Continuing our long slog through the end-of-Term opinion dump, it's fraud day! We dig into Kousisis v. United States and Thompson v. United States, two interesting federal criminal law puzzles.
Continuing our long slog through the end-of-Term opinion dump, it's fraud day! We dig into Kousisis v. United States and Thompson v. United States, two interesting federal criminal law puzzles.
[Divided Argument theme]
Will: Welcome to Divided Argument, an unscheduled, unpredictable Supreme Court podcast. I'm Will Baude.
Dan: And I'm Dan Epps. This is a big episode for us, Will.
Will: Why?
Dan: This is episode 25 of season 5, and this ties our record for number of episodes in a season. We weren't really trying for that. It just happened. We were going with the flow and then I checked the episode list and it turned out we had already hit 25 and it is barely August.
Will: And we got a slow start. If you'll recall, episode one, I think was a precedent setting late December 17th. [laughs]
Dan: Is that right? I knew there was a long-
Will: It was bad, Dan.
Dan: -delay. I blocked from my memory that it was actually, it was December 17th. Is that really true?
Will: Yeah. And episode two was January 19th, the day before the inauguration, so.
Dan: That's not great.
Will: I think we've maybe subconsciously feeling guilty or just feeling like we had a lot of pent up. So, we've been on a roll.
Dan: Yeah. And also, it's a lot easier to do these episodes where we talk about opinions versus the case previews.
Will: Yes.
Dan: I don't even remember why, why were we so slow?
Will: The case previews-- I find-- you can see the case ultimately.
Dan: Yeah. And then you make predictions and the predictions are wrong.
Will: Right. I think if we do predictions, we should try to find a way to be accountable for them. I mean, we do have listeners sometimes who email us things I've totally forgotten where I'd made some assertion of what was going to happen a year from now.
Dan: Oh, yeah, somebody emailed to remind us. I had totally forgotten this, that you said last season or the season before, you predicted that by now Judge Aileen Cannon would be on the Eleventh Circuit.
Will: Yes. A year ago, I think I predicted that.
Dan: And she is not thus far?
Will: Not to my knowledge.
Dan: So that's a good one. That's accountability and we're owning up to it. I try to be a little bit more careful with my predictions.
Will: Yeah, you're cagey. I'm not.
Dan: Yeah.
Will: Which is funny because I complain that other people are not careful enough about their predictions. So, you'd think I would better about.
Dan: I feel like you're getting a little bit looser of late. You said you were radicalized in the last episode.
Will: What? What was wrong with that?
Dan: Nothing. But just, you know, it's just you're so reserved normally, no one would think you're radical about anything. I guess your views of the law are radical in relation to precedent.
Will: Well, I'm speaking more like my political anger.
Dan: Right, right. No, I'm just saying that's not your public persona, the politically angry guy. There are folks on social media who channel that vibe more but you're reserved.
Will: Maybe my anger just presents in unusual ways.
Dan: That is like, are you familiar with the Marvel Cinematic Universe?
Will: Yes.
Dan: Okay. Do you recall Bruce Banner explaining why he could control when he turned into the Hulk? He says, “I'm always angry,” maybe that's you. So, you can unleash it when necessary. I don't think I've seen you unleash it yet, but maybe I will do something on this or a future episode that will finally cause the originalism Hulk to emerge.
Will: I'm not going to unleash it on you, Dan.
Dan: I don't know. Nothing I could do that would annoy you.
Will: Annoy, maybe, but--
Dan: [chuckles] Nothing I could do that would enrage you.
Will: Nothing you would do.
Dan: Okay, maybe you don't know me well enough. The other thing that's striking is I will say I am willing to make this prediction that we are going to hit a new record for number of episodes in a season. I'm going to make that prediction.
Will: That there will be at least one more episode before season six.
Dan: Yes. Because it is August 6th, when we're recording the seasons don't roll over until first Monday in October. That's our tradition. So, we have two months to do one to hit a new record. And I think we're going to do it.
Will: I think so too.
Dan: And maybe people are going to be worried that having predicted that we will now fail to do it, but I think we're going to do it. But the other thing I was going to say was it is crazy that we are starting season six. That's a lot of seasons. We're into the triple digits in episodes, but maybe we've done five seasons of the show.
Will: Yep.
Dan: That's a lot of stuff. That's a lot of seasons.
Will: Yep. It's been good.
Dan: Yeah. You don't sound as surprised by that.
Will: I'm not surprised, but I'm pleased.
Dan: Okay. And so, I don't think we have any plans to stop.
Will: No.
Dan: Is there some world in which the Court just goes so crazy if Trump gets six more nominees that we just decided it's not worth it. Would we want to do these little statutory interpretation cases once a week still?
Will: I think you asked me this question every other episode at this point.
Dan: Yeah, I know, but I'm still curious. I'm worried. Judge Bove confirmed future Supreme Court nominee, people say.
Will: You know,maybe if the next Democratic administration packs the court with so many justices that we can no longer keep up with their opinions, maybe that'll want to--
Dan: Yeah, that is. I've written a bit about court packing in my scholarship. I do think maybe that's one of the best arguments against it. Because right now we have opinions that are too long and there's too many separate opinions. These cases where six justices feel the need to write. It's tedious. I don't want to read it. I mean, maybe you want to read it, but it's just too much. And if we had 15 justices, there would be a lot of separate opinions. Any given case would be a 300-page PDF.
Will: Yeah. I mean, you could have a new equilibrium which they proposed, where the Justices decide most of the cases en banc and so on, but under current norms, the volume might just further increase.
Dan: Yeah, people just want to say their own thing. I think there's something to be said for an earlier era, the middle of the 20th century when people would be a little bit more terse. Sometimes, they would just do like I dissent with no opinion, stuff like that. I think a little bit of that is okay.
Will: The Supreme Court's very terse on the shadow docket and people are still mad at them about that. [laughs]
Dan: [laughs] That's true. That's true.
Will: Even like non lawyers, I don't know, I was talking to a colleague recently who was talking to somebody who works in a technical field at the university who was complaining about the Supreme Court's lack of opinions on the shadow docket.
Dan: And are these people that are actually going to sit down and read a 20-page PDF if the court were to issue an opinion, or are they just channeling what the news and op eds say?
Will: I'm not sure. I don't know if these are people who learned enough about the news that then they went to go try and read it for themselves. And then as Steve Vladeck likes to mock Justice Barrett, she gave an ill-timed speech where she was like, “If people are upset about our opinions or whatever we do? You just got to read the opinions, read the opinions.” Right after the Court granted somewhat controversial Clean Water Act today with no opinion. [laughs] So, I don't know whether it's that or whether it's just people who actually don't know what the Supreme Court has issued opinions, but they've been told there are no opinions, and so they're concerned about the opinions they can't read. I'm not sure.
Dan: And there's been a little bit of public debate among the Justices recently about whether it's good or bad for the Justices to explain themselves. So, Justice Kagan gave some remarks at a conference and she said, “I think as we have done more and more in this emergency docket, there becomes a real responsibility that I think we didn't recognize when we first started down this road to explain things better. I think that we should hold ourselves sort of on both sides to a standard of explaining why we're doing what we're doing.” Okay, what do you think about that? There's going to be a rebuttal to that momentarily.
Will: Yeah. I don't want to get on Justice Kavanaugh's bad side. Maybe you want to tell me what the rebuttal is.
Dan: Okay. So, he gave some remarks very shortly thereafter at a judicial conference, and he says, “There can be a risk in writing the opinion of a lock in effect of making a snap judgment and putting it in writing and a written opinion that's not going to reflect the final view.” I think both of these things are right. Is that possible?
Will: No, I agree. They're both right. I think it's ideal when the court can at least do the two paragraph Trump v. Boyle-style explanation.
Dan: I thinkabout Wilcox. I gave a quote to Adam Liptak where I said, maybe that's the best you can do, sort of a little opinion, sort of saying what they're doing, but not totally committing themselves.
Will: Right. I mean, I think the fact that's the best they can do is a cause for concern given how much they do in this context. And there are cases where we don't even get that. And I think there are these cases where instead you get a 15-page dissent that attributes various arguments to the majority with no opinion from the majority. I assume those often reflect something different, which is that different members of the majority have different views-- [laughs] [crosstalk]
Dan: [crosstalk] So they cannot defend their views.
Will: Well, yeah, but if you imagine that your average grant of a stay in favor of the Trump administration contains two to three Justices who think what the administration has done is totally fine and totally legal, one to two Justices who think it may well be Illegal but this was the wrong remedy and you should instead go to the Court of Claims or the Merit Systems Protection Board or somebody else that you didn't go to and take a while and come to us later. And then one of the two people who don't really have a view on the merits or the jurisdiction, but who just think it would better for the country if we intervened in this way now. And those might all be technically legitimate factors, but it would look very awkward if the court issued a three-way split opinion saying that.
