Petition for Writ of Certiorari — Wall v. United States
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96 SOSNOV 2 1 199%
No. __
ope OF THE CLERK
IN THE
Supreme Court of the United States
OCTOBER TERM, 1996
NATHAN WALL AND DONALD WALL,
PETITIONERS
Wa
THE UNITED STATES OF AMERICA,
RESPONDENT
ON PETITION FOR WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
PETITION FOR WRIT OF CERTIORARI
CARROL D. KILGORE
Attorney for Petitioners
Ceci. D. BRANSTETTER
Of Counsel
BRANSTETTER, KILGORE
STRANCH & JENNINGS
227Second Avenue, North
Nashville, TN 37201-1631
(615) 254-8801
QUESTIONS PRESENTED FOR REVIEW
Upon appeal from conviction of operating a
gambling business in violation of 18 U.S.C. § 1955,
under stipulated facts and an approved plea agreement
that reserved to the Defendants the right to litigate and
appeal constitutional and statutory construction
issues—
QUESTION NO. 1: On the issue of the Statute’s
Constitutionality—
(a) Whether the rationale of United States v.
Lopez, 514 U.S. 131 L.Ed.2d 626, 115 S.Ct.
1624, 131 L.Ed.2d 626 (1995), renders the statute
unconstitutional in view of the fact that the elements
of the offense do not restrict guilt to discreet gambling
acts that additionally have an explicit connection with
or effect on interstate commerce (131 L.Ed.2d at
639); or
(b) Where Sec. 1955 renders criminal only acts
that are crimes under local law, and does so for
purposes other than enforcing a regulation of
commerce among two or more states, whether it is
unconstitutional as exceeding the defined scope of
congressional jurisdiction, which is limited to
regulation of commerce among the separate states and
with foreign countries, plus laws necessary and proper
to enforce such regulation, with the Tent’
Amendment explicitly removing from Federal
jurisdiction acts that merely affect commerce across
state lines but are not a part of such commerce.
(i)
QUESTION NO.2: Considering the relevant
Constitutional provisions,’ could the lower Courts
properly refuse to consider rational demonstrations,
from Constitutional and statutory language, that the
authorities they followed were improper judicial
exercises of the Constitutional amendatory power and
the legislative power—
(a) In the Judicial claims, without warrant in
Constitutional language, of the right to treat the
Constitutional grant of power to regulate “commerce
among the several states” plus the necessary and
proper enforcement power as being identical to the
immensely broader power of regulating “all things
affecting commerce among the several states,” on no
basis other than acceptance of unjustifiable dictum; or
(b) In actions of Courts of Appeals in substituting
for the statutory element of a criminal offense, that a
business must be conducted by no less than five (5)
persons, an unstated re-definition of the verb
“conduct” as meaning “participate in the operation of”
the business, without the direction/leadership elements
of the verb “conduct,” when no dictionary definition,
no common usage, and no rules of statutozy
construction have been produced to justify this
modification of the statute?
‘Being (i) the three constitutional provisions fixing the bounds of
Congressional jurisdiction over commerce, (U. S. Const., Art. L, § 8, #4 3,
18, and Amendment X), (ii) the Constitutional mandate as to construction
of Amendments (U. S. Const., Art. V), and (iii) the obligation that every
Judge be bound by oath to uphold the “supreme Law of the land” as
constitutionally defined (U. S. Const., Art. VI, ¥ 2).
(ii)
TABLE OF CONTENTS
QUESTIONS PRESENTED FOR REVIEW ......... (i)
Ee . pi seh ee eae rah Tt (i)
eB Ci ee Shae re oe ee (ii)
TAC CREE ecw atta bie cewreet. (iii)
TABLE OF CITED AUTHORITIES ............. (iii)
RED OE So SA SS Se ee (iii)
United States Constitution .............. (v)
7 Bape As GN SR eg (vi)
OF Fa es ere ree (vi)
CITATION TO REPORT OF OPINION ............ l
BASIS OF JURISDICTION ............ cv tle ee ws l
CONSTITUTIONAL PROVISIONS AND STATUTES . . |!
DEAT OeTE OF EGA. ee 6
REASONS FOR ALLOWING THE WRIT ........... 7
TABLE OF CITED AUTHORITIES
CASES:
Gibbons v. Ogden,
BEAU hg O be. £o CIEE) 0 ow ee eee 10
(iii)
|
Kidd v. Pearson,
128 US. 1, 32 L.Ed. 346, 9 S.Ct. 6 (1888) . 11
Marbury v. Madison,
1 Cranch (U.S.) 137, 2 L-Ed. 60 (1803) .... 12
McCullough v. Maryland,
17 U.S. 316, 4 L.Ed. 597 (1819) ......... 10 |
Oliver Mining Company v. Lord,
262 U.S. 172, 67 L.Ed. 929, 43 S.Ct. 526 .. 11
Perez v. United States,
402 U.S. 146, 28 L.Ed. 2d 686, 91 S.Ct. 1357
COSTES ks cawednne Sh ee see 11
Ratzlaf v. United States,
510 U.S. 126 L.Ed.2d 615, 626, 114
BO CS Ce i eS ees ae
United States v. Bennett,
erie ss MiNi Fis Sees 13
United States v. Colacurcio,
659 F.2d 684, (Sth Cir, 1981), .......... 13
United States v. Dixon,
wp ee Re. fle AS. 7. : eee eee 13
United States v. Greco,
GIS F.26 633 GO, 19RD). co oc ce eaves 13
(iv)
United States v. King,
834 F.2d 109, (6 Cir., 1987) . 2.20.20... 13
United States v. Lopez,
514 US. 131 L.Ed.2d 626, 115 S.Ct.
1624, 131 L.Ed.2d 626 (1995)....... (i), 7,8
United States v. Mattucci,
502 F.2d 883 (6th Cir. 1974) ............ 12
United States v. Reeder,
614 F.2d 1179 (8th Cir., 1980) .......... 13
United States v. Tarter,
Jan 20 520 (6th Cir. 1975) 2... ea ew 12
United States v. Tucker,
638 F.2d 1292 (Sth Cir. 1981), Cert. Den., 454
U.S.833, 70 L.Ed.2d 111, 102 S.Ct. 132 (1981)
EE te en Wk CMEC E CES hoe rie Cee 13
Webster v. Fall,
266 U.S. 507, 69 L.Ed. 411, 45 S.Ct. 148 (1924)
FPR aba thos Eek s Cos we 11, 13
UNITED STATES CONSTITUTION:
U. 2 Ce, A ec ee, (i), (11), 3, 9
U. S. Const., Art. I, § 8,993,18 ........ (ii), 1, 2
of. Ry Ts eek a ca eee (ii), 2
As. a Re, Fe a Ee Oe oo ee ee (ii), 3
(v)
STATUTES:
ULES SUS i eas aioe ens, 13
Ee hi (i), 4, 6, 7, 13
MUSE 8 RSET. 6 orice bk. k 853 cet >: 1
OTHER AUTHORITIES:
House Report No. 91-1549, repr. (1970)
U.S. Code Cong. & Adm. News 4007, at 4029
1 Bl. Comm. *142 (Jones Ed., 1916) .......... 8
Gunther, Ed.,
John Marshall’s Defense of McCullough v.
Maryland (Stanford University Press, 1969). 10
Tenn. Const. (1870), Art. XI, §1 ............ 8
(vi)
CITATION TO REPORT OF OPINION
The District Court Orders and Opinions are
unreported and the citation of the Decision as to which
the writ is requested is:
United States of America v. Nathan Wall and
Donald Wall, 6th Circuit Court of Appeals,
Nos. 95-5007/5008, 92 F.3d 1444, 1996 WL.
457393 (C.A.6) (TN) (1996), 1996 Fed. App.
0266P (6th Cir.).
BASIS OF JURISDICTION
(i) The Judgment of the Court of Appeals
was entered August 15, 1996.
(i) | An Order overruling the Petition for
Rehearing was entered October 22, 1996, and no time
extensions have been granted to file this Petition.
(iii) |The Statutory provision believed to
confer on this Court jurisdiction to review on Writ of
Certiorari the Judgment in question is 28 U.S.C. §
1254(1).
CONSTITUTIONAL PROVISIONS AND
STATUTES
Constitution, Art. I, § 8, 3rd and 18th
paragraphs
SECTION 8. The Congress shall have
power...
* * *
To regulate Commerce with foreign
Nations, and among the several States, and
with the Indian Tribes;
a * »
To make all Laws which shall be necessary
and proper for carrying into Execution the
foregoing Powers, and all other Powers vested
by this Constitution in the Government of the
United States, or in any Department or Officer
thereof.
Constitution, Art. V.
The Congress, whenever two thirds of
both Houses shall deem it necessary, shall
propose Amendments to this Constitution, or,
on the Application of the Legislatures of two
thirds of the several States, shall call a
Convention for proposing Amendments,
which, in either Case, shall be valid fo all
Intents and Purposes, as Part of this
Constitution, when ratified by the Legislatures
of three fourths of the several States, or by
Conventions in three fourths thereof, as the
one or the other Mode of Ratification may be
proposed by the Congress; Provided that no
Amendment which may be made prior to the
Year One Thousand Eight Hundred and Eight
shall in any Manner affect the first and fourth
Clauses in the Ninth Section of the first
Article; and that no State, without its Consent,
~%.
shall be deprived of its equal Suffrage in the
Senate. (Emphasis added.)
Constitution, Art. VJ, 2nd and 3rd
Paragraphs
This Constitution, and the Laws of the
United States which shall be made in
pursuance thereof, and all Treaties made, or
which shall be made, under the Authority of
the United States, shall be the supreme Law of
the Land; and the Judges in every State shall
be bound thereby, any Thing in the
Constitution or Laws of any State to the
Contrary notwithstanding.
The Senators and Representatives before
mentioned, and the Members of the several
State Legislatures, and all executive and
judicial Officers, both of the United States and
of the several States, shall be bound by Oath
or Affirmation, to support this Constitution;
but no religious Test shall ever be required as
a Qualification to any Office or public Trust
under the United States.
Constitution, 10th An:sendment.
The powers not delegated to the United
States by the Constitution, nor prohibited by it
to the States, are reserved to the States
respectively, or to the people.
ane
18 U.S.C. § 1955(a}{c).
(a) Whoever conducts, finances, manages,
supervises, directs, or owns all or part of an
illegal gambling business shall be fined not
more than $20,000 or imprisoned not more
than five years, or both.
(b) As used in this section—
(1) “illegal gambling business”
means a gambling business
which—
(i) is a violation of the law
of a State or political
subdivision in which it is
conducted;
(ii) involves five or more
persons who conduct,
finance, manage, supervise,
direct, or own all or part of
such business; and
(iii) has been or remains
in substantially continuous
operation for a period in
excess of thirty days or has
a gross revenue of $2,000
in any single day.
(2) “gambling” includes but is
not limited to pool-selling,
bookmaking, maintaining slot
machines, roulette wheels or
ié.
dice tables, and conducting
lotteries, policy, bolita or
numbers games, or selling
chances thereon.
(3) “State” means any State of
the Unitec States, the District
of Columbia, the
Commonwealth of Puerto
Rico, and any territory or
possession of the United
States.
(c) If five or more persons conduct, finance,
manage, supervise, direct, or own all or part of
a gambling business and such business
operates for two or more successive days,
then, for the purpose of obtaining warrants for
arrests, interceptions, and other searches and
seizures, probable cause that the business
receives gross revenue in excess of $2,000 in
any single day shall be deemed to have been
established.
STATEMENT OF THE CASE
The jurisdiction of the Court of first instance was
based on an information filed by the United States
Attorney charging the Defendants with having
committed a felony prohibited and defined by
18 U.S.C. § 1955. A Court-approved lea agreement
permitted the Defendants to plead guii « but reserved
to them the right to judicial deteri.anation and
appellate review of constitutional and statutory
construction issues.
All facts were stipulated including a description of
Defendants’ business—operating their family
corporation by renting video poker machines within a
single Middle-Tennessee County for half the receipts
of each location-owner after deduction and payment of
reimbursement for winnings paid to customers—and
that there were never more than three persons
involved in directory/leadership functions. The Courts
below held that the activity so described constituted
illegal gambling under Tennessee criminal statutes and
that acts of participating in operation of the
business—as by repairing the machines, removing the
coins from the machines and dividing them with the
location owner and secretarial and other such work,
fulfilled the statutory requirement that the business
must be conducted by not less than five persons so as
to render Defendants guilty.
The only issues raised by Petitioners were
constitutional and statutory construction issues with
review of decisions on the state-law points not being
Pr
ee
sought here. The constitutional issue presents the
defensive insistence (even if the rationale of United
States v. Lopez, 514U.S.__, 131 L_Ed.2d 626, 115
S.Ct. 1624 (1995) does not establish that 18 U.S.C.
§ 1955 is unconstitutional) that the Courts of the
United States cannot properly substitute for the
defined scope of Congressional power—extending
only to the regulation of interstate commerce and laws
necessary and proper to execute such regulation—the
virtually unlimited concept of “all things affecting
commerce among the several states,” which
enlargement cannot lawfully be achieved except by
constitutional amendment. In the statutory
construction issue, Defendants insist that the
intermediate appellate Courts cannot properly, simply
by agreeing with each other, create a false definition of
the verb, “conduct,” in 18 U.S.C. § 1955, contrary to
all educated usage as to the meaning of the word,
contrary to popular use of the verb, without even
taking resort to any dictionary definition, or to any of
the rules of statutory construction.
Pe We ~ eb mene Sales tbe =
REASONS FOR ALLOWING THE WRIT
The Statute involved, 18 U.S.C. § 1955, which
contains no element of interstate commerce but only
addresses local evils, appears plainly unconstitutional
under the rationale of United States v. Lopez, 514 U.S.
, 131 L.Ed.2d 626, 115 S.Ct. 1624, 131
em
L.Ed.2d 626 (1995), particularly in view of the fact
that the Courts below mentioned but did not discuss
an aspect of determining Constitutionality held
applicable in Lopez—that guilt must be restricted to
discreet illegal acts, with the statutory definition
including an explicit connection with or effect on
interstate commerce and such elements are lacking
from this statute. (E.g., though some of the machines
were shipped from another state upon purchase, this is
not an explicit or required element of the offense.)
Even more importantly, this case demonstrates a
need for the Court to complete its return to first
principles that it began in deciding Lopez. These
issues include the insistence that the framers of the
Constitution rejected, for the purpose of the formation
of the government they were establishing, the
Blackstonian definition of “law of the land” as
consisting of Judicial decisions modifiable only by
Parliament’ and restricted the supreme law to the
elenents of Constitution, statutes, and treaties,
excluding judicial interpretations. There is a great
need for consideration and enunciation of the truism
that under this definition, no mere judicial construction
of the Constitution, however perfect and revered, can
supplant the Constitution itself as the leading element
of the supreme law of the land.
*This definition, 1 Bl. Comm. *142 (Jones Ed., 1916) appears in
contrasting state Constitutions designed to perpetuate existing Common
Law, and to continue its administration, ¢.g., Tenn. Const. (1870), Art. XI,
§ 1: “All laws and ordinances now in force and use in this State, not
inconsistent with this Constitution, shall continue in force and use until
they shall expire, be altered or repealed by the Legislature, . . .”
Es
With it being obvious that the phrase “all acts
affecting commerce among the several states” is
virtually unlimited in scope’ and far exceeds the
narrow scope of “commerce among the several
States,” there is need for reiteration of the obligation
to be bound by the Constitution rather than by popular
and time-honored misstatements of its content.
Considerations that apply, and whose rationale the
lower Courts did not attempt to refute, include these:
(i) The term “affecting commerce” includes all
productive activities and all consumption decisions
which are local actions not included in the scope of the
word “commerce,” as recognized by this Court’s past
decisions, and are therefore excluded by the Tenth
Amendment from the Commerce Powers;
(ii) Both the Federalist papers and notes of the
Constitutional Convention by Madison indicate
knowledge of the fact that commerce does not include
the antecedent productive activities;
(iii) By claiming the power to substitute for
the constitutional grant of regulatory commerce power
plus necessary and proper enforcement power, the
broader power to regulate all things affecting
commerce, the Courts have effectively nullified the
Necessary and Proper Clause and have immensely
broadened the powers of the Federal Government;
The pretended breadth of the Commerce Clause is parodied by a
quotation at the beginning of Judge Boggs’ dissent below, that the Clause
could be called the “Hey, you-can-do-whatever-you-feel-like Clause.”
United States v. Wall, 94 F 3d 1444, at 1454.
Ye
(iv) The only rational basis for considering
“effects” relates not to effects upon commerce but
instead to effects upon the regulation of commerce,
which is a test of the separate grant of enforcement
power by the Necessary and Proper Clause;
(v) Both in McCullough v. Maryland,
17 U.S. 316, 4 L.Ed. 597 (1819) and in writings off
the bench‘ Chief Justice Marshall recognized that any
Congressional enactment is unconstitutional unless the
objectives it seeks to achieve are within the powers
granted to the Congress by the Constitution.
(vi) The only basis in history for the
assumption that the powers to regulate commerce
among the states could be expanded to the unlimited
power to regulate all things affecting such commerce
is Chief Justice Marsh:’s dictum in Gibbons y.
Ogden, 22 U.S. 1, 6 L.Ed. “5 (1824); this cannot be
considered other than speculative dictum because
there was before the Court no question of the extent
to which internal commerce of a state might be subject
to Congressional regulation. The case involved only
commerce across state lines between New York and
New Jersey.
The allowance of certiorari is also important
because of the need to reemphasize a difference
between statutes, which can repeal by implication, and
judicial opinions, which are more limited in their
authoritative nature. In particular, the lower Courts
refused to apply a vital rule in determining the
‘Gunther, Ed., John Marshall’s Defense of McCullough v. Maryland
(Stanford University Press, 1969).
-10-
ee
authoritative effect of judicial decisions, the
enunciation of the principle in Webster v. Fall,
266 U.S. 507, 69 L.Ed. 411, 45 S.Ct. 148 (1924), that
no judicial decision is authority for the proposition that
earlier law is nullified unless the judicial decision
actually considers and passes upon such earlier law.
