Opinion ID: 779927
Heading Depth: 3
Heading Rank: 7

Heading: Aggregation and the Hobbs Act

Text: 101 As previously observed, the aggregation principle has relevance only in Lopez category three cases, cases that are concerned only with regulation of intrastate conduct. As to such regulation, Lopez's explicit requirement that the regulated intrastate conduct not merely affect interstate commerce but that it do so substantially is obviously designed to insure that congressional power under the Commerce Clause is not wholly without meaningful limits and does not obliterate the distinction between what is truly national and what is truly local, id. at 1634, so as to transform to a unitary system of government the constitutionally established federal system under which, among other things, there is no better example of the police power, which the Founders denied the National Government and reposed in the States, than the suppression of violent crime and vindication of its victims. Morrison at 1754. Yet if there are essentially no limits on use of the aggregation principle to satisfy the substantially requirement, then that requirement becomes virtually meaningless and wholly incapable of performing the function it is designed to serve, for the greater the breadth and generality of the regulatory net which Congress casts over intrastate conduct the more substantial will be the aggregated affect on interstate commerce of the total of all the intrastate conduct so regulated. Moreover, if the aggregation principle is applicable the courts have no power `to excise, as trivial, individual instances' of the class being aggregated. Perez v. United States, 402 U.S. 146, 91 S.Ct. 1357, 1361, 28 L.Ed.2d 686 (1971) (quoting Maryland v. Wirtz, 392 U.S. 183, 88 S.Ct. 2017, 2022, 20 L.Ed.2d 1020 (1968)). 102 Although the Supreme Court has on several occasions sustained federal statutes on the aggregation theory, it has never applied or even referred to it in a Hobbs Act case (nor is anything in the Hobbs Act legislative history supportive of such an approach). Nor since Lopez and Morrison has the Court made any general analysis or explanation of the contours of the doctrine. 103 In United States v. Robinson, 119 F.3d 1205 (5th Cir.1997), we rejected an as-applied challenge to a Hobbs Act conviction which urged that under Lopez the evidence was insufficient because it showed only that the charged robberies had some, but not a substantial, effect on interstate commerce. 36 We rejected that contention, relying on the aggregation principle as reflected by cases such as Wickard v. Filburn, 317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122 (1942), Katzenbach v. McClung, 379 U.S. 294, 85 S.Ct. 377, 13 L.Ed.2d 290 (1964) and Heart of Atlanta Motel v. United States, 379 U.S. 241, 85 S.Ct. 348, 13 L.Ed.2d 258 (1964), held that  Lopez did not undermine this principle and relied in that connection on the Tenth Circuit's decision in United States v. Bolton, 68 F.3d 396 (1995). Robinson, 1214-15. 104 Subsequently, in United States v. Hickman, 151 F.3d 446 (5th Cir.1998) (panel opinion), 179 F.3d 230 (5th Cir.1999) (en banc), we again addressed the requisite interstate commerce connection respecting Hobbs Act convictions for several robberies of retail establishments. The Hickman panel affirmed the convictions, considering itself bound by Robinson, but expressed serious questions as to the propriety of applying the aggregation principle in that setting. 37 The en banc court noted that [b]y means of an equally divided en banc court, we affirm the counts of conviction, but no opinion for affirmance was issued. Hickman, 179 F.3d 230. Half the judges comprising the en banc court joined in a dissenting opinion by Judge Higginbotham urging reversal on the basis that, particularly in light of Lopez, the aggregation principle was not properly applicable to those Hobbs Act prosecutions. Id. 105 Given the intervening decision in Morrison we revisit that issue and now express our essential agreement with the conclusions and underlying reasoning of Judge Higginbotham's Hickman opinion. 38 As stated in that opinion: 106 We would hold that substantial effects upon interstate commerce may not be achieved by aggregating diverse, separate individual instances of intrastate activity where there is no rational basis for finding sufficient connections among them. Of course, Congress may protect, enhance, or restrict some particular interstate economic market, such as those in wheat, credit, minority travel, abortion service, illegal drugs, and the like, and Congress may regulate intrastate activity as part of a broader scheme. The Hobbs Act is not a regulation of any relevant interstate economic market, nor are there other rational connections among nationwide robberies that would entitle Congress to make federal crimes of them all. 107 The Hobbs Act does not target any class of product, process, or market, or indeed even commercial victims. It facially applies to any robbery, or its attempt, of any person or entity.... The Hobbs Act offers no `regulatory scheme' which `could be undercut' if individual robberies were not aggregated.... Thus, putting aside robberies as part of an effort to regulate particular interstate markets such as guns, drugs, or organized crime syndicates, a local robbery spree can be within Congress's power only if it by itself has a substantial effect. Id. at 231. 