Dan: Why? As opposed to just saying granted?
Will: Yeah. I think when people see that kind of internal disarray, it seems to often concern them. I'm not sure that should. But it seems to like the-- [crosstalk]
Dan: I mean, it's also true though, and maybe it's good for them to know the truth?
Will: Well, it may be. That's why I'm sympathetic to both. It could both be that it would be bad for the court for us to fully understand the disarray and the reasons for the decision making, but also, it's potentially bad, that's where we are.
Dan: Yeah. In the same remarks, he also made clear he closely follows press coverage, podcasts and social media posts about the Supreme Court what he described as an ocean of criticism and critiques out there. So, unfortunately, didn't give any endorsements. So, if he's listening to this one, there are many Supreme Court podcasts you might be listening to but it would have been nice to get somebody's official endorsement. But I guess Article III doesn't really do that.
Will: But ocean of critiques doesn't exactly sound like an endorsement. [laughs]
Dan: Yeah, maybe he's not listening to us because maybe we're not part of the ocean. You criticize him a little bit. I criticize him a little bit. But we say nice things too. I think Justice Kagan has said something similar, and I think she even owned up to having a burner Twitter account a couple years ago is my memory. I mean on the one hand it's interesting, maybe admirable that they're listening to criticism, on the other hand, it seems crazy. I mean, they're very busy. [Will laughs] We get criticism sometimes on social media and you just need to tune it out, right?
Will: Yeah, well, it depends on who it's from. So, I think there are people, I know scholars who have a policy of never really reading any criticism of them or their work. And I think that probably makes them worse scholars, right?
Dan: Because they don't know when someone has made some devastating critique.
Will: Right. Or they assume that all criticism is just sort of like working the rafts or station identification rather than yes, some might actually be helpful to you within your projects.
Dan: These are scholars though that believe that.
Will: I know some scholars who believe that. At the same time, there is plenty of criticism that isn't helpful. And so obviously part of this, part of our job is sorting out what's worth reading and thinking about and what's not. And I assume that Justices have to do the same thing.
Dan: But in our case, we're not doing things. Obviously, you more than me have done some things that have really been involved in partisan politics, your Section III stuff. But even that, I mean, it's not on the same level as what Supreme Court Justices do. Everything significant they do is going to make half the country angry and huge amount of the criticism is going to be inflected with partisanship.
Will: Sure. And it just seems like it would be very, very hard to separate the wheat from the chaff. I mean, maybe if you're someone like Justice Kagan, you care about what liberals are saying about you. Maybe you're someone like Justice Kavanaugh, you care about what the Baudes and the Sachs are saying about you. [Will laughs] But I mean, is Justice Kagan reading-- I don't know. What's a right-wing outlet that would be very critical of her, reflexively, National Review.
Will: I'm not sure how right-wing National Review is anymore, but sure.
Dan: Okay. Yeah, things have changed. I assume she doesn't have a burner truth social account.
Will: I have no idea.
Dan: I don't even have one of those. Do you? Are you in there?
Will: No.
Dan: Okay. Yeah.
Will: Yeah. There's a time the Justices might have done things like read the Supreme Court edition of the Harvard Law Review. I doubt they do anymore, but there's a time you might have thought at least like that.
Dan: You don't think they'll read this year, friend of the show Richard Re, his forward?
Will: Well, they might read Richard Re.
Dan: Oh, you mean they might, as opposed to the student case comments?
Will: Or the other faculty comments? I mean, I'm just not sure. One thing would be as a matter of course, to think, well, the Harvard Law Review Supreme Court edition is things I should read. The other question is whether I might happen to read something in it that's unusually good.
Dan: Yeah. I don’t think--
Will: I mean, I don't know who the other comments are by.
Dan: But I don't think anybody sits down with that whole volume, whole issue of a Law Review anymore.
Will: I do that with the Harvard Law Review Supreme Court edition every year.
Dan: Do you subscribe to the paper copies?
Will: No. But as soon as it comes out, I download all the PDFs, put them into one PDF and then read them.
Dan: Including the student case comments? Yeah, all 25 student case comments?
Will: However, many are in the edition.
Dan: It's a lot.
Will: I do with the Michigan Law Review Book review edition too.
Dan: Well, your appetite for this stuff is higher than some.
Will: It's our job, Dan.
Dan: I don't think it's our job to read everything. I think it's our job to read the right things and to produce scholarship about the right things.
Will: I think the Harvard Law Review Supreme Court Edition and the Michigan Law Book Review Edition are sort of canonical.
Dan: I don't think the student case comments fit into that category, but--
Will: They're not the reason I read it. Once [chuckles] you've got the whole thing, you may as well look through them and see if there's something.
Dan: I don't know. They're tedious. I mean, I wrote one of those. I wrote two case comments.
Will: I'm not saying I read yours.
Dan: Oh, you weren't reading them back in the mid to late 2000s?
Will: I don't remember.
Dan: Okay. You were still reading Regulation magazine or maybe you had moved on from that.
Will: I mean, I guess I probably did, but there was a period right after I clerked where I think I had to detox on court coverage for a while. So, there have been little periods where in 2020 and 2021, there were a lot of things I didn't keep up with. So, there have been periods where I've got my own blackout periods from my past.
Dan: All right, one order to talk about and then a couple of opinions to talk about.
Will: So, the order was issued on Friday, August 1st. Order in a pending case, Robinson v. Callais and Louisiana v. Callais, cases that were argued at the court last term but ultimately held over for re-argument about the congressional redistricting in Louisiana and its compliance with the Voting Rights Act. And at the time the court held them over for re-argument, it said an order will be forthcoming in due course about what we're holding it over for and what's going to happen next. And due course has now happened. And so, on August 1st, the court directed the parties to file supplemental briefs addressing the following question raised on pages 36 to 38 of the brief for appellees.
So, this is something that has already been briefed in two pages and they now want it briefed in more pages whether the state's intentional creation of a second majority minority congressional district violates the 14th or 15th Amendments to the US Constitution. So, this is teeing up in some way the conflict between what the Voting Rights Act requires and what the Supreme Court believes the Constitution requires because the Voting Rights Act been interpreted to require that states to take race into account in order to create majority, minority districts, a form of pro-racial minority gerrymandering. And the 14th and 15th Amendments have been interpreted to largely restrict the use of race in drawing districts. And so, it's a sort of replay of the thing you see in other areas of law. There's a conflict between the demand for race consciousness on the one hand and more colorblindness on the other hand.
Dan: And so, I would think this order is somewhat ominous for that part of the Voting Rights Act.
Will: Yeah, I think that's right. I mean, I think the slightly puzzling thing is the time the Court issued its re-argument order. Justice Thomas dissented. And so, several people who were following the case read that as a good sign if you were a fan of the Voting Rights Act. You think the re-argument was going to be in the ominous direction, Justice Thomas probably wouldn't have dissented from it. But here the Court is explicitly putting the constitutional question on the table. It's specifically calling out a couple pages of the brief appellees.
Dan: But he has complicated views on that question, right?
Will: Justice Thomas does.
Dan: Yeah.
Will: He does have complicated views on that question.
Dan: He said Shaw v. Reno is wrong, right, recently?
Will: He has said Shaw v. Reno is wrong. He's also said he doesn't think that the Voting Rights Act applies to districting properly interpreted. So, yeah, fully teasing out his nest of views is going to be complicated.
Dan: Nest of views that's a nice metaphor.
Will: I guess teasing out a nest is arguably a mixed metaphor.
Dan: Yeah, I guess teasing is like something you do to hair.
Will: Yeah, but hair can be a nest. Like if hair was a nest and then you teased it. I don't know. Sorry. I'm a mixed metaphor hawk in my own writing because I frequently mix metaphors without thinking about it. Then when I go through it try to mercilessly unmix my metaphors.
Dan: Yeah, but there are a lot of situations where there are things that maybe started out as metaphors but are no longer such.
Will: Yes.
Dan: And then you wouldn't say someone is the head of this organization, that's a metaphor at this point, right?
Will: No, although you got to be careful. I think to the extent words have lost their metaphorical force but are still kind of used as metaphors, that's often just a sign they've become more banal and vapid than you realize. This is in Orwell.
Dan: Yeah.
Will: One of the early-- [crosstalk]
Dan: The dead metaphor.
Will: Yeah. So, now at some point, you go from being a dead metaphor to just being a live word.
Dan: Yeah, yeah. There's this intermediate space.
Will: Yeah.
Dan: I think head is not a dead metaphor. You don't think about a person's head when you hear that.
Will: I think that's right. I'm struggling with one off the top of my head, so to speak. [laughs] But I think there are times when the use of a metaphor right alongside ahead might potentially-- [crosstalk]
Dan: Yeah, no, that's fair.
