Legal Docket: Adjudicating incentives

MARY REICHARD, HOST: It’s Monday, April 10th. You’re listening to The World and Everything in It and we thank you for joining us today. Good morning! I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. It’s time for Legal Docket.

Today we cover three oral arguments heard at the Supreme Court in March. One dealing with trademark, one with procedure, and the other with words that can make you a criminal.

We’ll start with that one, the case of United States v Hansen. It’s a constitutional challenge to a federal law in Title 8 of the U.S. Code, Section 1324. [Remember that last part, “Section 1324,” that’s what we’ll use for a shorthand reference.]

That law, Section 13-24, makes it a crime to encourage or induce aliens to enter the US illegally or to remain in it, and to do that encouraging or inducing for private financial gain. A conviction for that comes with up to ten years in prison.

REICHARD: Here’re the facts: A man in California named Helaman Hansen concocted a get-rich scheme. He promised to help adult illegal aliens find American citizens to adopt them, in exchange for money, of course.

Fact is that illegals over age 16 who are adopted cannot obtain citizenship in that way, but Hansen’s “customers” didn’t know that. Hundreds of people collectively paid him nearly two million dollars through this fictional enterprise.

EICHER: But the crime didn’t pay. Hansen didn’t get away with it. A federal jury in 2017 found him guilty under section 1324, among other violations.

So he appealed. The court to which he appealed found the language of section 1324 too broad. It could possibly apply even to clearly protected speech under the Constitution, so the court tossed the convictions.

REICHARD: Then the federal government took it up with the Supreme Court, pointing out that the appeals court didn’t need to interpret the words of the statute so broadly.

Here’s lawyer for the government, Brian Fletcher:

BRIAN FLETCHER: Our position here is that the statute need not and should not be read that way. Everyone agrees that in criminal law, the terms "encourage" and "induce" are terms of art that can refer narrowly to soliciting or aiding and abetting unlawful activity.

In this next clip, he mentions the doctrine of constitutional avoidance. What that means is the court prefers not to reach constitutional issues, and looks first to resolve cases on less-ultimate grounds.

FLETCHER: At the very least, that's a plausible reading of the statute that ought to be adopted under the canon of constitutional avoidance because it would eliminate any overbreadth concern. …the First Amendment does not protect speech that is intended to induce or commence specific illegal activities.

Justice Sonia Sotomayor pushed back on that:

SOTOMAYOR: I think we're going to talk to the grandmother who lives with her family who's illegal or who are noncitizens. The grandmother tells her son she's worried about the burden she's putting on the family, and the son says, Abuelita, you are never a burden to us. If you want to live here -- continue living here with us, your grandchildren love having you. Are you -- can you prosecute this? And, if not, why not? So what do you tell the grandmother?

FLETCHER: I think not, Justice Sotomayor.

SOTOMAYOR: Don't -- stop qualifying with "think," because the minute you start qualifying with "think," then you're rendering asunder the First Amendment. People have to know what they can talk about.

EICHER: For the other side on behalf of the schemer, Hansen, ACLU lawyer Esha Bhandari. She doesn’t dispute the other convictions of her client. She’s taking aim at section 13-24.

ESHA BHANDARI: The government concedes that the statute is unconstitutional under its plain meaning. Instead, it asks this Court to rewrite the statute to prohibit only solicitation and aiding and abetting. But that is Congress's job, and Congress in 1952 took out the very words the government now asks this Court to write in: "solicit" and "assist."

REICHARD: She argued, why create a whole new category of unprotected speech called “criminal solicitation of civil law violations”?

BHANDARI: Otherwise, Congress and the states will be free, without any First Amendment scrutiny, to criminalize speech soliciting violations of the vast range of administrative and regulatory laws that govern us today, from mask and vaccine mandates to parking ordinances.

EICHER: And she argued that could chill free speech.

Justice Amy Coney Barrett countered:

JUSTICE BARRETT: I mean, the statute's been on the books for a long time, and there might -- there's an absence of prosecutions. There is also an absence of demonstrated chilling effect.

BHANDARI: This Court has never required a demonstrated chilling effect.

REICHARD: Justice Brett Kavanaugh asked Fletcher for the government to draw some lines:

JUSTICE KAVANAUGH: What do you say to the charitable organizations that say, even under your narrowing construction, there's still going to be a chill or a threat of prosecution for them for providing food and shelter and aid and recommending people for scholarships and -- and all the rest?... That's what a lot of charities do as part of their day-to-day activities with noncitizens who are not in the country lawfully.

