# Amicus Curiae Brief — Cleveland v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386014_0372%3A08 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 2000 - **Citation:** 531 U.S. 12 ## Text SS I CTT enema wey R04 = JUN 0 1 200 No. 99-804 : In The es Supreme Court of the United States ae ¢ CARL W. CLEVELAND, Petitioner, ¥. UNITED STATES, Respondent. . ¢ On Writ Of Certiorari To The United States Court Of Appeals For The Fifth Circuit ¢ BRIEF AMICUS CURIAE OF THE CHAMBER OF COMMERCE OF THE UNITED STATES IN SUPPORT OF NEITHER PARTY * Rosin S. ConraD CarTER G. PHILLIPS National Chamber RICHARD D. BERNSTEIN* Litigation Center, Inc. JoserH S. MILLER 1615 H Street, N.W. SipLey & AUSTIN Washington, D.C. 20062 1722 Eye Street, N.W. (202) 463-5337 Washington, D.C. 20006 (202) 736-8000 Of Counsel Counsel for Amicus Curiae *Counsel of Record June 1, 2000 COCKLE LAW BRIEF PRINTING CO., (800) 225-6964 OR CALL COLLECT (402) 342-2831 QUESTION PRESENTED Amicus curiae will address the following question: Whether, prior to its issuance, a standard business license —- one without a profit-sharing arrangement between the government and the licensee —- is the govern- ment’s property? TABLE OF CONTENTS Page QUESTION PRESENTED. ..............0.0c0cc0s00 TABLE OF AUTHORITIES .....................0: iii INTEREST OF AMICUS CURIAE ...........-..605. 1 INTRODUCTION. .......ccccccccececccencseselases 2 SUMMARY OF ARGUMENT...............0c00000. 5 ARGUMENT ......ce ee 6 I. AN UNISSUED STANDARD BUSINESS LICENSE IS NOT GOVERNMENT PROPERTY............. 7 Il. TREATING UNISSUED STANDARD BUSINESS LICENSES AS PROPERTY UNDER THE MAIL FRAUD STATUTE WOULD BRING ABOUT TROUBLING RESULTS IN OTHER AREAS OF Per Se 17 iii TABLE OF AUTHORITIES Page CASES Carpenter v. United States, 484 U.S. 19 (1987).......... 6 Chicago, Burlington & Quincy Ry. Co. v. Illinois ex rel. Grimwood, 200 U.S. 561 (1906)..............6.. 11 Dent v. West Virginia, 129 U.S. 114 (1889)..... 14, 15, 16 Dolan v. City of Tigard, 512 U.S. 374 (1994) ...17, 18, 19 Gundling v. City of Chicago, 177 U.S. 183 (1900)...15, 16 Hawker v. New York, 170 U.S. 189 (1898)............. 15 Hughes Aircraft Co. v. United States ex rel. Schumer, a gos Re Be. re nr ere er ree 1 Jones v. United States, 68 U.S.L.W. 4422 (U.S. May MI ik wd wna h seve sae eka nes wie sewnnesses 19 Kaiser Aetna v. United States, 444 U.S. 164 (1979)..... 19 Lucas v. South Carolina Coastal Council, 505 U.S. a eeieds Rdiwehh eee ee eee ce ewen 1 McNally v. United States, 483 U.S. 350 (1987) ......... 6 Mutual Loan Co. v. Martell, 222 U.S. 225 (1911)...... 11 Nollan v. California Coastal Commission, 483 U.S. BE ere Pr eri rr Teer ry ree 17, 18, 19 Semiconductor Energy Laboratory Co. v. Samsung Electronics Co., 204 F.3d 1368 (Fed. Cir. 2000)...20, 21 Sheriock ¥. Alling, 93 US. 99 (1676). ..... 2... cece ene. 14 Smith v. Alabama, 124 U.S. 465 (1888)......... 13, 14, 15 iv TABLE OF AUTHORITIES - Continued Toulabi v. United States, 875 F.2d 122 (7th Cir. 1989) . .3, 12 United States v. Granberry, 908 F.2d 278 (8th Cir. PR 53 for CEL RDE RS SS AR a eens 3 United States v. Kato, 878 F.2d 267 (9th Cir. 1989)..... 3 United States v. Martinez, 905 F.2d 709 (3rd Cir. erg Peer rere a erer Ee erey re ree 3, 10 United States v. Northern Pacific Ry. Co., 256 U.S. 51 {| SERRE ern pes Seem gnaG LOR rep mean Mn amN Cae m ROR tor /e 10 United States v. Paccione, 949 F.2d 1183 (2d Cir. CURR RSs nbd cue Red eee eka ts Dene eee ks 2 United States v. Salvatore, 110 F.3d 1131 (5th Cir. SOOU Rava de deck k red eres an Sonate Fe eas ee 4 United States v. Schwartz, 924 F.2d 410 (2d Cir. PERS 505 io abe cee deh Cok eee ase 12 United States v. Shotts, 145 F.3d 1289 (11th Cir. PUM SA ccd eer e aces ieee ue eee eae 3 STATUTES Be See IE hws ce wh oe eek Cone oe ead ka 9 RO teria ee he Pee ee eee Ape Neen 4,6 ee. 1g Ye reer esa, 20 Fs RR re mney erm DN ery G 20 RO Mii Kd Reh CN Aa Ee eae ee 20 ek Rees. Te rE £5 dd 1k wb SOA ne Se ees 22 SS 254 cane kha boxe hxwnsedansaucaes 22 v TABLE OF AUTHORITIES - Continued Page SED a ins a ish nce iwwakn vaxkisencuaes 23 ee |) err Tre herr er rey rer rr ct 23 DC. Cote Rae Te. Se, Ws Be ok ok hes cae ta sawans 2,7 OS BAAD 6a kiki oan bes access chaiesescenan 9 G7 To sustain a conviction for federal mail fraud, then, the Government must prove that the defendant defrauded another of something that qualifies as “property” under the