Will: Sound a little odd-- [crosstalk]
Dan: Yeah. I mean, I've been thinking about this a little bit because I do think that there's a lot of good legal writing out there, good briefs, but nonetheless, there are a lot of recurring tropes. And I've done this in my own brief writing. You see a turn of phrase that Paul Clement uses, you think that sounds good, you use it. And so, there's a certain sameness to legal brief writing at the elite level and Supreme Court opinion writing. You see sort of the same turns of phrase, same word memes that show up. And I think it's something to be resisted, but it's hard to resist. You want to be able to invent your own metaphors, but that's really hard.
Will: Yeah. You had a post about this right on the-- [crosstalk]
Dan: Yeah. Had a little post on our blog that I need to turn back to.
Will: Right. But soliciting people's examples of these tropes that drove them crazy.
Dan: Yeah.
Will: Because there are a lot. You know, the first time you read a sentence that is in full: Not so. It feels bold and simple. [chuckles]
Dan: And everybody does it, like everybody. Now, I think you lose your Supreme Court bar license if you don't have one of those in your merits brief, right?
Will: Right.
Dan: You need one.
Will: So, I agree. It's tricky.
Dan: Okay.
Will: All right. The one substantive thing I was going to say about the Supreme Court order is there's a kind of big, ominous interpretation, which is the Voting Rights Act Section II is going to be unconstitutional, the same way Section V has been held to be unconstitutional, or technically Section IV, but we can call it Section V, or there's a slightly more limited version of the argument, which you can partly glean from those pages of the brief, which is something like the Voting Rights Act, is not as enforceable or is not a compelling interest in states where the amount of racially polarized voting has declined because there are these factors, these tests in the doctrine about when a given area has sufficient racially polarized voting and other factors that mean it has to create a majority, minority district.
And you could read this to say something like, it's going to be a more gradual process. They're going to say, “Look, in Louisiana, there are plenty of African Americans who get elected and the racially polarized voting is not as powerful as the partisan voting and so on.” And that might mean the end of the VRA in many or most states, but maybe not quite all.
Dan: It's nuanced.
Will: Yeah. Something to watch. I teach election law sometimes now, Dan. So-- [crosstalk]
Dan: I thought you just were about to do that. Have you already done that once?
Will: I taught it for the first time last fall. I'm hoping it went well enough that I get to do it again. So, I don't know at what point I get to--
Dan: So, is this coming out of Anderson?
Will: I mean, that helped. I read a lot of election law stuff for Anderson, but I've always tried to follow it. Early on in my career, I thought I might become an election law scholar, although I took a different direction. It is also just applied public law and constitutional law, and it's a form of structure. I've always been interested in the questions that are not should abortion be illegal or illegal? But how should we decide whether abortion is legal or illegal? Or who should decide? And so that's part of why I've always been attracted to federal courts and structural constitutional law and conflict of laws. And election law is sort of one more version of that, right.
Dan: Are you going to start writing on it?
Will: Probably.
Dan: I'm looking forward to that.
Will: I have some ideas.
Dan: Okay, so I think that's it in terms of throat clearing before we get to the main course and we got-- [crosstalk]
Will: [crosstalk] -metaphor, Dan, you don't clear your throat before you eat.
Dan: You totally could.
Will: [laughs] It would be weird.
Dan: Like if your throat is very phlegmy, you think you want to just start eating.
Will: You can palate cleanse.
Dan: No, but if you were like, “Oh, God, I got to get my throat cleared so I can eat.” Yeah, totally would do that. I would do that.
Will: Sometimes you just eat food to send whatever it is down your throat.
Dan: No, I think you would drink something to do that. But good catch. So, we're at the point where we've talked about the biggest things and there's a number of other cases that we could talk about. We'll probably get to some more. But we're now following what we find interesting more than what the people are clamoring for. So, the people, I don't know if they're clamoring for this episode or not, but we're going to do a federal criminal law fraud episode.
Will: It's fraud day.
Dan: And we've done this before. We've had episodes where we talk about a couple federal criminal law cases. So, this is another one of those for those who like those and also for those who hate those. So, we're going to talk about two cases, Thompson v. United States and Kousisis v. United States.
Will: You think it's Kousisis?
Dan: Well, we always get in the middle of the episode, and I always am annoyed at myself that I didn't pull up the recording of the oral argument to figure out what it is. What do you think it is?
Will: I've been thinking it was “Kousisis,” but you may be right “Kousisis” might actually make more sense.
Dan: Should I figure answer this question in real time?
Will: Sure.
Dan: All right, who is correct? “Kousisis.” That's what the Chief said. “Kousisis.”
Will: Kousisis.
Dan: That's what I said, right?
Will: I thought you said “Kousisis”.
Dan: You said Kousisis.
Will: Potato, potato.
Dan: Yeah. Now it sounds Kousisis. I mean, it's an I. It's not an E. Okay, so that one's slightly meatier. So, should we do that one first?
Will: Sure. Thompson is funnier.
Dan: In a dry sort of way. So, people keep telling us we need to provide a little bit more of a capsule summary of the cases before we talk about them, because we get derailed. So, let me try to do that. Let me see if I can succeed in doing that. So, this is a case about federal fraud here, wire fraud, although with wire fraud, the wires play a [chuckles] very small role in these prosecutions. Basically, if you commit any fraud that in any way involves mail, you can be convicted of mail fraud or anything that involves transmission over interstate wires, which is basically everything, you can be convicted of wire fraud. So basically, all fraud is federal. And we'll tell you more about the facts in a second. But whether in such a question, when such a prosecution, whether the defendant can be convicted where the defendant did not seek to cause the victim net pecuniary loss. Can you be guilty of defrauding someone when you don't actually harm them financially. They don't lose anything. Well, exactly what that means is something that's a little complicated and the court says you don't need to prove that. So, it's going to affirm the conviction here and it's going to be in an opinion by Justice Barrett, joined by the Chief Justice and Justices Thomas, Alito, Kagan, Kavanaugh, Jackson. We're going to have a concurring opinion by Justice Thomas, a concurrence in the judgment by Justice Gorsuch and a concurrence in the judgment by Justice Sotomayor.
Will: So, unanimously, they all agree to uphold the conviction. Seven of them joined Justice Barrett's opinion upholding the conviction, and two of them, Gorsuch and Sotomayor, write separately to explain why they would uphold the conviction.
Dan: Although noting maybe we'll see possible other issues with it. How is that as a capsule summary? That was okay, right? I didn't write notes in advance, so that was on the fly.
Will: Yeah, that's pretty good. The wire fraud digression, I think that may have been unnecessary.
Dan: [laughs] Yeah, that took us out of the capsule, I guess.
Will: This is why we can't have capsule summaries.
Dan: I did my best.
Will: This is a problem you have with- Not you. This is a problem I have with articles, too. It's like everybody always, they read an article and they're like, but you need to say upfront X. So, you put X up front. Well, when you say X up front, it's misleading. Unless you also mention Y. Put Y up front. They're like, “Well, now you need to also make clear.” And then the next thing you know, the article is up front of the article.
Dan: Yeah. [chuckles] Isn't that what footnotes are for? All the caveats?
Will: Well, yeah, I mean, that's always the problem. What needs to be caveated is complicated. Okay, so they call this fraudulent inducement. And I guess as I understand it, the basic idea is, there's lots of times when there's something I tell you to get you to go to make a contract with me or make a deal with me, that is not true. And I think you care about it, which is why I lie about it. But it also doesn't affect the bottom line. So, here we're dealing with a request for government contracting to the Philadelphia Department of Transportation. And the people who are trying to get the contract, they falsely certify that they're a disadvantaged business basically.
Dan: That they're using a disadvantaged business, yeah.
Will: Right. So, that gives them preferential treatment under the bid. But for our purposes, the painting they did is perfectly fine painting. It's no worse than the painting that they would have done if they'd truly used a disadvantaged business, etc. So, the statement is like potentially, arguably material, although the Justice will argue with that in a way we'll talk about in the sense that they said it because they thought it would help them get the bid, but also harmless in the sense that it's not clear it actually hurt the counterparty.
Dan: Depending on how you define harm.
Will: Yes. Good.
Dan: It didn't result in worse painting.
Will: Right. But maybe it's worse in some other respect.
Dan: Yes.
Will: Okay. And now can we also say this backdrop, including several episodes we've talked about in this case where in general, in a lot of white color criminal cases, including prosecutions for federal wire fraud, the court has often been moving the law in a somewhat less criminal direction than the lower courts. So, we've seen them reject some other nebulous theories of wire fraud.
Dan: Particularly in cases involving alleged political corruption, I would say.
Will: Yeah, maybe that's most true.
Dan: Not exclusively. Not exclusively, but that has been one source of criticism of the Court's federal statutory criminal jurisprudence.
Will: Things that are corruption adjacent. Like, the mayor of Portage, Indiana, who took a gratuity from a company that then won a contract and so on, which seemed shady, but maybe it wasn't that bad, and so on. So, against that backdrop, you could imagine that Kousisis came in thinking like, “All right, we're going to convince the court that this is another example of overzealous fraud prosecution.” But this time they did not.