This principle is both valid and vital to a
demonstration that Perez v. United States,
402 US. 146, 28 L.Ed. 2d 686, 91 S.Ct. 1357 (1971),
is not authoritative because it not only effectively
amends the Constitution by its unlimited expansion of
the Commerce Clause and its nullification of the
Necessary and Proper Clause, but cannot be
considered as overruling earlier correct judicial
demonstrations—which it did not seek to demonstrate
incorrect by discussion—that such activities as mining,
manufacturing, and agriculture are no part of
commerce, Kidd v. Pearson, 128 US. 1,
32 L.Ed. 346, 9 S.Ct. 6 (1888), Oliver Mining
Company v. Lord, 262 U.S. 172, 67 L.Ed. 929,
43 S.Ct. 526. These and other such decisions
nevertheless would have to be inaccurately considered
a part of commerce if Perez had any rational validity.
This case presents at least an appearance of
judicial unwillingness to consider either the
Constitution or law but instead to view past judicial
decisions as supreme, even if those decisions fail to
follow the law. When it is contended that past Judicial
decisions themselves, such as Perez v. United States,
supra., are contrary to the Constitution, then the belief
that only this Court can address such issues is
eee
tantamount to holding that no provision of the
Constitution has effect until validated by opinions of
this Court, that only this Court can look to the
Constitution, and that judges of lower Courts must
refuse to recognize the Constitution when presented
claimed demonstrations that a decision by this Court
contradicts the Constitution. This is quite contrary to
explicit Constitutional commands placing the burden
of integrity upon every judge, and to the rationale of
Marbury v. Madison, | Cranch (U.S.) 137, 2 L.Ed. 60
(1803).
No one would question either the importance of
prior Judicial opinions or the deference owed them,
but it is absurd to pretend that Judicial opinions
supersede the Constitution. It is equally absurd to
pretend that any Judicial opinion has rejected an
argument, when examination of that opinion shows
that the argument was not even mentioned by the
Court, so that it evidently was overlooked by counsel.
By this method of refusing to reexamine prior
Judicial opinions, the inferior Courts herein refused to
consider the validity of a course of Federal
intermediate appellate decisions which have adopted
a fictitious definition of the verb “conduct,” and
thereby have greatly expanded the scope of criminality
beyond that enacted by Congress. When the decisions
being followed, of which United States v. Tarter, 522
F.2d 520 (6th Cir. 1975), United States v. Mattucci,
« 12.
502 F.2d 883 (6th Cir. 1974), are representative,’
merely rely on decisions by other Circuits and none of
them so much as cite or pretend to apply any rule of
Statutory construction, then the rule of Webster v.
Fall, supra., would dictate that the law of statutory
construction is still in effect and at least when invoked,
it should be honored and followed in construing the
meaning of 18 U.S.C. § 1955 instead of pretending
that the verb “conduct” actually has the fictitious
meaning assigned to it by the intermediate appellate
Judiciary without any reference to the rules of
statutory construction, to any dictionary definition, to
common usage, or to accepted literary usage of the
word.
While a dispute between Circuits warrants
allowance of the Writ, its allowance appears even
more warranted by a universal unquestioning
acceptance of whatever the prosecution wants, in total
*Principal cases on which the Court below relied in arriving at the
conclusion that one who does any assigned employment job “necessary”
to the gambling business “conducts” it even without leadership/direction
function include United States v. Dixon, 592 F.2d 329 (6 Cir., 1979),
United States v. Reeder, 614 F.2d 1179 (8th Cir., 1980), United States v.
Greco, 619 F.2d 635 (7 Cir., 1980), United States v. Tucker, 638 F.2d
1292 (Sth Cir. 1981), Cert. Den., 454 U.S.833, 70 L.Ed.2d 111, 102 S.Ct
132 (1981), United States v. Bennett, 653 F.2d #79, United States v.
Colacurcio, 659 F.2d 684, (Sth Cir., 1981), United Sates v. King, 834
F.2d 109, (6 Cir., 1987). The root cause of these misstatements of the
meaning of the verb “conduct” appears to be a false statement of meaning
contained in the legislative history of a different section of the same Act,
now 18 U.S.C. § 1511, being House Report No. 91-1549, repr. (1970)
U.S. Code Cong. & Adm. News 4007, at 4029. Such incorrect meaning
was judicially accepted without any attempt to demonstrate that the well-
known verb “conduct” is ambiguous in that context so as to justify reading
the legislative history, see, Ratzlaf v. United States, 510 US. :
126 L.Ed.2d 615, 626, 114 S.Ct. 615 (1994).
22.
disregard of the law of statutory construction, and by
the judicial refusal to consider seriously asserted
demonstrations that reason proves the Federal
judiciary has exercised the Constitutional amendatory
power and the Congressional legislative power.
WHEREFORE, Petitioners respectfully pray that
the Writ of Certiorari issue.
Respectfully submitted,
” va fy ae cc
CARROL D. KILGORE
ATTORNEY FOR PETITIONERS
BRANSTETTER, KILGORE,
STRANCH & JENNINGS
227 Second Avenue, North
Nashville, TN 37201-1631
Of Counsel:
CECIL D. BRANSTETTER
BRANSTETTER, KILGORE,
STRANCH & JENNINGS
227 Second Avenue, North
Nashville, TN 37201-1631
oe
APPENDIX
TO PETITION FORA
WRIT OF CERTIORARI
APPENDIX CONTENTS
Page No.
A. OPINION FROM THE UNITED STATES
COURT OF APPEALS FOR THE
ME MIU dee Sag |
B. MEMORANDUM DENYING MOTION
TO DISMISS THE INFORMATION
[UNITED States District Court] .... 111
C. ORDER DENYING PETITION FOR
REHEARING EN BANC FROM THE
UNITED STATES COURT OF APPEALS
POG See MOTTE AAOUNE ooo vieless, 119
D. PETITION FOR REHEARING AND
SUGGESTION FOR EN BANC HEARING ..... 12]
E. EXCERPTS OF TRANSCRIPT OF
PROCEEDINGS -- ORAL ARGUMENT
BEFORE THE HONORABLE THOMAS
A. HIGGINS, U.S. District JUDGE
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APPENDIX A
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UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
+
eS te ee ae ee Ce oatkete tt ramet
OPINION
*
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‘a ee es eee ee San
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 24
ELECTRONIC CITATION: 1996 FED App. 0266P (6th Cir.)
File Name: 96a0266p.06
Nos. 95-5007/5008
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
+
UNITED STATES OF AMERICA.
Plaintiff-Appellee,
v. ON APPEAL from the
United States District
NATHAN WALL (95-5007) and Court for the Middle
DONALD WALL (95-5008), District of Tennessee
Defendants-Appellants. |
+
Decided and Filed August 15, 1996
¢
Before: BOGGS and SILER, Circuit Judges;
COFFMAN, District Judge.
Apdx. A - |
SILER, J., delivered the opinion of the court, in which
COFFMAN, D. J., joined. BOGGS, J. (pp. 21-87),
delivered a separate opinion concurring in part and
dissenting in part.
SILER, Circuit Judge. Defendants Nathan and
Donald Wall appeal the district court’s denial of their
motion to dismiss the information charging them with
operating an illegal gambling business. They entered
conditional pleas of guilty to a violation of 18 U.S.C. §
1955.' Defendants aver constitutional and_ statutory
"18 U.S.C. § 1955 reads in pertinent part:
(a) Whoever conducts, finances, manages, supervises, directs,
or owns all or part of an illegal gambling business shall be
fined under this title or imprisoned not more than five years,
or both.
(b) As used in this section--
(1) “illegal gambling business” means a gambling business
which--
(i) is a violation of the law of a State or political
subdivision in which it is conducted;
(ii) involves five or more persons whio conduct,
finance, manage, supervise, direct, or own all or part
of such business; and
(iii) has been or remains in substantially continuous
operation for a period in excess of thirty days or has
a gross revenue of $2,000 in any single day.
(2) "gambling" includes but is not limited to pool-selling,
bookmaking, maintaining slot machines, roulette wheels
Apdx. A - 2
construction issues in this appeal. First, they attack the
constitutionality of § 1955. Next, they contend that two
essential requirements for conviction under § 1955 were not
met: five persons did not "conduct" a gambling operation,
and no state offense was violated. Finally, defendant
Donald Wall alleges that the district court misapplied the
United States Sentencing Guidelines in enhancing his
sentence. For reasons stated hereafter, we affirm the district
court.
Defendants owned and operated Amusement, Inc.,
a business that leased video poker machines to various
establishments in Nashville, Tennessee. In addition to
defendants, Amusement, Inc. had seven employees: a
president, a junior technician, two route men, an office
secretary, a part-time bookkeeper, and a manual laborer.
The video poker machines were of a type that displayed the
number of accumulated "credits" that players won. These
credits could be used for replays or, at the player’s request,
the lessee of the machine would disburse money for the
credits. Amusement, Inc. would reimburse the lessee for
any money distributed in this manner.
I. The Constitutionality of 18 U.S.C. § 1955
Section 1955 of Title 18 of the United States Code
criminalizes illegal gambling operations of a certain size.
or dice tables, and conducting lotteries, policy, bolita or
numbers games, or selling chances therein.
Apdx. A - 3
Defendants contend that § 1955 is void as a prohibited
exercise of congressional power.
This century has seen the aggrandizement of power
by the legislative branch of our government heretofore
unknown. Nonetheless, the power of Congress is by no
means absolute: it may exercise only those powers
enumerated in the Constitution. McCulloch v. Maryland, 17
U.S. (4 Wheat.) 316 (1819). Expressly delegated to
Congress is the ability "[t]lo regulate Commerce with
foreign Nations, and among the several States, and with the
Indian Tribes." U.S. CONST., art. I, § 8, cl.3. The
interpretation of this seemingly innocuous clause has a
storied history in Supreme Court jurisprudence that is well-
documented elsewhere.’
Action by Congress pursuant to the Commerce
Clause must be examined by the courts to verify that the
legislative body acted within its Constitutional authority.
>See, e.g., United States v. Lopez, 115 S. Ct. 1624, 1626-29 (1995)
(outlining Commerce Clause jurisprudence); | RONALD D. ROTUNDA
& JOHN E. NOWAK, TREATISE ON CONSTITUTIONAL LAW, SUBSTANCE
AND PROCEDURE §§ 4.1-4.10 (2d ed. 1992); LAURENCE H. TRIBE,
AMERICAN CONSTITUTIONAL LAW §§ 5-4 to 5-8 (2d ed. 1988); John
S. Baker, Jr. Nationalizing Criminal Law: Does Organized Crime
Make It Necessary or Proper?, 16 RUTGERS L.J. 495, 518-531 (1985)
(tracing the interaction of Commerce Clause decisions and federal
criminal law); Debra L. Farmer, Recent Development, United States
v. Lopez: The Fifth Circuit Declares the Gun-Free School Zone Act of
1990 an Unconstitutional Extension of Congressional Power Under the
Commerce Clause, 68 TUL. L. REV. 1674, 1674-82 (1994); David S.
Gehrig, Note, The Gun-Free School-Zones Act: The Shootout over
Legislative Findings, The Commerce Clause, and Federalism, 22
HASTINGS CONST. L.Q. 179, 183-91 (1994).
Apdx. A - 4
This court has examined and upheld the constitutionality of
18 U.S.C. § 1955. United States v. Pack, 16 F.3d 1222,
No. 92-3872, 1994 WL 19945, at **1-**2 (6th Cir. Jan. 25,
1994) (per curiam); United States v. Leon, 534 F.2d 667,
673-74 (6th Cir. 1976). Other circuits have similarly
upheld § 1955 as an appropriate exercise of Congress’s
power. See, e.g., United States v. Sacco, 491 F.2d 995,
999-1001 (9th Cir. 1974) (en banc). To this court’s -
knowledge, no other court has found § 1955 to be
constitutionally infirm.
Before April 1995, a discussion on the constitutional
viability of § 1955 would have terminated at this point.
This statute would have been summarily upheld as a valid
exercise of congressional power under the Commerce
Clause. For the first time in over fifty years, however, the
Supreme Court invalidated a federal statute because
Congress had exceeded its authority under the Commerce
Clause. United States v. Lopez, 115 S. Ct. 1624, 1634
(1995). Thus, this court must renew its examination of
§ 1955.
In Lopez, the Supreme Court invalidated the Gun-
Free School Zones Act. 18 U.S.C. § 922(q).? Canvassing
The act made it a federal offense "for any individual knowingly to
possess a firearm at a place that the individual knows, or has
reasonable cause to believe, is a school zone.” 18 U.S.C.
§ 922(q)(2)(A). The act did not require that the possession be related
to interstate commerce.
Apdx. A - 5
past Commerce Clause decisions, the Court identified three
categories of activities that Congress may regulate under its
commerce power: (1) "the use of the channels of interstate
commerce"; (2) "the instrumentalities of interstate
commerce, or persons or things in interstate commerce,
even though the threat may come only from intrastate
activities"; and (3) "those activities having a substantial
relation to interstate commerce, i.e., those activities that
substantially affect interstate commerce." Lopez, 115 S. Ct.
at 1629-30 (citation omitted). The Court concluded that §
922(q), classified in the third category, failed to
substantially affect interstate commerce.
In Lopez, the Court distinguished § 922(q) from
other regulatory statutes.‘ First, it emphasized the non-
commercial nature of the statute:
Section 922(q) is a criminal statute that by
its terms has nothing to do with
"commerce" or any sort of economic
“The Court confirmed that mining coal, Hodel v. Virginia Surface
Mining & Reclamation Ass'n, Inc., 452 U.S. 264 (1981); extorting a
loan, Perez v. United States, 402 U.S. 146 (1971); running a restaurant
or hotel, Katzenbach v. McClung, 379 U.S. 294 (1964); Heart of
Atlanta Motel, Inc., v. United States, 379 U.S. 241 (1964); and
growing wheat, Wickard v. Filburn, 317 U.S. 111 (1942)--though each
was an intrastate activity--were commercial activities validly regulated
by Congress. Lopez, 115 S. Ct. at 1630 ("Where economic activity
substantially affects interstate commerce, legislation regulating that
activity will be sustained."); see also id. at 1637 (Kennedy, J.,
concurring) ("These and like authorities are within the fair ambit of the
Court’s practical conception of commercial regulation and are not
called in question by our decision today.").
Apdx. A - 6
enterprise, however broadly one might
define those terms. Section 922(q) is not an
essential part of a larger regulation of
economic activity, in which the regulatory
scheme could be undercut unless the
intrastate activity were regulated. It cannot,
therefore, be sustained under our cases
upholding regulations of activities that arise
out of or are connected with a commercial
transaction, which viewed in the aggregate,
substantially affects interstate commerce.
Lopez, 115 S. Ct. at 1630-31 (footnote omitted). On its
face, § 922(q) did not regulate commercial activity; it did
not regulate commercial actors. The statute was therefore
non-commercial.
The second distinction hailed by the Court was that
§ 922(q) "contains no jurisdictional element which would
ensure, through case-by-case inquiry, that the firearm
possession in question affects interstate commerce." Lopez,
115 S. Ct. at 1631. The Court emphasized that "[nJeither
the statute nor its legislative history contain[s] express
congressional findings regarding the effects upon interstate
commerce of gun possession in a school zone." /d. at 1631
(quotation omitted).* In sum, “unlike the earlier cases to
®The Court was not requiring Congress to make formal findings as
to the burdens on interstate commerce before enacting regulations;
"[bjut to the extent that congressional findings would enable us to
Apdx. A - 7
come before the Court here neither the actors nor their
conduct have a commercial character, and neither the
purposes nor the design of the statute have an evident
commercial nexus." Lopez, 115 S. Ct. at 1640 (Kennedy,
J., concurring).
Significantly, the Court rejected two arguments that
would justify the lack of congressional findings. First,
§ 922(q) represented a "sharp break" with prior firearm
regulation. The "importation of previous findings . . .
[would therefore be] especially inappropriate." Lopez, 115
S. Ct. at 1632. Second, and more important, the Court was
unwilling to construct a tenuous argument that possession
of a firearm in a school zone results in violent crime,
which affects interstate commerce through increasing
insurance costs and decreasing educational opportunities.
Id. at 1632. Were this argument successful, the Court
reasoned, "it is difficult to perceive any limitation on
federal power, even in areas such as criminal law
enforcement or education where States historically have
been sovereign." Jd. at 1632.
evaluate the legislative judgment that the activity in question
substantially affected interstate commerce, even though no such
substantial effect was visible to the naked eye, they are lacking here."
Lopez, 115 S. Ct. at 1632.
this argument was the focal point of Justice Breyer’s dissent.
Lopez, 115 S. Ct. at 1659-62 (Breyer, J., dissenting).
Apdx. A - 8
The potential reach of Lopez has been debated.’
The Supreme Court itself conceded that Lopez would result
in legal uncertainty. /d. at 1633-34 ("These [determinations
of whether an activity is commercial] are not precise
formulations, and in the nature of things they cannot be.").
Criminal defendants across the country have exploited this
uncertainty, citing Lopez in hopes that the statutes
underlying their convictions will similarly be invalidated.
Most courts have resisted urgings to extend Lopez beyond
§ 922(q). See, e.g., United States v. Chesney, 86 F.3d 564
(6th Cir. 1996) (upholding 18 U.S.C. § 922(g), which
prohibits the possession of a firearm by a felon); United
7 The dissent echoes post-Lopez calls for stricter judicial scrutiny of
Congressional Commerce power. See, e.g., United States v. Bishop,
66 F.3d 569, 603 (3d Cir. 1995) (Becker, J., dissenting) (calling Lopez
a “watershed” case that “shifted the boundaries" of the Commerce
Clause and threw into doubt the constitutionality of non-commercial
intrastate crimes), cert. denied, 116 S. Ct. 681 (1995) and 116 S. Ct.
750 (1996); cf. United States v. Chesney, 86 F.3d 564, 581 n.11 (6th
Cir. 1996) (Batchelder, J., concurring) ("Lopez presages a return to the
day when the Congress’s interstate commerce authority had meaningful
limits."); United States v. Wilson, 73 F.3d 675, 691 (7th Cir. 1995)
(Coffey, J., dissenting) (describing Lopez as a “landmark case"). As
stated in the dissent, academics have also debated the potential changes
in post-Lopez Commerce Clause jurisprudence. See, e.g., Richard A.
