This week, the Supreme Court issued a flurry of important decisions, including two major decisions related to white collar criminal enforcement, both which deal significant blows to the government.

Snyder v. United States Supreme Court Significantly Limits Scope of Key Public Corruption and Bribery Statute

The first case, Snyder v. United States, dealt with 18 U.S.C. § 666 which, in relevant part, prohibits state and local government officials from “corruptly” accepting “anything of value of any person, intending to be influenced or rewarded” for an official act.  The defendant, James Snyder, was the mayor of Portage, Indiana.  Snyder was convicted of violating Section 666 by receiving $13,000 from a truck company that had recently received contracts totaling over $1 million to provide new trash trucks for the city of Portage.

In a 6-3 decision, authored by Justice Kavanaugh, the Supreme Court reversed Snyder’s conviction, concluding that Section 666 does not criminalize gratuities to state and local officials for their past acts.  That conclusion was based upon the text of the statute and the circumstances surrounding the statute’s enactment and later amendment by Congress.

Justice Jackson authored a strongly worded dissent, which was joined by Justices Sotomayor and Kagan.  Justice Jackson also pointed to the plain text of the statute, which she viewed as leading to the conclusion that Section 666 applies to gratuities paid to state and local officials after they have acted. “The term ‘rewarded,’” Justice Jackson stated, “easily covers the concept of gratuities paid to corrupt officials after the fact — no upfront agreement necessary.”

Securities & Exchange Commission V. Jarkesky The Supreme Court Deals Major Blow to SEC Enforcement Powers

The following day, the Supreme Court issued another 6-3 decision in Securities & Exchange Commission v. Jarkesky, which involved a challenge to the SEC’s ability to seek civil penalties through its administrative litigation process, without affording the defendant the right to a jury trial.

At issue was the administrative procedure established under the various statutes including the Securities and the Securities Exchange Act, which govern the registration and trading of securities.  When the SEC believes there has been a violation of one of these statutes, it can either file a lawsuit in federal court, where it proceeds just like any other civil case filed in federal court, or adjudicate the matter “in house”, in which case the matter is decided by an Administrative Law Judge (ALJ).  Upon finding a violation, the ALJ can impose various sanctions, including civil penalties.  That order is then subject to review by a federal Article III judge.

The question presented to the Court was whether the Seventh Amendment to the Constitution (which guarantees the right to a jury trial in most civil suits) entitles a defendant to a jury trial when the SEC seeks civil penalties for securities fraud.  The Court’s majority, led by Chief Justice Roberts, concluded that this was a “straightforward” question and that the answer was clear – the Seventh Amendment does, indeed, apply, and a defendant is entitled to a jury trial before civil penalties may be imposed.

Justice Sotomayor filed a dissenting opinion, which was joined by Justices Kagan and Jackson.  Justice Sotomayor pointed out what she saw as various flaws in the majority’s decision, including ignoring important principles of separation of powersx, and years of stare decisis.