Dan: Yeah, didn't work. And let's try to walk through the reasoning of the majority and then we'll talk about the separate opinions. So, the court says, “The fraudulent inducement theory is consistent with both the text of the wire fraud statute and our precedent interpreting it. We reject the defendant's proposed economic loss requirement.” Okay, so the court is going to start with the statute, as we're told you're supposed to when you have a statutory case. To be guilty of wire fraud, a defendant must devise or intend to devise a scheme to obtain money or property by means of false or fraudulent pretenses, representations or promises. So, let's talk about the core prosecution like this, which is basically, “give me money and I will give you my car,” and there's no car. You're just tricking the person out of $20,000 and run away.
Will: Yeah. Or like, “give me money and I will paint your bridge with high quality paint.” And then I actually paint it with a really low-quality paint that was cheap. “So, I did paint your bridge, but you got a worse paint job. And I got paid more for it than I would have if I hadn't lied to you about the paint.”
Dan: Yeah. You know that there's harm. In both cases, we would say, “Hey, you got defrauded.” I would say, “Hey, I got defrauded out of $20,000” in my car hypo.
Will: Right. And we would say the painting company, the fraudster, obtained money. The money they got paid by means of false pretenses. Like, I got paid for a lot for doing a good paint job, even though it's false. I didn't actually do a good paint job or I didn't give him my car or whatever.
Dan: Latent in here there is this requirement that the false or fraudulent pretenses, representations or promises have to be material. You mentioned this a second ago. We'll get into the specifics on that, but at a high level, what is that?
Will: Material means something like facts that make a difference or that hypothetically could make a difference or should make a difference or some word make a difference to the transaction.
Dan: Yeah. So, you're buying a car from someone and they say, “Hey, I went to your high school.” And you're like, “Oh, that's cool, we went to the same high school.” And that was a lie. That probably didn't actually make a difference in whether you were going to buy the car or not. That if they're actually selling you the car is probably not a material misrepresentation.
Will: I mean, I always wonder about that because maybe they're giving you a deal because they went to your high school or whatever, but sure.
Dan: Yeah.
Will: But let's say you buy the car and they say, “What's your name? And I say, “It's Bob.” But it turns out that Bob is my nickname. [Dan laughs] I'm really named Robert. I think we'd say it's non material, just doesn't matter.
Dan: Or Will and your real name is William.
Will: There you go.
Dan: That would work too. Okay, so obviously there's going to be some situations where money is changing hands and someone is-- People are saying various things, sometimes some of the things they say are false. Sometimes that turns it into fraud, sometimes it does not.
Will: Yeah.
Dan: But that is a secondary issue in this case that's going to come up in the separate opinions is not the real issue in this case, because that part is not really in front of the court.
Will: And just to make sure I've got this, I think the materiality would be relevant to the by means of part of the text.
Dan: Yeah.
Will: The idea would be if I made a false or fraudulent pretense that did not help me obtain the money or property, that means it's not material. It was not the means.
Dan: Yeah.
Will: Okay.
Dan: Although it's weird, right, because the statute just requires devising the scheme. So, maybe if you think it'll be material.
Will: Yeah. So, in materiality, there is this question about, “Is materiality, about whether it in fact mattered to you, whether I thought it would matter to you, whether it would have mattered to somebody like you.” So, we can get into that when we get to materiality. But instead, I think the Kousisis argument is roughly, well, in the bad paint case, we obtain money or property because we get an overpayment for the paint. We get paid for good paint when we actually give you bad paint. But in this case, we got paid for exactly the paint we provided. So, they want to say we didn't really obtain any money or property by means of false pretenses, like we got paid for the true paint.
Dan: Yeah.
Will: Now, it's true we got the contract by falsely claiming to use disadvantaged businesses, and if we hadn't done that, somebody else might have gotten the money instead. But what's it to you? You're out the same amount of money either way, and so you haven't really lost any money or property, and therefore we haven't really gained any.
Dan: Yeah. And so, the court at the outset just says, “As a matter of text, this can still be fraud.” And I found this part reasonably persuasive because in this situation, did you get money? Did you obtain money for the paint, and did you do it using fraudulent pretenses? Yes, that's it. You don't need to prove that there's not an additional element which is and the victim got less than they bargained for. That's not in there.
Will: Right. Textually, it's based on wrongful gain, not wrongful loss. So, even if you are, in fact, not harmed at all, the fact that I got your sweetheart government contract and not somebody else textually seems to qualify.
Dan: So, that seems simple. I found that quite persuasive. But we can't stop there. I guess we have to keep going. And why is that?
Will: Well, so there is a common law history of fraud, which the court thinks is relevant to interpreting the statute. The court has even actually a somewhat complicated common law history with several different kinds of fraud and so on.
Dan: And this idea that the Court has used, this turn of phrase, speaking of metaphors, that I quite like, that the idea is, if you use a word that actually isn't just something that the legislature is coming up with on the fly, but it's a settled word or phrase that comes from a common law background. The Court has said when Congress uses a term with origins in the common law, we generally presume that the term brings the old soil with it. I like that.
Will: Me too.
Dan: Do you know where that comes from?
Will: No.
Dan: So, it was quoted in an opinion called Sekhar. But Justice Scalia the great writer, one of the greatest writers on the court of all time, was quoting a 1947 article by Felix Frankfurter called “Some Reflections on the Reading of Statutes.”
Will: Classic article.
Dan: It's a really nice turn of phrase. That's what we should be striving for. Not just recycling the same turns of phrase. We should come up with things like that. That's like a job well done.
Will: Yeah.
Dan: So, first of all, do you agree with that principle? I bet you do, yeah.
Will: I do.
Dan: Yeah.
Will: The one thing I was going to say is, in a way, I think all words bring with them their old soil, because it's not like the common law had only some words in it. [laughs] I mean, the common law, of course, was unwritten. It's not like dictionary of terms. And so, in a way, all words and statutes that aren't neologisms, like tweet, have some old soil.
Dan: Yeah. We think about words in the context of how they've been used throughout the course of human history.
Will: Yeah. So, I might just say all statutes should be interpreted in light of their common law backdrops.
Dan: Yeah. Although, I mean, you don't need a word like tweet to conclude that there's not really a common law backdrop, right?
Will: Right. I think often there is. I mean, we talked about this maybe before, but anytime there's a statute creating crimes saying such and such shall be a crime, I think that brings with it the soil of criminal defenses.
Dan: Yeah, well, it may. I mean, that's more controversial. That's something I am thinking a lot about, planning to write something about down the line. So, stay tuned.
Will: Now, what's in the soil and which defenses qualify and how to think about that. I guess that's what I mean. I think those are always the questions you have to think through. But I think in a way, the old soil principle, I would say, is a generalization. And maybe the way I would think of it, therefore, is there are sometimes terms where, just like you see it, and you think this brings a lot of soil, a lot of specific soil with it.
Dan: Like malice aforethought, right?
Will: Or the privilege of the writ of habeas corpus.
Dan: Yeah. I mean, these are things that are in federal statutory law, in the Constitution, things like that.
Will: Right. But I think that's a spectrum rather than a binary. But it's fine. I'm happy to dig in the old soil.
Dan: Okay. Old soil. We're going to dig in the old soil. And it turns out that the old soil contained different types of soil. And so, we can't come up with a firm conclusion here. So, it's not going to control because court says, “It applies only to the extent that a common law term has accumulated a settled meaning.” And so, the court is going to look back at common law and it's going to conclude that this idea that you needed to show injury/loss to the victim was not a firmly settled thing in the common law. So, it didn't bring that soil with it.
Will: Right. And I think we do know more. We know that there are even some examples of fraud that would be actionable without that economic loss. And then the question is how much generalized one can draw from them. So, the majority says, “If someone contracts for a painting of her grandfather and instead winds up with a portrait of Grover Cleveland, what happens?” And even the petitioners agree, “Okay, that could be fraud.” Even if the painting portrait of Grover Cleveland is as valuable as the painting of your grandfather, it's not the thing you asked for.
Dan: Yeah. So, it's not just about dollars and cents.
Will: Right. I think of it as also, it's up to the contracting parties to decide what's important to them. So, if it's important enough to you to lie about it, it was probably important enough to me that I cared about it.
Dan: Yeah. And we have the separate materiality requirement, right?
Will: Yeah. And had you told the truth about it, you might have had to pay me more. Like, if you came to me and said, “Look, we're not actually a disadvantaged supplier, we want the contract anyway, how about you just give it to us anyway? Because it's the same to you either way,” presumably I'd say no and give it to a disadvantaged supplier for whatever reason. If you wanted me to overlook the disadvantaged supplier preference, you'd have to pay a 10% premium or something. So, I'm not sure these things could be as easily disentangled. But just intuitively, I have the right, and sometimes it's called the right to control theory. It's my money right now, and I have the right to decide what to transact it for. And if I want to spend it on a painting of my grandfather and not an equally valuable painting of Grover Cleveland, I'm allowed to do that. And therefore, you're not allowed to lie about it.