FLETCHER: I think a couple observations.

Fletcher answered that’s conduct, not speech. So no First Amendment involvement.

Still, we’ve heard about aggressive prosecutors who use broad or vague language to go after people. That a particular law isn’t often used is small comfort.

EICHER: Okay, on to our second dispute. It’s a procedural question about arbitration.

Here’s the background. A man unwittingly gave a scammer remote access to his computer. The crook stole $30,000 from his cryptocurrency account that he created with Coinbase. That’s a cryptocurrency exchange platform.

The man, Abraham Bielski, asked Coinbase for help. Unsatisfied, he eventually sued Coinbase for violating the Electronic Funds Transfer Act. A law that requires timely, good faith investigations.

But Coinbase argues Bielski signed a contract to resolve disputes by arbitration, not in the courts. So the company asked the district court to stop litigation and compel arbitration.

REICHARD: The question for the justices is whether the court litigation can proceed even while the company pursues an appeal that might end up sending the case to arbitration.

The Federal Arbitration Act governs here, and it has confusing language that needs clarification. A decision here will have broad application across industries.

EICHER: OK, final case, this one about trademark, a frequent flier at the high court. We just had one a few weeks ago with a trademark dispute between Jack Daniels whiskey.

This time, the question is whether US trademark law extends outside of the country.

Hetronic International is an American manufacturer of remote-control devices for heavy machinery. Its international distributor was Abitron in Europe. Their contractual relationship broke down when Abitron started making identical devices and selling them under the Hetronic brand overseas.

REICHARD: Hetronic sued and won ninety million dollars in damages for trademark infringement. The district court ordered a worldwide injunction to keep Abitron from selling the products.

The question is whether that federal trademark law [called the Lanham Act] permits damages recovery when the infringement occurred outside the US and didn’t confuse American consumers. Those are two factors of trademark infringement analysis.

Abitron’s lawyer Lucas Walker argued trademarks do not extend outside of American borders:

LUCAS WALKER: Extending the Lanham Act’s reach into foreign countries would create the very risk of international friction that this court’s current extraterritoriality doctrine seeks to avoid.

EICHER: The extraterritoriality doctrine is simpler than it sounds. It means that a state may not project its power beyond its physical borders.

In general, American law does not apply outside the US, but trademark law is a little bit different. A Supreme Court opinion from 1952 permitted Bulova Watch Company to sue over knock-off watches made and sold in Mexico. But the facts were a little different there because the defendant was an American citizen. And the court has tweaked trademark practice over the years.

Still, the aggrieved company Hetronic argued things are basically still the same. Here’s its lawyer, Matthew Hellman:

MATTHEW HELLMAN: Since 1952, this court has held and repeatedly reaffirmed that the Lanham Act’s uniquely broad language reaches infringement of US marks that is carried out overseas. And during those 70 years, Congress has amended the Act 36 times, and it has never pulled back on the Act’s extraterritorial reach. The court should maintain the status quo.

REICHARD: The justices threw out hypotheticals left and right.

Chief Justice John Roberts wanted to test the limits in this exchange with Masha Hansford, representing the Biden administration who argued in support of neither party:

JUSTICE ROBERTS: I mean, let's say there is an appearance on the internet, somebody looks at it, and that person thinks, oh, that's a nice Bulova watch, or that doesn't look too good. Is that enough?

HANSFORD: No, I don't think so. And I think, in the -- in the internet context, I think even under Petitioners' test, if a website is targeting U.S. consumers so U.S. consumers can purchase the good from the website or the website will ship the goods into the United States, that is -- that is actionable, but just the possibility that somebody might see something on the internet would not satisfy any proximate cause standard.

ROBERTS: Well, but, I mean, let's say it's, you know, an influencer, what -- whatever that is, but -- (Laughter) you know, somebody -- some people -- a lot of people look at it, and -- and they see the watch. Is that enough?

REICHARD: Hansford said it would be because American consumers would be confused in that scenario, and confusion is one tool by which to analyze trademark infringement.

Other tools include whether the foreign infringement hurts US consumers, a commerce analysis. Throw in the loss of goodwill and you’ve got a recipe for legal confusion, and that’s why the Supreme Court must resolve it.

And that’s this week’s Legal Docket.

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