimpeded

16

conduct of the plumbers’ commercial activities contin-

gent on the extorted payments, petitioners “ob-

struct[ed]” and “affect{ed]” commerce within the mean-

ing of the Hobbs Act, even though the plumbers’ submis-

sion to the extortionate scheme prevented more tangible

disruption of their businesses. In Stirone, this Court

addressed and approved a similar theory:

Had Rider’s business been hindered or destroyed,

interstate movements of sand to him would have

slackened or stopped. The trial jury was entitled to

find that commerce was saved from such a blockage

by Rider’s compliance with Stirone’s coercive and

illegal demands. It was to free commerce from such

destructive burdens that the Hobbs Act was passed.

361 U.S. at 215. Accordingly, even if there were error

in the jury instructions with respect to the depletion-of-

assets theory, any such error was harmless beyond a

reasonable doubt because the jury necessarily found

4 As the Seventh Circuit recognized 30 years ago,

[a]n effective prohibition against blackmail must be broad enough

to include the case in which the tribute is paid as well as the one in

which a victim is harmed for refusing to submit. Since the payment

would normally enable the business to continue without inter-

ruption, the inference is inescapable that Congress was as much

concerned with the threatened impact of the prohibited conduct as

with its actual effect.

United States v. Staszcuk, 517 F.2d 53, 57 (7th Cir.) (en banc) (Stevens,

J.) (footnotes omitted), cert. denied, 423 U.S. 837 (1975); accord United

States v. Rivera Rangel, 396 F.3d 476, 485 (1st Cir. 2005) (extortion had

a “‘realistic probability’ of affecting interstate commerce because, had

[the victim] refused to pay, [the defendant) may have caused his

business to suffer and, in so doing, indirectly caused him to purchase

fewer materials from the mainland United States”).

17

facts supporting an alternative theory. Neder v. United

States, 527 U.S. 1 (1999).°

3. Petitioners contend (05-111 Pet. 16; 05-5412 Pet.

15) that, as interpreted by the court of appeals, the

Hobbs Act “effectively federalizes all extortion, no mat-

ter how local.” Relying on Jones v. United States, 529

U.S. 848 (2000), petitioners argue (05-111 Pet. 16-22; 05-

5412 Pet. 15-21) that the Act should be more narrowly

construed in order to avoid potential constitutional diffi-

culties. Petitioners’ reliance on Jones is misplaced.

In Jones, this Court held that the federal arson stat-

ute, which prohibits damage or destruction by means of

fire or explosive to “any building, vehicle, or other real

or personal property used in interstate or foreign com-

merce or in any activity affecting interstate or foreign

commerce,” 18 U.S.C. 844(i), did not apply to the arson

of a private, owner-occupied residence not used for any

commercial purpose. 529 U.S. at 854-857. The Court

recognized, however, that the arson statute broadly pro-

tects property used in a commercial activity. Jd. at 855-

856. In contrast to the arson of a residence at issue in

Jones, petitioners’ extortion of commercial entities

whose assets were used to purchase supplies in inter-

state commerce implicates the core concern that

prompted Congress to enact the Hobbs Act. Nothing in

Jones suggests that the Court should overturn its long-

standing broad interpretation of the Hobbs Act, see

Stirone, supra, to avoid constitutional doubts. Nor do

United States v. Lopez, 514 U.S. 549 (1995), and United

® Indeed, the alleged error would be harmless even under the

dissent’s theory in Neder. See 527 U.S. at 35 (Scalia, J., concurring in

part and dissenting in part) (“Where the facts necessarily found by the

jury * * * support the existence of the element omitted or misdescribed

in the instruction, the omission or misdescription is harmless.”).

18

States v. Morrison, 529 U.S. 598 (2000), see 05-111 Pet.

16; 05-5412 Pet. 16, suggest that Congress lacks power

to punish financial crimes in which the victim is a com-

mercial actor. And, as the cases discussed above (see

note 3, supra) make clear, acceptance of the depletion-

of-assets theory has not led the courts of appeals to con-

strue the Hobbs Act as indiscriminately covering every

act of extortion committed within this country."

® Petitioners are also incorrect in contending (05-111 Pet. 21;05-5412

Pet. 20) that the courts below created a mandatory presumption that

relieves the government of actually proving the jurisdictional element.

The district court instructed the jury that the depletion of assets of a

business engaged in interstate commerce would satisfy the Hobbs Act’s

jurisdictional element (Pet. App. 11a), but that instruction did not

relieve the jury of finding an essential element of the crime. The

government was required to prove that the victimized businesses were

engaged in interstate commerce or purchased supplies that came from

interstate commerce, and that the assets of those businesses were

depleted by the extortionate payments. It is well settled that the trial

court does not invade the province of the jury by instructing it that

certain facts, if proved, would satisfy the interstate-commerce element.

Such an instruction is consistent with the fundamental rule that the

court instructs on the law and the jury decides the facts. See United

States v. Miles, 122 F.3d 235, 239-240 (5th Cir. 1997), cert. denied, 523

US. 1011 (1998); United States v. Smith, 101 F.3d 202, 215 (1st Cir.

1996), cert. denied, 520 U.S. 1160 (1997); United States v.O’Malley, 796

F.2d 891, 897-898 (7th Cir. 1986).

19

CONCLUSION

The petitions for a writ of certiorari should be de-

nied.

Respectfully submitted.

PAUL D. CLEMENT

Solieitor General

ALICE S. FISHER

Assistant Attorney General

KATHLEEN A. FELTON

Attorney

OCTOBER 2005