Epstein, Constitutional Faith and the Commerce Clause, 71 NOTRE
DAME L. REV. 167, 167 (1996) ("Lopez may turn out to be a flash in
the pan, or it may usher in a new age of constitutional restraint.")
(footnote omitted); cf. Lino A. Graglia, United States v. Lopez:
Judicial Review Under the Commerce Clause, 74 TEX. L. REV. 719,
767 (1996) (predicting that "[i}t is most unlikely . . . that the Court
will be able to muster five votes to invalidate a commerce power
measure when Congress does not coramit the oversight that explains
Lopez").
Apdx. A - 9
States v. Turner, 77 F.3d 887 (6th Cir. 1996) (same);
United States v. Michael R., ___ F.3d ___, 1996 WL
376597 (9th Cir. July 8, 1996) (upholding 18 U.S.C.
§ 922(x)(2), which prohibits juvenile possession of a
handgun); United States v. Staples, 85 F.3d 461 (9th Cir.
1996) (upholding 18 U.S.C. § 924(c)(1), which prohibits the
use of a firearm while engaged in drug trafficking); United
States v. Folen, 84 F.3d 1103 (8th Cir. 1996) (upholding 18
U.S.C. § 842(i), which prohibits felons from possessing
explosives); United States v. Lomayaoma, 86 F.3d 142 (9th
Cir. 1996) (upholding the Indian Major Crimes Act, 18
U.S.C. § 1153); United States v. Wilson, 73 F.3d 675 (7th
Cir. 1995) (upholding the Freedom of Access to Clinic
Entrances Act, 18 U.S.C. § 248(a)(1)); United States v.
Sherlin, 67 F.3d 1208 (6th Cir. 1995) (upholding federal
arson statute, 18 U.S.C. § 844(i)), cert. denied, 116 S. Ct.
795 (1996) and 116 S. Ct. 1548 (1996); United States v.
Bolton, 68 F.3d 396 (10th Cir. 1995) (upholding the Hobbs
Act, 18 U.S.C. § 1951), cert. denied, 116 S. Ct. 966 (1996);
Unised States v. Leshuk, 65 F.3d 1105.(4th Cir. 1995)
(upholding 21 U.S.C. § 841(a)(1), which prohibits the
manufacture of marijuana); United States v. Bishop, 66 F.3d
569 (3d Cir. 1995) (upholding carjacking statute, 18 U.S.C.
§ 2119), cert. denied, 116 S. Ct. 681 (1995) and 116 S. Ct.
750 (1996); United States v. Wilks, 58 F.3d 1518 (10th Cir.
1995) (upholding statute that prohibited the possession or
transfer of machine guns, 18 U.S.C. § 922(0)); cf Pic-A-
Apdx. A - 10
State PA, Inc. v. Reno, 76 F.3d 1294 (3d Cir.) (upholding
Interstate Wagering Amendment, 18 U.S.C. § 1301, which
prohibits the transmission in interstate commerce of
information to be used for the purpose of procuring a
lottery ticket), cert. denied, 116 S. Ct. 2504 (1996); Doe v.
Doe, __ F. Supp. ___, 1996 WL 344026 (D. Conn. June
19, 1996) (upholding the Violence Against Women Act of
1994, 42 U.S.C. § 13981). Few courts have cited Lopez to
reverse a conviction. See, e.g. United States v.
Pappadopoulos, 64 F.3d 522, 527 (9th Cir. 1995) (holding
that receipt of natural gas from out-of-state source was
insufficient to confer federal jurisdiction for arson
conviction);* United States v. Mussari, 894 F. Supp. 1360,
° pappadopoulos is sufficiently different from Lopez in that the statute
in question expressly required an interstate nexus between the crime
(arson) and the property. The court dismissed the argument that the
mere receipt of out-of-state natural gas was enough to affect interstate
commerce. The court did not invalidate the statute; it held that the
prosecution did not prove the requisite jurisdictional element.
Pappadopoulos, 64 F.3d at 528 ("Where the sole source of the
interstate commerce connection is the receipt by a private home of
natural gas from a company that receives some of that gas from an out-
of-state source, federal jurisdictional requirements have not been
met."); see also United States v. Denalli, 73 F.3d 328, 329 (11th Cir.
1996) (following Pappadopoulos and holding that the arson of a
residence does not satisfy the jurisdictional prerequisite of the federal
arson statute); cf. United States v. Pinckney, 85 F.3d 4, 8 (2d Cir.
1996) (overturning conviction pursuant to “chop-shop" statute, 18
U.S.C. § 2322, because the government failed to prove the
jurisdictional element of the offense). But see United States v. Gomez,
87 F.3d 1093, 1095-96 (9th Cir. 1996) (setting fire to a six-unit
apartment building meets jurisdictional element); United States v.
DiSanto, 86 F.3d 1238, 1244-46 (ist Cir. 1996) (torching of a
restaurant fulfilled the jurisdictional element); Sherlin, 67 F.3d at 1213-
14 (burning of college dormitory sufficient to trigger interstate
Apdx. A - 11
1363-64 (D. Ariz. 1995) (holding that the Child Support
Recovery Act, 18 U.S.C. § 228, which punished the failure
to pay child support, was an unconstitutional exercise of
congressional power);’ cf Hoffman v. Hunt, 923 F. Supp.
791, 807 (W.D.N.C. 1996) (declaring that 18 U.S.C. § 248,
the Freedom of Access to Clinic Entrances Act, was an
invalid expression of Congressional power);’® United
commerce element); United States v. Martin, 63 F.3d 1422, 1427-28
(7th Cir. 1995) (finding that building that had not been rented for three
months still had sufficient relationship to interstate commerce activity
to satisfy federal arson statute); United States v. Moore, 25 F.3d 1042,
Nos. 93-5273, 93-5274, 93-5281, 1994 WL 251174, at **3 (4th Cir.
June 10, 1994) (per curiam) ("{[W]e hfo]lid that connection of a house
to an interstate power grid constitutes a sufficient use in an activity that
affects commerce to satisfy the arson statute."), cert. denied, 115 S.
Ct. 1838 (1995).
* See also United States v. Parker, 911 F. Supp. 830, 834 (E.D. Pa.
1995) ("[I]t is plain to this court that Congress had no rational basis to
conclude that the willful failure to pay a child support obligation
substantially affects commerce. . . .”); United States v. Bailey, 902 F.
Supp. 727, 729 (W.D. Tex. 1995) (fol Mussari). But see United
States v. Nichols, 928 F. Supp. 302, 313 (S.D.N.Y. 1996) (finding that
the statute regulates the use of the channels of interstate commerce);
United States v. Kegel, 916 F. Supp. 1233, 1237 (M.D. Fla. 1996)
(same); United States v. Collins, 921 F. Supp. 1028, 1036 (W.D.N.Y.
1996) (finding a "rational, nontenuous relationship between interstate
wreheveekie 002 F. eee. 10a? 1358. eee tee ); United States
. Hampshire, 892 F. Supp. 1327, 1330 (D. Kan. 1995) (same); United
States v. Sage, 906 F. Supp. 84, 91 (D. Conn. 1995) (same) aff'd,
F.3d _, 1996 WL 450640 (2d Cir. Aug. 12, 1996); United States v.
Hopper, 899 F. Supp. 389, 391-93 (S.D. Ind. 1995) (collecting child
support orders across state lines is commercial).
10 ut see United States v. Dinwiddie, 76 F.3d 913 (8th Cir. 1996);
United States v. Wilson, 73 F.3d 675 (7th Cir. 1995); Cheffer v. Reno,
55 F.3d 1517 (ilth Cir. 1995). The Freedom of Access to Clinic
Entrances Act, like § 922(q) and § 1955, had nv jurisdictional element.
Apdx. A - 12
States v. Olin Corp., 927 F. Supp. 1502, 1522-32 (S.D. Ala.
1996) (holding that Lopez prohibits the application of
CERCLA liability)."
The question thus becomes if and how Lopez will
apply to 18 U.S.C. § 1955. This court will apply the Lopez
framework to organize this discussion. Like § 922(q),
§ 1955 must be classified under the third category. Thus,
to be sustained, § 1955 must regulate activities that
substantially affect interstate commerce. To make this
determination, this court will conduct a Lopez analysis: Is
§ 1955 commercial in nature? Is the statute otherwise
connected to interstate commerce?
First, this court must determine whether § 1955 is
commerciaily related--whether the statute regulates part of
an economic enterprise. Lopez, 115 S. Ct. at 1631. On one
However, 18 U.S.C. § 248 is unlike § 1955 in that the statute targeted
protest activity--non-commercial activity--rather than the abortion clinic
itself, which is a commercial enterprise. See Hoffman, 923 F.
at 809 ("[The Act] is not aimed at the commercial activity of abortion
clinics. It is aimed at the basic freedom of individuals to engage in
civil protest."). Section 1955, on the other hand, targets the
"1 the district court in Olin broadly employed Lopez to strike the
CERCLA statute as it applied to the defendants because "nothing in the
[CERCLA] statute provide(d]" for a “case-by-case inquiry” to ensure
an interstate commerce nexus. 927 F. Supp. at 1533. Alabama
Ne ee ee ee
a particular statute substantially affects interstate commerce-
even requiring a jurisdictional clause in the statute itself--to withstand
judicial scrutiny. This court does not find such an interpretation of
Lopez persuasive.
Apdx. A - 13
hand, § 1955 resembles § 922(q). Both are criminal
statutes of general application. Ostensibly, the purpose of
both statutes is not to regulate commercial intercourse;
rather, Congress’s primary intent was to deter and punish
criminal behavior. See, e.g., Mussari, 894 F. Supp. at
1363-64 (interpreting statute that punished non-payment of
child support as criminal in nature rather than commercial).
On the other hand, § 1955 has a stronger link to
commerce than does § 922(q). On its face, the statute has
a commercial aspect. It does not prohibit gambling per se;
rather, it punishes those who “conduct[] . . . an illegal
gambling business." 18 U.S.C. § 1955(a) (emphasis
added). To sustain a conviction, Congress required federal
prosecutors to demonstrate that a certain amount of
commercial activity took place--the business had to
"remain{] in substantially continuous operation for a period
in excess of thirty days or ha[ve] a gross revenue of $2,000
in any single day." /d. § 1955(b)(1)(iii). Gambling itself,
in its multiple forms, is a commercial activity. See, e.g.,
Pic-A-State PA, 76 F.3d at 1301 (affirming that lottery
tickets are "subjects of commerce” and that it was "beyond
dispute that state lotteries affect interstate commerce"). By
its terms, § 1955 is commercial in nature and is not
Apdx. A - 14
favorably compared to possession of a gun in a school zone,
which clearly does not involve commercial activity.”
Next, this court must analyze the purpose and design
of § 1955 to determine whether it affects interstate
commerce. Like § 922(q), § 1955 "contains no
jurisdictional element which would ensure, through case-by-
case inquiry," that the gambling operation in question
"2 The commercial aspect of a statute is one way in which courts
have distinguished Lopez. See, e.g., Staples, 85 F.3d at 463 ("Unlike
education, drug trafficking is a commercial activity which substantially
affects interstate commerce."); Bishop, 66 F.3d at 581 ("(CJarjacking
is economic in a way that possession of a handgun in a school zone is
not."); Wilson, 73 F.3d at 683 ("We agree . . . that the [Freedom of
Access to Clinic Entrances Act], unlike the Gun-Free School Zones
Act, regulates a commercial activity--the provision of reproductive
health services.”); of. Gomez, 87 F.3d at 1096 (upholding arson
conviction because a “rental property is a commercial establishment,
and is not substantially different than any other business"); United
States v. Kirk, 70 F.3d 791, 802 (Sth Cir. 1995) (Jones, J., dissenting)
(arguing that 18 U.S.C. § 922(0), which prohibits the possession of
machine guns, should be invalidated because it “is a purely criminal
law, without any nexus to commercial activity”), reh’g en banc
granted, 78 F.3d 160 (Sth Cir. 1996); Hoffman, 923 F. Supp. at 813
("[T]his court beliewes that Congress cannot regulate the protest
activities of the Plaintiffs because those eee ee
possession at issue in Lopez, are simply not properly ized as
commercial or economic activities."). Even the dissents in Bishop and
Wilson might uphold § 1955 because it clearly regulates economic
activity. See 66 F.3d at 592 (Becker, J., dissenting) (highlighting that
carjacking does not involve a "voluntary economic exchange"); 73 F.3d
at 689-93 (Coffey, J., dissenting) ( izing that the Freedom of
Access to Clinic Entrances Act criminalizes the “purely non-economic
activity (i.e., the civil disobedience) of anti-abortion protesters,” which
is “one step removed from the commercial enterprise") (quotations
omitted).
Apdx. A - 15
affects interstate commerce. Lopez, 115 S. Ct. at 1631."
The prosecutor need not prove and the jury need not find
that the accused or his instrumentalities crossed any state
lines or affected interstate commerce. There is nothing in
the statute that "might limit its reach to a discrete set of
[gambling operations] that additionally have an explicit
connection with or effect on interstate commerce." Lopez,
115 S. Ct. at 1631. But cf Wilson, 73 F.3d at 693-94
(Coffey, J., dissenting) (noting that jurisdictional
requirement has diminished importance for the regulation of
a business that engages in some form of economic activity).
'!nlike § 922(q), however, § 1955 contains reams of
legislative historical information to guide the courts.
Enacting the Organized Crime Control Act of 1970,
"Congress passed [§ 1955] in an attempt to attack
sophisticated, large-scale illegal gambling operations which
Congress thought to be a major source of income for
organized crime." United States v. King, 834 F.2d 109, 112
(6th Cir. 1987), cert. denied, 485 U.S. 1022 (1988); see
H.R. Rep. No. 91-1549, 91st Cong., 2d Sess. (1970),
"3 ome statutes require that the government prove that the activities
at hand substantially relate to interstate commerce. See, e.g., 18
U.S.C. § 2119 (carjacking conviction requires proof that vehicle
involved was “transported, shipped, or received in interstate or foreign
commerce"). Courts have required a low threshold of proof of
interstate relation for these statutes. See, e.g., United States v.
Johnson, 22 F.3d 106, 107-09 (6th Cir. 1994) (finding that a car
manufactured in Smyrna, Tennessee and shipped to Chattanooga,
Tennessee by way of Georgia and subsequently carjacked in
Chattanooga meets the requisite jurisdictional standard).
Apdx. A - 16
reprinted in 1970 U.S.C.C.A.N. 4007, 4028-32; cf Wilson,
73 F.3d at 684 (noting the importance of Congressional
findings connecting the criminal act to interstate commerce).
Congress determined that "organized crime posed a major
threat to American society and that illegal gambling
operations provided organized crime with its greatest source
of revenue." United States v. Sacco, 491 F.2d 995, 999
(9th Cir. 1974) (en banc). Congress specifically found that
"illegal gambling involves widespread use of, and has an
effect upon, interstate commerce and the facilities of
interstate commerce." H.R. Rep. No. 91-1549, 91st Cong.,
2d Sess. (1970), reprinted in 1970 U.S.C.C.A.N. 4007,
4028; see S. Rep. No. 91- 617, 91st Cong., Ist Sess. 70-76
(1969); Sacco, 491 F.2d at 999-1001 (outlining the debates
and findings of Congress connecting illegal gambling to
interstate commerce).'*
"4in the case at hand, there was no evidence that defendants were
engaged in a gambling enterprise that filled organized crime coffers.
This case appears to be one of those "rare instances where a gambling
operation meeting the requirements of 1955 will be a purely local
operation, in no way connected with organized crime." Sacco, 491
F.2d at 1000. Congress, however, may regulate commercial activities
that, although intrastate in nature, comprise a class of activities that
substantially affect interstate commerce. Courts may not excise
individual instances of a class of commercial activities that is within the
reach of federal power. Perez v. United States, 402 U.S. 146, 154
(1971); see also Lopez, 115 S. Ct. at 1630; Maryland v. Wirtz, 392
U.S. 183, 192-93 (1968); Wickard v. Filburn, 317 U.S. 111, 127-28
(1942); United States v. Pack, 16 F.3d 1222, No. 92-3872, 1994 WL
19945, at *2 (6th Cir. Jan. 25, 1994) (per curiam) ("If the class of
activities is within the reach of the federal power and the regulation
imposed is reasonable, a court’s investigation is concluded. There is
Apdx. A - 17
The Supreme Court cited Perez v. United States,
402 U.S. 146 (1971), as an example of appropriate
congressional regulation. Lopez, 115 S. Ct. at 1630."
Perez upheld 18 U.S.C. § 891, which outlawed extortionate
credit practices. Like § 1955, § 891 was a criminal statute
that punished commercial activity. Section 891 primarily
regulated intrastate activity and did not contain any
jurisdictional interstate element. However, attached to it
were extensive legislative findings and history that analyzed
the burden that extortionate credit practices placed on
interstate commerce. Perez, 402 U.S. at 155-57. Under
these circumstances, the Supreme Court confirmed that
§ 891 "substantially affected interstate commerce" and was
therefore properly enacted. Lopez, 115 S. Ct. at 1630."
no need for inquiry on a case-by-case basis or proof that a particular
activity had a [substantial] effect on commerce.") (quoting Sacco, 491
F.2d at 999)); of. Gomez, 87 F.3d at 1095-96 (noting that once the
commercial nature of the activity is established, the courts must
consider the aggregate effect of the activity on the commercial market).
Thus, if the structure of § 1955 is constitutional, this particular
conviction will be upheld.
"this court also cited Perez for support in previously upholding the
constitutionality of § 1955. See United States v. Leon, 534 F.2d 667,
673-74 (6th Cir. 1976).
6 rnis case does not mirror Perez exactly. Section 1955
incorporates state gambling law violations as an element of the federal
offense. While § 891 generically criminalized loan-sharking,
variegated gambling activities can be sanctified by individual states.
This "opt-out" measure casts doubt upon congressional findings that
such activities negatively burden interstate commerce. N less,
this court will defer to Congressional findings that gambling ventures
Apdx. A - 18
Lopez casts a shadow on regulation that is tenuously
related to interstate commerce.'’ Lopez, however, does
of this nature affect interstate commerce. See infra note 14 and
accompanying text; see also Leon, 534 F.2d at 673 (rejecting argument
that state law prerequisite makes the statute vague and unconstitutional);
United States v. Palmer, 465 F.2d 697, 699 (6th Cir.) (per curiam)
("[T]}he contention that [§ 1955] hinges on state law and is therefore an
unconstitutional delegation of congressional authority [will not] stand
scrutiny."), cert. denied, 409 U.S. 874 (1972).