108 ... 109 Where Congress has sought to regulate —protect, enhance, or restrict— some particular market such as wheat, credit, minority travel, or abortion service, it has pointed the way to a rational aggregation test. It has identified those things that affect that market, things which if not all subject to the regulation would erode the effort. Intrastate production and sales can be aggregated, because the prices of goods and services are determined in interstate markets. If, for example, the federal government enacts a price control to ensure sufficient income for producers, it will be thwarted if consumers switch to buying goods in intrastate commerce or produce the goods themselves. Because the instances of economic activity are intimately connected and in the aggregate substantially affect commerce, Congress can regulate such activity. Id. at 233. 110 We also observe that not only does the Hobbs Act not target any class of product, process or market or even commercial victims, but it has also been held to apply to robbery (or extortion) which adversely affects ill egal commerce 39 as well as to that which beneficially affects commerce. 40 111 The analysis in the Hickman en banc dissent fully comports with the following crucial passage in Lopez explaining the Court's refusal to sustain 18 U.S.C. § 922(q) under an aggregation theory, viz: 112 Section 922(q) is not an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated. It cannot, therefore, be sustained under our cases upholding regulations of activities that arise out of or are connected with a commercial transaction, which viewed in the aggregate, substantially affects interstate commerce. Id. at 1631 (emphasis added). 113 Where the Supreme Court has applied aggregation to uphold federal regulation of intrastate conduct against constitutional challenge under the Commerce Clause, there has always been a rational basis to find sufficient interrelationship or commonality of effect on interstate commerce among the discrete intrastate instances regulated and between them and a scheme of regulation (protection, enhancement or restriction) of some particular interstate market or activity such that the regulation of those intrastate activities can rationally be viewed as necessary to the effectiveness of or a meaningfully supporting part of the scheme of regulation of that particular interstate activity or market. 114 We now turn to the most frequently cited of these cases. 115 Wickard v. Filburn, 317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122 (1942), involved a farmer who owned and operated a small farm ... maintaining a herd of dairy cattle, selling milk, raising poultry, and selling poultry and eggs and raising a small acreage of winter wheat. Id. at 84. He sold part of the wheat, fed part to his poultry and cattle, some of which were sold, used some for seeding and some in making flour for home consumption. In the year in question his wheat available for marketing quota under the Agricultural Adjustment Act of 1938 as amended was 11.1 acres but he harvested and threshed 23 acres and was penalized 49 cents a bushel on the 239 bushels harvested and threshed from the 11.9 acres of excess acreage. Id. at 83, 84, 86. 41 The Court assumed that this excess was consumed on the farm, but nevertheless, and despite the comparatively minimal quantity, sustained the penalty as against Commerce Clause challenge, stating, inter alia, 116 The effect of consumption of homegrown wheat on interstate commerce is due to the fact that it constitutes the most variable factor in the disappearance of the wheat crop. 117 ... 118 One of the primary purposes of the Act in question was to increase the market price of wheat and to that end to limit the volume thereof that could affect the market. It can hardly be denied that a factor of such volume and variability as home-consumed wheat would have a substantial influence on price and market conditions. This may arise because being in marketable condition such wheat overhangs the market and if induced by rising prices tends to flow into the market and check price increases. But if we assume that it is never marketed, it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market. Home-grown wheat in this sense competes with wheat in commerce .... Congress may properly have considered that wheat consumed on the farm where grown if wholly outside the scheme of regulation would have a substantial effect in defeating and obstructing its purpose to stimulate trade therein at increased prices. 119 ... 120 Control of total supply, upon which the whole statutory plan is based, depends upon control of individual supply. Id. at 90-91 (emphasis added). 