United States v. Robertson – Oral Argument – February 27, 1995

Media for United States v. Robertson

Audio Transcription for Opinion Announcement – May 01, 1995 in United States v. Robertson

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William H. Rehnquist:

We’ll hear argument next in Number 94-251, the United States v. Juan Paul Robertson.

Mr. Estrada.

Miguel A. Estrada:

Thank you, Mr. Chief Justice, and may it please the Court:

The respondent was a California lawyer who became involved in drug dealing and other crimes.

With money obtained from his crimes, he invested in a venture to mine gold in Alaska.

He was eventually convicted of narcotics offenses and of violating the Racketeering Influenced and Corrupt Organizations Act, known as RICO.

RICO makes it a crime for any person to use income derived from a pattern of racketeering activity to acquire an interest in any enterprise

“which is engaged in, or the activities of which affect interstate or foreign commerce. “

The Ninth Circuit affirmed the narcotics conviction, but it reversed the RICO conviction for lack of proof that the activities of the gold mining venture affected interstate commerce.

The court held that a minimal effect on interstate commerce would be sufficient to satisfy RICO, but that an incidental effect on that commerce would not.

The court then found that the Government’s evidence, including the fact that the gold mining venture had hired employees outside of Alaska and purchased equipment outside of Alaska, showed, at most, an incidental effect on interstate commerce.

The Ninth Circuit emphasized that Alaska’s geographical isolation means that most supplies and equipment must get there via interstate commerce, and it believed that Alaska’s dependence on interstate commerce should not mean that local businesses in Alaska are covered by RICO.

We brought the case here because the Ninth Circuit decision conflicts with the view of every other court of appeals that has considered what sort of a jurisdictional proof satisfies the requirements of RICO.

William H. Rehnquist:

I think it’s we rather than you who brought the case here.

Miguel A. Estrada:

Well, I stand corrected, Mr. Chief Justice.

Our argument in the case, now that it is here, Mr. Chief Justice, starts with the language of RICO, and that language reaches all enterprises the activities of which affect interstate or foreign commerce.

This Court’s cases made clear that the phrase, affect commerce, is a term of art that Congress uses to exercise all commerce power it has under the Constitution, and that Congress intended to exercise all of its constitutional power in RICO is confirmed not only by its use of that term of art, but also by the fact that one of its principal goals in enacting RICO, which was to safeguard small businesses from infiltration by organized crime, could likely not be achieved under any narrower view of the jurisdictional requirement.

Under RICO, then, in our view, the question is whether the activities of the enterprise, here the gold mining venture, affect commerce when measured by the full constitutional authority of Congress and, under that standard, the evidence in this case was sufficient to meet the Government’s burden.

The Ninth Circuit conceded that respondent and his employees traveled between Alaska and the Lower 48 States in connection with the work in the mine, that the mine obtained supplies and equipment from the Lower 48 States, and the respondent mortgaged a home he owned in Arizona to finance the second mining season in 1986.

In addition, the evidence showed that the mine sold a substantial amount of gold in Alaska worth at least $200,000, that the purchasers of the gold were part of a broader market in precious metals that reached beyond Alaska, and that therefore the mine’s output was part of a class of activities that in the aggregate substantially affects interstate commerce.

In addition, the evidence showed that respondent and his associates used the instrumentalities of interstate commerce repeatedly, the mail and the telephones, as part of the business of the mine.

In our view, all of that evidence was clearly sufficient to satisfy the Government’s burden under–

Sandra Day O’Connor:

Mr. Estrada, in your view, is there any business enterprise in America that wouldn’t be covered by RICO?

What are the limits?

Miguel A. Estrada:

–As a factual matter, Justice O’Connor, I cannot think of any business in the country that could not be covered by RICO, given that what is at issue is the full constitutional authority of Congress.

I understand that the Commerce principle is a limited one, and we do agree with that.

However, the facts on which it operates are not limited, and in our economy on this day, I cannot think of anything that is likely to actually happen in the real world that would not be covered by this Court’s cases construing the extent of Congress’ power under the Commerce Clause.

Sandra Day O’Connor:

How do you distinguish the situation here from the situation which was argued recently here in the Lopez case?

Miguel A. Estrada:

Well, this case is significantly different from Lopez.

As I understand the claim of the respondent in Lopez and the view that was followed by the Fifth Circuit in that case, Congress is required to make findings and to set forth some sort of an explanation as to why it views the activities that it is trying to reach as affecting commerce.

Miguel A. Estrada:

We do not think that that is the case, but even if it were in this case, I think Congress did that and more.

Congress in this case considered the statute very carefully.

It was dealing with a broad national problem that it thought the old laws, both State and Federal, had been entirely inadequate to deal with.

Antonin Scalia:

Well, this case, I mean, Lopez involved a… this case involves a commercial enterprise–

Miguel A. Estrada:

Well, that’s right.

Antonin Scalia:

–doesn’t it?

The only question is whether it’s interstate or not.

Miguel A. Estrada:

Well, the–

Antonin Scalia:

Lopez didn’t involve a commercial enterprise at all.

It was a gun in a schoolyard.

Miguel A. Estrada:

–Well, that is true, Justice Scalia.

I’m not sure that it makes a great deal of difference for purposes of the–

Antonin Scalia:

Whether it’s commerce doesn’t make any difference for purposes of the Commerce Clause?