While this court questions the wisdom of “criminalizing conduct
already denounced as criminal by the States," Lopez, 115 S. Ct. at
1631 n.3, it should be noted that Congress did not attempt to displace
policy choices in those states that have legalized different forms of
gambling. Because § 1955 criminalizes only those enterprises that first
violate state law, Congress displayed some sensitivity and respect for
federal-state comity and avoided unwarranted intrusion in an area
traditionally reserved to the states. See id.; accord United States v.
Culbert, 435 U.S. 371, 379 (1978) (finding that Congressional
prohibition of conduct already criminalized under state law does not
necessarily disturb federal-state comity).
Tcours have cited Lopez to require a more "direct" effect on
interstate commerce. See Pinckney, 85 F.3d at 7 (rejecting argument
that "goods sold or distributed in Brooklyn auto body shops will
inevitably enter interstate commerce” pursuant to “chop-shop” charge);
Denalli, 73 F.3d at 330 (maintaining that the destruction of a residence,
which housed a computer that was occasionally used for work-related
purposes, does not affect interstate commerce); Pappadopoulos, 64
F.3d at 528 ("The arson of [this house] has only a remote and indirect
effect on interstate commerce."); United States v. Grey, 56 F.3d 1219,
1225 (10th Cir. 1995) (finding that the exchange of $200 in Federal
Reserve notes failed to have “even a minimal effect on interstate
commerce"); United States v. Klingler, 61 F.3d 1234, 1239-40 (6th
Cir. 1995) (requiring more than tenuous connection to trigger federal
jurisdiction); cf. Olin Corp., 927 F. Supp. at 1522 (employing Lopez
to question the constitutionality of CERCLA); see also Hoffman, 923
F. Supp. at 813 (finding that non-violent physical obstruction of
repeedaaties health service clinics does not affect interstate commerce).
But see United States v. Baker, 82 F.3d 273, 275-76 (8th Cir. 1996)
(upholding conviction under the Travel Act while citing Lopez;
defendant's accessing of a local automatic teller machine [ATM], which
Apdx. A - 19
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not mandate that § 1955 be invalidated. Until the Supreme
Court provides a clearer signal or cogent framework to
handle this type of legislation, this court is content to heed
the concurrence of two Justices that the history of
Commerce Clause jurisprudence still "counsels great
restraint." Lopez, 115 S. Ct. at 1634 (Kennedy, J.
concurring). Section 1955, in language, purpose, and
legislative history, better resembles commercial regulation
than does § 922(q). See Lopez, 115 S. Ct. 1633 ("[T]he
question of congressional power under the Commerce
Clause ‘is necessarily one of degree’") (citation omitted).
Section 1955 compares favorably to the statute analyzed in
Perez. As a result, we affirm that 18 U.S.C. § 1955 is a
proper exercise of congressional power under the United
States Constitution.
Il. The Applicability of 18 U.S.C. § 1955
A.
To be illegal under § 1955, the gambling operation
in question must "involve[] five or more persons who
conduct, finance, manage, supervise, direct, or own all or
part of such business." 18 U.S.C. § 1955(b)(1)(ii).
was part of an interstate network of ATMs, to promote extortion was
a use of a “facility in interstate or foreign commerce"); United States
v. Griffith, 85 F.3d 284, 288 (7th Cir. 1996) (conceding that "[o}ne can
imagine a scenario where a local prostitution offense might lack a
federal dimension” but still upholding conviction for money laundering
statute, 18 U.S.C. § 1956, in part because funds from a localized but
illicit prostitution enterprise were mailed from Illinois to Colorado).
Apdx. A - 20
Defendants contend that fewer than five persons
"conducted" such illegality; therefore, the requirements of
the statute were not met.
Defendants explain that only three persons
"conducted" business at Amusement, Inc. They employ
dictionary definitions and clever analogy to show that
"conduct," in every day usage, does not denote "participate
in" or "carry on." Courts, however, have broadly
interpreted "conduct" in the context of § 1955. The
Supreme Court, though not directly interpreting § 1955,
nonetheless suggested that "[i]t is participation in the
gambling business that is a federal offense," Sanabria v.
United States, 437 U.S. 54, 70 (1978), and "[n]umerous
cases have recognized that 18 U.S.C. § 1955 proscribes any
degree of participation in an illegal gambling business,
except participation as a mere bettor." /d. at 71 n. 26. This
court has added that "[t]he pleasure of participation and
association in a gambling enterprise which otherwise meets
the statutory test is sufficient." United States v. Rowland,
592 F.2d 327, 329 (6th Cir. 1979); see also United States
v. Merrell, 701 F.2d 53, 55 (6th Cir.) (serving coffee to
bettors and cleaning up after they left was enough to sustain
a conviction under § 1955), cert. denied, 463 U.S. 1230
(1983).
Defendants argue that these cases preceded the
Supreme Court’s ruling in Reves v. Ernst & Young, 507
U.S. 170 (1993). In Reves, the Court concluded that "to
Apdx. A - 21
i
i
|
;
|
}
conduct or participate, directly . indirectly, in . . . [an]
enterprise’s affairs" indicates "some degree of direction."
Id. at 177-78." However, the Court specifically
distinguished Reves from Sanabria: "*{C]onducts’ has been
given a broad reading in [§ 1955’s] context to distinguish
it from ‘manages, supervises, [or] directs.’" /d. at 178 n. 3.
This broad reading of "conduct," sanctioned by the
Supreme Court, will remain undisturbed.
B.
Although defendants query whether a payout from
a video poker machine constitutes gambling,’ the main
thrust of their next argument is that leasing these machines
did not violate Tennessee law. An essential element for
conviction under § 1955 is that the illegal gambling
business be in "violation of the law of the State . . . in
which it is conducted." 18 U.S.C. § 1955(b)(1). Alleging
"8rhe Supreme Court was interpreting a RICO statute. Especially
relevant is that petitioners in Reves ag the Court to interpret
"conduct" as “carry on.” 507 U.S. at 178.
ris contention appears to have little merit. Under Tennessee law,
"[a] person commits an offense who knowingly induces or aids another
to engage in gambling, and . . . [iJntends to derive or derives an
economic benefit other than winnings from the gambling.”
Tenn. Code Ann. § 39-17-503(a). “Gambling” is defined as “risking
anything of value for a profit whose return is to any degree contingent
on chance.” /d. § 39-17-501(1). These liberalized definitions include
payouts from playing video poker machines. See T & W Enter. v.
Casey, 715 $.W.2d 356, 358-59 (Tenn. Ct. App. 1986); Ferguson v.
State, 628 S.W.2d 37, 38-39 (Tenn. Crim. App. 1981).
Apdx. A - 22
that they have not violated the law of Tennessee, defendants
assert that they may not be prosecuted for this offense.
The defendants correctly note that the business of
leasing video poker machines is a lawful, taxable privilege
in Tennessee. Tenn. Code Ann. § 67-4-507. By paying the
proper tax, defendants were vested with the privilege of
leasing the machines to location owners. Defendants
contend that because their action--leasing the machines--was
within the scope of the privilege for which they paid the
tax, this activity was exempted from criminal prohibitions,
even if the end-users employed the machines for gambling.
This privilege, however, continues only so long as
the privileged actor remains within the scope of his lawful
licensed business. An actor who strays beyond the lawful
privilege is not protected and can be criminally charged.
The privilege for leasing a coin-operated amusement device
does not extend to "any device operated for the purpose of
unlawful gambling." Tenn. Code Ann. § 67-4-507(1).”
Defendants and the lessees of the machines anticipated that
the machines would be used to gamble. By arranging to
reimburse lessees for cash payouts to successful players,
defendants stepped beyond the lawful privilege. Defendants
helped to induce gambling and intended to “derive an
20 Fenn. Code Ann. 67-4-507(f) confirms that "{nJothing in this
section, including payment of the tax provided for herein, shail be
construed to make legal an otherwise illegal device, or to authorize or
permit gambling on any device whatsoever."
Apdx. A - 23
economic benefit" from the gambling, violating § 39-17-
503(a). Consequently, they were properly charged under 18
U.S.C. § 1955.
Hl. Sentencing Guideline Provisions
Defendant Donald Wall contends that it was
improper for the district court to enhance his offense level
by four points based upon his leadership role in the
gambling venture.”’ He alleges that the underlying offense
and the base offense level” already accounted for his
leadership role, thereby making the enhancement a double
counting.
Courts generally do not permit double counting
under USSG § 3B1.1 when the offense of conviction
reflects an inherent control or leadership role, see, e.g.,
United States v. Stevenson, 6 F.3d 1262, 1269-70 (7th Cir.
1993), or when the same conduct is penalized under a
separate guideline provision. See, e.g, United States v.
Chichy, 1 F.3d 1501, 1505-07 (6th Cir.), cert. denied, 510
U.S. 1019 (1993). The difficulty in defendant’s position is
21SSG §3B1.1(a) provides that "[i}f the defendant was an organizer
or leader of a criminal activity that involved five or more participants
or was otherwise extensive, increase by 4 levels."
22 SSG §2E3.1(a), the base offense level for gambling offenses,
provides for levels of:
(1) 12 if the offense was (A) engaging in a gambling business;
(B) transmission of wagering information; or (C) committed
as part of, or to facilitate, a commercial gambling operation;
or
(2) 6, otherwise.
Apdx. A - 24
that § 1955 warrants a conviction of those who may not
lead or manage the enterprise. Moreover, the base offense
level is not strictly applied to leaders or organizers--one
merely had to "engage" in a gambling business to receive
this level. USSG §2E3.1(a)(1). As a result, the four-point
enhancement is not a double counting.”
AFFIRMED.
BOGGS, Circuit Judge, concurring in part and
dissenting in part. Before United States v. Lopez, 115 S.
Ct. 1624 (1995), Congress’s commerce powers were
unlimited.’ "[One] wonder[s] why anyone would make the
23rhe circumstances surrounding this case make it inapposite to the
cases cited by defendant. In United States v. Romano, 970 F.2d 164,
166-67 (6th Cir. 1992), and Chichy, | F.3d at 1505-07, this court held
that the district court ar 2 pee double counting by
enhancements under § 4 § 2F1.1(b)(2). However,
§ 2F1.1(b)(2), the base offense level for deceit and fraud, is unlike the
apts. base offense level because it permits an increase of two levels
or “more than minimal planning.” Moreover, recent amendments to
the Guidelines have abrogated these particular provisions in Romano
and Chichy. See USSG §1B1.1, comment. (n.4); United States v.
Cobleigh, 75 F.3d 242, 251 (6th Cir. 1996).
In Stevenson, 6 F.3d at 1269-70, the Seventh Circuit prohibited
double counting under §3B1.1 because the crime of conviction (hiring
a minor to participate in a crime) already encompassed the concept of
"leadership." However, § 1955 does not exclusively target leaders.
Wall’s base offense level was the result of engaging in a gambling
operation; his sentence was enhanced because he managed that
operation. See, e.g., United States v. Trupiano, 11 F.3d 769, 775 (8th
Cir. 1993).
‘See Laurence Tribe, American Constitutional Law § 5-4 to 5-7, at
305-13 (2d ed. 1988) (cataloging initial prevalence of view that
Congress’s Commerce Clause powers were broad, giving way to a
Apdx. A - 25
mistake of calling it the Commerce Clause instead of the
"Hey, you-can-do-whatever-you-feel-like Clause."" Judge
Alex Kozinski, /ntroduction to Volume Nineteen, 19 Harv.
J.L. & Pub. Pol’y 1, 5 (1995). In light of the text of the
Commerce Clause’: "Could anyone say with a straight face
that the consumption of homegrown wheat [in Wickard v.
Filburn, 317 U.S. 111 (1942)] is *commerce among the
several states?’" Richard A. Epstein, The Proper Scope of
the Commerce Power, 73 Va. L. Rev. 1387, 1451 (1987).
Lopez has made us consider anew the concepts we had
become used to accepting without comment. If we are to
be true to our function as a intermediate federal court, we
must carefully examine Lopez to see what limits it has
placed on the formerly limitless Commerce Clause
jurisprudence of the Supreme Court.
It is clear that Lopez represents some revival of the
slumbering doctrine of enumerated powers. No longer will
a simple invocation of the commerce power by Congress
substitute for a detailed analysis into exactly how a
“formalistic” reading of the Commerce Clause, in turn giving way to
the modern, virtually unbounded reading of the Commerce Clause);
Jesse Choper, The Supreme Court and Unconstitutional Conditions:
Federalism and Individual Rights, 4 Cornell J.L. & Pub. Pol’y 460,
463 (1995) icting Lopez would go the other way because the
Commerce Clause was such a non-existent limit on federal power,
"[t}he true surprise will be if there are many dissenting votes").
2-The Congress shall have Power... To regulate Commerce with
foreign Nations, and among the several States, and with the Indian
Tribes... .” U.S. Const. art. I, § 8, cl. 3.
Apdx. A - 26
congressional enactment can fairly be said to "regulate
Commerce . . . among the several States." I believe the
court’s opinion in this case does not adhere to the new
limits Lopez has established on congressional power under
the Commerce Clause. Instead, the court upholds the
statute at issue in this case, 18 U.S.C. § 1955, by focusing
on only one part of the Lopez test -- the determination of
whether a regulated activity is commercial in nature -- and
concluding that gambling is more commercial than the gun
possession regulated in the statute struck down in Lopez.
The court also seems overly impressed with the existence
and volume of congressional findings. Applying a more
detailed Lopez analysis leads me to the conclusion that
§ 1955 is not within Congress’s commerce power, and I
therefore dissent.
I do not question the court’s caution, slip op. at 15-
16, in approaching a challenge to a statute based on the
Commerce Clause -- courts should be hesitant to use their
power to strike down Congress’s enactments. Hodel v.
Indiana, 452 U.S. 314, 323 (1981) ("It is established
beyond peradventure that “legislative Acts adjusting the
burdens and benefits of economic life come to the Court
with a presumption of constitutionality ... .’") (citing
Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15
(1976)). Cf Erznoznik v. City of Jacksonville, 422 US.
205, 216 (1975) (emphasizing caution before striking down
a State statute as facially unconstitutional). Especially given
Apdx. A - 27
the intricacies of Lopez, reasonable judges may differ as to
how this case should be resolved, based on that new
precedent. Lopez should not be treated as an aberration,
however, simply because its newness makes unclear the
contours of the boundaries the Supreme Court intends to
impose on congressional power.’
The concurring opinion of Justices Kennedy and
O’Connor in Lopez only amplifies the uncertain dimensions
of congressional power. These two Justices indicated they
believe that Lopez does not "call in question the essential
principles now in place respecting the congressional power
to regulate transactions of a commercial nature." Lopez,
115 S. Ct. at 1637 (Kennedy, J., concurring). It must be
stressed, however, that Lopez is not a plurality opinion, with
a majority merely concurring in the result that the statute is
SRichard A. Epstein, Constitutional Faith and the Commerce Clause,
71 Notre Dame L. Rev. 167, 167 (1996) (expressing uncertainty about
whether Lopez will be "a flash in the pan” or “usher in a new age of
constitutional restraint"); Mark Tushnet, Living in a Constitutional
Moment ?: Lopez and Constitutional Theory, 46 Case W. Res. L. Rev.
845 (1996) (exploring whether Lopez is a constitutional event on the
same order as the ratification of the 14th Amendment or the New
Deal); John P. Frantz, Note, The Reemergence of the Commerce Clause
as a Limit on Federal Power, 19 Harv. J. L. & Pub. Pot’y 161, 167
(1995) (unclear whether Lopez “an aberration or a watershed"); Charles
B. Schweitzer, Comment, Street Crime, Interstate Commerce, and the
Federal Docket: The Impact of United States v. Lopez, 34 Dug. L. Rev.
71 (1995) ("implications of the decision are uncertain and potentially
far-reaching"); William H. Freivogel, Uncertainty Surrounds Court
Ruling on Commerce: But Experts Agree Ruling Limits Congress, May
Jeopardize Laws, St. Louis Post-Dispatch, May 2, 1995, at 11B
(canvassing law professors and attorneys who make contradictory
predictions about what Lopez means for constitutional law).
Apdx. A - 28
unconstitutional. Both Justices Kennedy and O’Connor
fully endorsed the majority opinion written by Chief Justice
Rehnquist. Therefore, I read the Kennedy-O’Connor
concurrence to sound a note of caution about the scope of
Lopez, not a note of paralysis. It is true that the "spirit" of
Lopez cannot be applied indiscriminately or expanded
without further encouragement from the Supreme Court, but
Lopez must currently be examined with a deliberate and
close focus on the precise reasoning used therein. When
this intellectual spadework is performed, however, one sees
the "cogent framework," slip op. at 16, for Commerce
Clause analysis that the court thinks is lacking.
Because of the uncertainty surrounding Lopez, and
especially in light of the caveats contained in the Kennedy-
O’Connor concurrence, the district courts* and the courts
of appeals* face the problem of how to implement Lopez
without overstepping their authority. I start with the
* United States v. Campbell, 891 F. Supp. 210, 212 (M.D. Pa. 1995)
(conceding that Lopez represents a significant shift in constitutional law,
but maintaining that, as a district court, it lacked the authority to strike
down a different statute on Commerce Clause grounds in light of more
specific pre-Lopez Supreme Court precedent on point).
SSoseph Calve, Anatomy of a Landmark, Conn. L. Trib., Aug. 14,
1995, at 1 (Circuit Judge Garwood, author of the Fifth Circuit's Lopez
opinion, noting that when Lopez was before the court of appeals he
proceeded on the theory that the Gun-Free School Zones Act was
unconstitutional because it lacked congressional findings, rather than on
a theory that returned to first principles, in keeping with his proper role
as an intermediate appellate court judge).
