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Matched Legal Cases: ['§ 209', '§ 209', '§ 209', '§ 209', '§ 209', '§ 201', '§ 209', '§ 209', '§ 209', '§ 209', '§ 66', '§ 1914', '§ 1914', '§ 209', '§ 209', '§ 201', '§ 203', '§ 209', '§ 209', '§ 209', '§ 209', '§ 209', '§ 209', '§ 209', '§ 203', '§ 209', '§ 209', '§ 1914', '§ 209', '§ 209', '§ 209', '§ 209', '§ 7301', '§ 209', '§ 209', '§ 209', '§ 201', '§ 203', '§ 7301', '§ 209', '§ 100', '§ 100', '§ 735', '§ 209']

Crandon v. United States (full text) :: 494 U.S. 152 (1990) :: Justia U.S. Supreme Court Center Log In
› Crandon v. United States
Crandon v. United States 494 U.S. 152 (1990)
U.S. Supreme CourtCrandon v. United States, 494 U.S. 152 (1990)Crandon v. United StatesNos. 88-931, 88-938Argued Nov. 6, 1989Decided Feb. 27, 1990494 U.S. 152CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
(a) Section 209(a)'s text indicates that employment status is an element of the offense. Neither of its two prohibitions -- the one directed to every person who "receives" any salary supplement "as compensation for his services as an officer or employee" -- and the other directed to every person who "pays," or makes any contribution to the salary of, "any officer or employee" -- directly specifies when a payment must be made or Page 494 U. S. 153 received. However, a literal reading of the second prohibition supports the conclusion that the payee must be a Government employee at the time the payment is made, and the prohibitions appear to be coextensive in their coverage of both sides of a single transaction. Pp. 494 U. S. 158-160.
STEVENS, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and BRENNAN, WHITE, MARSHALL, and BLACKMUN, JJ., joined. SCALIA, J., filed an opinion concurring in the judgment, in which O'CONNOR and KENNEDY, JJ., joined, post, p. 494 U. S. 168. Page 494 U. S. 154
The essential facts are not disputed. Each employee resigned because he planned to accept a specific federal position. These shifts required forgoing the higher salaries that each employee would have earned at Boeing and also Page 494 U. S. 155 severing all financial connection with the company. Thus, petitioner Paisley, who took early retirement to become Assistant Secretary of the Navy for Research, Engineering and Systems -- an office that requires confirmation by the United States Senate -- estimated that the financial cost to him of separating from Boeing would be approximately $825,000, including approximately $77,000 in lost stock options and $250,000 in lost retirement benefits. [Footnote 2] Boeing's severance payment to Paisley amounted to $183,000. [Footnote 3] The comparable estimate of petitioner Crandon, who resigned to become a computer scientist for the North Atlantic Treaty Organization, was $150,000; his severance payment was $40,000. [Footnote 4] The other three individual petitioners' payments were higher than Crandon's but lower than Paisley's. [Footnote 5] Boeing paid the five departing employees a total of $485,000. [Footnote 6] Page 494 U. S. 156
After a full trial, the District Court ruled against the Government on several alternative grounds. 653 F.Supp. 1381 (ED Va. 1987). First, it held that § 209(a) had not been violated Page 494 U. S. 157 because the payments were made before the recipients had become government employees and were not intended to compensate them for government service. Second, it held that there was no violation of any fiduciary standard of conduct established by common law principles of agency because the payments were disclosed to responsible government officials and because they did not "tend to subvert the loyalty of the individual defendants to the United States government." Id. at 1387. Finally, the District Court concluded that the payments "created neither the appearance of nor an actual conflict of interest," and that the Government had not been injured by the payments, and was therefore not, in any event, entitled to recover damages. Ibid.