Miguel A. Estrada:

–It does make a difference for purposes of the Commerce Clause, Justice Scalia.

It may not make a difference for purposes of whether, under the Necessary and Proper Clause, Congress can reach something that is not in itself commerce in order to safeguard–

Antonin Scalia:

The Necessary and Proper Clause expands the Commerce Clause to cover things that the Commerce Clause wouldn’t otherwise cover?

Miguel A. Estrada:

–In effect, yes–

Antonin Scalia:

That’s wonderful.

Miguel A. Estrada:

–Justice Scalia, but–

William H. Rehnquist:

When was the last time since McCulloch v. Maryland that we held to that effect?

Miguel A. Estrada:

–Oh, Mr. Justice Rehnquist… I’m sorry, Mr. Chief Justice, I think my reading of Wickard v. Filburn would be to that effect.

William H. Rehnquist:

That case would you say relied on the Necessary and Proper Clause?

Miguel A. Estrada:

That is my recollection.

I must say that I’m not entirely sure.

There are several cases which unfortunately I can’t think of in the 1930’s and ’40’s, and especially in the ’40’s, in which the Court restated the view of Gibbons v. Ogden and pointed out that that was merely an application of–

William H. Rehnquist:

I don’t think Gibbons v. Ogden relied on the Necessary and Proper Clause the way McCulloch did.

Gibbons v. Ogden was just a broad definition of the commerce power.

Miguel A. Estrada:

–That’s right, although in later cases in the 1940’s this Court expressed the view that… the broad view that Mr. Chief Justice Marshall had expounded in the Ogden case was in fact merely an exposition, even though he didn’t himself say so, of the power of Congress because of the combination of the Necessary and Proper Clause–

Anthony M. Kennedy:

In the Darby case, which was the Fair Labor Standards Act, and in the Perez case, which was loan-sharking–

Miguel A. Estrada:

–Mm-hmm.

Anthony M. Kennedy:

–I don’t think we used the Necessary and Proper Clause, although I’ll refresh my recollection on that to make sure.

Miguel A. Estrada:

My understanding, Justice Kennedy, is that there are cases in the 1940’s, and I’m fairly sure of it, because understand that we have read them recently, xx just can’t cite you one.

Maybe when I rise again I will be able to.

Ruth Bader Ginsburg:

But you’re not relying on Necessary and Proper here, are you, Mr. Estrada?

Miguel A. Estrada:

Well, in effect… I will answer that question in two steps, Justice Ginsburg.

We don’t need to in the sense that I think the evidence in this case, inasmuch as the enterprise engaged in interstate transactions, doesn’t call upon us to do so.

Ruth Bader Ginsburg:

Doesn’t our recent decision in the Allied Bruce case have some relevance to this problem of what affects commerce?

Miguel A. Estrada:

Yes, I… but the only reason that it is necessary to point to the Necessary and Proper Clause, Justice Ginsburg, is that the Commerce Clause in itself, as Justice Scalia pointed out, authorizes Congress to regulate only commerce, and the so-called affectation doctrine that allows Congress to deal with other matters that are not in themselves commerce, but they have an effect on commerce, is usually justified by reference to the Necessary and Proper Clause even though the cases talk about it as the commerce power.

It is not in itself the commerce power in the sense that that term is used in the Constitution.

It is a statement of how far Congress can go when it combines the commerce power and the Necessary and Proper Clause.

William H. Rehnquist:

Well, you say the power is justified.

It’s justified by whom?

Miguel A. Estrada:

By… this Court’s cases have made reference in explaining why Congress has been held to have authority to reach matters that are not in themselves commerce to the Necessary and Proper Clause.

William H. Rehnquist:

These are the cases that you can’t remember from the thirties and forties?

Miguel A. Estrada:

Yes, Mr. Chief Justice, but in fact, and the Court has explained on occasion, that even though the cases speak of Congress’ power to reach anything that affects commerce, some of the more cases… some of the Court’s cases have been more specific, and have pointed out that Congress under the Commerce Clause can reach only commerce in itself, but that under the Necessary and Proper Clause, Congress can then reach other things that are not in themselves commerce, but that affect commerce, and this Court’s cases dealing with whether something affects commerce and saying that Congress has power to reach those matters are usually… are logically traceable to reasoning based ultimately on the Necessary and Proper Clause.

I was going to turn to the justifications given by the court of appeals.

The court of appeals though that despite all of the evidence of interstate conduct in this case, the fact that the enterprise hired employees and purchased equipment outside of Alaska, that a different result was warranted by its description of the effects on commerce as incidental rather than minimal.

And that was wrong, because this Court stated in Wickard v. Filburn that questions as to the constitutional power of Congress really should not be solved by reference to any formula that gives controlling weight to nomenclature, and that the real question is whether actual effects can be identified on commerce, and in this case, they surely could.

The second reason that the Ninth Circuit gave was based on the isolation of the State of Alaska, and we do not think that that isolation should count against our case.

It is certainly true that many of the businesses in Alaska have to obtain supplies and equipment from interstate commerce, but that State is hardly unique in that respect, and much the same could be said about Rhode Island or Wyoming.

No State of the Union is entirely self-sufficient, and in our view it makes little sense to say that the greater a State’s dependence on interstate commerce, the less likely it will be that the activities within that State will be deemed to affect interstate commerce.