Apdx. A - 29
proposition that Lopez means something and is not simply
an aberration designed to strike down one statute, the Gun
Free School Zones Act ("GFSZA"), with no genera} doc-
trinal basis. Indeed, a careful reading of Lopez leads me to
the conclusion that a law premised on the Commerce Clause
is constitutional only if it regulates:
(1) channels of interstate commerce,
Lopez, 115 S. Ct. at 1629;
(2) instrumentalities of interstate
commerce or persons or things in
interstate commerce, whether the
threat the regulation is designed to
address comes from interstate or
intrastate activities, ibid.; or,
(3) activities having a substantial effect
on interstate commerce, id. at 1629-
30, which in turn requires in inquiry
into whether:
-- the regulation controls
a commercial activity
or an activity neces-
sary io the regulation
of some commercial
activity, id at 1630-31;
-- the statute includes a
jurisdictional nexus
requirement to ensure
Apdx. A - 30
that each regulated in-
stance of the activity
affects interstate
commerce, ibid.; and
-- the rationale offered to
support the consti-
tutionality of the
statute (i.e., statutory
findings, _ legislative
hisiory, arguments of
counsel, or a review-
ing court’s own attri-
bution of purposes to
the statute being chal-
lenged) has a logical
stopping point, so that
the rationale is not so
broad as to regulate
on a similar basis all
human endeavors, es-
pecially those tradi-
tionally regulated by
the states, id. at 1631-33.
Unfortunately, this analytical framework, ,articularly in
relation to the sub-parts of the "substantial effects” test, is
not laid out as clearly in Lopez as it might have been.
Nevertheless, each of the points summarized above is taken
Apdx. A - 31
directly from Lopez and this synthesis represents the most
logical way to give a fair reading to Lopez.
In my view, § 1955 obviously fits into neither of
the first two categories. Whether § 1955 fits into the third,
"substantial effects" category, is a more difficult inquiry.
Applying the three sub-parts of the Lopez substantial effects
test leads me to the conclusion that the activity regulated by
§ 1955 does not have a substantial effect on interstate
commerce and that the statute is therefore unconstitutional.
While § 1955 regulates commercial activity, it has neither
a jurisdictional nexus requirement nor supporting rationales
with any logical stopping point. The court’s opinion in this
case, on the other hand, finds constitutional support for
§ 1955 by straying from the analytical framework set forth
in Lopez. The court’s arguments are generally too broad,
lacking in logic, or otherwise in disharmony with Lopez.
Most importantly, the court takes the findings in the statute
and legislative history of § 1955 at face value, without
pausing to analyze whether those findings have a logical
stopping point that would prevent all human endeavors from
being regulated on the same basis, as we are required to do
by Lopez.
In a nutshell, this case involves federal regulation of
all gambiing that is forbidden by state law, if relatively
minor conditions are met with respect to the number of
individuals, the amount of money, and the period of time
involved in the gambling operation. Section 1955 is not
Apdx. A - 32
limited to gambling that is in interstate commerce or
substantially affects interstate commerce. The statute is not
necessary to a nationwide scheme to control either legal or
illegal gambling. And, on the facts of this case, the
connection of the defendants’ gambling operation to
interstate commerce is very tenuous. The gambling at issue
here involves Tennesseeans standing or sitting in Tennessee,
manipulating buttons on a machine located in Tennessee,
and receiving pay-offs in Tennessee. The only connection
that the gambling operation in this case had to interstate
commerce was that the video poker machines used in the
operation were shipped to Tennessee from New Jersey.
In the analysis below, I first outline the facts of the
case, set forth my points of agreement with the court, and
address certain preliminary arguments based on pre-Lopez
precedent. Second, I lay out my analysis of Lopez and
apply it to § 1955. Finally, I refute the five arguments the
court makes to defend the constitutionality of § 1955.
I. FACTS OF THE CASE AND PRELIMINARY
ARGUMENTS
A. Facts of the Case and Elements of a Violation of
§ 1955
Here are what | think are the relevant facts in this
case, including some not touched upon by the court:
Nathan and Donald Wall ran a video poker machine gamb-
ling business exclusively in Nashville area restaurants, bars
Apdx. A - 33
and other establishments in violation of Tennessee law.
The W: lls employed seven other people to help them con-
duct t eir gambling operation. Between 1989 and
September 1991, the Walls’ business operated for at least
two consecutive days, earning gross revenues during these
two days that exceeded $2,000. During this same period,
the business generated approximately $2 million in gross
revenues. In their business, the Walls used twenty video
poker machines purchased from Lucky Distributing and
Amusement Co., Inc. on June 12, 1989 for $10,622.50.
The machines vere shipped directly to the Walls’ company
from SMS Manufacturing Corp. in New Jersey at Lucky’s
request on August 3, 1989. On June 2, 1994, the United
States Attorney charged the Walls in a criminal information
with operating a gambling business in violation of § 1955.
The defendants ultimately pled guilty to this charge,
reserving the right to challenge by motion the validity of
the criminal information. The defendants moved to dismiss
the information on July 7, 1994. The district court denied
the motion on August 12, 1994.
While it is unnecessary for me to consider whether
Part Ill of the court’s opinion addressing the sentencing
©The invoice contained the following in "small print”: "The operation
pol end pe eedmer beet ne vetayr= sind Bok arb Sater adage
and local laws and regulations. It’s not intended in to solicit the
sale of such games in any jurisdiction wherein the same may not be
lawfully sold or operated." (Emphasis supplied.) The Walls
apparently did not heed, or did not read, this warning.
Apdx. A - 34
argument advanced by Donald Wall is correct, I concur in
Part II of the opinion, which concludes that the Walls sat-
isfied the elements constituting a violation of § 1955. If the
Walls were correct that their conduct did not violate the
statute, there would be no need to consider the consti-
tutional argument they raise. NLRB v. Catholic Bishop of
Chicago, 440 U.S. 490, 500-01 (1979) (a federal court must
engage in any reasonable construction of a_ statute that
allows it thereby to avoid a constitutional question); United
States v. Five Gambling Devices, 346 U.S. 441, 449-50
(1953) (plurality) (applying the canon of avoiding consti-
tutional questions to a statute banning the shipment of
gambling machines in interstate commerce). As the court
rightly holds, the Walls’ statutory arguments are wholly
lacking in merit under both the text of § 1955 and Sixth
Circuit case law interpreting § 1955.
B. Lack of National Uniformity in § 1955
Before addressing the reasoning used in the court’s
opinion, it is also necessary to consider a Commerce Clause
argument the Walls make that is not based on Lopez. The
Walls appear to have drawn this argument from United
States v. Sacco, 491 F.2d 995, 1003 (9th Cir. 1974) (en
banc) (upholding § 1955 against a Commerce Clause
challenge). On the basis of a similar argument rejected in
Sacco, the Walls challenge the lack of national uniformity
in § 1955. In order to violate § 1955, one must first violate
a state’s gambling laws. Therefore, if a particular kind of
Apdx. A - 35
gambling is not illegal in a state, it is not a violation of
federal law to engage in that particular kind of gambling in
the state. As a result, § 1955 applies to the same gambling
activities differently depending on the state or states in
which that gambling activity takes place. The Constitution
specifically imposes uniformity requirements on some forms
of economic regulation, for instance on the power to lay
duties and excises.’ Currin v. Wallace, 306 U.S. 1, 14
(1939). The Commerce Clause includes no such require-
ment, however. Therefore, by negative implication, it has
been held that no uniformity limitation can be engrafted
onto the Commerce Clause. /bid. Based on Currin, I con-
clude that the lack of uniformity in § 1955 is not fatal to its
constitutionality under the Commerce Clause. Although,
as I discuss below at pp. 73-77, I do think that § 1955’s
peculiar manner of intruding into the criminal law related
to gambling, an area of regulation traditionally reserved to
the states, does implicate the Tenth Amendment.®
C. Section 1955, the Bar Doctrine, and the Lottery
Case
7+(A]ll Duties, Imposts and Excises shall be uniform throughout the
United States.” U.S. Const. art. I., § 8, cl. 1. See also U.S. Const.
art. I, § 8, cl. 4 (requiring bankruptcy and naturalization laws to be
uniform).
8--The powers not delegated to the United States by the Constitution,
nor prohibited by it to the States, are reserved to the states respectively,
or to the people.” U.S. Const. amend. X.
Apdx. A - 36
Another Commerce Clause argument not addressed
by the court is one the government could have made to de-
fend the constitutionality of § 1955, but either overlooked
or did not choose to make. It is an argument too important
not to consider, however, because it involves the only Com-
merce Clause case | am aware of in which the Supreme
Court addressed the federal regulation of gambling. In
Champion v. Ames, 188 U.S. 321, 358 (1903), commonly
known as the Lottery Case, the Supreme Court upheld the
constitutionality of a federal statute that prohibited the
interstate transportation of lottery tickets’, even though the
Commerce Clause only gives Congress the power to
"regulate" commerce. The Court held that the power to
regulate encompasses the power to prohibit regulated activi-
ties in their entirety. This holding has become known as
the "bar doctrine." See Lino Graglia, United States v.
Lopez: Judicial Review under the Commerce Clause, 74
Tex. L. Rev. 719, 733-38 (1996) (discussing the develop-
ment of the bar doctrine). The bar doctrine was extended
in Hoke v. United States, 227 U.S. 308, 322 (1913), to
uphold the constitutionality of the Mann Act, which, inter
alia, prohibited the interstate transportation of women for
the purpose of engaging in prostitution.
®The statute also prohibited advertising connected with lotteries that
required the interstate transportation of tickets. Champion, 188 U.S.
at 322.
Apdx. A - 37
Professor Graglia argues that the evolution in the
early twentieth century of the bar doctrine constituted as
substantial an erosion of the enumeration of powers as the
creation of the mere effects on interstate commerce test
pioneered by the New Deal Supreme Court. Central to his
thesis that Lopez represents a minor change in constitutional
law is that Lopez did not curtail the bar doctrine in any
way. Graglia, 74 Tex. L. Rev. at 755. Whether Graglia’s
conclusion that the bar doctrine survives Lopez is correct or
not is irrelevant to the Walls’ case, however, as the bar
doctrine is not implicated here." Section 1955 does not
mention interstate commerce at all. Obviously, under the
bar doctrine Congress could have criminalized the interstate
transportation of video poker machines" (Champion) or it
could have criminalized the interstate transportation of
video poker machines with the intent to use them in the
commission of some independently defined crime (Hoke).
See United States v. Olin Corp., 927 F. Supp. 1502 (S.D.
Ala. 1996) (striking down the Comprehensive Environ-
ror a humorous example of how well-established the bar doctrine
has become, see Goetz v. Glickman, 920 F. Supp. 1173, 1180 (D. Kan.
1996) (upholding the Beef Promotion and Research Act of 1985 against
an argument that Congress can only restrict or prohibit commerce not
promote it). The litigant in Goetz had the text and the developmental
history of the Commerce Clause backwards.
"indeed, Congress has done so in 18 U.S.C. § 1953, the current
version of the statute addressed in Five Gambling Devices, 346 U.S.
441.
Apdx. A - 38
mental Response, Compensation, and Liability Act based on
Lopez and noting that "regardless of the congressional
motive or the broad dicta in the Champion opinion, the
Lottery Act regulated a matter (cross-border movement of
certain commerce) which the Court’s interpretation of the
dormant Commerce Clause had placed beyond the power of
the states."). Section 1955 does not criminalize either of
the general categories of activities addressed in Champion
or Hoke, however. In fact, § 1955 criminalizes activity that
could be completely unconnected to interstate commerce.
Running a card game, where the playing cards were made
from paper manufactured wholly within one state by un-
sophisticated methods using wood, chemicals, and mach-
inery from that state, if directed as an illegal gambling
operation under state law, would violate § 1955 as long as
five people were involved in conducting the operation and
the operation either continued for more than 30 days or had
gross revenue of $2,000 or more on any single day. See
Robert W. Lee, /8 U.S.C. § 1955: Who Conducts an Illegal
Gambling Business? -- It's Just a Roll of the Dice, 12 W.
St. U. L. Rev. 239, 244 (1984) ("Time has shown . . . that
relative few continuous gambling operations are outside the
parameters of the federal legislation."). Section 1955 is
Apdx. A - 39
substantially different from either the statute upheld in the
Lottery Case or in Hoke."
Il. THE LOPEZ FRAMEWORK AND ITS
APPLICATION TO THIS CASE
A. Appropriate Level of Scrutiny
Lopez is unclear on the proper level of constitutional
review that courts should now apply to Commerce Clause
challenges. See David G. Wille, The Commerce Clause: A
Time for Reevaluation, 70 Tul. L. Rev. 1069, 1090 (1996)
("the Court appeared to be applying a higher level of
scrutiny [than rational basis scrutiny in Lopez] and re-
asserting its constitutional role of judicial review by limiting
Congress’s power within particular, narrow boundaries");
Molly E. Homan, Comment, United States v. Lopez: The
Supreme Court Guns Down the Commerce Clause, 73 Denv.
U. L. Rev. 237 (1995) ("[t]he majority’s analysis [in
Lopez] . . . raised the question of what level of review the
courts should apply in future Commerce Clause cases");
Leading Cases, 109 Harv. L. Rev. 111, 111 (1995) (editors
of the Harvard Law Review opining that it is unclear
whether Lopez signals a note of caution in rational basis
‘2 The Third Circuit has recently upheld, post-Lopez, an amendment
to the federal statute at issue in the Lottery Case, 18 U.S.C. § 1301,
which prohibited the communication across state lines of information
related to lotteries. Pic-A-State PA, Inc. v. Reno, 76 F.3d 1294, 1303
(3d. Cir. 1996).
Apdx. A - 40
review or “indicates an aggressive new level of review,
untrammeled by the obligation to defer to legislative
findings"). I read Lopez as requiring courts to use more
than mere rational basis scrutiny in reviewing challenges to
Congress’s commerce powers. See Epstein, Constitutional
Faith and the Commerce Clause, 71 Notre Dame L. Rev. at
177 (Lopez represents a move "from rational basis (back) to
intermediate scrutiny"); Wendy M. Rogovin, The Politics of
Facts: 'The Illusion of Certainty’, 46 Hastings L.J. 1723,
1725 (1995) (interpreting Lopez and other recent decisions
of the Rehnquist Court as moving away from deference to
Congress and replacing a deferential approach with
requirements that empirical data support congressional
findings); Larry E. Gee, Federalism Revisited: The Supreme
Court Resurrects the Notion of Enumerated Powers by
Limiting Congress's Attempt to Federalize Crime, 27 St.
Mary’s L.J. 151, 191 (1995) (Lopez is the “first step" in
moving to a "Commerce Clause jurisprudence . . . based in
fact"); Stephen M. McJohn, The Impact of United States v.
Lopez: The New Hybrid Commerce Clause, 34 Dug. L. Rev.
1 (1995) ("Although not explicitly rejecting the ‘rational
basis’ precedents, the Court appears to have abandoned its
previous deference to Congress in favor of its own
independent assessment of the effect on commerce.");
Graglia, United States v. Lopez: Judicial Review under the
Commerce Clause, 74 Tex. L. Rev. at 752 (noting that
Lopez surprisingly uses the words "rational basis" to support
Apdx. A - 41
its adoption of the “substantial effects" test,’ but that
Lopez did not apply anything remotely like the rational
basis test to the GFSZA)); Herman Schwartz, Court
Abandons Rational-Basis Test, Legal Times May 8, 1995,
at 25-26 (author’s position clear from the title chosen for
his article); Deborah Jones Merritt, Commerce!, 94 Mich. L.
Rev. 674, 677 (1995) (Lopez applies a "toughened rational
basis standard"). But see Doe v. Doe, No. 3:95cv2722
(JBA), 1996 WL 344026, at *4 (D. Conn. June 19, 1996)
("Lopez reaffirmed the rationality test"). Though there is
obviously nothing in Lopez to indicate that the Court was
applying strict scrutiny, the Court was definitely not
applying minimal, rational basis scrutiny to the GFSZA.
Below, I provide my best understanding of the type of
intermediate scrutiny used in Lopez.
B. Three Broad Categories of Activities that
Congress Can Regulate under the Commerce Clause
"Schief Justice Rehnquist in his Lopez opinion mentions rational
basis scrutiny at one point in Lopez, citing Hodel v. Virginia Surface
Mining & Reclamation Ass'n, Inc., 452 U.S. 264, 276-80 (1981), but
then immediately cites his own concurrence in Hodel in a footnote for
the proposition that “simply because Congress may conclude that a
particular activity substantially affects interstate commerce does not
necessarily make it so." Lopez, 115 S. Ct. at 1629 n.2 (quoting Hodel,
452 U.S. at 311 (Rehnquist, J., concurring)). As Justice Souter’s
dissent in Lopez makes clear, Lopez, 115 S. Ct. at 1653-54 (Souter, J.,
dissenting), the majority of the Court certainly does not appear to be
applying mere rational basis scrutiny. It is also important to note that
Justice Kennedy’s concurrence does not mention rational basis scrutiny.
Apdx. A - 42
ee
As the court recognizes, slip op. at 5, Lopez follows
the tripartite test for Commerce Clause analysis set out by
Justice Douglas in Perez v. United States, 402 U.S. 146,
150 (1971). Congress may proverly regulate under its
Commerce Clause power: (1) "the use of the channels of
interstate commerce"; (2) "the instrumentalities of interstate
commerce, or persons or things in commerce, even though
the threat may come only from intrastate activities"; (3)
"activities that substantially affect interstate commerce. "
Lopez, 115 S. Ct. at 1629-30. The government in this
case concedes that it defends the statute exclusively because
of the substantial effect on interstate commerce of gambling
businesses made illegal by state law.'*
“4 Perez allows regulation wherever commerce is “affected.” Lopez
makes it clear that commerce must be “substantially affected” by the
activity to be regulated under the Commerce Clause. Lopez, 115 S. Ct.
at 1630. This point makes the court's direct reliance on Perez to
uphold § 1955 questionable. See United States v. Chesney, 86 F.3d
564, 578 n.7 (6th Cir. 1996) (Batchelder, J., concurring) (making a
similar point).
8Nor could the government have defended § 1955 under either of
the other two routes to constitutionality under Lopez. It is clear that
§ 1955 regulates an activity that can take place wholly within state
boundaries, not a channel of interstate commerce. Furthermore,
§ 1955 does not regulate an instrumentality of interstate commerce, for
instance aircraft (Perez, 402 U.S. at 150) or a person or thing in
interstate commerce. Gambling can be performed by individuals in a
single state. And gambling is a servic: rather than a commodity. Cy.
