Supreme Court Unanimously Overturns ‘Bridgegate’ Scandal Convictions, Declines To Endorse Broad Interpretation of Property Under Federal Statutes

Kramer Levin Naftalis & Frankel LLP

On May 7, 2020, the Supreme Court unanimously overturned the convictions of two public officials charged in the “Bridgegate” political corruption scandal. The two had been convicted for their roles in shutting down traffic lanes from a town in New Jersey into New York City to punish the town’s mayor for declining to endorse Gov. Chris Christie in his 2013 reelection campaign. Writing for a unanimous Court in Kelly v. United States,[1] Justice Elena Kagan acknowledged the evidence presented to the jury “no doubt shows wrongdoing.” The Court concluded, however, that the government had failed to prove the defendants’ objective was to obtain government property or money and therefore reversed the defendants’ wire fraud, federal-program fraud and conspiracy convictions.

Background

The defendants were two public officials with political ties to New Jersey’s then-Gov. Chris Christie: Bridget Anne Kelly, a gubernatorial aide, and William Baroni, the deputy executive director of the Port Authority of New York and New Jersey. In September 2013, the defendants, under the guise of a “traffic study,” coordinated commuter traffic lane closures on the George Washington Bridge — a busy motor-vehicle bridge spanning Fort Lee, NJ, and New York City — as political retribution against the mayor of Fort Lee, who had declined to endorse Gov. Christie’s reelection campaign.

The government charged the defendants with wire fraud, theft or bribery concerning a federally funded program or entity (federal-program fraud) and conspiracy to commit each of those crimes.[2] Recognizing that the defendants’ conduct only ran afoul of these statutes if the “object” of their scheme was obtaining the Port Authority’s money or property, the government argued the defendants’ scheme sought to (1) “commandeer” the Bridge’s physical lanes and (2) deprive the Port Authority of the costs of compensating the traffic engineers and toll collectors who performed additional work relating to the traffic lane closures. A jury convicted the defendants on all counts, and the Court of Appeals for the Third Circuit affirmed. The Supreme Court granted certiorari to resolve the question of whether the defendants’ conduct actually constituted property fraud.

The Supreme Court’s Decision

The Court unanimously rejected the government’s theory of the case, emphasizing that both the wire fraud and federal-program fraud statutes only prohibit deceptive schemes executed with the object of obtaining money or property. The Court concluded that the defendants’ scheme to close traffic lanes from Fort Lee was not “directed at the Port Authority’s property.” Instead, the traffic lane closures were “a quintessential exercise of regulatory power” and any related economic harm to the Port Authority — primarily the value of its employees’ labor — was only “incidental” to the execution of the scheme.

In reaching this conclusion, the Court referenced its prior decision in Cleveland v. United States,[3] which “held that a scheme to alter [] a regulatory choice is not one to appropriate the government’s property.” The defendant in Cleveland had submitted a fraudulent application for a gaming license to Louisiana authorities, and the government argued that fraud deprived the state of property by altering its licensing decisions. The Supreme Court rejected that argument, stating that the fraud implicated Louisiana’s “sovereign power to regulate,” rather than its property interests. Following similar reasoning, the Kelly Court concluded that in deciding to close certain traffic lanes, Kelly and Baroni had engaged in a scheme to exercise the state’s regulatory authority, rather than to deprive the state of any property.

The Court also rejected the government’s claim that the additional compensation afforded to the engineers and toll conductors in connection with the purported traffic study was sufficient to bring the defendant’s conduct within the reach of the federal property fraud statutes. The Court held that “a property fraud conviction cannot stand when the loss to the victim is only an incidental byproduct of the scheme,” and that the additional compensation necessitated by the lane closures was merely an incidental byproduct of the defendants’ regulatory object.

Because the defendants’ scheme did not aim to obtain money or property, the Court concluded they did not violate the wire fraud and federal-program fraud statutes, and overturned the convictions.

Looking Ahead

The Court’s decision in Kelly is another in a growing line of decisions in which the Court has rejected expansive interpretations of federal criminal statutes.[4] As the Supreme Court has repeatedly signaled, prosecutors should not attempt to stretch the scope of federal statutes to reach behavior that — while perhaps wrongful — is not clearly criminal, and lower courts should more carefully scrutinize novel applications of the federal criminal laws.


 

[1] No. 18-1059, 590 U.S. __ (2020).

[2] 18 U.S.C. §§ 1343, 666(a)(1)(A).

[3] Cleveland v. United States, 531 U.S. 12, 121 S. Ct. 365 (2000).

[4] See McNally v. United States, 483 U.S. 350, 109 S. Ct. 2875 (1987) (holding that wire fraud statute did not authorize federal prosecutors to “set [] standards of disclosure and good government for local and state officials”); Cleveland, 531 U.S. at 25 (holding that regulatory interests do not constitute property under the wire fraud statute); Skilling v. United States, 561 U.S. 358, 411, 130 S. Ct. 2896, 2933 (2010) (confining honest services fraud statute to schemes involving bribes or kickbacks); United States v. Yates, 135 S. Ct. 1074, 1088 (2015) (providing a limiting construction of the term “tangible objects” within the Sarbanes-Oxley Act); McDonnell v. United States, 136 S. Ct. 2355, 2360, 195 L. Ed. 2d 639 (2016) (interpreting the term “official act” within the Hobbs Act and honest services statute narrowly).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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