Sandra Day O’Connor:

Now, does the Sherman Antitrust Act have a lesser scope of coverage?

Miguel A. Estrada:

No.

We think that the Sherman Act, the Hobbs Act, and RICO, all go to the limits of the Commerce Clause, and therefore if–

Sandra Day O’Connor:

But the language in each is somewhat different, is it not?

Miguel A. Estrada:

–That is right.

The language in each of them is somewhat different.

Some of them use the word NLRB cases, particularly the Polish case versus the NLRB, all of those are terms of art that are used to invoke the full authority of Congress under the Commerce Clause, and therefore all of those terms have been interpreted by this Court, when Congress uses them, as going to the limits of the Commerce Clause.

Antonin Scalia:

Do I have to agree with that to agree with the Government in this case?

Because I don’t agree with it as to the Sherman Act, as you know.

Miguel A. Estrada:

Yes, I do know, Justice Scalia.

In this case, no, because in our view the evidence in this case, and this is how we tried to prove most of these cases, was actually sufficient to show that the enterprise was engaged in interstate commerce.

It hired its employees outside of Alaska, and it purchased equipment and supplies–

Antonin Scalia:

The Sherman Act doesn’t use “affecting interstate commerce” at all, does it?

Miguel A. Estrada:

–No, it does not.

It is–

Antonin Scalia:

It’s language is

“in restraint of trade between the States. “

isn’t it?

Miguel A. Estrada:

–That’s right, and I know the view that you expressed in Summit Health.

As I understand your view in that case, the view was that the activity in that case could be reached by Congress, but that in passing the Sherman Act, Congress did not exercise its full authority.

In this case, it seems fairly plain to us at least that Congress in using the words, RICO was passed, Congress had been told again and again by this Court that if it wished to invoke its full power under the Commerce Clause, these were the words it had to use, and therefore, no, even if you continue to hold your view as to the Sherman Act, Justice Scalia, that should not keep you from sort of… from taking our view of this case under this statute.

William H. Rehnquist:

Mr. Estrada, your opponent relies, in part at least, on Gulf Oil v. Copp Paving.

How do you distinguish that case from this?

Miguel A. Estrada:

That case stated that when Congress engages, or defines a class of activities, the Court’s role in effect is significantly different, but from the examples that the Court cited in that footnote 12, especially the Perez case, it is evident that what the Court was getting at is that when Congress itself does what it did in the Perez case, that no further proof of interstate commerce at all is called for in any given case.

That doesn’t really answer the question here, because Congress exercised its full power under the Commerce Clause, and that full power could be met by a class of activities analysis, or any other way in which Congress could lawfully exercise its power, and the significant difference that the Court was talking to in that case was the difference between having to prove the fact in every case and having to have no evidence whatsoever of the fact in any one case.

Anthony M. Kennedy:

In this case, Mr. Estrada, was there an argument before the jury that interstate commerce was not affected?

Miguel A. Estrada:

No.

Anthony M. Kennedy:

And was there any objection to the instruction that the court gave?

Miguel A. Estrada:

No.

The instruction given by the court is basically the Ninth Circuit pattern jury instruction.

I think it’s 8.34, and it doesn’t really go into detail as to interstate commerce.

The… that was not objected to, and as can be expected in most of these cases, when the case was tried to the jury, this wasn’t really what the case was turning on.

I mean, the main contention on the other side was that he had not in fact been involved in drug trafficking.

Anthony M. Kennedy:

So the Ninth Circuit’s view was that this case should not have been submitted to the jury as a matter of law, I take it?

Miguel A. Estrada:

That’s right.

That’s right, and we think that that’s clearly wrong under this Court’s cases.

The Ninth Circuit’s view is that the evidence in this case was so insufficient that the respondent was entitled to a judgment of acquittal on the RICO count, and that that’s the end of that count.

Obviously, we cannot go back to the jury and try it again.

Anthony M. Kennedy:

Would it have been improper for the trial court to tell the jury, if you find that there were trips between Arizona and Alaska, and if you find that any of the gold over a 3-year period was sold in interstate commerce, then I instruct you as a matter of law that interstate commerce was involved?

Anthony M. Kennedy:

Would that–

Miguel A. Estrada:

Yes.

Anthony M. Kennedy:

–have been–

Miguel A. Estrada:

Yes, because–

Anthony M. Kennedy:

–an appropriate instruction?

Miguel A. Estrada:

–Yes.

That would be an instruction that is tailored to the facts, and it is all right for a court to instruct the jury on the legal significance of facts so long as it makes clear that the question as to whether the facts exist is for the jury.

David H. Souter:

Mr. Estrada, would the following argument be sound?

It would go like this, that if Congress wanted to make it unequivocally clear that it was legislating to the fullest extent of its powers, it would have described the activity of the enterprise in this way: it would have spoken of an enterprise which engages in activities that affect interstate commerce.

That would have made it clear that the enterprise was simply one participant in a broader activity, or congeries of activities that have, in the aggregate, this substantial effect, but that what Congress in fact did was to speak of an enterprise, the activities of which affect commerce, which suggests that we are speaking or looking not to an aggregate, but to the particular activities of that enterprise, and to them alone.

Is that sort of contrast in language the basis for a sound argument that Congress was taking a narrower view here?

Miguel A. Estrada:

I don’t think so, Justice Souter.

