Supreme Court Makes It More Difficult for Judges to Impose Sizable Criminal Fines

Supreme Court Makes It More Difficult for Judges to Impose Sizable Criminal Fines

In its just completed term, the Supreme Court limited the power of judges to enhance criminal fines in Southern Union Co. v. United States. Southern Union Co. had been convicted for storing liquid mercury without a permit in violation of the Resource Conservation and Recovery Act of 1976 (“RCRA”), a felony punishable by a fine of $50,000 for each day of the violation. The district court determined that the maximum fine was $38.1 million based on a storage period of more than two years as alleged by the indictment, but imposed a lesser fine of $6 million, plus a “community service obligation” of $12 million.

Southern Union Co. contested the fine at sentencing. The company argued that it would be unconstitutional for the district court to impose a fine above $50,000 because the trial judge had instructed the jury that it could find the natural gas distributor guilty if it had stored the liquid mercury without a permit for a single day. The defendant relied upon Apprendi v. New Jersey, 530 U.S. 446 (2000), which held that a jury must first find facts beyond a reasonable doubt that increase the maximum punishment.

The district court agreed that Apprendi did apply, but concluded that the jury had necessarily found that the violation endured for 762 days based on the “content and context” of the verdict form, which had stated that the approximate dates of the alleged violation spanned that period of time. The U.S. Court of Appeals for the First Circuit disagreed with the district court. It rejected the notion that the jury had necessarily found that the violation had endured for 762 days, but the First Circuit nevertheless upheld the $6 million fine because it also disagreed with the district court on the question whether Apprendi applied to criminal fines (the Court of Appeals determined that it did not). On appeal, the Supreme Court resolved a split in the Circuits on the question of whether Apprendi applies to fines, reversing the First Circuit and holding that it does.

Writing for the majority, Justice Sonia Sotomayor explained that Apprendi’s “core concern” is to preserve the jury’s “historic role as a bulwark between the State and the accused at the trial for an alleged offense.” Juries perform this function by deciding all facts that support the punishment imposed. This principle applies regardless whether the sentence is imprisonment or death as in Apprendi, or a criminal fine. Indeed, “[f]ines were by far the most common form of noncapital punishment in colonial America,” the Court noted, and “[t]hey are frequently imposed today, especially upon organizational defendants who cannot be imprisoned.”

But the majority placed limits on its holding. “[W]here a fine is so insubstantial that the underlying offense is considered ‘petty,’” the Court observed, “the Sixth Amendment right of jury trial is not triggered and no Apprendi issue arises.” Nevertheless, “not all fines are insubstantial, and not all offenses punishable by fines are petty.”

The dissent – authored by Justice Stephen Breyer and joined by Justices Anthony Kennedy and Samuel Alito – protested that “the Sixth Amendment permits a sentencing judge to determine sentencing facts . . . .” Facts supporting a fine are “facts that are not elements of the crime but are relevant only to the amount of the fine the judge will impose.” In the present case, the statute itself considered the number of storage days to be a sentencing fact, relevant only “upon conviction.” The dissent posited that the Court’s holding ultimately “will lead to increased problems of unfairness in the administration of our criminal justice system.” Not only will sentencing be more inconsistent, but parties will be “nudg[ed]” toward plea bargains in the face of complex jury trial requirements.

Some commentators have asked whether this decision will matter. After all, 97 percent of federal convictions result from a guilty plea and, moreover, very few companies go to trial. Although it is true that companies rarely seek jury trials, the Supreme Court’s decision in Southern Union Co. will make the prosecutor’s job more difficult. Instead of having to prove just a single statutory violation (to which a sizable monetary punishment could have previously attached), a prosecutor now has to prove additional facts to support the financial penalty the government intends to seek. This additional burden may provide companies with more bargaining power at the plea negotiation table.

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