At the outset, we note that Congress has not created an express civil remedy for violations of § 209(a). The Government Page 494 U. S. 158 does not, in so many words, argue that the enactment of the statute implicitly created a damages remedy. Rather, the Government begins with the common law rule that an agent who secretly profits from a breach of a fiduciary obligation to his principal must disgorge his ill-gotten gains. It then replaces the common law definition of fiduciary obligation with the stricter standard of § 209(a), arguing that, because concealment of a payment is not an element of the statutory offense, disclosure of payments is no defense. Regardless of whether the Government's amalgamation of common law and statutory concepts describes a tenable theory of recovery, it is at least clear that the Government must prove a violation of § 209(a) to prevail in these cases. We proceed therefore to consider whether § 209(a) applies to a severance payment that is made to encourage the payee to accept government employment, but that is made before the payee becomes a government employee.
Section 209 is one of almost two dozen statutory provisions addressing bribery, graft, and conflicts of interest that were revised and compiled at Chapter 11 of the Criminal Code in Page 494 U. S. 159 1962. 18 U.S.C. §§ 201-224. While some sections focus on bribes or compensation offered as a quid pro quo for government acts, and apply to persons before and after commencing government service, § 209 is a prophylactic rule that aims at the source of government employees' compensation. [Footnote 9]
Section 209(a) contains two prohibitions, neither of which directly specifies when a payment must be made or received. The first paragraph is directed to every person who "receives" any salary supplement "as compensation for his services as an officer or employee" of an executive agency of the Government. The second paragraph is directed to every person who "pays," or makes any contribution or supplement to the salary of, "any such officer or employee" under circumstances that would make the receipt of the contribution a violation of the subsection. A literal reading of the second paragraph -- particularly the use of the term "any such officer or employee" -- supports the conclusion that the payee must be a government employee at the time the payment is made. Similarly, the paragraph's additional prohibitions on one who "makes any contribution to, or in any way supplements the salary of," also refer to "any such officer or employee." Indeed, since the prohibited conduct is merely the receipt or the payment of the salary supplement, it follows that a violation of § 209(a) either is or is not committed at the time the payment is made. Despite the awkward drafting of the paragraphs, they appear to be coextensive in their coverage of both sides of a single transaction. The text of § 209(a) thus indicates that employment status is an element of the offense. [Footnote 10] Page 494 U. S. 160
The predecessor of § 209(a) was enacted in 1917 as an amendment to the Bureau of Education's legislative appropriation, and provided that "no Government official or employee shall receive any salary in connection with his services" from a non-Government source. [Footnote 12] The phrase "being a Page 494 U. S. 161 Government official or employee" did not appear until 1948, when the provision was transferred from 5 U.S.C. § 66 to 18 U.S.C. § 1914 in the reorganization of Title 18. [Footnote 13] As the Court of Appeals recognized, this wording of § 1914 unquestionably required a recipient of a payment to be a government employee at the time the payment was made. This Page 494 U. S. 162 reading neither changed the original scope of the statute nor engendered any controversy; in the entire period between 1917 and 1962, criticism focused instead on the vagueness of the reference to payments made "in connection with" the employee's service. [Footnote 14] The fact that the legislative history of § 209(a) explains the narrowing consequence of the elimination of these words, but is silent on the reason for eliminating "being a Government official or employee," is inconsistent with the view that Congress intended the latter change to broaden the coverage of the section. [Footnote 15] The Senate and House Judiciary Committees and the Attorney General all maintained that § 209(a) made no substantive change in the law. Rather, the deletion of "Government official or employee" and use of the phrase "officer or employee of the executive Page 494 U. S. 163 branch" seemed only to enhance clarity and consistency with the other new conflicts statutes. [Footnote 16]
We attach greater significance to two other changes that Congress made when it revised the bribery and conflict laws in 1962. In § 201, it added language extending the prohibition against bribery of a public official to a "person who has been selected to be a public official," which it defined as "any person who has been nominated or appointed to be a public official, or has been officially informed he will be so nominated or appointed." [Footnote 17] In § 203, which prohibits outside compensation for the performance of public service, Congress expressly covered advance requests or offers of compensation for services to be "rendered . . . at a time when [the recipient] is an officer or employee of the United States." [Footnote 18] In both of these provisions, Congress used unambiguous language to cover preemployment payments; the absence of comparable language in § 209(a) indicates that Congress did Page 494 U. S. 164 not intend to broaden the preexisting coverage of that provision.