Congress usually will write the words, “affect commerce” at the end of the language that otherwise makes conduct a crime on the understanding that that goes to the full power of its commerce–

David H. Souter:

So that whenever you see it, it’s basically a signal for the shorthand, whatever we can do we’re doing?

Miguel A. Estrada:

–Yes, and I would give as an example to you the Scarborough case, which dealt with coming into possession of a firearm in commerce, or in affecting commerce.

This Court held in that case, in the Scarborough case, that even though the language said, possession affecting commerce, that that requirement would be satisfied by proof that the firearm had traveled in interstate commerce at some point in human history, even if it had nothing whatsoever to do with the conduct of the defendant, and if that had happened before the defendant came to have the firearm, and I think cases like that properly give Congress an understanding–

David H. Souter:

Well, that argument in effect I guess is… and I’m not saying it’s an illegitimate argument, but I guess that argument in effect is that wherever Congress uses the term, “affecting commerce”, by using the broadest, most umbrella kind of term, it therefore is including any of the kind of more restrictive tests, like involving the instrumentalities, or involving goods that have moved, and so on.

Miguel A. Estrada:

–That is exactly our argument, Justice Souter, and I think that that’s–

Antonin Scalia:

No matter how the rest of the sentence reads, so long as the word “affecting” is in it, that’s it, it’s sort of a… it does everything.

Miguel A. Estrada:

–Well, yes, and I understand that–

Antonin Scalia:

Yes.

Miguel A. Estrada:

–Yes, and I understand that that may not be the best way to write the statute, but if the Court’s cases–

Antonin Scalia:

Not the best way to read it either, I don’t think.

Miguel A. Estrada:

–Well, I would respectfully disagree, Justice Scalia, because once phrases have acquired the status of terms of art, and Congress has been told that it can go to the very limit by using them, they–

Antonin Scalia:

How would it have expressed the thought that a normal, English-speaking person would express by saying, any enterprise the activities of which affect interstate or foreign commerce?

Suppose I wanted to really require that the activities of that enterprise affect interstate commerce, rather than the activities that that enterprise engages in when engaged in by others in the aggregate affect commerce?

Miguel A. Estrada:

–You could say–

Antonin Scalia:

How would I express the thought that I would normally express by saying, any enterprise, the activities of which affect interstate commerce?

Miguel A. Estrada:

–Well, you could say–

Antonin Scalia:

We cannot say it any more in English?

Miguel A. Estrada:

–Well, if that is what one means, one could say, the activities of which considered in isolation affect interstate commerce.

I mean, all we’re talking about is how do we determine congressional intent, and in a world in which the Court’s cases have told Congress that these words have independent legal significance, while it may make more sense in an alternative world to sort of write the statute differently, Congress in effect–

Antonin Scalia:

And you really think that that’s what our cases now, that whenever Congress uses the word “affecting” the rest of the sentence doesn’t matter?

Miguel A. Estrada:

–Well, I think that it matters in the sense that the activities of the enterprise of course have to affect commerce, but one of the tests that may make that true under this Court’s cases, and especially the NLRB cases, is that they may affect commerce because, considered with other like activities throughout the country, the effect on commerce is substantial.

Antonin Scalia:

If that’s what we’ve said, maybe we should unsay it, because it certainly is a trap for the unwary legislator who thinks that he’s speaking English, and it turns out that if he uses the word “affecting” all sorts of unreal things happen.

Miguel A. Estrada:

But it isn’t, because one of the canons of this Court’s cases is that Congress is presumed to know what this Court’s cases say and, in effect, if you had a case that told Congress that–

Antonin Scalia:

Because our cases are presumed to say reasonable things.

Miguel A. Estrada:

–Well, but even–

Antonin Scalia:

And maybe we should adhere to that presumption.

Miguel A. Estrada:

–Justice Scalia, if you had a case that told Congress that it could reach to the full limits of the Commerce Clause by affixing to the statute the score of “Suwannee River”, and Congress did that, it should be taken to have reached to the limits of the Commerce Clause, and that’s basically all that we’re arguing here.

David H. Souter:

Of course, what we’ve come with in your answers to me and to Justice Scalia are a kind of three variants, one of which would make it expressly clear that we were talking about an enterprise whose activities, when aggregated with others, affected.

At the other end of the spectrum, the answer that you gave to Justice Scalia, something to the effect like, the activities of which alone affect interstate commerce, and what we’ve got in the statute is something in between.

And I suppose you could, simply on the basis of these answers, argue that we have an ambiguous statute here, even though each of those three variants uses the word “affect”, and I suppose if we get to that point, the thing to do is to look to legislative history.

You don’t want to say that to Justice Scalia, but you could say that to me.

[Laughter]

Miguel A. Estrada:

I have said it to Justice Scalia before, Justice Souter, and it didn’t do me much good at the time, but yes, if that were necessary to ascertain the meaning of Congress, our view is that the use of the term of art itself makes it clear.

Antonin Scalia:

Of course, the Government’s view is so expansive, it really doesn’t even matter if you use “affecting” does it, because it’s not used in the Sherman Act, and you take the same “it covers everything” view of the Sherman Act, right?

Miguel A. Estrada:

There are several–

Antonin Scalia:

So if you use “affecting”, or, alternatively, do not use “affecting”, it covers everything.