Dan: And so, we've got this 1840 decision from the Maine Supreme Court, State v. Mills, where a horse owner was selling a horse and said, “This is the horse called the Charlie,” but he knew it was not actually Charlie, and the buyer bought the non-Charlie horse even though it was a horse of equal value as good of a horse than Charlie, the court said in that case, said it was fraud.
Will: Yeah.
Dan: Do you agree with that?
Will: Yeah. It's got to be right.
Dan: It seems right. Yeah. Okay, but we're going to get into some hypos in a minute that may or may not push against that intuition. Okay, now there's a footnote here. Should we talk about the footnote here, or should we circle back to the footnote when we get to Justice Gorsuch's opinion?
Will: Maybe we should just do Justice Gorsuch's opinion now, in the side of order.
Dan: Okay, sure.
Will: Okay.
Dan: This is why we need those capsule summaries, because we meander and bob and weave.
Will: Well, we'll try to follow the thread.
Dan: Okay, so we're going very out of order because we're skipping part of the majority. Maybe we'll come back to it. And we're skipping another concurrence by Justice Thomas. And now we're going to Justice Gorsuch, and he starts with this example. And I want to spend some time on this example.
Will: Okay, good.
Dan: He says, “This case touches an old question. What is the difference between a lie and criminal fraud? Consider an easy hypothetical. In a phone interview, a couple asks a prospective babysitter if she has a criminal record. Babysitter says no, but that's not right. While she has sought to turn her life around, a burglary conviction lurks in her past, one she is too embarrassed to mention. Relying on her misrepresentation, the parents hire the babysitter. Her work proves exemplary, and the couple pays her well. Later, though, the parents discover the babysitter's lie. They might be upset and refuse to hire her again. But should the babysitter face federal fraud charges? Of course not.” Okay, I guess my reaction to that hypo was not. Of course not.
Will: Same.
Dan: My reaction was, I don't know, maybe that actually seems pretty important. Like hiring a criminal to, I really don't want to hire criminals to take care of my children.
Will: Right. So, my reaction was should she or should she not be prosecuted within the discretion of your local U.S. attorney's office? maybe not, but does this constitute wire fraud? Because it's on the phone? It seems like it. I mean, that instance of the same principle. If it's important enough for her to lie about her burglar conviction, that's in part because it was important enough to the couple who were hiring her that they cared about it. And again, if you imagine a world where she'd said, “Yes, I do have a criminal conviction. It's in my past, so I don't really like to talk about it. I've struggled to turn my life around. I still want the job.” And the parents said, “Well, I tell you what, you can have the job, but for the first night, we're only going to pay you $10 an hour less because we're unsure about you.” That would be material, that would be evidence.
Dan: If we knew that was the case.
Will: Right. And of course, more likely they'd say, “I don't want to risk it. I want to hire somebody else instead.” I take it the hypos force-- [crosstalk].
Dan: I mean, presumably in the hypo, we are assuming that they would not have hired her but for this misrepresentation, right?
Will: I take it the hypo's force is supposed to be well the only reason they would care about this is she might do a bad job as a babysitter. And since, in fact, her work proved exemplary, we know in hindsight that it didn't harm anybody.
Dan: They shouldn't have cared about it, even though they did care about it, even though it would have been dispositive, right?
Will: But again, I take it there are multiple reasons you could care about it. I mean, if you ask, I don't know, is this the same. So, if you ask, “I asked the babysitter, your car has seatbelts, before they drive my children around?” And she says yes, because she's embarrassed to admit that her car is old and seatbelts don't work. And she drives my kids around, but they're fine. Nothing happens. I mean, maybe it's obvious that I haven't been harmed and there's no problem.
Dan: Yeah. I mean, in both these cases, it seems bad and it seems plausibly criminal to me. Maybe the intuition is that it's not fraud. You wouldn't necessarily say, “I was defrauded by my babysitter because she told us she didn't have a criminal record and someone would say, “Oh, she stole your money.” “No, no we paid her, it was fine.” So, maybe that's the intuition.
Will: Well, the intuition may also be drawing from scale. It seems hard to imagine that the acts of a babysitter and a set of parents are like a federal case. But if you imagine this is, let's say, one of these agencies like care.com that helps you find babysitters, imagine they just do the same thing, but systematically. There's a box-- [crosstalk]
Dan: They're actually a rehab organization for criminals and everyone who works there is a criminal, but they're not.
Will: Or I should say, they just have a box that says, “I don't want to hire somebody with a criminal record.” And they let you check the box and they promise that they've done that. And in fact, they haven't. In fact, they just regularly match people's criminal records, but they screen the people to be otherwise responsible. So, it's all fine. They do a good job and get paid well. It doesn't seem at all crazy to think that company would be charged with wire fraud for its scheme to defraud people into paying to hire background checked babysitters who are not, in fact, background checked.
Dan: Yeah. And if you said you're a financial advisor and you said, I'm a financial advisor to the Vanderbilts and you get all this business as a result, is it a defense to say, “Well, everybody, I beat the market returns.”?
Will: Yeah.
Dan: Right. Yes, $100 million was invested, but I beat the market returns, beat the S&P 500. I don't know. I thought this was a strange example to start with.
Will: Do you remember there is an old Supreme Court case about-- it's not that old, 15 years old. United States v. Alvarez about-- [crosstalk]
Dan: The Stolen Valor?
Will: Stolen Valor, where the court says give a constitutional right to lie about having been in the military, having won a military medal.
Dan: Or at least when you're not using it to get money, right?
Will: Right. And there's a lower court opinion in the case by, I think, Alex Kozinski when he was on the bench, where he has this list of lies that are supposed to make you think, sure, lots of lies are fine. It's well done, it's extremely well written because it's Kozinski. But half the lies, I don't know as I read it, I was like, I don't have a strong intuition about whether it's okay to lie and say, “I only lost $10 of poker when in fact I lost more.” Or to lie and say, “the check is in the mail when I haven't really sent it.”
Dan: Should I read the whole thing or is it too long?
Will: Yeah, I've got it here.
Dan: I've got it too. Okay, go for it. “Saints may always tell the truth, but for mortals living means lying. We lie to protect our privacy ("No, I don't live around here"); to avoid hurt feelings ("Friday is my study night"); to make others feel better ("Gee you've gotten skinny"); to avoid recriminations ("I only lost $10 at poker"); to prevent grief ("The doc says you're getting better"); to maintain domestic tranquility ("She's just a friend"); to avoid social stigma ("I just haven't met the right woman"); for career advancement ("I'm sooo lucky to have a smart boss like you"); to avoid being lonely ("I love opera"); to eliminate a rival ("He has a boyfriend"); to achieve an objective ("But I love you so much"); to defeat an objective ("I'm allergic to latex");” it's a spicy one, “to make an exit ("It's not you, it's me"); to delay the inevitable ("The check is in the mail");” That one-- Let's come back to that one in a second.
“To communicate displeasure (“There’s nothing wrong”); to get someone off your back (“I’ll call you about lunch”); to escape a nudnik (“My mother’s on the other line”);” I guess I could keep going, but maybe that makes the point. There's like 10 or 12 more of these.
Will: Theirs is like-- [crosstalk]
Dan: To get a clerkship. (“You’re the greatest living jurist”). That one's pretty funny.
Will: Yeah. To save a dollar (“I gave at the office”). Yeah. So, we just do, “the check is in the mail,” I mean, maybe the thought is nobody believes that. So, it's a well-known, it's not really a lie.
Dan: He says it delays the inevitable, right?
Will: I think it's potentially fraud to tell somebody you've mailed them a check that you owe them when you haven't.
Dan: Yeah. I mean, if you're lying to continue to get services from them, if they're going to keep mowing your lawn and you're not paying them and you'd say, “Oh, just keep paying. I've already paid you and you'll get it soon.”
Will: Right. And the spicy ones, I think it's actually a real subject of criminal law scholarship and case law. Like, under what circumstances lying to get somebody to engaged in sexual acts with you is not criminal. It's not obvious.
Dan: I think there's a case from Israel where the defendant lies about being Jewish to obtain sex, and should that be a crime or not?
Will: Right. So, I just remember reading that and thinking, I mean, again, my reaction to that was not, that's just life, but maybe some people navigate the world differently than I do.
Dan: Yeah, I mean, certainly some of these. But I guess it was a strange example to start with. I mean, especially, like, what if you change the crime? Right? Child molestation, child sexual abuse, and you're like-- [crosstalk]
Will: So, is he doing this because Justice Barrett has the famous babysitter hypo in I think it's Biden v. Nebraska, where she has her concurring opinion in the major questions doctrine, and she makes it into a babysitting hypothetical where you hire the babysitter and then why the resume isn't detailed. That's where she has her statute of interpretation principles drawn from the law of babysitting to explain why she doesn’t adopt Justice Gorsuch’s view of the major question of doctrine. Now she's got a majority opinion. And so, he's hiring the babysitters. I wasn't sure.
