Trying to Hire a Hit Man? Don’t Answer Your Cell Phone

A new Seventh Circuit decision underscores the jurisdictional breadth of the federal murder-for-hire statute, 18 U.S.C. § 1958(a). Although solicitation to commit murder would seem a prototypical state offense, it can be prosecuted federally if money was involved and a “facility of interstate commerce” was used. And it takes very little indeed to satisfy the latter element.

For instance, in the new Seventh Circuit case, United States v. Mandel (No. 09-4116), the defendant planned a hit on his business partner with one of his employees, who turned out to be a confidential informant. A jury convicted Mandel on six counts of violating § 1958(a). In four, the “use of a facility of interstate commerce” was a cell phone conversation with the c.i. (three of which were actually initiated by the c.i.). In the other two, the “use of a facility of interstate commerce” was driving around in a car with the c.i. while the hit was discussed.

In all of these counts, what triggers federal jurisdiction seems only incidental to the offense; it is not the use of a cell phone or a car that made the defendant’s conduct dangerous and his intentions blameworthy. Mandel would merit no less punishment if he had communicated with the c.i. by sign language or smoke signals, or if he had gotten around by roller-skating. It is this lack of a meaningful connection between the jurisdictional element and the wrongfulness of the defendant’s conduct that gives federal prosecution such an arbitrary character in so many cases. But, for better or worse, that is where we are in the modern world of Commerce Clause jurisprudence. (Note, though, the Supreme Court’s efforts to maintain some sort of principled limitations on federal criminal jurisdiction in its interesting decision last term in Fowler v. United States.)

Mandel contested the jurisdictional issues on appeal, but to no avail.

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Combatting Gray Markets: A Copyright-Protected Distribution Right or a Sherman Act Violation?

At one time, the prospect of stating legal claims against gray market importers looked bleak.  Product manufacturers tried trademark protection, but trademark law proved disappointingly unsuccessful.  One company has now turned to copyright protection, and this company obtained a Ninth Circuit decision that found a store using a gray market importation scheme unable to raise a defense to copyright infringement.  The company is Omega S.A., a Swiss luxury watch manufacturer known for producing the Seamaster line of watches appearing in many James Bond films, and the case is Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. 2008). In spite of Omega’s favorable Ninth Circuit judgment and opinion,  market-wide legal questions about Omega’s distribution practice remain.  Regardless of whether or not a manufacturer could state a claim for copyright infringement against gray marketers, infringement defendants may answer back by counterclaiming an antitrust violation.  And if an antitrust counterclaim can halt copyright enforcement, then Omega’s win at the Ninth Circuit would end up a hollow victory at best or an academic stroll through the Copyright Act at worst.

Here are the facts of Omega v. Costco.  Omega maintains a tight grip on its authorized distribution channels.  Omega attempted to gain control of its watches’ distribution by engraving a design on the back of its watches (pictured below) and registering this design at the U.S. Copyright Office. Omega sold watches with these designs to their authorized distributors.  Somewhere along the distribution line, however, the watches ended up in the hands of distributors outside of Omega’s authorized channels abroad.  As the Ninth Circuit recognized, this is a paradigm gray market importation scheme, in which products meant to be sold in one territory are imported into another, usually for cheaper prices. One of Costco’s suppliers based in New York imported watches from these unauthorized distributors and eventually transferred the watches to Costco, which then sold these watches to its customers in California. One of those purchasing customers turned out to be a plant employed by Omega.

Omega then sued Costco for violating their exclusive right to distribute  its copyrighted works and for importing them without Omega’s authorization.  Costco asserted the first-sale defense, arguing that Omega’s right to control the distribution of its watches under both the distribution and importation statutes ends with its first transfer to its authorized distributors.  Costco v. Omega’s ending at the Supreme Court was a bit anticlimactic, with the U.S. Supreme Court evenly divided 4-4 (Justice Kagan didn’t take part in the non-decision).  This led to a summary affirmance of the Ninth Circuit’s decision below and no rule from the Supreme Court resolving the statutory tension in the Copyright Act.

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Seventh Circuit Reaffirms Conviction of Gov. Ryan

As the Casey Anthony trial/cultural moment/media feeding frenzy reached its denouement last week, two of the biggest trials of 2006 collided in the Seventh Circuit.  Five years ago, Illinois Gov. George Ryan and Enron President Jeffrey Skilling were both convicted of mail fraud.  From there, the two cases took quite different paths.  Ryan’s conviction was affirmed by the Seventh Circuit, and the Supreme Court denied certiorari, but Skilling managed to win a partial reversal in the Supreme Court a year ago, as the Court substantially narrowed the reach of the mail-fraud statute.  Ryan immediately sought another review of his conviction through a 28 U.S.C. § 2255 motion, arguing that the jury in his case was improperly instructed in light of Skilling.  The district court denied relief, and the Seventh Circuit affirmed the decision last Wednesday.  Ryan v. United States (No. 10-3964).

The court did not stake out any new ground legally in Ryan, but the opinion does provide a helpful roadmap of some of the opportunities and pitfalls that face defendants who try to take advantage of a new, narrowing construction of a criminal statute after their direct appeals have been exhausted.

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