[Laughter]

Miguel A. Estrada:

–If you use “affecting” or “obstructing”, or several of the other words that this Court has identified–

Stephen G. Breyer:

Well, is that really true that the Government’s position is that if two pizza parlors in downtown Anchorage fix their prices, the Sherman Act applies?

Miguel A. Estrada:

–Yes, it is, and I see that my time is running low–

Stephen G. Breyer:

If you didn’t accept that, would it be–

[Laughter]

Just in case one didn’t go that far, is this distinguishable?

Miguel A. Estrada:

–Yes.

Stephen G. Breyer:

I mean, is it possible?

Because–

Miguel A. Estrada:

Yes, because as Justice Scalia pointed out, it is possible to make good arguments, as he did in Summit Health, that the Sherman Act, because of its different language, doesn’t go so far, that would not really be there for RICO, which has much more expansive language.

Stephen G. Breyer:

–You mean, one could look to see whether or not Congress intended each individual farmer, the class of which affects the price of wheat, also to fall within the statute, and sometimes the answer would be yes, and sometimes no, depending on what the statute’s about?

Miguel A. Estrada:

We would… no.

We would look to see whether the language uses… used by Congress reaches to the full limit of the Commerce Clause, and if it does, then that class-of-activities analysis would be available in every case.

If I may reserve the remainder of my time–

William H. Rehnquist:

Very well, Mr. Estrada.

Miguel A. Estrada:

–Thank you.

William H. Rehnquist:

Mr. Warren, we’ll hear from you.

Glenn S. Warren:

Mr. Chief Justice, and may it please the Court:

The question before the Court is whether the Commerce Clause has any limitations.

Does the term, “interstate commerce” mean anything, or is it a jurisdictional fiction?

This Court’s precedents require that the phrase, RICO statute, require that there be a substantial effect on interstate commerce.

The Government effectively urges upon this Court a standard of identifiable and perceptible.

That is, if there is an activity, whether it be a pizza parlor or the buying of tissue paper, that activity is identifiable, it has a potential effect on interstate commerce, and under the Government’s theory would be cognizable under the RICO statute.

Anthony M. Kennedy:

Is it open for you to argue this when you did not object to the instruction?

The instruction referred to activities of financial institutions that have an effect, however small, on interstate or foreign commerce.

That was what the–

Glenn S. Warren:

Justice Kennedy, that instruction was applied to section 1956, which was one of the racketeering acts which was a part of count 6, which was the general RICO count.

The general RICO count used the language, “affects interstate commerce”.

It did not use the language,

“in any way affects interstate commerce. “

It would be our position that this is a jurisdictional question which was not waived, in any event, by the failure to object.

Furthermore, there was a request by trial counsel to submit a special instruction on the RICO count.

That request was denied by the trial court.

Ruth Bader Ginsburg:

–Mr. Warren, you use the word, has to have a substantial effect, so does it turn on the success of the mine?

That is, we look to the reality and not the expectation?

Glenn S. Warren:

The RICO statute talks about, and the statute that Mr. Robertson, the respondent, was prosecuted under, talks about actual effects.

It does not, as in the Sherman Act, talk about an agreement which has potential consequences.

Ruth Bader Ginsburg:

So if Mr. Robinson’s dream had come true, then he would be covered, but it’s just because his mine was not successful that he’s not.

Is that–

Glenn S. Warren:

That is my position, because I believe that the clear language of the statute talks about effects of the enterprise on interstate commerce and not potential effects.

Sandra Day O’Connor:

–Now–

–So if–

–counsel, are you arguing that this gold mine operation doesn’t even come within Congress’ power to regulate, or is it your position that Congress had intended to exercise less than its full power under the RICO statute?

It wasn’t clear to me.

Glenn S. Warren:

I believe that Congress does have the power in different ways to regulate gold mines such as the one that existed in this case.

Sandra Day O’Connor:

Even ones that aren’t successful?

Glenn S. Warren:

Even ones that are not successful under Congress’ different powers that Congress has, but it’s my position that RICO statute, which refers to the gold mine as the enterprise, does not cover the gold mine in this particular case.

Antonin Scalia:

Not the different powers that Congress has, the commerce power.

Does it have power to regulate even this mine under the commerce power if it wanted to?

Glenn S. Warren:

I believe that it would have that power if it wanted to, but I do not believe that the RICO statute in this instance reached this gold mine.

Ruth Bader Ginsburg:

So if you invest and strike it rich, you’re covered by RICO, but if you invest and it turns out to be a bust, you’re not covered?

Glenn S. Warren:

That may be the possible consequence of the statute the way it is written.

Antonin Scalia:

I suppose that a lemonade stand that doesn’t go anywhere doesn’t affect interstate commerce, and if it turns into McDonald’s, it does.

Glenn S. Warren:

Well, under the Government’s theory, I believe that the lemonade stand would affect interstate commerce, because any activity has some effect on interstate commerce.

My position is that there must be a substantial effect on interstate commerce, and therefore the lemonade stand would not, but a McDonald’s franchise might, depending on the particular activities.

The–

John Paul Stevens:

Mr. Warren what do you have to say about the Russell case?

Glenn S. Warren:

–The Russell case is… the Russell case looked at title VIII of the Organized Crime Control Act of 1970, and uses language which is different than the RICO statute.

Russell, or section 844(i) of title XVIII, talks about buildings, vehicles, and property that are used in activities which affect interstate commerce.