statute. See, e.g., Car- penter v. United States, 484 U.S. 19, 26 (1987) (upholding federal mail and wire fraud convictions where “[t]he Journal had a property right in keeping confidential and making exclusive use, prior to publication, of the sched- ule and contents of the ‘Heard’ column”). Indeed, as the Court observed in McNally, the mail fraud statute “had its origin in the desire to protect individual property rights, and any benefit which the Government derives from the statute must be limited to the Government's interests as property holder.” McNally, 483 U.S. at 359 n.8 (emphasis added). Because a standard business license is” 3 The federal mail fraud statute provides, in relevant part, that “[wJhoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, . . . for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service . . . shall be fined under this title or imprisoned not more than five years, or both.” 18 U.S.C. § 1341 (1994). not the issuing authority’s property before an applicant obtains it, a falsehood submitted to that licensing author- ity through the mails is not mail fraud. I. AN UNISSUED STANDARD BUSINESS LICENSE IS NOT GOVERNMENT PROPERTY. Local, state, and federal authorities have established myriad licensing and permitting regimes. These licensing and permitting regimes touch virtually every aspect of contemporary American commercial life, from the licens- ing of the professions (such as law and medicine) to setting conditions on the marketing of basic goods and services (such as selling and serving food). In order to obtain one of these standard business licenses, an appli- cant typically pays a fee that roughly approximates the proportionate cost of the regulatory program, and pro- vides information demonstrating that he or she (or it) satisfies the government’s criteria for obtaining the license. For example, Chapter 28 of Title 47 of the District of Columbia Code sets forth a comprehensive “General License Law” for businesses operating in the District of Columbia. See D.C. Code Ann., tit. 47, ch. 28 (1997 & Supp. 2000). Under this General License Law, “[n]o per- son shall engage in or carry on any business in the District of Columbia without having first obtained a mas- ter business license and any necessary endorsements,” which vary by the specific business at issue.4 D.C. Code 4 “Business” is defined broadly under this scheme as “any trade, profession, or activity which provides, or holds itself out Ann. § 47-2851.2 (Supp. 2000). The licensing system is administered by a Business License Center within the D.C. Department of Consumer & Regulatory Affairs. See D.C. Code Ann. §§ 47-2851.5, -2851.7 (Supp. 2000). The Business License Center “collect[s] a fee of $25 for each master business license it issues, plus $5 for each endorsement added to the master business license.” D.C. Code Ann. § 47-2851.8(a)(1) (Supp. 2000). This fee is “deposited in the Master License Fund,” D.C. Code Ann. § 47-2851.8(a)(2) (Supp. 2000), which Fund pays “[t]he entire cost of the master business licensing system,” D.C. Code Ann. § 47-2851.13(b) (Supp. 2000).5 The licensing requirements vary according to the par- ticular business at issue. “An applicant for licensure as a certified public accountant,” for example, must “establish to the satisfaction of the Board of Accountancy that,” among other things, she “[i]s of good moral character” and .“[h]as passed a written examination in accounting and auditing and such related subjects as the Board shall to provide, goods or services to the general public or to any portion of the general public, for hire or compensation, and which pays, or is subject to the payment of, taxes on earnings, or fees in lieu of taxes, to the District of Columbia, or which qualifies for tax-exempt status under District law.” D.C. Code Ann. § 47-2851.1(1)(A) (Supp. 2000). Moreover, the general requirement that all District businesses be licensed has only two narrow exceptions, one for businesses that are affiliated with a District-licensed business but maintain no business address in the District, and the other for specific businesses “whose annual gross receipts are $2,000 or less in any calendar year.” D.C. Code Ann. § 47-2851.2(a)(1) & (2) (Supp. 2000). 5 Renewal fees are treated in like manner. See D.C. Code Ann. §§ 47-2851.8(b), -2851.13(b) (Supp. 2000). determine to be appropriate.”