Bridgegate and Property Law

by Dennis Crouch

An expansive notion of “property” also allows for expansive criminal prosecution.  As an example, the Federal Wire Fraud statute makes it a crime to use the “wires” to move forward with “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.”  18 U.S.C. § 1343.

Case-in-point is Kelly v. U.S., 140 S. Ct. 1565 (2020).  Kelly case involves George Washington Bridge lane closing scandal known lovingly as “Bridgegate.” In 2013, Chris Christie was Governor of New Jersey seeking reelection (he won).  His deputy Chief of Staff Bridget Kelly (and others) had caused the bridge lanes to be closed (via text messages) “for a political reason—to punish the mayor of Fort Lee for refusing to support [Christie’s] reelection bid.”  Kelly was prosecuted and criminally convicted for property fraud — both wire fraud as well as fraud on a federally funded program.    The Second Circuit affirmed.

 These statutes require the use of fraud for the purpose of obtaining “property.”  The Supreme Court took up the case and reversed the convictions — holding that Kelly’s actions were not designed to obtain money or property and thus do not violate the statutes.  The court recognized the abuse-of-power: “But not every corrupt act by state or local officials is a federal crime.” (Unanimous opinion authored by Justice Kagan).

The evidence the jury heard no doubt shows wrongdoing—deception, corruption, abuse of power. But the federal fraud statutes at issue do not criminalize all such conduct. Under settled precedent, the officials could violate those laws only if an object of their dishonesty was to obtain the Port Authority’s money or property.

The Government pointed to the following property frauds: commandeering of bridge lane access; diverting the “wage labor” of federal employees.  While the bridge itself can be considered Property, the actions here, according to the court, were a “quintessential exercise of regulatory power” rather than a scheme to “appropriate the government’s property.   The court noted that a “public employee’s paid time” is also the property of the government. According to the court, the use of employee time was “incidental to” the lane-closure purpose — the use of that portion of the government’s property was not the “object of the fraud” as required under Cleveland v. U.S., 531 U.S. 12, (2000) (the statute “requires the object of the fraud to be ‘property'”).

= = = = =

The decision here offers an interesting dichotomy regarding property and property rights. On the one hand, the Court offers a broad conception of what counts as property — including a conclusion that an employer “owns” the time employees are spending working (this seems like a pre-civil war conclusion). On the other hand, the Court weakens property rights by reinforcing its prior conclusions that major regulatory actions that shift the owner’s ability to use its property do not count as property rights violations.  This same dichotomy is seen in patent law with the advent of inter partes review; and is a longstanding element of zoning law.

In January 2011, the Supreme Court vacated and remanded (GVR) a parallel case in Blaszczak v. U.S., 20-5649, 2021 WL 78043 (U.S. Jan. 11, 2021) “for further consideration in light of Kelly v. United States, 590 U.S. –––– (2020).”  In that case, the Second Circuit held that “confidential information” about an upcoming regulatory action was a property right whose “embezzlement” could serve as a basis for property fraud under the statute.  In its decision, the Second Circuit did not use the term “trade secret” but rather suggested that the information was property because it was a “thing of value.” quoting U.S. v. Girard, 601 F.2d 69 (2d Cir. 1979). The outcome of Blaszczak will end up giving us a lot more information about the meaning of property in the US.

 

 

17 thoughts on “Bridgegate and Property Law

  1. 6

    Would spreading lies by newswires designed to overturn an election result to retain the salary and other direct financial benefits of a major public office constitute wire fraud? [Apparently not, since it had gone on ever since the U.S. had interstate telegraph lines.]

    1. 6.1

      One can (and should) easily spin the “spreading L 1 e s” to apply to every single Main Stream Media organization there Paul.

  2. 5

    One of the problems here is the distinction between wire fraud (§ 1343) and mail fraud (§ 1341)… because they arise from different constitutional authority. Wire fraud — which for federal purposes arises under the Commerce Clause — requires a sufficient connection to interstate commerce. (Heart of Atlanta Motel remains good law, but its scope has been steadily restricted over the years.) This is why a call between an aide to the Governor of New Jersey and a New Jersey needs not just a property, but an interstate property, connection to fall inside of § 1343.

    Mail fraud, however, doesn’t come from the Commerce Clause, but the Post-Roads Clause. So it’s inherently of “federal interest.”

    Naturally, one of the best examples of this is porn-film distribution in the 1950s through 1970s, when the government frequently had to prove that a particular print had passed outside of the state… if transported privately; but if mailed, the “unlawful matter” was fully federalized. There’s a notorious case involving the bridge in question here, because the “natural” bus route between Brooklyn and (if I recall correctly) Syracuse sent the bus through New Jersey, thus creating federal jurisdiction!

  3. 4

    Wonder if the last case cited might spill over and infect trade secret common law or 18 USC 1831 et seq.?

  4. 3

    Totally off topic, but a case with a great nameDeere & Co. v. Gramm—was handed down today. It has a fantastic opening paragraph:

    Over a half century ago, the Supreme Court decided a patent case between one Graham and John Deere, Graham v. John Deere Co., 383 U.S. 1 (1966), which established the factual inquiries that underly the legal question of obviousness under 35 U.S.C. § 103. We now have an obviousness case between John Deere and another Gramm. John Deere is not so fortunate in the result this time.

    As that last line implies, this is an instance in which the patentee was entirely victorious in the IPR. The sun sets, and the sun also rises.

  5. 2

    Although both involve violation of property rights, conversion and trespass to chattel are different torts. Rather than defining property, I see this case as defining what it means to “obtain” property. Apparently, using property does not necessarily require obtaining it first.

    I don’t think that “regulatory power” in this context extends far enough to implicate inter partes review. In this case, Kelly’s regulatory power was the power to direct the activities of state employees. This is the same right as any other employer’s agent. She abused that power, but she technically didn’t make them her personal employees. I don’t think there is anything analogous that would apply in the inter partes review context. Unilaterally ending an employment contract?

    1. 2.1

      I don’t think that “regulatory power” in this context extends far enough to implicate inter partes review

      To the contrary (naturally, it seems), post grant review (in the patent sphere) very much extends to the realm of regulatory takings.

      1. 2.1.1

        IMHO, more in the nature of an Executive taking – since the PTAB ‘judges’ are mere employees of the unitary Executive. Of course, the Worst SCOTUS Ever (WSCOTUSE) will figure out some back flip – and call it regulatory or what’s the legal BS – public rights doctrine – and declare it not a ‘taking’ al la Oil States to be compensated but part of some over arching red headed step child part of the law – called patent law. In for a penny in for a pound logic at this point.

        1. 2.1.1.1

          I see your point (and I was too cavalier with the “legislative,” as your are correct with this being an “executive”)

  6. 1

    “including a conclusion that an employer “owns” the time employees are spending working”

    That’s fun to say in theorylol but if that be true, then it is 100% likely that federal employees are, far and away the largest thieves of gubmit “property” just by being standard issue lazy office workers. All other property stolen from the gubmit (saving historical relics maybe) would pale in comparison and would be hardly worth prosecuting, ever.

    1. 1.1

      Something about “indentured servitude” would likely challenge the view that the government OWNS your time.

      1. 1.1.1

        Hmmm . . . I’ve always thought that “indentured servitude” had something to do with dentistry.

        Silly me.

        1. 1.1.1.1

          That bites.

    2. 1.2

      Wow, 6 your time in service is starting to show – you red pilling yourself? Nice to see the awakening – in the best sense of the word.

      1. 1.2.1

        Brother I took all the red pills many years back. Probably too quickly.

        1. 1.2.1.1

          red pills…?

          How incite-ful.

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