Congress appropriately enacts prophylactic rules that are intended to prevent even the appearance of wrongdoing and that may apply to conduct that has caused no actual injury to the United States. Section 209(a) is such a rule. Legislation designed to prohibit and to avoid potential conflicts of interest in the performance of governmental service is supported by the legitimate interest in maintaining the public's Page 494 U. S. 165 confidence in the integrity of the federal service. [Footnote 20] Neither good faith, nor full disclosure, nor exemplary performance of public office will excuse the making or receipt of a prohibited payment. It is nevertheless appropriate, in a case that raises questions about the scope of the prohibition, to identify the specific policies that the provision serves as well as those that counsel against reading it too broadly. See Offshore Logistics, Inc. v. Tallentire, 477 U. S. 207 (1986).
Association of the Page 494 U. S. 166 Bar of the City of New York, Conflict of Interest and Federal Service 211 (1960).
"Such regulation, while setting the highest moral standards, must not impair the ability of the Government to recruit personnel of the highest quality and capacity. Today's Government needs men and women with a broad range of experience, knowledge, and ability. It needs increasing numbers of people with top-flight executive talent. It needs hundreds of occasional and intermittent consultants and part-time experts to help deal with problems of increasing complexity and technical difficulty. In short, we need to draw upon America's entire reservoir of talent and skill to help conduct Page 494 U. S. 167 our generation's most important business -- the public business."
The severance payments made to the petitioners in this case have a somewhat nebulous character. On the one hand, as the Government correctly argues, they give rise to a possible appearance of impropriety that is certainly one of the concerns Page 494 U. S. 168 of § 209(a). On the other hand, allowing corporations to encourage qualified employees to make their special skills available to the Government serves the public interest identified by both the President and the Attorney General when § 209(a) was enacted. It is not our function to express either approval or disapproval of this kind of unconditional severance payment. We note only that a literal reading of the statute -- which places a pre-Government service severance payment outside of the coverage of § 209(a) -- is consistent with one of the policies that motivated the enactment of the statute. Because the language Congress used in § 209(a) is thus in "harmony with what is thought to be the spirit and purpose of the act," this case presents none of the "rare and exceptional circumstances" that may justify a departure from statutory language. Crooks v. Harrelson, 282 U. S. 55, 282 U. S. 59-60 (1930); accord, Rubin v. United States, 449 U. S. 424, 449 U. S. 430 (1981).
Joint Stipulations of Uncontested Facts ¦ 41, App. 27.
Joint Stipulations of Uncontested Facts ¦ 87, App. 33; 845 F.2d at 478.
Petitioner Jones, who resigned to become Deputy Under Secretary of Defense for Strategic and Theater Nuclear Forces, requested $176,000 as the cost of severance and received $132,000. Petitioner Reynolds, who resigned to become a consultant and then Deputy Director of Space and Intelligence Policy, requested $195,000 and received $80,000. Petitioner Kitson, who took early retirement to become Deputy Assistant Secretary of the Navy for Command, Control, Communications and Intelligence, requested $180,000 and received $50,000. Joint Stipulations of Uncontested Facts ¦ 25, App. 26; i.d, ¦ 55, App. 29; id., ¦¦ 71-72, App. 31; 845 F.2d at 478. The employees submitted estimates to Boeing that included their expected reduction in salary and benefits and the value of accumulated, but unvested, company benefits. A separate payment, standard to all departing Boeing employees, cashed out the employees' interests in vested benefits. Ibid.
I agree with the Court that the Government has failed to prove that any of the petitioners violated 18 U.S.C. § 209(a), and that its claim to a common law remedy premised upon such a violation accordingly must fail. My reasons, however, are somewhat different. I do not think that payments which are made before or after the term of federal employment are necessarily excluded from § 209(a); but I do think that payments which are neither made periodically during Page 494 U. S. 169 the term of federal service, nor calculated with reference to periodic compensation, are excluded.