Dan: Maybe. I don't know. It doesn't seem like an obvious, totally clear connection, but maybe I feel like we have seen some babysitter hypos in opinions. Okay, so he says that's obviously not fraud. Not convinced. It's obvious, but it's obviously not fraud. And why is that obviously not fraud?
Will: The common law harm requirement.
Dan: Yeah, the injury requirement. “To prove a criminal fraud, a prosecutor must show that the victim did not receive what the defendant promised. It is a rule that shields people like our babysitter from the prosecutor's sights, and it is a rule that keeps judges from becoming arbiters of good morals.” And so, he says, “Look, the court's opinion is right about a lot, but it has a footnote that appears to spurn fraud's historic injury rule.” Okay, so let's go back. We promised we weren't totally losing the majority. Let's go back to footnote five on page 11. So, footnote five says, “Justice Gorsuch understands us to have “spurn[ed] fraud’s historic injury rule. Respectfully, he is mistaken. All agree that “at common law, fraud required proof that the victim was injured.” But as the Supreme Court of Pennsylvania put it in Williams v. Kerr, an “injury” has occurred when a fraudster “obtains from an owner, by a false representation of a fact which he deems material, property which he would not otherwise have parted with upon the terms which he is thus induced to accept.”
Will: Yeah.
Dan: Okay. And then she has some other cases. And then Justice Gorsuch tries to paint what the court has said as dicta. They say, “This is not dicta. It's essential to our holding. To reject that pecuniary loss is an element of fraud is to accept, as common law courts long have, that a fraud is complete when the defendant has induced the deprivation of money or property under materially false pretenses.” So, I guess the court thinks the babysitter hypo is a crime, right?
Will: I think so.
Dan: Okay.
Will: I think they're saying the injury is complete if it's material.
Dan: Yeah. And if, in that case, someone would say, “Yeah, I'm not going to hire a burglar.”
Will: Right. So, maybe in the hypo, it's still a little undefined whether it's material, because maybe we imagine this is like a sufficiently old conviction where she's sufficiently reformed that if the babysitter had disclosed it, the couple would have said, “Oh, yeah, that's fine. We don't care about that.”
Dan: I think the hypo assumes that that's not the case, though.
Will: I think the hypo assumes that it-- [crosstalk]
Dan: Says, “Relying on her misrepresentation, the parents hired the babysitter.”
Will: Yeah. But anyway, so probably it's material and maybe if the same hypo was, she once got a misdemeanor citation for whatever, jaywalking in a state where that's technically a criminal misdemeanor, they wouldn't have cared or something, that'd be different.
Dan: As a hypo, I think it's designed to bake in the fact that, it's material because it's supposed to say, like, “This is the line. The line is injury.”
Will: I think so.
Dan: Not that there's another way to deal with it.
Will: Right. Yeah. And I think they're saying from the point of view of the Philadelphia Department of Transportation, like, they, for whatever reason, have this disadvantaged contractor requirement because they think it serves some social goal. And so, if you are painting their bridges without giving them the disadvantaged contractors that they want, they are injured. They don't have as many disadvantaged contractors, which is the thing they care about.
Dan: Yeah. Okay. So, why is he concurring in the judgment? How is this case different from the babysitter case. So, to find this, you got to go through the opinion. Go to page 11. He says, “Just ask yourself: If the Court deleted its footnote, or reversed its position and endorsed the traditional injury rule, would its conclusion on economic loss be any different? Of course not. Under either view, Mr. Kousisis loses. He loses because his lies induced the Pennsylvania Department of Transportation to part with money when it paid him for the building projects in question. And he loses because the department did not receive what it bargained for in return: projects completed using “‘socially and economically disadvantaged’” firms. Okay, I'm totally at a loss as to how this is different from the babysitter hypothetical. Why isn't it the case that the parents are bargaining for a noncriminal babysitter?
Will: Indeed. That's why I'm a little confused about the hypo. Maybe there's a set of things that you rely on but don't bargain for.
Dan: I mean, what if the parents had put it in a written contract? I mean, a lot of employment forms require you to check a box if you have a criminal record.
Will: Yeah.
Dan: Yeah, I'm just totally at a loss here.
Will: So, I will just say this dispute reminds me of the disputes the courts have in Article III standing cases of what counts as injury, where one view is anything, you're legally entitled to that you don't get is an injury, and the other view is no something's got to happen, like a real injury.
Dan: You need to lose money.
Will: Yeah. And specifically, in TransUnion, there's this question about if there are misstatements in your credit report about you that are illegal, is that an injury or is it only an injury if then something else happens, like the knock-on thing? And Justice Kavanaugh has this whole example of suppose somebody's driving dangerously but they don't hit you or they injured you and the Gorsuch hypothetical with the babysitter seems designed to call that to mind because it's like the reason you might not want to hire a babysitter with a criminal record is that might be a bad at taking care of your children. And if in fact that didn't happen, then there's no harm.
Dan: Yeah.
Will: But I feel like there's some work going on in the background assumptions about what's injury and what's not here.
Dan: So, I guess here's the difference, right? In the babysitter hypo, we know what they care about and they're using the criminal conviction as a proxy for the thing that they care about. Whereas in the contracting example, they're not using the use of socially disadvantaged firms owned by socially disadvantaged people, as a way to get better painting. They're using it to accomplish a different social goal. And so, I guess let's flip the hypo. Let's say the parents put out an ad saying, “We are looking to hire babysitters with criminal records because we think people deserve a second chance. And this gives us a lot of satisfaction. And we both want good babysitting, but we also want to make the world a better place.” And then someone forges a criminal conviction to get the job. Is that fraud?I mean, I think it must be under Justice Gorsuch's analysis here. Unless I'm missing something.
Will: I think so. Although even here it wouldn't be totally clear, like we don't know from the hypo, but why the couple asks about the criminal record. It could be that they only care about that as instrumental to the question of, like, what will happen to their children.
Dan: Yeah.
Will: But it could be that they just think, you know, they're very socially conservative and think like they don't want to reward people who've ever done wrong or they don't want people like that in their lives or they worry what the neighbors will think or they worry about their confirmation hearing for Attorney General 20 years from now or whatever.
Dan: Yeah.
Will: So, I think even on Justice Gorsuch's own premise, his hypo is not easy. His hypo depends on further information not stated in the hypo.
Dan: Yeah, I mean, because I can understand the position that the defendant wants. The defendant wants a specific kind of injury, but nobody seems to accept that the defendant wants to be able to say, “Look, did you get the physical thing, the service that you asked for?” And rejecting the idea that you might also be bargaining for these metaphysical things, these nontangible things, that at least makes sense to me. But the line here between these two opinions does not make a lot of sense to me.
Will: Yeah. Okay. Should we talk about the other opinions?
Dan: Yeah, we lost the thread on the majority. Was there anything else in the majority we needed to circle back to? I don't think so.
Will: I don't think so.
Dan: Okay. Because otherwise it was just responding to arguments about precedent and so forth. I will say though, the last thing is about the majority. The court does deal with some counterarguments by just saying, “Oh, this is going to have all these bad effects.” The court says, “No materiality is the way to deal with that, materiality is demanding. So that's the solution.”
Will: Yeah.
Dan: Okay.
Will: All right. And that gives you Justice Thomas's concurring opinion, which says, “I just want to say, I don't think these would be material.”
Dan: For a couple of reasons, so one is that he says, “Look, there's lots of fraud in these contracting programs,” and apparently this happens all the time.
Will: Yeah.
Dan: He's being a little slippery on whether he actually thinks that contradicts materiality, but he sort of says, maybe it does.
Will: Yeah.
Dan: You know, I'm not persuaded by that because I think it at least as I understand the allegations, like, defendant wouldn't have gotten the contract but for these-- Or at least we think defendant wouldn't have gotten the contract but for these misrepresentations. That at least seems to be the premise of what's going on here.
Will: Yes. I think-- [crosstalk]
Dan: Even, if there's not great enforcement, like, if you were to go to the government and say, “Yeah, no, no. We’re rich white people.”
Will: Right. Although, it depends on the extent of the fraud. Like, if you imagine we have a system where if they go to them and say, “Look, we don't actually have any disadvantaged contractors, but we're willing to lie and say we do. Does that work for you?” And imagine their head's like, “Yeah, that's fine. We need you to check the box. So, we have political cover, but we really don't care.”
Dan: Yeah. Although at that point, I wonder whether it's fraudulent. If the victim, so to speak, knows that it's not true, I mean.
Will: Right.
Dan: I don't know.