© D.C. Code Ann. § 47-2853.42 (Supp. 2000). Importantly, all the District’s licensing boards are expressly empowered to discipline a licensee who “[k]nowingly provides false or misleading information on or in support of an application or renewal application,” as well as one who “[f]raudulently or deceptively obtains, or attempts to obtain, a license or certificate, or to register, for another person.” D.C. Code Ann. § 47-2853.17(a)(1) & (2) (Supp. 2000). Possible penal- ties include revocation of the license, a “civil fine not to exceed $5,000 for each violation,” and prosecution for criminal violations.” D.C. Code Ann. § 47-2853.17(c)(2) & (5), (d) (Supp. 2000). As even this brief foray into District of Columbia business licensing makes clear, conducting a business in many localities entails applying for (and, from time to time, renewing) a standard business license of one kind or another. Under the Government's construction of the mail fraud statute, making a false statement on an appli- cation for such a license that is sent through the mails is 6 The Board of Accountancy is itself established by the General License Law. See D.C. Code Ann. § 47-2853.6(b) (Supp. 2000). 7 Under the District’s general criminal code, it is unlawful to “willfully make[ ] a false statement that is in fact material, in writing, directly or indirectly, to any instrumentality of the District of Columbia government, under circumstances in which the statement could reasonably be expected to be relied upon as true,” so long as “the writing indicates that the making of a false statement is punishable by criminal penalties.” D.C. Code Ann. § 22-2514(a) (1996 & Supp. 2000). This is analogous to the prohibition against making false statements to the Government of the United States set forth in 18 U.S.C. § 1001 (1994). 10 federal mail fraud because the unissued license is the issuing authority’s property. Thus, for example, in United States v. Martinez, 905 F.2d 709 (3rd Cir. 1990), the Gov- ernment successfully prosecuted as federal mail fraud a scheme for obtaining a Pennsylvania state medical license that included submitting fraudulent documents (e.g., transcripts, a medical degree, etc.) through the mails. See id. at 710-11 (describing the scheme). This construction of the mail fraud statute is fundamentally flawed, however, because an unissued standard business license is not an issuing authority’s “property” within the meaning of the statute - a conclusion compelled by the very nature of standard business licensing regimes and this Court’s cases upholding such regimes as proper exercises of the police power. 1. To be sure, governments both own property and routinely exercise the power to dispose of that property. The United States, for example, once owned large tracts of land in what are now the Western States and, in order to promote the growth of the railroads, granted that land to railroad companies for them to develop. See, e.g., United States v. Northern Pacific Ry. Co., 256 U.S. 51, 52-53 (1921) (discussing one such set of grants to the Northern Pacific Railway Company). Similarly, the United States regularly disburses from the Treasury funds that it owns, sending the funds to designated recipients as diverse as taxpayers who are owed an income tax refund and gov- ernment contractors who are owed for goods sold to the United States. State and local governments likewise own land and improvements (e.g., school grounds and build- ings) and hold and disburse general revenue funds. When governments engage in commercial or proprietary 11 activities, they exercise the powers of a property owner and are in many respects indistinguishable from other property owners. Governments also exercise a different power that many other property owners lack — namely, the power to regulate conduct in the interests of public safety and welfare, or the “police power.” “[T]he police power of a state embraces regulations designed to promote the pub- lic convenience or the general prosperity, as well as regu- lations designed to promote the public health, the public morals, or the public safety.” Chicago, Burlington & Quincy Ry. Co. v. Illinois ex rel. Grimwood, 200 U.S. 561, 591 (1906). Indeed, “the police power is but another name for the power of government.” Mutual Loan Co. v. Martell, 222 U.S. 225, 233 (1911). When a government issues standard business licenses pursuant to its own licensing regime, it clearly exercises its police power, not the powers it has by virtue of owning property. This fact is evident when one con- siders that a licensing regime, no less than a correspon- dingly framed general prohibition, serves directly to limit and regulate private conduct. For example, a munici- pality could decide to regulate the provision of taxi ser- vices by making it a crime to drive a taxi without a specified level of knowledge about the streets in the municipality.