"[w]hoever pays . . . any such officer or employee under circumstances which Page 494 U. S. 170 would make its receipt a violation of this subsection."
it does not imply that the recipient must be an officer or employee at the time of receipt. There is no more reason to think that the second clause imports such a requirement when it refers to someone who "pays, or makes any contribution to, or in any way supplements, the salary of any such officer or employee." Perhaps it is not possible to pay an officer when he is not an officer; Page 494 U. S. 171 but it is surely possible to pay, to contribute to or to supplement the salary of an officer (just as it is possible to receive payment, contribution to, or supplementation of such salary) either before or after the service to which the salary pertains has been completed.
Webster's Second New International Page 494 U. S. 172 Dictionary 2203 (1957) (emphasis added). See also Benedict v. United States, 176 U. S. 357, 176 U. S. 360 (1900) ("The word salary' may be defined generally as a fixed annual or periodical payment for services, depending upon the time and not upon the amount of services rendered"). To "receive salary as compensation" is to receive periodic payments as compensation. And, in the context of the present statute, it must reasonably be thought that to "receive contribution to or supplementation of salary as compensation" is to receive contribution to or supplementation of periodic payments, in the sense that the contribution or supplementation itself must be periodic. To read it differently -- to regard any single payment from a nongovernment source as a "contribution to or supplementation of salary" -- is to render all the references to salary superfluous, so that the statute might as well have prohibited (like § 203) all "compensation." [Footnote 2/1] It is significant that, when the Office of Personnel Management sought to embody the substance of § 209(a) in its ethics regulations in a fashion that would be understood to mean what the Government thinks it means, it revised the references to contribution and supplementation of salary, as follows: Page 494 U. S. 173
62 Stat. 793. In each of these versions, if one interpreted the phrase "make(s) any contribution to, or in any way supplement(s) the salary of" to include not only periodic payments but also lump-sum payments, then the prohibitions upon payor and payee would not match: the Government official who received a lump-sum payment would be guiltless (since he did not "receive Page 494 U. S. 174 any salary") whereas the payor would be criminally liable. This obviously was not intended. At both ends, salary was the object of the prohibition. The Government does not rely upon any change in the meaning of the statute effected by the 1962 revision and recodification, but, to the contrary, acknowledges -- indeed boasts -- that its position was "firmly established" under the earlier versions. Nor would it be appropriate to regard the 1962 legislation as congressional approval and ratification of the prior interpretation. That would in any circumstance be a doubtful basis for disregarding the text of a criminal statute, but is particularly unjustified when, as I shall discuss in Part III below, the interpretation in question was not that of the courts or of an agency that had primary responsibility for administering the law, and was full of inconsistencies to boot.
I must acknowledge that subsections (d) and (e) of § 209 exclude from the coverage of subsection (a) some payments that are not periodic payments, so that the interpretation I have described is no more successful than the Government's in giving effect to all the language of the section. But superfluous exceptions (to "make assurance doubly sure") are a more common phenomenon than the insertion of utterly pointless language at the very center of the substantive restriction. Moreover, since (as I shall discuss in Part III below) the Government is not so foolish as to apply literally its interpretation that all lump-sum payments as compensation are covered, subsections (d) and (e) turn out to be largely superfluous under its view of the statute as well. See May 31, 1961, Memorandum of Office of Legal Counsel (OLC) (advising that the proposed subsection (d) would be "a clarification of existing law" rather than "an exemption" from 18 U.S.C. § 1914 (1958 ed.)); 33 Op.Atty.Gen. 273 (1922); 42 Op.Atty.Gen. 111, 125 (1962). In any case, granting that the only reasonable implication of subsections (d) and (e) is that subsection (a) applies to payments in addition to periodic payments, it remains true that the only reasonable meaning of subsection Page 494 U. S. 175 (a) itself is that it applies exclusively to periodic payments. Even if one does not think that a meaning trumps an implication, at most we have an ambiguity -- and, since this is a criminal statute, the rule of lenity demands that it be resolved in favor of the more narrow criminal liability.