The RICO statute, on the other hand, talks about enterprises which affect interstate commerce.

The RICO statute does not address enterprises which are used in activities which affect interstate commerce.

Therefore, I believe that there is a significant difference, and that Congress was aware of that difference when it passed both of those statutes, since they were both parts of the Organized Crime Control Act of 1970.

Furthermore, in the Organized Crime Control Act of 1970, Congress in… I’m sorry, the arson statute is title XI.

Title VIII was the gambling statute, which says that if certain requirements are met, a certain number of people gamble and so on, then there is a per se effect on interstate commerce, so I believe that in passing the Organized Crime Control Act Congress was well aware of the different approaches it could take to interstate commerce.

With the arson statute, it used language, buildings and so on engaged in activities which affect interstate commerce, RICO it used language, enterprises which affect interstate commerce, and in the gambling statute, it defined a class of activities.

Stephen G. Breyer:

If Congress has the power to regulate the output of gold mines, or gold mines, even local mines, because like wheat they affect, what reason is there in this statute to believe that Congress would not have wanted to bring within the statute every single enterprise that is a member of this class?

Here, the reason… the language is jurisdictional, I take it, in the statute.

In the Sherman Act, for example, they’re interested in going after only certain kinds of price-fixing agreements, but here the language is jurisdictional.

They’d like every pizza parlor to fall within it if they could, wouldn’t they?

Glenn S. Warren:

I agree, Justice Breyer, Congress may have wanted to bring every enterprise under its jurisdiction, but I would submit that is beyond the commerce power of Congress.

Stephen G. Breyer:

Is this now beyond the power of commerce… Congress to say, this gold… in other words, you’re saying now, Congress doesn’t have the constitutional power to penalize investment in this kind of gold mind, this kind of investment?

Glenn S. Warren:

That is my position with the approach that Congress used in this particular case.

It has defined–

Sandra Day O’Connor:

Well, I just asked you that same question.

You said, no, Congress could reach it, but it didn’t.

Now, what is your position?

It has just shifted dramatically.

Glenn S. Warren:

–With all respect, Justice O’Connor, I believe that if Congress had defined a class of gold mines that it wished to regulate, then the individual mines within that class could be aggregated to establish a substantial effect on interstate commerce, but when Congress uses the generic term, “enterprise”, which covers virtually every activity within the United States, it’s a class that is so broad that it is tantamount to trying to exercise the commerce power itself over every activity.

The rationale, I would submit, of the class analysis, is that classes are subsets of the whole, and that Congress can properly pick out particular classes and regulate those classes.

David H. Souter:

Well, it can, but why does it follow from that that Congress may not do it otherwise?

In other words, why does it have to make that subclass identification?

I don’t see your basis for assuming that.

Glenn S. Warren:

If Congress did not make the subclass classification, then effectively it would be regulating every enterprise from the lemonade stand to General Motors.

David H. Souter:

Well, I mean, that doesn’t follow.

I mean, there still are the substantially affecting commerce tests.

It doesn’t mean that it takes over every activity in the country.

It simply means it goes as far as it can go, and what reason is there to assume, textually or constitutionally, that it can only go as far as it can go if it does it by the specific identification of what you call subclasses to be regulated?

Glenn S. Warren:

Well, the statute itself, in addition the two… the class which would be enterprises which have elicit funds invested in them, has words of limitation, which–

David H. Souter:

That’s a different argument.

I mean, you’re now making a textual argument, and I understood you before to be saying that if Congress wants to legislate to its limit, it must do so as a constitutional matter, I suppose, by identifying each so-called subclass which it wishes to regulate to the extent of its power, and I didn’t understand that to be an argument based on the text of this statute.

I understood that to be an argument based on the way Congress has to exercise its constitutional power.

Maybe I misunderstood you.

Glenn S. Warren:

–I would agree with that position, that it’s not a textual question.

David H. Souter:

Okay.

If it’s not a textual question, what, then, is the constitutional basis for your imposition of this, identify the subclass requirement, before Congress can legislate to the extent of its powers?

Where do you get that?

Glenn S. Warren:

Well, I believe as a matter of logic, if nothing else, that if Congress can define a class as including all enterprises in the United States, then effectively the commerce power has no limitation, and as even the Government concedes–

David H. Souter:

Well, it has no limitation beyond the substantially affecting commerce limitation, and Congress would say, that’s absolutely right.

That’s just what we intend to do.

Glenn S. Warren:

–Well, I think the Government’s position is that Congress could legislate over all enterprises in the United States, and then could use those, could aggregate those and declare, or ask the court to interpret that aggregation as having the substantial effect on commerce, and therefore there would be no distinction between interstate and intrastate commerce.

Glenn S. Warren:

Every type of commerce would be subject to congressional legislation.

Antonin Scalia:

I thought that was your position, too.

I thought you were just saying Congress could do that, but didn’t do it here.

I thought it was essentially an interpretive argument you were making, rather than a constitutional argument.

Glenn S. Warren:

I’m making two arguments, Justice Scalia.

I do not believe, as a matter of constitutional law, that Congress can with this kind of class approach exercise jurisdiction over every class.

I am also making a statutory argument that it did not do so in this case.

John Paul Stevens:

But your constitutional argument is based on the assumption they define everything that go into the class, but how does that respond to the argument that here the only class is gold mines?