United States v. Wilks, 58 F.3d 1518, 1521 (10th Cir. 1995) (applying
Lopez to uphold against a Commerve Clause challenge a federal law
regulating machine gun ownership and transfer because machine guns
are "by their nature” "a commodity . . . transferred across state lines
for profit").
Apdx. A - 45
C. Lopez’s Explication of the Substantial Effects Test
In holding that the GFSZA did not regulate activity
that substantially affected interstate commerce, the Court
noted that (1) the possession of a gun near a school zone
was not a commercial activity or an essential part of a
larger regulation of commercial activity; (2) the GFSZA
lacked a jurisdictional nexus requirement that would allow
courts to ensure through case-by-case inquiry that a
particular firearm possession substantially affects interstate
commerce’®; and, (3) the rationales offered by the Solicitor
General to show a substantial effect on interstate commerce
did not have a logical stopping point that would prevent the
regulation of all intrastate activity on a similar basis.
Lopez, 115 S. Ct. at 1630-34. The tough question we face
is how these three points of analysis interact: In order to be
constitutional, must a statute satisfy all three sub-parts of
this test? In what order should the three sub-parts be
applied? Because the GFSZA satisfied none of the three
"6The Third Circuit has rejected the idea that te Supreme Court
could have intended to impose a requirement that the particular
instances of criminal activity charged under a federal statute with a
jurisdictional nexus requirement must substantially affect interstate
commerce. United States v. Bishop, 66 F.3d 569, 587-88 (3d Cir.),
cert. denied, 116 S. Ct. 681 (1995). In light of the Supreme Court's
statement in Lopez that, “[the GFSZA] contains no jurisdictional
element which would ensure, through case-by-case inquiry, that the
firearm possession in question affects interstate commerce,” this
statement seems in error. Lopez, 115 S. Ct. at 1631 (emphasis added).
The Third Circuit’s argument depended upon two Supreme Court
precedents, not directly on point, that preceded Lopez.
Apdx. A - 44
¥?
sub-parts, the Court did not have to face these questions.
But they cannot be ignored. See United States v. Chesney,
86 F.3d 564, 576-77 (6th Cir. 1996) (Batchelder, J.,
concurring) (chastising many sister courts and commentators
for reading Lopez’s analysis of the substantial effects tes: as
only requiring that a statute pass muster under any one of
the three points to be held constitutional).
My best answer to the open question of how the
three points made by the Court interact is contained in the
following framework for analysis of whether an activity
sought to be regulated substantially affects interstate
commerce after Lopez: First, a reviewing court should
determine whether the intrastate activity being regulated is
commercial in nature or its regulation is an essential part of
the regulation of some commercial activity.'" If the
activity is neither commercial nor is its regulation an
essential part of the regulation of commercial activity, then
that activity cannot be regulated under the Commerce
Clause. If the intrastate activity is either commercial or its
regulation is necessary to the regulation of a commercial
activity, however, then a reviewing court needs to go on to
the next question.
Second, that court must ask whether the statute
contains a jurisdictional nexus requirement that limits
"7 Lopez uses the words “economic” and “commercial” inter-
changeably. I consistently use the word "commercial" in this context.
Apdx. A - 45
jurisdiction over the intrastate activity generally to those
instances of the activity that have some particular
connection with interstate commerce. If a facial challenge
is mounted to the constitutionality of a statute with a
jurisdictional nexus requirement, then this challenge must be
rejected; the regulation being challenged is facially
constitutional under the Commerce Clause.” A
jurisdictional nexus requirement should be read to invoke
the full extent of Congress’s Commerce Clause power.
United States v. Russell, 471 U.S. 858, 859 (1985). It
should also be read, however, especially when vague or
incomplete, to avoid constitutional difficulties.” If a
statute contains a jurisdictional nexus requirement and the
challenge is to the application of that requirement in a
Be or an example of a court noting the difference between a facial
challenge and an as-applied challenge to the constitutionality of a statute
under the Commerce Clause after Lopez, see United States v. Medina,
901 F. Supp. 59, 60 (D.P.R. 1995) (deeming it premature to rule on
whether the jurisdictional nexus requirement in 18 U.S.C. § 922(g)(1)
was met after rebuffing a facial challenge to the statute's
constitutionality based on Lopez).
For instance, even if the plain meaning of a jurisdictional nexus
requirement permitted regulation of a non-commercial activity that was
not essential to the regulation of some commercial activity, the plain
meaning of the jurisdictional nexus requirement should be ignored.
Instead, the jurisdictional nexus requirement should be read to comport
with the first sub-part of the Lopez substantial effects test and permit
the regulation only of commercial activities or activities essential to the
regulation of commercial activities. See Five Gambling Devices, 346
U.S. at 449-52, 454-56 (reading jurisdictional nexus requirement so as
to avoid a constitutional question in direct contravention of the plain
meaning of that requirement).
Apdx. A - 46
particular case, or the statute contains no jurisdictional
nexus requirement, then the court must go on to the final
question.”
Third, the court must ask whether the statute’s con-
stitutionality or the constitutionality of its application in a
particular case is supported by (1) the findings in the statute
20 re-Lopez Commerce Clause Supreme Court precedent establishes
that jurisdictional nexus requirements are to be read as coextensive with
Congress's Commerce Clause powers. Still, because constitutional
questions are to be avoided through statutory interpretation where fairly
possible, it makes sense initially to make the threshoid determination
that a particular activity falls within the terms of a plain meaning
reading of jurisdictional nexus requirement before moving on to
consider the three sub-parts of the Lopez substantial effects test. See
the discussion of the Tenth Circuit's decision in United States v. Grey,
56 F.3d 1219 (10th Cir. 1995), infra p. 64 0.44.
Also, some might contend that the Supreme Court’s language,
when discussing the jurisdictional nexus sub-part of the substantial
effects test, authorizes a court to read into a statute a nonexistent
jurisdictional nexus requirement and thereby save a statute from facial
Commerce Clause attack. See Lopez, 115 S. Ct. at 1631 (discussing
United States v. Bass, 404 U.S. 336 (1971)). Lopez's analysis of Bass,
however, only stands for the proposition that a statute with an
ambiguous jurisdictional nexus requirement can be saved by creative
statutory construction to avoid constitutional questions. Lopez does not
permit a court to read a jurisdictional nexus requirement into a statute
wholly lacking such a requirement. If it did, then perhaps the GFSZA
might have been saved by this technique. Section 1955 contains no
jurisdictional nexus requirement and therefore the Buss technique has
no application to this case. For an example of an excellent district
court opinion following the proper approach to reading a statute
arguably creating commerce power difficulties after Lopez, see United
States v. Tidwell, No. CIV. A. 94-CR-353, 1995 WL 764077, at *3-*5
(E.D. Pa. Dec. 22, 1995) (reading 21 U.S.C. § 848(e) to avoid Lopez
difficulties).
Apdx. A - 47
or the legislative history of the statute”, if there are any;
(2) by the litigants’ proffered defenses of the constitu-
tionality of the statute”; or, (3) by the court’s own attri-
bution of congressional purpose to the statute.” This
listing of potential supporting rationales is meant to state a
hierarchy. In other words, with a typical statute the pre-
sence of statutory findings will obviate the need to consider
findings in the legislative history or the other sorts of
rationales farther down the hierarchy. The rationales of-
fered to support the constitutionality of the statute, whatever
their location in the hierarchy, must have a logical stopping
point that would prevent them from being used to regulate
any intrastate activity. In light of the Tenth Amendment,
this is especially true when the federal government seeks to
regulate activities that have historically been the province of
21 the Lopez Court specifically noted that it would have considered
statutory findings in connection with the GFSZA, if only
Congress had made any. Lopez, 115 S. Ct. at 1631. The Court also
indicated a willingness to consider legislative history. Jbid.
22 The Lopez Court’s consideration of the rationales offered to defend
the GFSZA by the Solicitor General establish that the Supreme Court
will examine the rationales offered by a litigant to support the
constitutionality of a statute under the Commerce Clause. Lopez, 115
S. Ct. at 1632.
3The Lopez Court also saw fit to respond to the purposes ascribed
to the statute by Justice Breyer, writing in a ae 115 S. Ct.
at 1632-33. Given the presumption of constitutionality, we should
afford any statute not supported by findings, legislative history, or
supporting rationales by a litigant a “last chance,” in the form of a
sensible attribution of purpose by the reviewing court.
Apdx. A - 48
the states. Lopez, 115 S. Ct. at 1631 n.3 (noting that states
possess the primary authority under our constitutional
system to define and enforce criminal law). A statute that
must be upheld on the third sub-part of the Lopez sub-
stantial effects test that intrudes upon those areas of life that
have traditionally been exclusively regulated by the states
is highly unlikely to have the requisite logical stopping
point. But, if at least one of the rationales does have such
a logical stopping point, then the statute is insulated from
facial constitutional challenge.”
In as-applied challenges to a statute with a
jurisdictional nexus requirement or a logical stopping point,
the test is whether the instance of the activity to be regu-
24The most contentious part of the reading of Lopez I advocate is the
focus on whether the congressional findings or other rationales offered
to support the constitutionality of a statute have any logical stopping
point. However, th’* inquiry is demanded by the Supreme Court’s
intensive scrutiny of the rationales offered by the government to uphold
the GFSZA in Lopez. Lopez, 115 S. Ct. at 1632-33. A few courts
have realized that Lopez requires courts to take a hard look at
congressional findings and other rationales offered to support the
constitutionality under the Commerce Clause of any statute that must
be justified under the substantial effects test. See, ¢.g., United States
v. Parker, 911 F. Supp. 830, 837-39 (E.D. Pa. 1995) (rejecting the
rationales, denominated by the court as the “basic necessities" and
“federal subsidy” theories, offered by the government to support the
constitutionality of the Child Support "heneveey Act of 1992
(“CSRA”)). Hoffman v. Hunt, 923 F. Supp. 791, 816 (W.D.N.C.
1996) (after Lopez, courts must engage in “meaningful judicial review
of Congress’ findings” -- congressional findings in that case were
“insufficient” and supported “almost exclusively by anecdotal
evidence”). But see Doe, 1996 WL 344026, at *4 (calling Lopez’s
rejection of the rationales offered to support the GFSZA by the
Solicitor General mere “dicta").
Apdx. A - 49
lated falls within the terms of the jurisdictional nexus
requirement or within the rationales having a logical stop-
ping point offered to support the constitutionality of the
statute. If the instance of the activity to be regulated falls
within these parameters, then the as-applied challenge fails.
If it is outside of these parameters, then the as-applied
challenge succeeds.
For convenience, the flowchart illustrates this
understanding of the Lopez substantial effects test:
NO
emg NCONSTITUTION UL
TO REGULATE
CONSTITUTION
TO REGULATE
UNCONSTITUTIONAL
TO WEGCULATE
The Lopez Substantial Effects Test
Four important consequences of my analysis of the
substantial effects test are: (1) non-commercial activities can
be regulated, but their regulation must be essential to a
larger regulation of some commercial activity; (2) not all
Apdx. A - 50
BEST AVAILABI
commercial activities can be regulated by Congress; (3) a
jurisdictional nexus requirement or a rationale with a logical
stopping point can sometimes protect a statute from a facial
Commerce Clause challenge, but not from an as-applied
challenge; and (4) the fact that a statute regulates activities
that have been traditionally regulated by the states (a Tenth
Amendment concern) is relevant only if a statute’s validity
depends on whether the rationales offered to support its
constitutionality have a logical stopping point because
whether the traditional purview of state regulation is
impinged upon is crucial in testing whether a logical
stopping point exists.
D. Application of Lopez’s Substantial
Effects Test to § 1955
1. Commercial Activity
Section 1955 involves the regulation of what is
obviously a commercial activity within the meaning of
Lopez. Gambling is a diversion that people pay money to
engage in. Some forms of gambling may be mere enter-
tainment, but it is clear that § 1955 is directed at gambling
businesses. Therefore, | do not need to consider whether
the statute regulates non-commercial activity essential to the
regulation of some commercial activity. I can move on to
answer the second and third questions in the above frame-
work. I pause only to address in advance one potential
objection to this approach. Some have contended that an-
Apdx. A - 51
alysis under Lopez’s substantial effects test should cease
when the intrastate activities being regulated are determined
to be commercial. I do not think that this is the proper way
to read Lopez.
Proponents, perhaps including the court, of the view
that all intrastate commercial activities can be regulated
under Lopez’s substantial effects test point to Chief Justice
Rehnquist's statement in Lopez that the Gun Free School
Zones Act was "a criminal statute that by its terms has
nothing to do with commerce’ or any sort of economic
enterprise, however broadly one might define those terms."
Lopez, 115 S. Ct. at 1630-31. See Cheffer v. Reno, 55 F.3d
$517, 1520 (11th Cir. 1995) (upholding the Freedom of
Access to Clinic Entrances Act ("FACE") against a Lopez-
based challenge because the provision of reproductive health
services is commerce); United States v. Lucero, 895 F.
Supp. 1421, 1423 (D. Kan. 1995) (FACE is constitutional
because the provision of reproductive health services is
commerce)"; United States v. Smith, 920 F. Supp. 245,
248 (D. Me. 1996) (Lopez permits the regulation of any
28 put see United States v. Wilson, 73 F.3d 675, 692-93 (Coffey, J.,
dissenting) (7th Cir. 1995), petition for cert. filed, 64 U.S.L.W. 3669
(Mar. 20, 1996) ("I am at a loss to mage et how the [anti-abortion]
protesters, who were taking part in a local act of civil disobedience,
can be classified as having engaged in a commercial activity.").
Apdx. A - 52
goods that "frequently travel" in interstate commerce”);
United States v. Najarian, 915 F. Supp. 1460, 1472 n.19
(D. Minn. 1996) (Lopez only requires a "commercial
nexus," which was satisfied even when _ intrastate
distribution of a drug was being regulated by the FDA);
John P. Frantz, Note, The Reemergence of the Commerce
Clause as a Limit on Federal Power, 19 Harv. J. L. & Pub.
Pol’y 161, 167-68 & n.52 (1995) (all commercial activities
are regulable under the Commerce Clause after Lopez).
The Court could not have intended to imply that all
commercial activities could be regulated when it said that
the GFSZA "is a criminal statute that by its terms has
nothing to do with ‘commerce’ or any sort of economic
enterprise, however broadly one might define those terms."
Lopez, 115 S. Ct. at 1630-31. Else, the word "interstate" in
the Commerce Clause is rendered a nullity. Similarly, the
fact that § 1955 is a criminal statute does not determine its
(un)constitutionality, even though criminal laws are the
traditional purview of the states. Some commercial
regulation must be off limits to Congress under its
26, erbatim, the Smith court stated, "the Drug Act bears a substantial
relation to commerce by regulating the manufacture, distribution, and
sale of controlled substances that frequently travel in intrastate
commerce." Smith, 920 F. Supp. at 248. ( is supplied.) I
assume the court meant “interstate commerce," the district
court’s point, taken in context, appeared to be that as long as enough
instances of some activity were interstate in nature Congress could
regulate the entire activity, even in its intrastate manifestations.
Apdx. A - 53
commerce powers, just as all criminal regulation is not off
limits to Congress.
Lopez also went to great lengths to make the lower
federal courts aware that the test in connection with this
third broad category of congressional power is not whether
there is any effect on interstate commerce, but whether the
effect is substantial. "We conclude, consistent with the
great weight of our case law, that the proper test requires an
analysis of whether the regulated activity ‘substantially
affects’ interstate commerce." Lopez, 115 S. Ct. at 1630
(quoting Maryland v. Wirtz, 392 U.S. 183, 197 n.27 (1968),
which also required a substantial effect on interstate
commerce). It would odd for the Supreme Court to
emphasize this point if any commercial activity, whether
intrastate or interstate, would be constitutionally regulable
by Congress under its commerce powers per se.
Finally, the mere purchase of goods made in other
states cannot be sufficient to permit congressional regulation
of an intrastate commercial activity, especially by means of
criminal statutes. For instance, here the Walls purchased
video poker machines from a retailer in their own state.
The machines were then shipped from New Jersey to the
Walls at their retailer's request. If this is enough to
authorize congressional regulation of the Walls” gambling
business, then almost any activity in modern America may
be federally criminizable. I consider this argument in more
detail below (see p. 45) in connection with the explicit
Apdx. A - 54
findings Congress made when enacting § 1955. My basic
point, however, is that the conclusion that an intrastate
activity is commercial in nature does not end the Lopez
inquiry under the substantial effects test.
2. Jurisdictional Nexus Requirement
Section 1955 does not have a jurisdictional nexus
requirement that could ensure, on a case-by-case basis, that
the intrastate gambling operations reached by the statute are
sufficiently connected to interstate commerce to be
regulated by Congress under its commerce powers.”’
Commentators have been nearly unanimous in recognizing
the centrality of the lack of a jurisdictional nexus
requirement in considering the validity of statutes after
Lopez.” Even though § 1955 lacks a jurisdictional nexus
27 Contra United States v. Becker, 461 F.2d 230 (2d Cir. 1972),
vacated on other grounds, 417 U.S. 903 (1974); United States v.
485 F.2d 1333 (10th Cir. 1973), cert. denied, 416 U.S. 936
In these two court of appeals cases, imposition of the
i
28x clly G. Black, Removing Intrastate Lawsuits: The Affecting-
Commerce after United States v. Lopez, 1995 B.Y.U. L.