® The regulation would be enforced by pros- ecuting taxi drivers who were stopped because they 8 A legislature could accomplish equally its regulatory goals through a general prohibition (e.g., “you shall not practice accountancy without adequate skill”) or through a licensing regime (e.g., “you shall not practice accountancy without a license, which requires adequate skill”). No one would claim 12 appeared to be lost, or who were reported by passengers to lack the requisite knowledge. Alternatively, the munic- ipality could decide to achieve the same regulatory objec- tive (i.e., limiting taxi drivers to those who are knowledgeable about local streets) by requiring would-be drivers to obtain a taxi driver’s license that is conditioned on the successful completion of a local geography test. See Toulabi v. United States, 875 F.2d 122, 123 (7th Cir. 1989) (“To be a taxi driver in Chicago, a person must pay a fee of $50 and answer correctly 20 out of 25 questions on a test of local geography.”). In this hypothetical, the licensing method may be more effective at producing knowledgeable taxi drivers than the prohibition method. The crucial point here, how- ever, is that in both methods the municipality acts as a regulator, not an owner disposing of his or her property. See id. at 125 (holding that an unissued taxi driver’s license is not property for purposes of the federal mail fraud statute); see also United States v. Schwartz, 924 F.2d 410, 417 (2d Cir. 1991) (“The government’s interest in issuing its licenses ancillary to its regulatory program is no different than its interest in propounding and enforc- ing its other regulations with broad based applications that a general prohibition is a form of government property. Cf. Guido Calabresi, The Cost of Accidents 113-14 (1970) (“[P]rohibition and restriction . . . are really the same thing on different levels of generality. I speak of prohibiting an activity (banning the sale of firecrackers or all driving), or alternatively of restricting it (allowing firecrackers only in limited circumstances or barring driving at speeds of over 80 miles per hour). When we restrict an activity, we are simply prohibiting one of its subcategories.”). 13 that do not include the issuance of licenses. Whether it chooses to use licenses or blanket rules, the government's purpose is to control the private use of private prop- erty.”). 2. This Court has repeatedly held, in cases sustain- ing state and local licensing regimes against various con- stitutional attacks, that the creation of a licensing regime is an exercise of the police power. These cases thus con- firm that the decision whether to issue a particular license to a given applicant is a regulatory and adminis- trative act, not a disposition of property. The earliest of these decisions, Smith v. Alabama, 124 U.S. 465 (1888), involved a Commerce Clause challenge to a then-new Alabama train engineer licensing law. The statute made it “unlawful for the engineer of any railroad train in [Alabama] to drive or operate or engineer any train of cars .. . without first undergoing an examination and obtaining a license.” Id. at 468. Operating a train without a license was made a misdemeanor. Id. at 470. The license fee was $5. Id. at 469. Smith, an engineer arrested for operating a train without a license, id. at 466, attacked the statute as a vidlation of the Commerce Clause, id. at 473. This Court rejected Smith’s theory, concluding that the licensing law was “within the scope of the admitted power reserved to the State to regulate the relative rights and duties of persons being and acting within its territorial jurisdiction.” Id. at 482 (emphasis added). Importantly, in turning aside Smith’s challenge, the Court emphasized that the licensing law was the same 14 sort of state regulatory action as the Indiana state wrong- ful death statute it upheld