121 We note that Lopez describes Wickard as perhaps the most far reaching example of Commerce Clause authority over intrastate commerce. Lopez at 1630. Clearly, however, the factors that brought Wickard under the aggregation principle are absent in the present character of prosecution. In Wickard market forces related the effect of the individual instances of regulated intrastate conduct to each other and to the scheme of regulation of the particular interstate market, namely sustaining the price at which wheat was sold in interstate commerce; moreover, the diverse instances of regulated intrastate conduct in Wickard each had a similar effect on the regulatory scheme, that is each had the same tendency to affect the interstate price of wheat in the same way. 122 Likewise, in United States v. Wrightwood Dairy Co., 315 U.S. 110, 62 S.Ct. 523, 86 L.Ed. 726 (1942), the Court upheld a regulation prescribing the minimum price to be paid producers for all milk marketed in the Chicago area, approximately forty percent of which came from out-of-state, rejecting the contention that the regulations could not under the Commerce Clause be applied to a local milk marketer all of whose business was entirely intrastate. The Court explained: 123 ... the marketing of intrastate milk which competes with that shipped interstate would tend seriously to break down price regulation of the latter. 124 ... 125 We conclude that the national power to regulate the price of milk moving interstate into the Chicago, Illinois, marketing area, extends to such control over intrastate transactions there as is necessary and appropriate to make the regulation of the interstate commerce effective; and that it includes authority to make like regulations for the marketing of intrastate milk whose sale and competition with the interstate milk affects its price structure so as in turn to affect adversely the Congressional regulation. Id. at 527. 126 The decisions in Heart of Atlanta Motel v. United States, 379 U.S. 241, 85 S.Ct. 348, 13 L.Ed.2d 258 (1964), and Katzenbach v. McClung, 379 U.S. 294, 85 S.Ct. 377, 13 L.Ed.2d 290 (1964), sustained under the Commerce Clause the public accommodation provisions of Title II of the Civil Rights Act of 1964 applicable to hotels and restaurants respectively. In doing so the Court in each case pointed to the overwhelming evidence before Congress in its consideration of the legislation that racial discrimination by hotels and restaurants impeded minority interstate travel. In Heart of Atlanta the Court noted that the Committee Reports and testimony before Congress reflected that: 127 [O]ur people have become increasingly mobile with millions of people of all races traveling from State to State; that Negroes in particular have been the subject of discrimination in transient accommodations, having to travel great distances to secure the same; that often they have been unable to obtain accommodations and have had to call upon friends to put them up overnight, ... and that these conditions had become so acute as to require the listing of available lodging for Negroes in a special guidebook ... that this uncertainty [of the Negro traveler finding lodging] stemming from racial discrimination had the effect of discouraging travel on the part of a substantial portion of the Negro community. This was the conclusion not only of the Under Secretary of Commerce but also of the Administrator of the Federal Aviation Agency who wrote the Chairman of the Senate Commerce Committee that it was his `belief that air commerce is adversely affected by the denial to a substantial segment of the traveling public of adequate and desegregated public accommodations.' ... We shall not burden this opinion with further details since the voluminous testimony presents overwhelming evidence that discrimination by hotels and motels impedes interstate travel.  Id. at 355 (emphasis added). 42 128 The Court went on to hold that interstate travel was interstate commerce under the Commerce Clause and that accordingly Congress's commerce power embraced the power to remove the impediment to interstate travel posed by race based refusal to serve hotel customers. Id. at 355-360. McClung similarly placed great emphasis on the same consideration, id. at 381-82, 43 and goes on to hold that the fact that one restaurant's activities may have but a de minimus effect on interstate commerce was not significant, relying on Wickard. McClung at 382. 129 In Heart of Atlanta and McClung the discrete local activities regulated—the race based refusal of diverse hotels and restaurants to serve minority customers—each had a similar effect on a particular interstate market or activity, namely impeding minority interstate travel, an obstruction to interstate commerce which the statute was designed to remove. 