Glenn S. Warren:

Well, gold mines are not defined either by Congress in the statute or in the legislative history.

Unlike the Russell case, for example, where the legislative history reflected that there was a congressional concern about buildings, and this Court was then able to interpret the class of activities as being commercial real estate, there’s nothing in this statute or its legislative history to indicate any concern about gold mines, so–

John Paul Stevens:

No, but may I go back to Russell for a second?

Your distinction, if I understand it, is that there it talked about the whole class of activities, and here it talks about the activities of the particular enterprise, in this statute.

Glenn S. Warren:

–Right, the… and–

John Paul Stevens:

So that if this statute had read… instead of, any enterprise which is engaged in or the activities of which affect interstate commerce, if it had said, any enterprise which is engaged in activities which affect interstate commerce, then you would agree you would lose.

Glenn S. Warren:

–Yes.

John Paul Stevens:

Yes.

Glenn S. Warren:

I disagree with the position of the Government that the words, “affect interstate commerce” have a general meaning which we can look at and take into every statute.

I believe that those words have been used in different ways, and that we have to take a close look at the way the words are used in a particular statute, and it’s my position that those words reflect an intent that only substantial effects on interstate commerce be cognizable under the RICO statute.

Ruth Bader Ginsburg:

To what extent do you rely on the Ninth Circuit point about the distance of Alaska?

Wouldn’t the same thing apply to two States that are very close to each other, just as–

Glenn S. Warren:

I agree with you, Justice Ginsburg.

I do not rely on the Ninth Circuit to that extent, because I think that almost any activity in the United States or in any given State draws supplies and purchases supplies from another State, whether we’re talking about Alaska, or California, or New York, or Wyoming, so I do not rely on the Ninth Circuit distinction in that regard.

As far as the activities of the enterprise, the Government would lump anything that happened in connection with the gold mine and call it interstate commerce.

The activities of the gold mine, in our view, were those activities which were ongoing and which were unique to this particular mine, and that would be the extraction of minerals from the ground, and the sale of minerals in Alaska.

William H. Rehnquist:

–How about hiring employees to come to Alaska from somewhere else?

Glenn S. Warren:

Well, that is, I would argue first, Chief Justice Rehnquist, is not technically an activity of the mine.

It’s–

William H. Rehnquist:

You don’t think finding people to run the operation is an activity of the mine?

Glenn S. Warren:

–Well, to the extent that it is an activity, and can be viewed as an activity, I would argue that it did not constitute any kind of substantial effect in this case.

It’s a… it’s the type of activity, if you will, that is a part of every business.

Glenn S. Warren:

There are probably few businesses that do not have people who come from other States to work at one time or another.

It’s not a significant part of the activity of the mine, if it is considered an activity of the mine.

Antonin Scalia:

Mr. Warren, what’s your best case?

What case displays an interpretation by this Court of the word, “affecting” that would make you win this case?

Glenn S. Warren:

I believe the analogy to the Sherman Act, some of the Sherman Act cases.

Antonin Scalia:

It doesn’t involve the word, “affecting”.

I mean, I agree, that’s a wonderful line of cases.

Unfortunately, it doesn’t have anything to do with this.

It’s–

Glenn S. Warren:

Well, I don’t know that I agree that the Sherman Act doesn’t have anything to do with RICO, because the Sherman Act does talk about the… about effects on interstate commerce, or at least the Court’s interpretation of the Sherman Act in various cases talks about that.

Antonin Scalia:

–Restraint of trade between the States is what you’re talking about, and the Court said, you know, that that seems to focus on the individual activity, or at least we used to say that, but you don’t have a single case in which “affecting” has been interpreted by this Court as you urge us to interpret it here.

Glenn S. Warren:

“Affecting” has been interpreted by this Court in class of activities cases, and the Court has indicated that when there is a class, there must be a substantial effect on interstate commerce.

I do not have a case which discusses this issue in terms of a nonclass analysis and addresses an individual activity, but it’s my position that the jurisprudence of this Court requires that there be a substantial effect on interstate commerce, otherwise the distinction between interstate and intrastate commerce is lost, and there is no limit to the commerce power.

Ruth Bader Ginsburg:

Mr. Warren, in connection with employees, perhaps the Alaska distance doesn’t make a distinction that cuts against you.

There was a whole line of cases about people who go up to Alaska to work and then come back to California sick and lame and are a burden on the California Workers Compensation system, so wouldn’t the effect of getting employees to come to Alaska, wouldn’t that have an amplified effect on interstate commerce–

Glenn S. Warren:

Looking–

Ruth Bader Ginsburg:

–than the distance between, say, New York and New Jersey?

Glenn S. Warren:

–Looking at any particular activity, there might be a heightened effect if there are a number of employees coming from one State to another.

I would point out that in this case there were a total of only five or six employees who worked at this particular mine over the span of 3 years, so even if these employees did travel in interstate commerce, it was… as the Ninth Circuit pointed out, it was certainly not of any importance.

In fact, I would almost refer to some of these incidents such as the travel of employees, the driving of a Cadillac, which the Government refers to, as incidental effects, a term which this Court used in Oregon State Medical Society to describe sporadic and few contacts with interstate commerce, and I would submit that the same is true in this situation.

John Paul Stevens:

May I ask another question?