against a Commerce Clause attack in Sherlock v. Alling, 93 U.S. 99, 103 (1876) (conclud- ing that Indiana’s wrongful death statute “only declares a general principle respecting the liability of all persons within the jurisdiction of the State for torts resulting in the death of parties injured”). See Smith, 124 U.S. at 474-77 (analogizing licensing law to wrongful death stat- ute at issue in Sherlock). According to the Court, “[t]he power to punish for the offence after it is committed certainly includes the power to provide penalties directed, as are those in the statute in question, against those acts of omission which, if performed, would pre- vent the commission of the larger offence.” Id. at 481. The licensing provisions were thus upheld as “parts of that body of the local law which, as we have already seen, properly governs the relation between carriers of pas- sengers and merchandise and the public who employ them.” Id. at 480. A year later, in Dent v. West Virginia, 129 U.S. 114 (1889), the Court rejected a Due Process challenge to West Virginia’s medical licensing law. The challenged statute “require[d] every practitioner of medicine in [West Vir- ginia] to obtain a certificate from the State Board of Health” permitting him to practice. Id. at 115. Practicing medicine without this certificate was made a misde- meanor. Id. at 117. Dent, who was fined for practicing without a license, attacked the statute as a deprivation of “his vested right in relation to the practice of medicine” without due process. Id. at 118, 121-22. This Court upheld the constitutionality of the medical licensing law as a 15 routine and valid exercise of the police power. According to the Court in Dent, [t]he power of the State to provide for the gen- eral welfare of its people authorizes it to pre- scribe all such regulations as, in its judgment, will secure or tend to secure them against the consequences of ignorance and incapacity as well as of deception and fraud. As one means to this end it has been the practice of different States, from time immemorial, to exact in many pursuits a certain degree of skill and learning upon which the community may confidently rely, their possession being generally ascer- tained upon an examination of parties by com- petent persons, or inferred from a certificate to them in the form of a diploma or license from an institution established for instruction on the subjects, scientific and otherwise, with which - such pursuits have to deal. The nature and extent of the qualifications required must depend primarily upon the judgment of the States as to their necessity. Id. at 122; see also Hawker v. New York, 170 U.S. 189, 192-93 (1898) (“No precise limits have been placed upon the police power of a State, and yet it is clear that legisla- tion which simply defines the qualifications of one who attempts to practise medicine is a proper exercise of that power.”). In Dent, as in Smith, the Court recognized that when a government issues a standard business license, it engages in a fundamentally regulatory act. Finally, in Gundling v. City of Chicago, 177 U.S. 183 (1900), this Court upheld a conviction under a Chicago city ordinance “forbidding the sale of cigarettes by any person without a license.” Id. Like the unlicensed doctor 16 in Dent, the unlicensed cigarette seller in Gundling chal- lenged the ordinance as, among other things, an uncon- stitutional deprivation of his property rights without due process. Id. at 185-86. This Court upheld the licensing scheme for cigarette sales. According to the Court, “(whether dealing in and selling cigarettes is that kind of a business which ought to be licensed is, we think, con- sidering the character of the article to be sold, a question for the state, and through it, for the city, to determine for itself.” Id. at 187. Indeed, such a licensing scheme for regulating product sales was an unexceptional exercise of the police power: ee Regulations respecting the pursuit of a law- ful trade or business are of very frequent occur- rence in the various cities of the country, and what such regulations shall be and to what par- ticular trade, business, or occupation they shall apply are questions for the state to determine, and their determination comes within the proper exercise of the police power by the state. ... Id. at 188; see also id. at 189 (licensing cigarette sales served a “regulating . . . function”). The governmental business licensing requirements that were already “very frequent” a century ago are, today, virtually universal. And, just as they were a cen- tury ago, governmental decisions whether to issue a stan- dard business license to a given applicant are regulatory acts, not dispositions of government property. 