130 Maryland v. Wirtz, 392 U.S. 183, 88 S.Ct. 2017, 20 L.Ed.2d 1020 (1968), 44 rejected Commerce Clause challenges to the 1961 amendments to the Fair Labor Standards Act adopting the enterprise concept extending coverage to include not only employees personally engaged in interstate commerce or in the production of goods for interstate commerce, but also all those employed by an enterprise engaged in interstate commerce or in the production of goods for interstate commerce. The Court noted that in the original act Congress had found that substandard wages and excessive hours, when imposed on employees of a company shipping goods into other States, gave the exporting company an advantage over companies in the importing States and that this had the undesirable effect of driving down labor conditions in the importing States. Id. at 2020. 45 The Court went on to state: 131 When a company does an interstate business, its competition with companies elsewhere is affected by all its significant labor costs, not merely by the wages and hours of those employees who have physical contact with the goods in question. Id. at 2021. 132 Wirtz also noted that Congress had found that substandard labor conditions tended to labor disputes and strikes, that when such strife disrupted businesses involved in interstate commerce, the flow of goods in commerce was itself affected, id. at 2021, and that this applied equally to substandard labor conditions of all employees of an enterprise engaged in commerce, not merely those personally so engaged. Id. at 2021-22. Wirtz goes on to state that under the Commerce Clause courts could not excise, as trivial, individual instances falling within a rationally defined class of activities, citing Wickard. Wirtz at 2022. 133 The intrastate activities regulated in Wirtz (wages of employees of an enterprise engaged in interstate commerce or in the production of goods for or acquisition of goods directly in interstate commerce even where the employee personally was not so engaged) were by market forces interrelated and related to interstate commerce and to the regulated interstate market in wages. Moreover, each of those intrastate activities had the same character of effect on the statutory scheme of regulation—as each proscribed substandard wage tended, by market forces, to lower wages generally and to foster industrial discord, contrary to and tending to undermine the statutory scheme for maintaining wages of employees of enterprises engaged in interstate commerce (or the production of goods for or acquisition of goods directly in interstate commerce) and avoiding the disruption of interstate commerce incident to industrial strife resulting from substandard wages. 134 In Perez v. United States, 402 U.S. 146, 91 S.Ct. 1357, 28 L.Ed.2d 686 (1971), the Court sustained Perez's conviction for making an extortionate extension of credit contrary to the provisions of Title II of the Consumer Credit Protection Act of 1968, rejecting the contention that the statute was unconstitutional as not requiring proof that the particular transaction affected interstate commerce. The Court observed that [p]etitioner is one of the species commonly known as `loan sharks' which Congress found are in large part under the control of `organized crime,' citing congressional findings under Title II that [o]rganized crime is interstate and international in character, that [a] substantial part of the income of organized crime is generated by extortionate credit transactions, and that [e]xtortionate credit transactions are carried on to a considerable extent in interstate and foreign commerce and through the means and instrumentalities of such commerce and [e]ven where ... purely intrastate in character... directly affect interstate and foreign commerce. Id. at 1358 & n. 1. It also noted evidence before Congress that loan sharking was the second largest source of revenue for organized crime and is controlled by organized criminal syndicates, that through loan sharking the organized underworld has obtained control of legitimate businesses, including securities brokerages and banks, id. at 1362, and concluded by stating that loan sharking in its national setting is one way organized interstate crime ... syphons funds from numerous localities to finance its national operations. Id. at 1362-63. 135 The Court likewise noted that [t]here was ample evidence showing petitioner was a `loan shark' who used the threat of violence as a method of collection, id. at 1358, and [i]n the setting of the present case there is a tie-in between local loan sharks and interstate crime. Id. at 1367. 46 136 In upholding the conviction the Perez Court relied on Wickard, Wrightwood Dairy Co., Heart of Atlanta, McClung, and Wirtz for the principle that the class of activities is the proper measure of the required relationship to interstate commerce and that courts would not `excise, as trivial, individual instances' of the class. Perez at 1360-61. 137 Plainly, Perez dealt with a national market in credit, in which individual instances interact with each other by virtue of market forces. More significantly, perhaps, it dealt with a statute attempting to regulate a particular interstate activity, that of organized interstate crime, which was financed by the both local and interstate loan sharking which it controlled. Id. at 1362-63. 