Rev. 1103, 1105 (1 2 coniing ha lr epi ro
nexus and f by
desire to purely intrastate activities to federal
statutes with ambiguous j nexus requirements in Bass, 404
Apdx. A - 55
spiny erie oe ou ey eee
a
requirement, there is one other way to save the statute from
being struck down as unconstitutional: the rationales offered
to support the statute might serve as a surrogate for a
jurisdictional nexus requirement.”” Determining whether
U.S. at 338); President William J. Clinton, Message to Congress
Transmitting the "Gun-Free School Zones Amendments Act of 1995,”
31 Weekly Comp. Pres. Doc. 809 (noting that these Amendments add
the jurisdictional nexus requirement that Attorney General Reno advised
that the Supreme Court in Lopez required for constitutionality); Herb
Kohl, Kohl Fights to Reinstate Gun-Free School Zones Law,
Congressional Press Release, June 7, 1995, available in LEXIS, Nexis
Library (Senators Kohl, Simon, Specter, Feinstein, Bradley,
Lautenberg and Chafee making same argument as President Clinton);
Harvey Berkman, Congress’ Reach May Be Nipped, Nat’! Law J.,
Nov. 21, 1994, at A6 (predicting, before Lopez, that the Violence
Against Women Act would withstand Commerce Clause challenge
because most of its provisions contained jurisdictional nexus
requirements); Constitutional Law Conference Probes Impact of
Supreme Court’s 1994-95 Term (hereinafter Constitutional Conference},
64 U.S.L.W., Oct. 24, 1995 (Judge Frank Easterbrook, one of the
participants, opining that the chief requirement Lopez gto is that
of a jurisdictional nexus requirement; colleague Professor Jesse T
concurred). For cases employing the jurisdictional nexus requirement
rationale, see, ¢.g., Bishop, 66 F.3d at 585 (federal carjacking statute,
18 U.S.C. § 2119, constitutional partially because of presence of
jurisdictional nexus irement); United States v. Hinton, No. 95-
5095, 1995 WL 623876, at *2 n.2 (4th Cir. Oct. 25, 1995)
(unpublished per curiam) (federal felon in possession of a firearm
statute, 18 U.S.C. § 922(g)(1), constitutional because it includes a
jurisdictional nexus requirement), cert. denied, 116 S. Ct. 1026 (1996).
23 The court agrees with my analysis that congressional findings can
serve as surrogates for missing jurisdictional nexus requirements. See
slip op. at 12-13 (noting that § 1955 lacks a jurisdictional nexus
requirement, but holding that the statute is still saved by the
of "reams of legislative historical information”). In light of this
agreement, the court’s disapproval of Olin, 927 F. Supp. 1502, slip op.
at 10, n.11, for holding that Congress either must make findings or
include a jurisdictional nexus requirement is puzzling. Because I do
not dispute that § 1955 is a commercial statute, I must be diverging
from the court either over whether the findings that Congress in
Apdx. A - 56
this is the case requires an analysis of these rationales to
discover whether they have any logical stopping point. Just
as a jurisdictional nexus requirement must put the regulation
of some intrastate commercial activities off limits, so must
the rationales offered to uphold the constitutionality of such
a statute. I turn now to a consideration of these rationales.
3. Congress’s Findings in Connection with § 1955
In Lopez, the Court rejected the following arguments
to support the assertion that possession of a firearm within
1,000 feet of any school substantially affected interstate
commerce: (1) firearm possession near schools could result
in violent crime which, (a) has high costs that are paid by
the general population through insurance premiums, and (b)
could deter individuals from traveling to areas perceived to
be unsafe; (2) firearm possession near schools substantially
threatens the educational process, and therefore could
reduce the productivity of the national citizenry. Lopez,
115 S. Ct. at 1632. The Court labeled the first of these
reasons, the "costs of crime" rationale, and the second, the
"national productivity" rationale. /bid. Both of these
this case have a logical none point or in my conclusion that Lopez
imposes such a requirement. I infer from the court's discussion of
Congress’s findings that the court does not believe that Lopez imposes
a logical stopping point requirement on congressional findings, despite
the fact that the court acknowledges that Lopez carefully scrutinized the
hig a for the GFSZA offered by the Solicitor General.
lp op. at 6-7.
Apdx. A - 57
rationales were flawed because under them "it is difficult to
perceive any limitation on federal power, even in areas such
as criminal law enforcement or education where States
historically have been sovereign." Jbid.*°
In this case, Congress made supporting findings in
the statute itself.*' Normally, under my analysis of the
3°75 refute any potential objection that the logical stopping point
analysis | present would never allow a congressional ation to pass
through the eye of its needle, I provide an example of a hypothetical
statute I believe would be supported by findings with a logical stopping
point. Consider a statute without a jurisdictional nexus requirement
that regulated in some fashion al! trade, interstate and intrastate, in
radioactive waste, supported by congressional findings that (1) the
problems sought to be remedied in connection with radioactive waste
are relatively new because the artificial production of radioactive waste
is relatively new; and (2) radioactive wastes stem largely from
technologies enabled or created directly by the federal government
during World War Il’s Manhattan Project. Neither of these two
rationales is infinitely extendable or invasive of traditional areas of state
regulation. The first, "newness" rationale obviously has limits that
specifically invoke, and therefore respect, traditional state regulation.
The second rationale, which relies on the federal government’s unique
role in having created the technologies that led to the iferation of
radioactive waste, also has a logical stopping point. Neither rationale
would not allow Congress to regulate trade in all hazardous materials,
let alone all human endeavors, unlike the "costs of crime” and “national
productivity” rationales rejected in Lopez.
31 Congress’s findings when it adopted § 1955 as part of a larger
statute aimed at organized crime are discussed in United States v.
Aquino, 336 F. Supp. 737, 739 (E.D. Mich. 1972) (quoting Pub. L.
91-452, 84 Stat. 922 (1970), known as the “Organized Crime Control
Act of 1970"):
The Congress finds that (1) organized crime in the United
States is a highly sophisticated, diversified, and wi
activity that annually drains billions of dollars from America’s
economy by unlawful conduct and the illegal use of force,
fraud, and corruption; (2) organized crime derives a major
Apdx. A - 58
Lopez substantial effects test, this would mean that I would
not need to consider findings made in the legislative history
or rationales offered to support the statute by the litigants,
or attempt to attribute a purpose to the statute without these
extrinsic aids. As these legislative findings show, however,
the aim of § 1955 was to target organized crime’s illegal
gambling operations, though the law’s actual ambit is vastly
wider. If these congressional findings are to have any
logical stopping points, those points must be contained in
the five more particular findings set forth in the legislative
history of § 1955 and addressed in detail below. The
"reams" of rationales (see slip op. at 13) mentioned in the
legislative history for enacting § 1955, however, have no
logical stopping points:
The Congress finds that (1) illegal gambling
involves widespread use of, and has an effect upon,
portion of its power through money obtained from such illegal
endeavors as syndicated ling, loan , the theft and
fencing of property, importation and istribution of
narcotics and other dangerous drugs, and other forms of social
exploitation; (3) this money and power are increasingly used
to subvert and corrupt our democratic processes; (4) organized
crime activities in the United States weaken the stability of the
Nation’s economic system, harm innocent investors and
competing organizations, interfere with free competition,
seriously burden interstate and foreign commerce, threaten the
domestic security, See DEEN ie SONNE: SE Oe
Nation and its citizens .
Only finding (2) mentions gambling i in any way, and this finding relates
solely to "syndicated gambling,” not to the other forms of gambling
that § 1955 reaches.
Apdx. A - 59
interstate commerce and the facilities thereof; (2)
illegal gambling is dependent upon facilities of
interstate commerce for such purposes as obtaining
odds, making and accepting bets, and laying off
bets; (3) money derived from or used in illegal
gambling moves in interstate commerce or is
handled through the facilities thereof; (4)
paraphernalia for use in illegal gambling moves in
interstate commerce; and (5) illegal gambling
enterprises are facilitated by the corruption and
bribery of State and local officials or employees
responsible for the execution of or enforcement of
criminal laws.
Sacco, 491 F.2d at 999 (quoting S. Rep. No. 617, 91st
Cong., Ist Sess. 16 (1969)). I analyze each of these
congressional rationales in turn to determine whether they
can support the constitutionality of § 1955 in light of Lopez.
The first rationale, that any illegal gambling has an
effect on interstate commerce, is marred in two respects. It
references an effect, rather than a substantial effect, as
Lopez requires. Moreover, even assuming Congress be-
lieved the effect to be substantial, this finding in the
legislative history is not a rationale at all, merely an
ultimate conclusion by Congress of what needs to be true in
order for an exercise of its power to fall within the scope of
the Commerce Clause. Congressional findings can be help-
ful to a court examining congressional intent, Preseault v.
Apdx. A - 60
ICC, 494 U.S. 1, 17 (1990), but they are not dispositive of
the judicial inquiry required by the Commerce Clause.
Lopez, 115 S. Ct. at 1631; Heart of Atlanta Motel, Inc. v.
United States, 379 U.S. 241, 273 (1964) (Black, J., concur-
ring). The fifth rationale, relating to state and local cor-
ruption, while laudable and an excellent policy reason to
justify federal intervention, does not even attempt to estab-
lish the necessary link between interstate commerce and the
gambling activity being regulated. No causal chain linking
state and local corruption and interstate commerce, however
attenuated, was even stated in this rationale, let alone
proven.
The third rationale is also devoid of any ability to
limit Congress’s power. If the fact that money derived
from or used in an activity will travel in interstate com-
merce is sufficient to give Congress the power to regulate
under the Commerce Clause, then this constitutional pro-
vision is rendered meaningless. In Lopez, the Court
invoked a fear of congressional jurisdiction over family law,
implicitly assuming that such regulation was beyond the
Commerce power. Lopez, 115 S. Ct. at 1632. Because the
money used for child support payments and paid out as a
result of divorce decrees is likely to move in interstate
commerce, Congress’s third rationale to support § 1955
would justify intrusion into the same area of state regulation
that the Supreme Court argued in Lopez could not be
reached.
Apdx. A - 61
The second (illegal gambling depends on facilities
of interstate commerce) and fourth (illegal gambling uses
paraphernalia that traveled interstate) rationales are closely
related, and perhaps identical. They merit closer consider-
ation. Dependence on the facilities of interstate commerce,
the second rationale, is flawed because not every gambling
enterprise requires information, such as centrally-established
odds, to be transmitted across state lines. For instance,
video poker gambling operations can be conducted without
the transmission of odds information across state lines.
Unlike a typical national sports betting operation, where a
resident of New Jersey might call a bookie in New York to
bet on a college football game taking place in California
using odds set in Nevada, a video poker gambling operation
need not necessarily use the facilities of interstate commerce
-- unless Congress intended "facilities" of interstate
commerce to mean requiring the use of goods that have
traveled in interstate commerce, in which case the identity
of the second and fourth rationales becomes apparent.”
See Lee, 18 U.S.C. § 1955: Who Conducts an Illegal
Gambling Business? -- It's Just a Roll of the Dice, 12 W.
32Nevada is the only state with legalized sports betting. See Nev.
Rev. Code Ann. § 463.160 (licensing ises and individuals
conducting sports pools). Entrepreneurs in Florida, however, have
recently begun conducting sports betting on ships outside of Florida’s
territorial waters. Briefly: Sports Betting Sets Sail: Las Vegas-Style
a is Legal on Ship Off Florida Coast, L.A. Daily News, Jan.
1, 1995.
Apdx. A - 62
St. U. L. Rev. at 239-40 ("Due to the prevalence of sports
betting, most gambling money is presently wagered through
bookmaking operations ... . [D]ue to the vast
informational system needed to effectuate a profitable and
efficient operation, bookmaking has been exclusively
dominated by organized crime elements.").
By contrast, United States v. Leon, 534 F.2d 667
(6th Cir. 1974), the pre-Lopez case in which the Sixth
Circuit upheld the constitutionality of § 1955 on Commerce
Clause grounds, presents a better case on its facts for the
existence of a substantial nexus with interstate commerce
than this case. The gambling enterprise there was at least
a conventional bookmaking operation that made great use
of the telephone network and probably involved out-of-state
betting. /d. at 672 (discussing illegal bets placed on a St.
Louis sports team, in an action brought in the Eastern
District of Michigan).
It is frequently said in the Commerce Clause context
that "when it is necessary in order to prevent an evil to
make a law embrace more than the precise thing to be
prevented, it [Congress] may do so." Westfall v. United
States, 274 U.S. 256, 259 (1927) (Holmes, J.). Simply
because video poker is not as closely connected to interstate
commerce as a national sports betting operation does not
mean that Congress might not be able to prohibit video
poker, if such a prohibition were necessary to the enforce-
ment of the proscription against truly national gambling.
Apdx. A - 63
This is nothing more than a special example of the opera-
tion of the Necessary and Proper Clause in the Commerce
Clause context.”
The celebrated case of Wickard, the result of which
is not questioned in Lopez, although it clearly reached well
beyond the text of the Commerce Ciause, has been given a
em shall a Power . . . To make er kr 4 which shall be
or carryi into Execution ing Powers,
and ood ae other ay vested by this Constitution in ioe Canetainats of
the United States, or in any Department or Officer thereof." U.S.
Const. art. I, § 8, cl. 18.
In McCulloch v. Maryland, the great Chief Justice Marshall said
of the Necessary and Proper Clause: “Let the end be legitimate, let it
be within the scope of the constitution, and all means which are
appropriate, which are plainly adapted to that end, which are not
prohibited, but consist with the letter and spirit of the constitution, are
constitutional.” 17 U.S. (4 Wheat.) 316, 421 (1819). As Professor
Epstein points out, however, this phrase has been taken out of context
in Marshall's jurisprudence -- a point demonstrated by noting his
statement that, “[iJn the last of the enumerated powers, that which
rants, expressly, the means for carry all others into execution,
ongress 1s au ‘to make laws shall be necessary and
nig a for the purpose. But this limitation on the means which may
used, is not extended to the powers which are conferred." Gibbons
v. Ogden, 22 U.S. (9 Wheat.) 1, 187 (1824). pol 73 Va. L. Rev.
at 1397-1400 ("The clause does not, however, authorize the creation of
new and i heads of power . . . that obliterate the distinction
between a fi and a national government.”). The Necessary and
Clause grants new means, but does grant the power to reach
additional ends. Thus, in this context, only the Commerce Clause itself
could define permissible ends. The views of Justice Marshall and
whether his enthusiastic construction of the Necessary and Proper
Clause in McCulloch has been misinterpreted is a subject to which the
Walls devote too many pages in their brief. Ultimately, Lopez is the
sunchesoue for duersaiaing bate Garasusts tak webina to cal adeiniliet
understanding of the interaction of the Commerce Clause and the
Necessary and Proper Clause, however. Hence, whether we have gone
down the wrong track because of misinterpretations of McCulloch is
rather beside the point at this stage of constitutional development.
Apdx. A - 64
new orientation by the Supreme Court. See United States
v. Denalli, 73 F.3d 328, 330 (11th Cir. 1995) (per curiam)
(Lopez makes it clear that the Wickard lines of cases ’may
not be extended so as to embrace effects upon interstate
commerce so indirect and remote that to embrace them, in
view of our complex society, would effectively obliterate
the distinction between what is national and what is local’")
(quoting United States v. Pappadopoulos, 64 F .3d 522, 52€-
27 (9th Cir. 1995)); Alaska v. Babbitt, 72 F.3d 698, 707
(9th Cir. 1995) (Hall, dissenting) (concluding that a statute
giving subsistence fishing priority on public lands to navi-
gable waters within those public lands was outside of
Congress’s commerce powers because "[i]t would be hard
to argue that the priority of a handful of Alaskan natives
over subsistence fishing in one river in Alaska would
"substantially affect" interstate commerce)”; Schroeder,
912 F. Supp. 1242-43 ("No longer will the Wickard v.
Filburn rationale be good enough to allow Congress to
regulate any area of an individual’s life.") (footnote
omitted); Epstein, Constitutional Faith and the Commerce
Clause, 71 Notre Dame L. Rev. at 174-75 (after Lopez,
Wickard "becomes a case in which price stabilization . . . is
>The majority in the case did not dispute Judge Hall’s conclusions,
but merely held that Congress had not chosen to exercise its Commerce
Clause powers in enacting the statute, 16 U.S.C. §§ 3113-3114, instead
relying on -- the Property Clause, U.S.
Const. art. [V, § 3, cl. 2. itt, 72 F.3d at 703.
Babbitt
Apdx. A - 65
i
i
———
thought to be achievable only by regulating the amount of
wheat available in the market") (emphasis added).** See
also John W. Boyle, Note, 34 Dug. L. Rev. 187 (1995)
(puzzled by how the Lopez majority used Wickard to
support its conclusions).
38This "transformation" of Wickard is in reality a return to the case’s
original meaning. As Robert L. Stern, ardent New Dealer and
proponent of Wickard, explained in a law review article predating and
perhaps influencing that case:
The constitutional lawyer may yet ask one more question: "If
the power to regulate commerce among the states be not
limited to acts affecting movement across state lines, but
includes all commercial transactions in one state which affect
business in other states . . . [i]s there any commercial activity
Congress cannot control? . ... Although all business may be
said to affect commerce in other states to a slight extent, some
line must undoubtedly be drawn... . . Coal miners’ wages
in one state affect the wages of miners elsewhere, since the
coal which they produce is in competition. A state which by
itself attempted to raise the wages of its miners would ruin its
domestic coal industry. If wage regulation is to be had, it
must be had on a national scale to be effective. Barbers in
different states, on the other hand, do not compete. The fact
that in a few instances persons living near a state border might
be induced to cross the line to get a cheaper hair cut would
not of itself justify federal control of barbers’ wages. But the
wages of barbers are just as important to the national
purchasing power as the wages of miners or railroad
conductors. In times when there is little unemployment and
wages are high, a court might find that such wages did not
“directly” affect business in other states through their effect on
purchasing power. A contrary result might easily be reached
when commerce in all the states is seriously obstructed by a
lack of purchasing power throughout the entire nation.
Robert L. Stern, That Commerce Which Concerns More States Than
One, 47 Harv. L. Rev. 1335, 1363-65 (1934) (paragraph breaks
indicated by ellipses). I submit that Stern’s reasoning and Wickard
itself is based on nothing more than the Necessary and Proper Clause.
Apdx. A - 66
In Lopez, the Court categorized Wickard as standing
for the proposition that intrastate activity may be regulated
if doing so is "an essential part of a larger regulation of
economic activity, in which the regulatory scheme could be
undercut unless the intrastate activity were regulated."