17 Il. TREATING UNISSUED STANDARD BUSINESS LICENSES AS PROPERTY UNDER THE MAIL FRAUD STATUTE WOULD BRING ABOUT TROUBLING RESULTS IN OTHER AREAS OF LAW. The question whether the United States can pros- ecute for federal mail fraud one who sends a falsehood through the mail to obtain a standard business license (be it local, state, or federal) might initially be viewed strictly as a matter affecting federal criminal law. But the effects of answering that question affirmatively - i.e., by ruling that unissued licenses are government property — could extend far beyond the confines of the criminal law. Three illustrations drawn from diverse areas of law - one involving this Court’s Takings Clause jurisprudence, the others involving powerful civil remedies — will suffice to demonstrate the havoc that could well result from con- cluding that unissued licenses are the government's prop- erty. 1. Treating an as-yet-unissued license as if it were the issuing authority’s property would draw key features of this Court’s regulatory takings jurisprudence into serious doubt. To see that this is so, one need only con- sider the Court’s decisions in Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994), from the state permitting authority’s new vantage as the property owner of the unissued real estate development permit. In both Nollan and Dolan, the government authority that was charged with issuing the relevant real estate development permit had decided to condition the grant 18 of the permit on the would-be permittee’s agreement to an easement. See Nollan, 483 U.S. at 828 (permit would be granted “subject to the condition that they allow the public an easement to pass across a portion of their property”); Dolan, 512 U.S. at 380 (“the Commission required that petitioner dedicate . . . an additional 15-foot strip of land adjacent to the floodplain as a pedestrian/ bicycle pathway”). In both cases, this Court concluded that the government, by extracting these easements, had taken the permittee’s property. See Nollan, 483 U.S. at 841-42; Dolan, 512 U.S. at 396. This conclusion cannot be squared, however, with the Government’s current posi- tion that unissued permits and licenses are government property. According to the Government’s approach, the unis- sued permits at issue in Nollan and Dolan would be the property of the governmental authorities that had the power to issue them. If unissued permits or licenses are the government’s property, however, it should be able to charge the would-be permittees whatever price it deems fit under the circumstances — including the price of grant- ing the general public an easement over private realty. Indeed, the power to name one’s selling price - any selling price at all — is the very essence of a property interest: “An entitlement is protected by a property rule to the extent that someone who wishes to remove the entitlement from its holder must buy it from him in a voluntary transaction in which the value of the entitle- ment is agreed upon by the seller.” Guido Calabresi & Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089, 1092 (1972) (emphasis added). In more traditional ae Se ess oe _———— 19 parlance, the power to set one’s selling price is one aspect of the owner’s right to exclude others, “one of the most essential sticks in the bundle of rights that are commonly characterized as property.” Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979). Under the Government’s reason- ing in this case, the permitting authorities in Nollan and Dolan did not take anything; rather, they simply priced the unissued permits that they owned at a level which included the surrender of a public easement. In short, the Government’s approach means that Nollan and Dolan were wrongly decided. Indeed, if one adopts the Government’s conclusion that an unissued permit or license is the issuing authority’s property, the government's refusal to issue a permit or license would always be an exercise of its right to refuse to transfer ownership of its own property and thus could never be a taking. 