Will: So, imagine, for instance, you go to rent an apartment and you have a dog, and they tell you're only allowed to have the dog if you've certified the dog is an emotional support animal.
Dan: Yeah.
Will: You're like, “The dog's not an emotional support animal.” I say, “Yeah, I know, but look, all I need you to do is check the box and say it's an emotional support animal, and we're good.”
Dan: Yeah.
Will: You know, is that a material fraud or not?
Dan: Yeah.
Will: This actually happened to me.
Dan: Did you check--? Do you had a dog?
Will: Yeah.
Dan: You don't currently have a dog, right?
Will: No, she passed away during the pandemic.
Dan: I'm sorry. I didn't know that.
Will: Yeah. We moved to Chicago. No, of course we didn't check the box.
Dan: Sorry. You refused to lie.
Will: Yeah, of course.
Dan: So, what did you do with the dog?
Will: We bargained and they eventually agreed to let us have the dog anyway.
Dan: But they told you to lie.
Will: They told us to lie.
Dan: Did you consult counsel or did you just as a Kantian principle, you refused to. If they were like, look, I would be like, they told me to do it. I don't care. I would totally check the box.
Will: As Justice Gorsuch would say, “I regarded that as an easy case.” Of course, we wouldn't lie about that.
Dan: Even if the person, the recipient is telling you to do it?
Will: If it's important enough for them to ask me to lie about it, there must be some reason that matters.
Dan: Okay.
Will: Yeah.
Dan: And then the other thing is, he says, “Well, I don't think this would be material because I think these programs are probably unconstitutional and a reasonable person would think that.”
Will: That's more interesting, I think.
Dan: Yeah.
Will: I mean, the court did say in Adarand [laughs] that these programs are generally unconstitutional.
Dan: Yeah. There's a very, very demanding test for them to survive. They seem to still be widely used though. I think it's perplexing.
Will: Indeed. Yeah. I looked into this at some point, and there are a lot of cases where the city presents some evidence that there's widespread discrimination in the contracting industry and the court says, “Okay, that's good enough.”
Dan: I wonder whether these are going to get dialed back as the court becomes more in favor of colorblindness.
Will: Yeah.
Will: Or as the Trump Justice Department starts to prosecute the city for fraud or flagrant constitutional violations or something.
Dan: Yeah. So, I guess I wasn't totally persuaded that the constitutional analysis somehow comes in the back door through materiality.
Will: Yeah. I don't really know what materiality is. So, you could tell me it brings in the Constitution or the law of France and I might believe you.
Dan: Yeah. But if I still know that, if I don't lie about it, I'm not going to get the thing. It just seems like he's importing the constitutional analysis because he doesn't like these programs. Not really because he thinks that it actually goes materiality.
Will: Yeah. Although it could be these things all work together. It could be that the reason these things are still widespread is because, in fact, they are not really taken seriously. And because they are not taken seriously, nobody bothers to challenge them. And if that were true that nobody took them seriously, they are unconstitutional. Nobody takes them seriously because nobody takes them seriously, and you just check a box and falsely claim you qualify or you don't. It's not in any position just to challenge them.
Dan: But, I mean, people get prosecuted for these actually fairly regularly. I spoke to someone who was involved in a prosecution for one of these some years ago. Same thing, they use a shell company with someone who's supposed to represent that they're doing the work. And it's not true.
Will: Yeah. Well, I guess in Justice Thomas's world, it's happening so regularly that people shouldn't be prosecuted for them anymore.
Dan: Yeah.
Will: Anyway, and then Justice Sotomayor concurrence is more or less just like responding to Justice Thomas, right?
Dan: Yeah. Yeah. And I will just say there is this weirdness about this case, about this side disagreement about what materiality means. And so, defendants say we should just use the traditional materiality test, which is basically but-for test whether the misrepresentation constituted an inducement or motive to enter into a transaction. The government, by contrast, proposes an essence of the bargain test, under which a misrepresentation is material only if it goes to the very essence of the party's bargain. I don't know what that means. I don't know what the essence and non-essence of a bargain is. So, the government is saying materiality is more demanding. The defendant is saying it's less demanding, I guess, to try to put more weight on. This is on page 16 of the opinion.
Will: Yeah.
Dan: That is weird.
Will: That's weird.
Dan: Okay. And Justice Thomas is endorsing this essence of the bargain theory.
Will: Right.
Dan: Okay.
Will: All right. If we're going to talk about the second case, we got to do it now.
Dan: Do we want to say anything about Justice Sotomayor?
Will: Well, she makes the point that Justice Thomas is wrong.
Dan: Yeah. She says her example at the beginning is a, “A Yankees fan deceived into buying Mets tickets is no less defrauded simply because the Mets tickets happen to be worth the same amount as the promised Yankees ones.” I mean, that's obviously correct, but it's not obviously correct if you're buying them to resell them. It's obviously correct if you're buying them to go to the game, because it's a totally different experience.
Will: Right.
Dan: But if you're just a ticket reseller, I don't know.
Will: Yeah. Okay, here's one more I wonder about. Sorry. A lot of people publish books under pen names and sometimes pen identities. My understanding is that women buy a lot more fiction than men, and so sometimes men publish fiction under female pen names.
Dan: Yeah.
Will: Fraud?
Dan: Yeah, that's a really good question. There's a lot of readers that say, “I would only buy a book, it was written by a woman.” I mean, there's other-- [crosstalk]
Will: It doesn't need to be a lot of readers, right? One reader.
Dan: Yeah. Yeah, I guess. And there's other instances where there was that novelist who created this fictional character who was supposedly a truck stop prostitute and wrote this memoir. It was all fabricated. It was just a work of fiction. Was that fraud?
Will: Yeah.
Dan: I don't know. Okay.
Will: Ghostwriters.
Dan: Yeah. So, we're not getting answer to that question here.
Will: Yeah.
Dan: So, our other case.
Will: Okay, let's talk briefly about Patrick Thompson v. the United States, which is not that important of a legal question, but I just think it's hilarious. This is another fraud prosecution arising out of the Seventh Circuit. This time it is bank fraud rather than wire fraud, or the actual crime is making false statements. And Mr. Thompson challenged his conviction for making false statements, saying that his statements were not really false. They were misleading, but not false and the Supreme Court agrees with him unanimously. And Justice Alito and Justice Jackson file concurring opinion.
Dan: Very short ones, mercifully.
Will: Yeah. Right. Okay. And the core of the false or misleading statement is this. Thompson took out three loans totaling $219,000 from the same bank. Later, he tells the Federal Deposit Insurance Corporation that he had borrowed $110,000.
Dan: Which was the amount of the first loan.
Will: Right. So, he said, “I had no idea where the 269 number comes from. I borrowed the money. I owe the money, but I borrowed. I think it was $110,000.”
Dan: Okay. That statement is obviously false, right?
Will: The no idea where the number comes from?
Dan: Yeah, that part is false. That was the total amount he owed, including the whole original loans, plus interest.
Will: Presumably false.
Dan: That is a lie.
Will: Yeah. Okay, so I guess we're focusing here on the “I borrowed the money. I owe the money, but I borrowed. I think it was 110,000.”
Dan: And he has a subsequent call with two FDIC contractors, and there's just notes of that, but he says, “He mentioned borrowing $110,000 for home improvement.”
Will: Yeah. So, he would say, “Well, I did borrow $110,000. It's true. Now I also borrowed [laughs] another $100,000, another $109,000 and109 plus 110 is 219, plus $50 interest in stuff. But what I told you was true. It just wasn't the whole truth, and therefore, I shouldn't be able to be prosecuted.” And so, the legal question is, does Section 1014, the bank fraud statute, only punish false statements or does it also punish misleading statements? Statements that are misleading but not false.
Dan: And it turns out it's just going to punish false statements.
Will: Yeah. Okay, so we get two more. There are lots of cute hypos in this case. But the court is to begin with the point that misleading is different from false. There can be statements that are misleading but not false, and they give the examples that the government gives an oral argument, like, “A tennis player says she won the championship when her opponent forfeited. Her statement, even if true, might be misleading because it could lead people to think she'd won a contested match or a doctor tells a patient, “I've done 100 of these surgeries,” when 99 of the patients die.”
[laughter]
Will: Those are good.
Dan: The second one is a better example than the first one, I would say.
Will: Better which way?
Dan: I don't know. It's like, yeah, I mean, somebody forfeits you in. I mean, that doesn't strike me as a particularly troubling.
Will: Maybe not even misleading, but I've done a hundred of these surgeries.
Dan: Yeah, that strikes me as extremely troubling.
Will: Yeah. So, those statements prove misleading and false are not the same thing. The statute says false. It doesn't say misleading. And so, Thompson wins, or at least wins the appeal and gets the remand.
Dan: So, now it doesn't mean that defendant wins here in the end, right?