It may seem strange nowadays that Congress should think of categorically criminalizing only periodic payments (salary or supplementation of salary), rather than all payments, to Government employees. But it would not have seemed strange in 1917, when the substance of subsection (a) was originally enacted. There existed at that time, in apparently more than one Government agency, a regular practice of hiring, at nominal salary, individuals whose real compensation would be paid by private organizations. 54 Cong.Rec. 2039-2047, 4011-4013; B. Manning, Federal Conflict of Interest Law 148-149 (1964). Cf. 31 Op. Atty.Gen. 470 (1919); 2 Comp.Gen. 775 (1923). Apart from the fact that Congress often acts only "one step at a time," to eliminate one abuse that has become the focus of its attention but not all allied abuses, there are good practical reasons why the payment or supplementation of salary would have been singled out. Surely receipt of a regular salary from a private source poses the greatest risk of corruption; one commonly characterizes the corrupt official by saying that "he is on someone's payroll." Moreover, the payment or supplementation of salary can be categorically eliminated (as lump-sum payments cannot) without criminalizing a large number of harmless, perfectly innocent, and often desirable, arrangements. For example: It is rare, I think, for well-to-do parents to make periodic, salary-like payments to their child so that he might continue in a low-paying Government job that they are proud of his performing and wish him to continue. I suspect it is not at all rare, however, for such parents to make occasional gifts to the child, or to leave a particularly generous bequest, with precisely that end in mind. Under the interpretation of § 209 adopted by the Government, each such act of generosity, Page 494 U. S. 176 if rendered and accepted with that objective, would seemingly violate the law. That alone, I should think, would be reason enough not to criminalize all "supplementation of salary" in the sense the Government would have us understand the term.
Two points must be made clear at the outset: First, the substantial history of interpretation that exists is not a history of judicial interpretation. In the more than 70 years that § 209 and its predecessors have been in existence, this Court has discussed them, in passing, only three times, see Muschany v. United States, 324 U. S. 49, 324 U. S. 67 (1945); United States v. Myers, 320 U. S. 561, 320 U. S. 567 (1944); International Railway Co. v. Davidson, 257 U. S. 506, 257 U. S. 515 (1922). Prior to the present litigation, the Courts of Appeals have discussed them only three times, see United States v. Oberhardt, 887 F.2d 790, 793-794 (CA7 1989); United States v. Raborn, 575 F.2d 688, 691-692 (CA9 1978); United States v. Muntain, 198 U.S.App. D.C. 22, 27-28, 610 F.2d 964, 969-970 (1979), and the District Courts only four times, see United States v. Pezzello, 474 F.Supp. 462, 463 (N.D.Tex.1979); Exchange National Bank of Chicago v. Abramson, 295 F.Supp. 87, 89-91 (Minn.1969); United States v. Gerdel, 103 F.Supp. 635, 638-639 (ED Mo.1952); United States v. Morse, 292 F. 273, 276-277 (SDNY 1922). Only one of these scarce judicial references, a 1952 District Court opinion, explicitly discusses the issue of salary versus lump-sum payment, agreeing with the Government's position here; that discussion, moreover, was by its own admission "gratuitous," Page 494 U. S. 177 since the statute was in no way at issue. See Gerdel, supra, at 638. And in only two of these cases -- one from a District Court, one from a Court of Appeals, and both relatively recent -- was the (unchallenged) assumption that lump-sum payments were covered apparently necessary to the court's holding. See United States v. Oberhardt, supra; United States v. Pezzello, supra. In sum, the Government's position is not supported by a long, or even appreciable, body of judicial interpretation.