2. Treating an as-yet unissued license as if it were the issuing authority’s property would also nullify exis- ting locally-crafted, specifically-limited remedies (such as those discussed in connection with the District of Colum- bia’s General License Law, supra at 7-8), in favor of not only much harsher federal criminal penalties,? but also in ° This Court has, of course, “cautioned . . . that ‘unless Congress conveys its purpose clearly, it will not be deemed to have significantly changed the federal-state balance’ in the prosecution of crimes.” Jones v. United Stctes, 68 U.S.L.W. 4422, 4425 (U.S. May 22, 2000) (quoting United States v. Bass, 404 U.S. 336, 349 (1971)), see also id. (Stevens & Thomas, JJ., concurring) (same). The mail fraud statute contains no such clear statement of purpose to up-end the existing federal-state balance regarding local prosecution for violations of local standard business licensing regimes. 20 favor of broad federal and state civil anti-racketeering and qui tam remedies designed for problems far removed from arguable misstatements in applications for standard business licenses. Congress surely did not intend to expose business license applicants to these types of civil lawsuits. Consider, first, RICO. The federal RICO statutes criminalize, among other things, engaging in “a pattern of racketeering activity.” 18 U.S.C. § 1962(c) (1994). The RICO regime also provides private parties a cause of action against racketeers: “Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor . . . and shall recover threefold the damages he sustains and the cost of the suit.” 18 U.S.C. § 1964(c) (1994). A ” ‘pattern of rack- eteering activity’ requires at least two acts of racketeering activity,” and an act of federal mai! fraud is within the definition of “racketeering activity.” 18 U.S.C. § 1961(1) & (5) (1994). As a result, a party who is injured in his business or property by another party’s two acts of mail fraud could seek to sue in federal court for treble dam- ages. Assuming, for example, that obtaining two renewals of a standard business license by submitting false information through the mails constitutes federal mail fraud, that licensee is thus also liable under federal RICO to those he injures in their business or property. Many states have their own parallel RICO laws. The foregoing scenario is not mere sport. In Semicon- ductor Energy Laboratory Co. v. Samsung Electronics Co., 204 F.3d 1368 (Fed. Cir. 2000), decided just three months ago, the United States Court of Appeals for the Federal Circuit 21 confronted just such a claim for RICO liability. In Sam- sung, the accused infringer successfully defended against patent infringement liability by proving that the patent was unenforceable due to the patentee’s inequitable con- duct before the United States Patent & Trademark Office (“PTO”) during the patent prosecution process. Id. at 1373-78 (affirming district court’s conclusion that patent was unenforceable due to inequitable conduct). The accused infringer had also, however, brought counter- claims under the federal and state RICO statutes. Id. at 1378. The accused infringer’s theory of RICO liability was that the patentee had committed two or more acts of mail fraud, and thus racketeering activity, by submitting false information to the PTO through the mails. Id. at 1379. The unissued patent was, according to the accused infringer, property for purposes of the mail fraud statute. Id. at 1380. The Federal Circuit rejected the federal and state RICO claims, concluding “that inequitable conduct before the PTO cannot qualify as an act of mail fraud or wire fraud for purposes of the predicate act requirement.” Id. Central to this conclusion was the Federal Circuit's rejec- tion of the notion that an unissued patent is property: [T]he PTO has not been defrauded of property. Although that ‘a patent is property, protected against appropriation both by individuals and by government, has long been settled,’ an appli- cation that has not yet matured into a patent cannot properly be deemed government prop- erty. Id. (quoting Hartford-Empire Co. v. United States, 323 U.S. 386, 415 (1945)). Of course, under the Government's the- ory of the mail fraud statute in this case, Samsung was 22 apparently wrongly decided, and RICO liability for ineq- uitable conduct before the PTO should obtain. Consider, as well, qui tam suits under the False Claims Act, 31 U.S.C. §§ 3729-3733 (1994), and state anal- ogs thereof.!