Will: Right. So, the court says, “Look, the government's argument is that we should affirm because Thompson's statements were false, that he did." And the court says, “We agree. Everybody agrees that in considering whether statements are false, you have to consider context.” Thomson concedes, for example, that if he had made his statement in response to a question like, “Did you borrow $269,000?” Then his statement in context would have been false. So, if they said, “Did you borrow $269,000?” And he said, “I borrowed $110,000,” that would be a false answer because that's implicitly saying, I borrowed less than $269,000.
Dan: Yeah. If you go to Vegas and you lose $1 million and then you come home and your spouse says, “How much money did you lose in Vegas?” And you'd say, “I lost $50,000.” That is a true statement in one sense, but it is a false statement in another sense, right?
Will: Right. And apparently, according to Judge Kozinski, it's also constitutionally protected. That was one of his examples.
Dan: Yeah. Can I give you a case that was cited in the brief by the defendant? Doesn't make its way into the majority opinion, but would have been a good one to cite. So, this is a perjury prosecution. It's a case called Bronston v. United States from 1973. And so, here's the colloquy the defendant had with a lawyer at a bankruptcy hearing.
Q. Do you have any bank accounts in Swiss banks, Mr. Bronston?
A. No, sir.
Q. Have you ever?
A. The company had an account there for about six months, in Zürich.
Q. Have you any nominees who have bank accounts in Swiss banks?
A. No, sir.
Q. Have you ever?
A. No, sir.
So, the thing that makes this misleading is that he did in fact have accounts in Swiss banks previously. The company did have an account for six months. So, there's nothing he says is a lie, but it is obviously misleading in context. If someone says, “Hey, did you ever have a Swiss bank account?” You say, “Well, the company did.”
Will: Yeah.
Dan: The court said, “That's not perjury.”
Will: So, this is the part that makes me, I think these statements are false. I think probably the statement you describe is false.
Dan: The court says no.
Will: Well, I'm not sure how to think about--
Dan: Unanimously, opinion by Chief Justice Burger.
Will: I mean, so words are just tokens of sound that are ascribed meaning by social convention.
Dan: Yeah.
Will: And so, if the goal of my using a bunch of tokens of sound is to cause you to have a false view of the world and it succeeds, then even if I just answer bloop. But for whatever reason, when I say bloop, you'll think it means yes.
Dan: If someone asks the question and you're like, “Oh, look at that dog.” And I know that's going to trick you into thinking that the answer is no, even if you didn't say no.
Will: They ask the question, and I nod my head in the generally recognized symbol for yes, and I say, “Well, head nodding means no in Latvia.” [laughs] You just misleadingly thought that my head nodding was responsive or-- Well, when I said yes, I was actually answering your previous question two questions ago. You just mistakenly thought that my answer pertained to the most recent question. I think we would all disregard those.
Dan: Yeah, but I mean, you can understand the intuition here is that we're trying to draw bright lines with criminal conduct. And if we can say, “Look, it's going to require you to make a statement that on its own terms, is clearly false.” And in that, I think in the Bronston case, I just gave you something driving the intuition there is, like, this is bad lawyering, right?
Will: Yes.
Dan: Someone doesn't clearly answer the question, ask the follow up.
Will: Yes, I'm sympathetic to the intuition. I guess this is part of-- when I was a kid, I learned you weren't supposed to lie. And so, I spent a lot of time coming up with true, misleading statements to accomplish everything that you might have wanted to accomplish through lies and thought I was so clever for doing so. And at some point, I realized it's really just still lying, [laughs] especially because you can do incredibly complicated gymnastics. You can be like, “Well, when I said this, I meant this.” Or, you know. I didn't quite answer the question. And so, I do think, at bottom, saying words that you want to create a false belief in somebody that you do in fact create through the saying of those words is saying false things. And when I get the intuition that's different from the, “I've done 100 of these” example.
Dan: Yeah.
Will: I'm not positive that intuition actually holds up, but it may not matter because I guess the jury will go back or Seventh Circuit will go back and figure out whether or not he falsely claimed not to have borrowed $269,000. And it sure seems like he did.
Dan: Yeah. And the interesting thing about this is he didn't make this argument as an objection to the jury instructions. The jury instructions didn't say you can convict someone on the basis of misleading statements. So, his argument is just an argument for acquittal as a matter of law, which is a much more demanding standard. So, it's going to go back down to the Seventh Circuit. And Seventh Circuit is just going to have to decide whether viewing the evidence in light most favorable to government, any rational finder of fact could conclude beyond a reasonable doubt the petitioner's statements were false in context. And my view is obviously, yes.
Will: Yeah.
Dan: And certainly, if we're allowed to take into consideration the, “I have no idea where the 269 number comes from,” at least with respect to the count, if it's just based on that call, the second call where he just mentioned borrowing $110,000. Okay, maybe not.
Will: Yeah.
Dan: Okay.
Will: This guy, Patrick Thompson, by the way, the D in Patrick D. Thompson is Daley. He's the grandson of Chicago Mayor Richard Daley, nephew of the other mayor, Richard Daley. So, he's a prominent political family in Chicago.
Dan: So, this has adjacent to political corruption as a lot of these white-collar criminal prosecution cases are.
Will: Yes. And again, maybe there's a sort of backdoor materiality argument here. Somebody would say, “Look, if you ask a member of the Daley [laughs] family how much money they borrowed, you got to understand that their answers are interpreted in a hyper literal way or something.”
Dan: Yeah, and so we have that point I just made about the going on remand. That's something that's hammered home in a short concurrence by Justice Alito where this is one of these things where the court is ruling for a criminal defendant. And Justice Alito was like, “Yeah, I guess I have to go along with this,” but let me tell you why it's not as much of a big deal and this is not going to result in letting a lot of people or even this guy out of prison.
Will: Yeah. And the Alito concurrence also nicely borrows a hypo from a large article by Professor Richard Fallon.
Dan: Oh, yes.
Will: Which is just a nice use of law review articles by Fallon, recently passed away, so it was nice to see him.
Dan: So, here's the hypo. “Parents, James and Rachel are talking about their teenage son, Alex. James enlists Alex to help break leaves, but Alex is distracted and does little work. Afterwards, James tells Rachel, as usual, Alex was a big help. Taken literally, his statement is false. But if James and Rachel have often spoken about Alex's unwillingness to help with household chores, Rachel would understand that James's statement was ironic and that James actually meant Alex was no help at all.” So, it's actually a true statement.
Will: That's a good example.
Dan: Yeah, I think so. Although, there's no question about the-- Everyone is on the same page. In that case, they're speaking a variant of English, right? They're speaking James and Rachel English, under which certain phrases have certain meanings. And so, it's just a different hypo where we're assuming that people are speaking ordinary language, ordinary English, and one of them is doing something sneaky.
Will: Yes. I mean, I agree. Although the thing is, sarcasm is a part of ordinary English. And so, in a way, we're all speaking a variant of ordinary English, one in which shared context matters. And all the hard questions are where the context is not in fact shared, or I pretend that I don't have part of the context, that I really do have to get away with something.
Dan: Yeah. And it also depends a little bit on stuff that we don't have, where if the father says, “As usual, Alex was a big help.” Right? Obviously-- [crosstalk]
Will: The tone matters.
Dan: No one would think that that was a false statement. Everyone would understand what that meant.
Will: Yeah, I mean, it is true that using sarcasm in depositions is bad practice. [laughs] Back to the bad lawyering and the perjury example. Obviously, if you let your clients try to speak sarcastically under oath, disaster might ensue. But I still like it.
Dan: This reminds me of-- this is a famous, I think probably apocryphal story that's attributed, I think, to various professors. But here's a version that I found on the internet. “An MIT linguistics professor was lecturing his class the other day in English, he said, “A double negative forms a positive. However, in some languages, such as Russian, a double negative remains a negative. But there isn't a single language, not one, in which a double positive can express a negative. A voice from the back of the room piped up, ‘Yeah, yeah,’” [Will laughs] or in one version it's yeah, yeah.” [Will laughs] In the other version, it's, “Yeah, right.” I don't know which one of those is better.
Will: I like “yeah, right” better, but they're both good.
Dan: Okay, you like “yeah, right” better? I've heard the “yeah, yeah” one a little bit more, but maybe “yeah, yeah” means “yes, but it's stupid,” and “yeah, right” means no.
Will: Yeah. All right. I got to call the show.
Dan: Okay. Thanks very much for listening. Please rate and review wherever you get your podcasts. Visit our website dividedargument.com for transcripts, blog.dividedargument.com for our Substack with posts from the larger Divided Argument universe, store.dividedargument.com for merchandise. Send us an email pod@dividedargument.com, leave us a voicemail 314-649-3790.
Will: Thanks to the Constitutional Law Institute for sponsoring all of our endeavors.
Dan: And if there is a long delay between this and our next episode, it will because we made false statements when we promised that there was going to be another episode in season five.
Will: Yeah, right.
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