Besides being unentitled to what might be called ex officio deference under Chevron, this expansive administrative interpretation of § 209(a) is not even deserving of any persuasive effect. Any responsible lawyer, advising on whether particular conduct violates a criminal statute will obviously Page 494 U. S. 178 err in the direction of inclusion rather than exclusion -- assuming, to be on the safe side, that the statute may cover more than is entirely apparent. That tendency is reinforced when the advice-giver is the Justice Department, which knows that, if it takes an erroneously narrow view of what it can prosecute, the error will likely never be corrected, whereas an erroneously broad view will be corrected by the courts when prosecutions are brought. Thus, to give persuasive effect to the Government's expansive advice-giving interpretation of § 209(a) would turn the normal construction of criminal statutes upside-down, replacing the doctrine of lenity with a doctrine of severity.
"'object of the provision . . . Page 494 U. S. 179 was that no Government official or employee shall serve two masters to the prejudice of his unbiased devotion to the interests of the United States.'"
ibid., the opinion approves receipt of the Rockefeller Public Service Awards, established under a grant from John D. Rockefeller III. [Footnote 2/2] Page 494 U. S. 180
April 7, 1977, Memorandum of Office of Legal Counsel 2-3. There would certainly be no objection to this "we'll look at all the circumstances and see if it looks dangerous" approach if it were applied in the exercise of the President's discretion-laden power to "prescribe regulations for the conduct of employees in the executive branch," 5 U.S.C. § 7301. But it is an unprecedented way of interpreting the criminal law. Page 494 U. S. 181
"[t]he payments in Page 494 U. S. 182 such circumstances are made with respect to the former employment and incidental to the leave granted; they are not made 'in connection with' the services of the individual as an official or employee of the United States within the contemplation of the statute."
As the last example shows, the liberties that the Government has taken with its interpretation of § 209(a), to the extent they appeal to anything more concrete than the "spirit" of the statute, rely upon the phrase "as compensation for" (or its predecessor, "in connection with"). The proper interpretation of § 209(a) will not eliminate that troublesome phrase, but it will eliminate most of the temptation to give it something other than a clear and constant meaning. If § 209(a) covers only the payment of salary, there would be little difficulty in following the principle that the statute is violated when the reason for paying the salary is, in whole or in part, the recipient's status as, or work that the recipient has performed or will perform as, a federal officer or employee. But one balks at applying such a clear principle to, for example, the reimbursement of transportation and lodging for a Page 494 U. S. 183 federal employee who gives a speech, see 33 Op.Atty.Gen. 273 (1922), meritorious public service awards, see Memorandum of June 26, 1959, reduced-price registration fees for federal employees at American Bar Association meetings, reduced-price entertainment tickets for members of the armed services, or many other situations one can envision. Until a criminal statute reasonable enough to be accorded a clear interpretation can be enacted, lump-sum payments that do not consist of bribes (which are already covered by 18 U.S.C. § 201) or of compensation for services in a particular matter (which are already covered by 18 U.S.C. § 203) are better handled by administrative prohibition, through Executive Order under the President's authority and pursuant to 5 U.S.C. § 7301, see Exec. Order No. 11222, 3 CFR 306 (1964-1965 Comp.), and by agency regulations adopted under delegation of that authority. Operating in that manner, the Executive can make, and can experiment with, all sorts of reasonable distinctions that § 209(a), if interpreted to cover lump-sum payments, cannot honestly be said to permit -- according special treatment, for example, to privately paid compensation that consists of cash reimbursement for travel and subsistence expenses, see 3 CFR § 100.735-15(d)(1), and to compensation that consists of awards, but only if conferred by a nonprofit organization, see 3 CFR § 100.735-15(d)(3); 5 CFR § 735.203(e)(3) (1989).
I come, finally, to applying § 209(a) as I think it must be interpreted to the facts of the present case: The payments to all the recipients here were in lump sums. Perhaps there is room for argument that they would nonetheless fall within the statute if their existence and their amounts were strictly tied to a period of federal service -- that is, if they had been computed on the basis of so much per month or so much per year that each recipient promised to serve. But even this argument is eliminated by the District Court's finding that Page 494 U. S. 184