Lopez, 115 S. Ct. at 1631. After Lopez, Wickard is a
category two case, regulating intrastate activities that
threaten the regulation of things in interstate commerce or
instrumentalities of interstate commerce.” Jd. at 1630-
31.” Wickard thus becomes an excellent example of the
application of the Necessary and Proper Clause to
Congress’s commerce power. Wickard upheld the Agri-
cultural Adjustment Act of 1938, regulating the sale of
homegrown wheat. 317 U.S. at 128-29. The Court rea-
soned that it was within Congress’s power to regulate the
price of wheat in interstate markets. To do so effectively,
36 4. discussed above (see pages 33-34 & n.15), however, § 1955
can be justified only on a category three, “substantial effects"
argument. Therefore, the court is not persuasive in citing Perez as
holding that a single instance of an intrastate activity can be regulated
as long as it is part a class of activities having a substantial effect on
interstate commerce. Slip op. at 14 n.14 (citing Lopez at 1630). See
infra p. 72 for a discussion of the scope of the Perez “class of
activities” doctrine after Lopez.
37 professor Epstein summarizes the old view of the significance of
Wickard very nicely: "To say that Congress may regulate X because of
its price effects upon goods in interstate commerce, or because of its
effects upon the quantity of goods so shipped, is to say that Congress
can regulate whatever it pleases... ." Epstein, 73 Va. L. Rev. at
1796 (footnote omitted).
Apdx. A - 67
however, it was vital to be able to regulate wheat pro-
duction and homegrown consumption in the aggregate, even
though any single grower of wheat at home was unlikely to
disrupt the government’s regulation of interstate wheat
prices singlehandedly.
United States v. Wrightwood Dairy Co., 315 U.S.
110, 119 (1942), a case discussed along with Wickard in
Lopez, is similar -- Congress can regulate the price of milk
sold intrastate because of competition with milk sold inter-
state. Lopez, 115 S. Ct. at 1628 ("the commerce power
extends to those intrastate activities which in a substantial
way interfere with or obstruct the exercise of the granted
power") (quoting Wrightwood, 315 U.S. at 526). The
broad sweep of § 1955 cannot be justified under Wickard or
Wrightwood Dairy as interpreted in Lopez, however. Regu-
lating video poker is in no sense necessary to regulating
national sports betting. Intrastate video poker does not
interfere in a substantial way with the regulation of national
sports betting. The activities both involve gambling, but
their regulation is completely severable. To argue otherwise
would convert Justice Holmes’s statement in Westfall (see
supra p. 50) into: ’when one evil properly within
Congress’s power is of the same general sort as another
evil, then Congress may regulate the other evil.’ This is a
tremendous distortion of the Necessary and Proper Clause
and an improper expansion of Congress’s power after
Lopez, cutting against the grain of the entire purpose of
Apdx. A - 68
:
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enumerating specific congressional powers in_ the
Constitution.*
The statutes involved in Wickard and Wrightwood
Dairy are distinguishable from § 1955 because they in-
volved price regulation. To regulate interstate prices
effectively, it will almost always be necessary for Congress
to regulate intrastate prices in the same good or service.
Section 1955 is not aimed at regulating the price at which
gambling activities take place. It is aimed at eliminating
certain kinds of gambling activity, based on the legal status
of those activities under state law, not on general com-
38 rhere are two Cases giving useful examples of regulations that can
be justified under Wickard as reinterpreted in Lopez. See Kelley v.
United States, 69 F.3d 1503, 1507-08 (10th Cir. 1995), cert. denied,
116 S. Ct. 1566 (1996), where the Tenth Circuit upheld § 601 of the
FAA Authorization Act of 1994, Pub. L. No. 103-305, 108 Stat. 16605
(1994), against a Lopez-based challenge. This Act preempted state
economic regulation of intrastate motor carriers because the regulation
of intrastate motor carriers was inextricably connected to the regulation
of interstate motor carriers. For instance, some states’ regulations
were onerous enough to increase the prices for intrastate shipments to
such a degree that some motor carriers would choose to ship a package
across state lines and back again to take advantage of interstate
transportation rates. Kelley is thus similar to Wickard and Wrightwood
Dairy viewed through the prism of Lopez. It involves a species of
price regulation. Mother Waddles Perpetual Mission, Inc. v. Frazier,
904 F. Supp. 603 (E.D. Mich. 1995), is another example. In that
case, the court found the jurisdictional nexus requirement in the
Lanham Act, 15 U.S.C. § 1125(a), was met because, even though the
defendant in the case had used the plaintiff's trademark in its home
state, the plaintiff relied on its trademark in interstate commerce. /d.
at 611. Moreover, the court noted that the trademark was used in
connection with the sale of automobiles that could compete in price
with cars sold in interstate commerce because even cars sold intrastate
could be driven out of state and resold. Jbid.
Apdx. A - 69
mercial, or even moral, effects. The kinds of gambling
activities that remain legal under § 1955 and those that it
makes illegal were not thought by Congress to be fungible
entertainments.” Certainly, in the aggregate, making
some kinds of activities illegal will raise the price of the
illegal activities and induce substitution toward legal forms
of the activity. However, this is not the purpose of § 1955,
as the findings of Congress make clear. Section 1955 is not
a price regulation statute. If it were, the statute would
define the gambling activities made illegal without reference
to state law. Any argument that Congress was attempting
to regulate the price of interstate gambling by means of §
1955 cannot account for why Congress would therefore
choose to exempt from federal reach al! gambling that is
legal under state law. The court admits as much in a foot-
note. Slip op. at 15 n.16. Legal gambling, like illegal
gambling, may have the same effect of inducing people to
cross state lines, yet it is not prohibited by the statute.
Thus, the congressional aim in § 1955 was not to regulate
the price of interstate gambling, but rather to add an
“i Congress did think that activities like the Walls’ video poker
operation and a live poker game at a legal casino in Las Vegas were
fungible, then § 1955 makes even less sense, for in that case the statute
simply encourages gambling activities to move to states where those
activities are legal. Section 1955 effectively stifles competition to legal
gambling from home-grown illegal gambling. Seen in this way, the
federal government is, of course, actually aiding organize’ crime-
infiltrated gambling operations in states with legalized gambling by
crushing intrastate competition to shady operations with a legitimate
cover.
Apdx. A - 70
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additional level of federal, police-power-like, enforcement
on top of existing state anti-gambling laws.
Congress’s fourth rationale, resting on the fact that
some illegal gambling paraphernalia travels in interstate
commerce, cannot constitutionally justify § 1955 because
the mere use of goods that have traveled in interstate com-
merce to further some activity should not be sufficient to
establish that the activity has a substantial effect on inter-
state commerce. If this were not true, nearly every human
activity could be regulated by Congress, as most contempo-
rary activities involve the use of goods that are manu-
factured and transported across state lines or incorporate
components that similarly traveled in interstate commerce.
The Commerce Clause would thus be converted into a
general police power. Willamette Iron Bridge Co. v. Hatch,
125 U.S. 1, 13 (1888) (Congress lacks a general police
power). Such an expansive reading of the Commerce
Clause would violate the clear function of the enumeration
of powers. Lopez, 115 S. Ct. at 1626. "To uphold the
Government’s contentions here, we would have to pile in-
ference upon inference in a manner that would bid fair to
convert congressional authority under the Commerce Clause
to a general police power of the sort retained by the States."
Id. at 1634. As the Supreme Court implicitly makes clear
in Lopez, for instance, a federal domestic relutions law is
not authorized by the Commerce Clause simply because
marital beds are purchased in interstate commerce.
Apdx. A - 71
There is every reason to give Congress more ieeway
in terms of regulating commercial activities than non-
commercial activities. Activities like gambling at least
involve commerce on some level. However, this recogni-
tion cannot be taken too far without judicially excising the
word "interstate" from the Commerce Clause. The regula-
tion of truly interstate gambling operations, such as those
that make frequent use of the telecommunications network
and rely on bettors living in different states, are within
Congress’s commerce power. A video poker operation that
drew a substantial number of its patrons from other states
also could be reached by Congress. Congress could have
written a statute to reach these gambling operations alone
simply by including a jurisdictional nexus requirement.
Courts would then be free to judge the nexus with interstate
commerce of the Walls’ illegal gambling operation against
such a provision -- as, for example, the Supreme Court did
for the RICO statute at issue in United States v. Robertson,
115 S. Ct. 1732 (1995) (per curiam), a case decided shortly
after Lopez. This statute included an interstate jurisdictional
nexus requirement and thus permitted the Court to analyze
the facts of the case to see if a sufficient statutory nexus
existed.” By contrast, in § 1955, Congress did not use
OE ven if a jurisdictional nexus requirement existed in this case, I
am not sure after Lopez that the Walls’ operation would meet it. It is
true that in Robertson the defendant’s gold mine used goods and
supplies purchased in interstate commerce, but the key difference
Apdx. A - 72
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the caution it should have used in defining the interstate
pro-blem it was attempting to solve. The federal courts
must guard against congressional overreaching and
overbroad statutes, even if these abuses result from
congressional inadvertence. See Sacco, 491 F.2d at 1007-11
(Ely, J., dissenting) (laying out in detail the divergence
between Congress’s narrow desire to address the problem of
organized crime in § 1955 and the very broad statute it
actually enacted); John S. Baker, Nationalizing Criminal
Law: Does Organized Crime Make it Necessary or Proper?,
16 Rutgers L.J. 495, 497 (1985) ("Activity labeled
organized crime’ has become almost indistinguishable from
ordinary crime and even from some organized noncriminal
activity. As a result, the role of federal law enforcement
has expanded much more so than many realize.").
The Ninth Circuit, in Pappadopoulos, 64 F.3d 522,
has reached this same conclusion: the mere use of
"interstate commerce" goods in connection with some
activity cannot be enough to grant Congress the power to
regulate the activity on that basis alone. In Pappadopoulos,
between that operation and the Walls’ operation is that the operation in
Robertson was directed at interstate commerce. It sold the products of
the mine in interstate commerce. There is no evidence in the reord
that any of the users of the Walls video poker machines were fiom
outside Tennessee or that the Walls advertised outside Tennessee to
attract gamblers, for instance. Compare Robertson with United States
v. Pinckney, 85 F.3d 4, 7 (2d Cir. 1996) (holding that government had
failed to prove that defendant had disposed of vehicles or parts in
interstate commerce, as required by 18 U.S.C. § 2322).
Apdx. A - 73
the Ninth Circuit held that the interstate commerce juris-
dictional requirement (invoking Congress’s full panoply of
powers under the Commerce Clause*') of 18 U.S.C. §
844(i), prohibiting arson against buildings used in interstate
commerce or in any activity substantially affecting interstate
commerce, was not met when the defendant burned down
a house that used natural gas purchased from a company
that sometimes obtained that gas from other states. /d. at
527. Holding that neither the first (channels of interstate
commerce) nor second (instrumentalities of interstate com-
merce) bases of commerce power under Lopez applied, the
Ninth Circuit applied the third category’s requirement that
the effect on interstate commerce must be substantial for
Congress to properly invoke its power: "The arson of such
a structure has only a remote and indirect effect on inter-
state commerce." /d. at 528. On the other hand, the
*"The court attempts to distinguish Pappadopoulos on the basis that
it was not a Commerce Clause case, but a statutory interpretation case.
Slip op. at9n.8. However, the Pappadopoulos court took great pains
to emphasize that under Supreme Court case law, statutory provisions
with a jurisdictional nexus, such as § 844(i), are meant to invoke
Congress’s full Commerce Clause power. Pappadopoulos, 64 F.3d at
525 (citing Russell, 471 U.S. at 859) (in the arson statute the
jurisdictional nexus requirement "expresses an intent by Congress to
exercise its full power under the Commerce Clause"). Thus, activities
falling outside of a jurisdictional nexus requirement will be
unconstitutional to regulate under the Commerce Clause.
As the court points out, our circuit has upheld an application of
§ 844(i) in United States v. Sherlin, 62 F.3d 1208, 1213 (6th Cir.
1995), cert. denied, 116 S. Ct. 795 (1996). However, Sherlin is
distinguishable. In Pappadopoulos, the only connection with interstate
Apdx. A - 74
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Fourth Circuit held that a house receiving electricity from
an interstate power grid had a sufficient effect on interstate
commerce to satisfy the nexus requirement of the arson
statute. United States v. Moore, 25 F.3d 1042, at *3 (4th
Cir. 1994) (unpublished per curiam), cert. denied, 115 S.
Ct. 1838 (1995). Justice Scalia, however, would have
granted the writ and remanded for reconsideration in light
of Lopez. 115 S. Ct. at 1838.
Katzenbach v. McClung, 379 U.S. 294 (1964)
(upholding the application of Title II of the 1964 Civii
Rights Act to a restaurant that obtained a large portion of
its food in interstate commerce), and to a lesser extent
Heart of Atlanta (rejecting a similar challenge to Title II
where the public accommodations industry was subjected to
anti-discrimination regulation because the patrons of such
establishments were often interstate travelers), may seem to
hold that the mere use of goods that traveled in interstate
commerce is sufficient to allow regulation of the underlying
activity. However, each of the statutory provisions in those
cases contained a jurisdictional provision requiring the
government to demonstrate an individualized nexus to inter-
state commerce. The statute in Lopez lacked such an ele-
ment, as does § 1955. Cf United States v. Robinson, 62
commerce in that case was the tenuous one of gas heat, whereas in
Sherlin, the building set aflame was a dormitory building used at a
college in the business of providing educational services and 86% of its
students were from out-of-state.
Apdx. A - 75
F.3d 234, 236-37 (8th Cir. 1995) (upholding constitu-
tionality of federal carjacking statute because statute had the
jurisdictional nexus requirement lacking in the GFSZA and
because cars are commodities that move in interstate com-
merce); United States v. Oliver, 60 F.3d 547, 550 (9th Cir.
1995) (same); United States v. Hanna, 55 F.3d 1456, 1462
(9th Cir. 1995) (upholding constitutionality of federal
statute criminalizing possession of a firearm by a convicted
felon because it included a jurisdictional nexus require-
ment); Campbell, 891 F. Supp. at 212 (same). The statute
in Heart of Atlanta was limited to the regulation of public
accommodations, the operations of which "affect com-
merce." Heart of Atlanta, 379, U.S. at 247. The statute in
McClung was limited to the regulation of restaurants that
offered "to serve interstate travelers" or that derived "a
substantial portion of the food" they served from commerce.
McClung, 379 U.S. at 298. After Lopez, therefore, the
statutes in Heart of Atlanta and McClung are insulated from
facial constitutional challenges because they regulate
commercial activity and have jurisdictional nexus
requirements embedded within them.
For statutes lacking a jurisdictional nexus require-
ment, however, the connection to interstate commerce
generally must be more than slight. The connection of an
individual instance of some overall activity can be slight
only if the regulation of that activity in the aggregate is
necessary to the regulation of what is clearly interstate
Apdx. A - 76
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commerce. The regulation of intrastate gambling illegal
under state law is in no sense necessary to the regulation of
interstate gambling. Section 1955 is not a price regulation
of a fungible good or service. Any argument to the con-
trary is undercut by the statute’s failure to criminalize
identical gambling activities in different states depending on
whether the activities are legal under state law.
Section 1955 regulates a commercial activity, but it
does not contain a jurisdictional nexus requirement. Section
1955’s congressional findings contain no logical stopping
point that could serve as a surrogate for the missing juris-
dictional nexus requirement. If this statute is constitutional
on the basis of Congress’s findings in this case, then Con-
gress could, by making similar findings in other statutes,
regulate every intrastate activity in the country, including,
for example, domestic relations. Moreover, § 1955 regu-
lates criminal activity, the regulation of which has been the
traditional province of the states. Moralistically-based
legislation outlawing gambling has also been the traditional
concern of the states. Thus, § 1955 raises Tenth
Amendment concerns that only reinforce my conclusion that
this statute is unconstitutional.
I conclude § 1955 is unconstitutional under Lopez's
third category because some of the activity the statute
regulates does not substantially affect interstate commerce.
Apdx. A - 77
Ill. THE COURT’S ANALYSIS OF THE WALLS’
COMMERCE CLAUSE CHALLENGE TO § 1955
As I read the court’s opinion, it rests on five
propositions: (1) § 1955, unlike the GFSZA in Lopez, is
"commercially related . . . part of an economic enterprise,"
slip op. at 11; (2) the lack of a jurisdictional interstate
nexus requirement, one of the defects of the GFSZA, is not
fatal to § 1955’s constitutionality, because unlike the
GFSZA, § 1955 is supported by "reams of legislative his-
torical information," slip. op. at 13; (3) Perez, 402 U.S.
146, which upholds the constitutionality of Title II of the
Consumer Protection Credit Act (targeting loan sharking),
18 U.S.C. § 891 et seq., is cited approvingly in Lopez, slip
op. at 14; (4) because § 1955 criminalizes only gambling
that violates state law it shows Congress "display[ing] some
sensitivity and respect for federal-state comity and avoid-
[ing] unwarranted intrusion in an area traditionally reserved
to the states," slip. op. at 15 n.16; and, (5) "Most courts
have resisted urgings to extend Lopez beyond [the Gun Free
Schoc! Zones Act (GFSZA), 18 U.S.C. § 922(q)],"_ slip op.
at 8. Unfortunately, none of these rationales give Lopez its
due.
A. Lopez Allows Congress to Regulate Any
Commercial Activity
First, it is a weak argument to maintain that the
difference between running a gambling operation
Apdx. A - 78
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(undisputably a commercial enterprise) and possessing a gun
within 1,000 feet of a school (probably not a commercial
enterprise, unless one adopts the reasoning of Justice
Breyer’s dissent in Lopez, in which case every human
activity is a commercial enterprise) immediately makes
Lopez inapposite to an inquiry into § 1955’s constitu-
tionality.” The court ignores portions of Lopez that are
inconvenient to that argument. The Supreme Court indi-
cated in Lopez that any rationale offered to support consti-
tutionality under the substantial effects test will fail if it
does not have a logical stopping point. Lopez, 115 S. Ct.
at 1632-33 (rejecting government’s and Justice Breyer’s
proffered rationales because, if they were accepted, "it is
difficult to perceive any limitation on federal power, even
in areas such as criminal law enforcement or education
where States historically have been sovereign"). See also
Pappadopoulos, 64 F.3d at 526, 528; United States v.
Wilson, 880 F. Supp. 621, 625-26 (E.D. Wis.), rev'd 73
F.3d 675 (7th Cir. 1995), petition for cert. filed, 64
U.S.L.W. 3669 (Mar. 20, 1996); Jeffrey Rosen, Fed Up:
43 though again, the court is not without support. See Anne C.
Dailey, Federalism and Families, 143 U. Pa. L. Rev. 1787, 1789
(1995) (arguing that it
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