47 Moreover, Perez also relied on the principle that `when it is necessary in order to prevent an evil to make the law embrace more than the precise thing to be prevented it may do so' (quoting Westfall v. United States, 274 U.S. 256, 47 S.Ct. 629, 71 L.Ed. 1036 (1927)), and then observed in the present case there is a tie-in between local loan sharks and interstate crime. Id. at 1362. This would appear to invoke the rule that where the same kind of trafficking is carried on both interstate and intrastate Congress in preventing the interstate trafficking may also proscribe the intrastate trafficking where, as a practical matter (for reasons such as the fungibility of the particular commodities or the like), it is necessary to regulate the intrastate trafficking in order to effectively regulate the interstate trafficking. See, e.g., United States v. Lopez, 459 F.2d 949, 951-53 (5th Cir.1972). 48 138 The present case does not involve the targeting of any particular interstate market or activity, and it is evident that the proscription of robberies which do not have the requisite effect on interstate commerce is in no sense necessary to effective regulation of those that do. 139 We finally turn in this connection to Hodel v. Virginia Surface Mining & Reclamation Ass'n, 452 U.S. 264, 101 S.Ct. 2352, 69 L.Ed.2d 1 (1981) ( Hodel v. Virginia ) and Hodel v. Indiana, 452 U.S. 314, 101 S.Ct. 2376, 69 L.Ed.2d 40 (1981), in each of which the Court rejected Commerce Clause challenges by various coal producers to certain provisions of the Surface Mining and Reclamation Control Act of 1977. The challenged provisions constituted a complex regulatory scheme governing surface coal mining operations, requiring, among other things, land restoration, use of dams, spoil disposal and the like. The Court noted congressional findings that surface mining adversely affects interstate commerce by, inter alia, destroying the utility of land for commercial, industrial, agricultural, forestry and other purposes, causing erosion and contributing to flooding, polluting water and otherwise. Hodel v. Virginia at 2361. The Court observed that coal is a commodity that moves in interstate commerce. Here Congress rationally determined that regulation of surface coal mining is necessary to protect interstate commerce from adverse effects that may result from that activity and that the power conferred by the Commerce Clause [is] broad enough to permit congressional regulation of activities causing air or water pollution, or other environmental hazards that may have effects in more than one state. Id. at 2363. Hodel v. Indiana focused on the prime farmland provisions of the Act, holding that Congress had a rational basis for finding that surface coal mining on prime farmland affects interstate commerce in agricultural products. Id. at 2384. Both decisions note that federal standards were appropriate to insure that the forces of interstate competition in the coal industry would not undermine the maintenance of adequate standards. Thus Hodel v. Virginia states: 140 the Act responds to a congressional finding that nationwide `surface mining and reclamation standards are essential in order to insure that competition in interstate commerce among sellers of coal produced in different States will not be used to undermine the ability of the several States to improve and maintain adequate standards on coal mining operations within their borders.' ... The prevention of this sort of destructive interstate competition is a traditional role for congressional action under the Commerce Clause. Id. at 2363. 141 Hodel v. Indiana expresses essentially the same thought. 49 A footnote called for at the conclusion of the portion of the Hodel v. Indiana opinion dealing with the Commerce Clause states: 142 Appellees contend that a number of the specific provisions challenged in this case cannot be shown to be related to the congressional goal of preventing adverse effects on interstate commerce. This claim, even if correct, is beside the point. A complex regulatory program such as established by the Act can survive a Commerce Clause challenge without a showing that every single facet of the program is independently and directly related to a valid congressional goal. It is enough that the challenged provisions are an integral part of the regulatory program and that the regulatory scheme when considered as a whole satisfies this test. Id. at 2386 n. 17 (emphasis added) (citing Heart of Atlanta Motel and McClung ). 