Last week the Supreme Court decided a case interpreting the Bank Secrecy Act, Bittner v. U.S., 598 U.S. __(2023).  Justice Ketanji Brown Jackson joined Justice Neil Gorsuch’s opinion for the majority in a 5-4 decision. The case revolved around what constitutes a violation of the act: Each unreported foreign account? Or: Only the report which failed to list the foreign accounts? If Bittner is fined per report, he owes $50,000. If he’s fined per account, he owes $2.72 million. That’s a big difference to Bittner but what difference does it make for the per se rule? The case caught my eye because Justice Jackson joined Justice Gorsuch in a section of the opinion (Section C) finding in favor of the defendant based on the rule of lenity.

The Rule of Lenity

            The case turned on interpretation of the text of the Bank Secrecy Act. Notably, Justice Brown joined Gorsuch’s ruling interpreting the Bank Secrecy Act in favor of the defendant, relying in part on the rule of lenity. In baseball, a tie goes to the runner (or in football, a close call goes to the Chiefs).  The rule of lenity states: “the law is settled that penal statutes are to be construed strictly,”’ and an individual ‘“is not to be subjected to a penalty unless the words of the statute plainly impose it.”’ Bittner, slip opinion at 14, citing, Commissioner v. Acker, 361 U.S. 87, 91 (1959).

            Defense lawyers have been making frequent challenges to the use of the per se rule in criminal antitrust cases but to date have been beaten back by ample precedent in every circuit upholding the per se rule.  But, if eventually the Supreme Court takes a per se rule challenge, could the rule of lenity help cement a majority to overturn the per se rule?

Is the Per Se Rule Vulnerable?

            One attack on the per se rule is textualism. The Supreme Court has stated: “the problem presented by the language of Section 1 of the Sherman Act is that it cannot mean what it says.”[1]  That would seem to pose a problem under the rule of lenity.  If the text cannot mean what it says is the solution to: a) allow the Supreme Court to rewrite it by creating the per se rule, or b) find in favor of the defendant who is facing up to ten years in prison if an individual? Justice Gorsuch has explained that, “If a statute needs repair, there’s a constitutionally prescribed way to do it. It’s called legislation.”[2]

            Besides a textualism challenge, the per se rule has been challenged on constitutional grounds. To date, the Supreme Court has dealt with its view that the Sherman Act cannot possible mean that it says by rewriting Section One: “Given its generality, our enforcement of the Sherman Act has required the Court to provide much of its substantive content.”[3] The Supreme Court has held that these three words “restraint of trade” have “created two substantive rules of law—the rule of reason or the per se rule.’” Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723 (1988).  Circuit courts have accepted the government’s interpretation of the per se rule: “It is as if the Sherman Act read: “An agreement among competitors to rig bids is illegal.’[4]  To date, this interpretation of the Sherman Act has been successful in defending it against the constitutional due process challenge that the per se rule takes away from the jury, by judicial legislation, the requirement that the government prove every element of the offense in a criminal case beyond a reasonable doubt, including the fundamental element of whether the agreement restrained trade.

            Recent Supreme Court cases, however, show the Court being more accepting of defense arguments regarding due process constitutional protections, see e.g.,  Ruan v. United States, 142 S. Ct. 2370, 2376–77 (2022)(mens rea “knowingly or intentionally” required for conviction) and open to textualist arguments to limit long-standing government enforcement powers. See e.g.,  AMG Capital Management, LLC v. FTC, 141 S. Ct 1341, (2021)(FTC lacks authority to seek equitable monetary relief  under Section 13(b) of the FTC Act ).  The rule of lenity provides another opportunity to attract a Justice to overturn the per se rule, particularly since the per se rule it was established when price fixing was a misdemeanor and is now a felony carrying a ten year prison sentence.

What If Section One of the Sherman Act Did Mean What It Said?

P.S.   I do not agree that Section One of the Sherman Act “cannot possibly mean what it says.” Section One only prohibits agreements that restrain trade and it is incorrect to believe that every agreement restrains trade.  Do we believe every merger restrains trade? Of course not.  As Justice Brandies correctly observed nearly a century ago, “[t]he true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.”[5]  In a criminal case, therefore, the jury, not the court, should decide whether the agreement restrained trade.

When lobbying for ten-year maximum prison sentences for a Sherman Act conviction, which it achieved, the Antitrust Division stated, “the [criminal] cases that we are charging, and prosecuting are unmistakable fraud.”[6] The best thing the per se rule has going for it is that it is a great tool for prosecutors against cartels, which are “the supreme evil of antitrust” (but not that evil as far as supreme evils go).  Even without a per se rule, as long as the Antitrust Division sticks to hard core cartels in criminal case selection, requiring the government to prove beyond a reasonable doubt that the cartel restrained trade should have limited negative consequences for criminal enforcement.

Bob Connolly


[1]  National Soc’y of Prof. Engineers v. United States,  435 U.S. 679, 687 (1978).

[2]  Perry v. Merit Systems Protection Board, 137 S. Ct 1975, 1990  (2017) (Gorsuch dissenting).

[3]  Arizona v. Maricopa County Medical Society, 457 U.S. 332, 354 (1982).

[4]  See United States v. Brighton Building & Maintenance Co., 598 F.2d 1101,1114 (7th Cir. 1979).

[5] Bd. of Trade of City of Chicago v. United States, 246 U.S. 231, 238 (1918).

[6]   Scott D. Hammond, Deputy Assistant Att’y Gen., Antitrust Div., U.S. Dep’t. of Justice, Transcript of Testimony Before the United States Sentencing Commission Concerning Proposed 2005 Amendments to Section 2R1.1 at 3 (Apr. 12, 2005), available at testimony/209071.pdf.

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