Stealing Money from a Bank Account Is “Defrauding a Financial Institution”
Perhaps getting a bit too creative for his own good, Lawrence Shaw argued that his conviction under 18 U.S.C. sec. 1344(1), for “executing a scheme . . . To defraud a financial institution,” should be overturned because what he really did—steal information about a person’s bank account so he could take funds from that person’s account—did not defraud the bank itself, but rather just the person he stole from. The Court, in a unanimous opinion by Justice Breyer, slammed the door shut on that potential loophole, and affirmed the conviction, noting at the outset that the bank did indeed have “property rights” in a depositor’s funds, at minimum like a bailee. Even if the bank itself suffered no loss, the statute’s prohibition still applied. However, the Court granted Shaw a slight victory: he complained that his jury instruction might have led the jury to believe that he could be convicted under the statute without it being proven that his scheme was intended to deprive the bank of “something of value.” The Court vacated and remanded for further proceedings on the instruction, although noting that the Ninth Circuit could find that the error was harmless. Given the facts and the Court’s opinion, harmless error would seem likely. A link to the opinion in Shaw v. United States is here.
The U.S. Supreme Court released three new opinions on December 6, 2016.
Court Vacates Apple’s $399 Million Award Against Samsung
Apple suffered a setback in its legal war with Samsung, as a unanimous Court vacated and remanded a jury verdict under the Patent Act for recalibration. Apple originally sued Samsung because Samsung started churning out smartphones that looks a lot like the iPhone. In actuality, though, Apple had only patented parts of the iPhone, like the black rectangular front face with rounded corners, and a grid of 16 colorful icons on a black screen. The jury found Samsung guilty of patent infringement, and awarded Apple the entirety of Samsung’s profits from selling the infringing smartphones. The Federal Circuit affirmed, noting that while the Patent Act limited damages to those caused by the infringing “article of manufacture,” it was impossible to separate the infringing articles from the rest of the smartphone. The Court, through an opinion by Justice Sotomayor, rejected that analysis, holding that “article of manufacture” as defined by the Act covers both “a product sold to a consumer and a component of that product,” and thus damages from infringement can and should be limited only to the infringing articles, and not necessarily the final product that incorporates those articles. Thus, Apple’s damages award needed to be recalculated, although the Court declined to offer how to go about doing so. Samsung Electronics Co. v. Apple, Inc.
Insider Trading “Personal Benefit” Inferred When Information Is Given To A Relative
After the Court held in Dirks v. SEC, 463 U.S. 646, that liability for insider trading could be inferred where the tipper gave the confidential information to a trading relative or friend, the Second Circuit held in U.S. v. Newman, 773 F.3d 438, that there also needed to be proof of a meaningfully close personal relationship between the tipper and tippee that generated in an exchange of some pecuniary gain. The Ninth Circuit rejected the Second Circuit’s test and affirmed the conviction of Salman, who received insider information from a brother-in-law without there being any benefit to the original tipper, the brother-in-law’s brother. The Court, in a unanimous opinion by Justice Alito, affirmed the Ninth Circuit’s holding and rejected the Second Circuit’s additional gloss. The Court re-affirmed Dirks, holding that when a person gives insider trading information to a family member, that is enough to infer a personal benefit by the tipper, regardless of whether the tipper received an actual benefit. Salman v. United States
Court Rejects Dismissal Of False Claim Act Cases For Violation Of Seal Requirement
When a party files a complaint on behalf of the Government under the False Claims Act, the Act requires that “[t]he complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders.” In State Farm First & Casualty Co. v. United States ex rel. Rigsby, former famous tort lawyer Dickie Scruggs filed such a complaint under seal as required, but released certain information about the action to the news media in violation of the seal requirement. The defendants moved to dismiss the complaint, on the presumption that violation of the seal requirement mandated dismissal—the defendants did not request any other relief. The district court declined to dismiss the case, and the Fifth Circuit affirmed. The Court, in a unanimous decision by Justice Kennedy, affirmed as well. While noting that the FCA’s seal requirement was mandatory, the Court noted that the Act lacked any explicit language requiring dismissal. The Court also recognized that the purpose of the seal requirement was to protect the Government’s potential interest in the lawsuit, and such interest would not be served if the requirement were read to require the dismissal of the lawsuit.
Vacated Guilty Verdicts Not Subject to Issue Preclusion
The Double Jeopardy Clause prevents a person from being prosecuted a second time after a jury acquits based on findings of fact. The U.S. Supreme Court had previously held that the Clause did not apply when a jury returns a verdict that is rationally irreconcilable—convicting on one count but acquitting on the other when both counts turned on the same issue of law. However, the Clause does apply where a jury acquits on one count and is hung on the other, even though both turned on the same issue of law. But what if the jury enters inconsistent verdicts, and the appeals court vacates the guilty verdict based on an erroneous jury instruction? The defendants in Bravo-Fernandez v. United Stateswere convicted of bribing a government official, but acquitted of conspiring to bribe, or of violating the Travel Act in bribing the official. Since the only issue at trial was whether the defendants bribed the official, the acquittals were inconsistent with the conviction. On appeal the U.S. Court of Appeals for the First Circuit reversed the conviction based on an errant jury instruction. The defendants then moved for acquittal based on the premise that the other acquittals precluded a retrial. The First Circuit disagreed, and the Court, in a unanimous opinion by Justice Ginsburg, affirmed, holding that the vacatur of the guilty verdict did not fundamentally change the fact that the jury entered inconsistent verdicts at the outset, which nixes the application of the Clause. Justice Thomas filed a concurrence, arguing that the Clause should only prohibit successive prosecutions for the same act and crime, and the Court was wrong to extend the Clause to prosecutions for distinct crimes based on shared facts. A link to the opinion is here.