° In a qui tam suit, a private party brings an action on behalf of the government to redress an injury to the government, e.g., a fraudulent claim for government property. See generally John T. Boese, Civil False Claims and Qui Tam Actions § 1.01[A], 1-6 - 1-11 (2c ed. 2000) (reviewing early history of federal qui tam statute). Speci- fically, under the False Claims Act, one who “knowingly presents, or causes to be presented, to an officer or employee of the United States Government .. . a false or fraudulent claim” is “liable to the United States Govern- ment for a civil penalty,” as well as “3 times the amount of damages which the Government sustains because of the” false claim.!! 31 U.S.C. § 3729(a) (1994). A “claim” is defined broadly under this statute as “includ[ing] any request or demand, whether under a contract or other- wise, for money or property,” so long as “the United States Government provides any portion of the money or property which is requested or demanded.” 31 U.S.C. § 3729(c) (1994). 10 A number of States have False Claims Act-like statutes that create qui tam causes of action. See, e.g., John T. Boese, Civil False Claims and Qui Tam Actions § 6.01[A], [B] & [D], -at 6-4 - 6-14, 6-25 — 6-26 (2d ed. 2000) (reviewing details of California, Florida, and Illinois analogs to the False Claims Act). 11 In addition to seeking penalties (and damages, if they exist), a clever plaintiff might also try to concoct a common law claim for restitution of alleged ill-gotten gains, e.g., all profits earned by a business with a wrongly obtained license or permit. 23 Given the expansive definition of a “claim” in the False Claims Act, a falsified application for a standard business license from the United States could - if that unissued standard business license constitutes govern- ment property - give rise to False Claims Act liability. Moreover, under the gui tam provision in the False Claims Act, “[a] person may bring a civil action for a violation of section 3729 for the person and for the United States Government.” 31 U.S.C. § 3730(b)(1) (1994). Such private party suits are made attractive by the False Claims Act’s bounty provisions, according to which the private party who initiates the suit receives anywhere from 10% to 30% of the proceeds of the action, as well as expenses, fees, and costs. 31 U.S.C. § 3730(d) (1994). Federal and state qui tam statutes, no less so than federal and state RICO statutes, would no doubt become powerful weapons of civil liability should unissued standard business licenses come to be viewed as the issuing authority’s property. The point is that Congress surely did not intend to launch the mail fraud, wire fraud, RICO, and qui tam statutes as weapons to be used in disputes about the issuance of standard business licenses. Nor is it any answer to say that only those who deliberately falsify license applications need fear such an expansion of lia- bility. Even honest parties who apply for standard busi- ness licenses will be faced with, at a minimum, the costs of defending nuisance suits brought by private plaintiffs clever enough to frame RICO and qui tam complaints that, although meritless, can withstand a motion to dismiss and serve as a basis for burdensome discovery. The fact that the Government's treating unissued business licenses as government property for purposes of the federal mail 24 fraud statute entails exposing licensees to massive RICO and qui tam lawsuits demonstrates the absurdity of such a construction of the mail fraud statute. ¢ CONCLUSION For the foregoing reasons, in deciding this case the Court should make clear that an unissued standard busi- ness license does not constitute government property for purposes of the federal mail fraud statute, or expressly refrain from addressing that question. Respectfully submitted, Rosin S. CONRAD Carter G. PHILLIPS National Chamber RicHARD D. BERNSTEIN* Litigation Center, Inc. JoserpH S. MILLER 1615 H Street, N.W. Sipcey & AUSTIN Washington, D.C. 20062 1722 Eye Street, N.W. (202) 463-5337 Washington, D.C. 20006 (202) 736-8000 Of Counsel Counsel for Amicus Curiae “Counsel of Record June 1, 2000 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386014_0372%3A08. Public record. Not legal advice.