Just looking at the general purpose of the statute to reach competitive… the use of, in competitive markets, of funds that are the product of income derived from a pattern of racketeering activity, basically organized crime, and I understand it’s been given broader construction than perhaps Congress intended, but looking at the heart of the statute and wanting to police investments of this kind of money, why would Congress want to do anything less than its full power to reach all of the use of proceeds of this kind of activity?

What would the reason be for the… I mean, what sense does your distinction make in terms of the overall purpose of the statute?

Glenn S. Warren:

There could be some concern about the Federal-State balance.

That could be one reason why Congress would not want to cover every single enterprise.

John Paul Stevens:

No, but the threshold inquiry has to be… there’s no doubt about the threshold of, you’re regulating the proceeds of activities that are clearly subject to the power of Congress to regulate, the organized crimes… you know, getting the money in the first place.

Glenn S. Warren:

Yes.

John Paul Stevens:

And then we’re talking about, what can they do with it.

Glenn S. Warren:

Yes.

John Paul Stevens:

And basically a full power answer would say, they can’t do anything with i, we want to get it all, and you say that… why wouldn’t that be the more normal reading of the statute?

Glenn S. Warren:

Well, even if it were the more normal reading of the statute, and I don’t know the answer to your question, Justice Stevens, but there may be certain types of activities that Congress wants to reach, and it wants to use its full powers to reach those activities, but the commerce power just does not allow it to reach those activities.

Antonin Scalia:

Or I guess you could say the same reason we think, or used to think that the Sherman Act doesn’t cover small businesses that don’t substantially, individually substantially affect interstate commerce, that the Federal Government left it to State Valentine acts to do that job with respect to smaller enterprises.

Glenn S. Warren:

That would–

Antonin Scalia:

Or the National Labor Relations Act.

A lot of acts have been inter… or have been limited by either the statute or the regulations that implement them to major interstate activities, leaving the States to do the rest.

Glenn S. Warren:

–I would agree with that.

I would again refer the Court to the Sherman Act, because even though the language of the Sherman Act does not talk about affecting interstate commerce, I believe it provides a useful analog to an analysis.

This Court’s Sherman Act cases have historically talked about a substantial effect on interstate commerce, and I would submit that is what the RICO statute talks about.

The gold mine in Alaska sold gold intrastate to refiners in Alaska.

There’s no evidence, although there is an inference, that that gold was subsequently sold outside of Alaska, but in the scheme of what probably is a multitrillion-dollar market, as the court below pointed out, $200,000 over a period of 3 years is not a significant amount of activity.

Stephen G. Breyer:

They also took out $30,000, didn’t they?

Glenn S. Warren:

I’m sorry?

Stephen G. Breyer:

Didn’t they take out some nuggets or something?

Glenn S. Warren:

There was approximately $30,000–

Stephen G. Breyer:

So 15 percent of the output was taken out of State?

Glenn S. Warren:

–That’s correct, but that… that was not an activity of the mine.

If anything, that was a… that could be looked at as one of the participants in the mine, Mr. Robertson, the respondent, just taking the money out of Alaska.

This was not an activity of the mine where it sold mine… sold gold in Alaska, or sold gold outside of Alaska.

This was somebody just taking the gold.

If that were to provide a jurisdictional basis, the fact that somebody could take something from an enterprise and travel to another State, then again, almost any activity could have some effect on interstate commerce.

Ruth Bader Ginsburg:

Mr. Warren, the Ninth Circuit was obviously concerned about the sweep of this provision, and there was an issue left over.

I think the… what was the issue that was left over about sentencing under this count?

Glenn S. Warren:

Well, this count, the RICO count brings the… brings Mr. Robertson’s sentence within the Sentencing Guidelines, and without the RICO count, then all other counts that he was convicted on would not be within the Sentencing Guidelines, because they occurred prior to November 1, 1987.

The Government acknowledges in principle that the Commerce Clause has limits.

Its approach, however, is to abandon what I would submit is the longstanding substantial effect test of this Court, and would give Congress an unbridled power to punish any kind of criminal conduct.

This could result in the punishment of criminal conduct which has really nothing to do with interstate commerce.

It can result in overburdening of the Federal courts, an expansive use of the RICO statute in both the criminal and the civil context and, I would submit, it could act, will act to significantly affect the Federal-State balance.

By upholding the language of the RICO statute in this particular case, which is to view “affects interstate commerce” as giving Congress the power to legislate over any type of effect, Congress can simply pass a statute, indicate that it is exercising its Commerce Clause jurisdiction over an activity or activities which affect interstate commerce, and there basically is no check.

I would urge the Court to affirm the ruling of the court below.

William H. Rehnquist:

Thank you, Mr. Warren.

William H. Rehnquist:

Mr. Estrada, you have 1 minute remaining.

Miguel A. Estrada:

Thank you, Mr. Chief Justice.

I have one case in response to the question you asked earlier.

It is not cited in our brief.

The name is U.S. v. Ferger, F-e-r-g-e-r, 250 U.S. 199, and the citation is at page 203, in which, after stating the substance of the affectation doctrine the Court stated,

“It would be superfluous to refer to the authorities which, from the foundation of the Government, have measured the exertion by Congress of its power to regulate commerce by the principle just stated, since the doctrine is elementary, and is but an expression of the text of the Constitution. “

citing the Necessary and Proper clause.

I have nothing further.

William H. Rehnquist:

Very well.

The case is submitted.