143 Thus the Hodel cases deal with a complex regulatory program of a particular industry engaged in interstate commerce designed to control a particular set of interstate effects of certain practices of that industry. The regulated instances of intrastate conduct are related to each other and to the particular scheme of regulation of interstate commerce and effects thereon by the forces of the interstate market in the particular regulated industry. And the regulated instances of intrastate conduct also all either have the same character of effect on interstate commerce or are an integral or essential part of the overall complex regulatory scheme governing particular businesses engaged in interstate commerce such that unless the covered intrastate activities were regulated the regulatory scheme would be undercut. 144 It is also significant that in all the above discussed Supreme Court aggregation cases the intrastate conduct being regulated was conduct forming a part of the operation of a wholly or partially commercial enterprise (whether owned and operated by an individual or some legal entity). The regulations governed aspects of how such a commercial (or partially commercial) enterprise must operate, what it must or must not do in its operations. See Morrison, 120 S.Ct. at 1750 n. 4 ([I]n every case where we have sustained federal regulation under Wickard's aggregation principle, the regulated activity was of an apparent commercial character.). 145 We recognize that language in Russell v. United States, 471 U.S. 858, 105 S.Ct. 2455, 85 L.Ed.2d 829 (1985), a prosecution under the federal arson statute, 18 U.S.C. § 844(i), suggests that a broader—indeed virtually unlimited—application of the aggregation principle is constitutionally permissible. 50 But the only issue in Russell was one of statutory construction; no constitutional or Commerce Clause claim was presented to the Supreme Court. Russell involved the owner of a two unit apartment building which was being rented to tenants at the time he attempted to destroy it by fire; he earned rental income from it and treated it as business property for tax purposes. Id. at 2456. 51 He unsuccessfully contended before the Supreme Court, as he had in the District Court, 563 F.Supp. 1085 (N.D.Ill.1983), and in the Court of Appeals, 738 F.2d 825 (7th Cir.1984), that the building was not commercial or business property, and therefore was not capable of being the subject of an offense under section 844(i). Id. at 2456. In the Supreme Court he presented only an issue of statutory construction and expressly disclaimed any constitutional argument, his Brief For Petitioner there stating: 146  Mennuti [ United States v. Mennuti, 639 F.2d 107, 2d Cir.1981, the case on which he principally relied] does not hold, nor does petitioner contend, that Congress could not have drafted a statute encompassing virtually every building in the land, had it chosen to do so. Thus, this case does not present a constitutional challenge to congressional power under the Commerce Clause. It is our contention that, as held in Mennuti, the statute that Congress did pass, 18 U.S.C. § 844(i), as explicated by the House Judiciary Committee Report referred to above, does not cover a building used as a dwelling by a tenant of the owner, even though interstate utilities may have been used in the building. Id. at 11 (emphasis added; footnote omitted). 52 147 We also note that section 844(i) applies only to property that is active[ly] employ[ed] for commercial purposes, Jones, 120 S.Ct. at 1910, while the here relevant prong of the Hobbs Act is in no way analogously limited but rather applies regardless of whether or not the victim is engaged in any character of commercial activity. We conclude that Russell does not resolve the Commerce Clause aggregation issue as applied to this character of Hobbs Act prosecution. 148 We recognize that substantial for purposes of Lopez category three has a qualitative as well as a quantitative aspect, though those two aspects are somewhat interrelated rather than being entirely independent of each other. Limits on the aggregation principle, necessary to give meaning to substantial so as to preserve the distinction between what is truly national and what is truly local, should thus take into account both quantitative and qualitative considerations. We conclude that the limits we have outlined do so notwithstanding that their most obvious focus may be quantitative. To the extent that there is a meaningful, rational basis to aggregate, then the aggregated quantitative effect on interstate commerce tends to qualitatively justify viewing the matter as truly national rather than truly local. Conversely, that the regulated category three intrastate conduct is not a commercial activity but is rather essentially the suppression of violent crime is a qualitative consideration pointing towards the regulation being of a truly local nature unless there is a meaningful and rational basis for aggregation. There is no sufficient rational basis to aggregate the effects on interstate commerce of any of the four individual prototypically local crimes of violence here prosecuted with the effects on interstate commerce of all the undifferentiated mass of robberies covered by the Hobbs Act's general proscription of any and all robberies that in any way or degree ... affect[] commerce.