Legal Docket: Where in the world is restitution?

MARY REICHARD, HOST: It’s Monday, June 19. Thanks for joining us for today’s edition of The World and Everything in It. Good morning. I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher.

We’re down to the final two weeks of our June Giving Drive. One of two times of the year where we ask you to renew your support to strengthen sound journalism grounded in facts and biblical truth.

REICHARD: Nick, I think it’s important to emphasize where those dollars go, and it’s very practical. I’m talking things like microphones, recorders, cables, computers, licensing, even the music you’re hearing right now. Even the music you just heard. That has to be licensed and that takes money.

EICHER: Right, and we license software to do audio and video editing, web services to publish online content and to deliver podcasts to you. There are licensing fees to news wires we need for photography, audio, and video for some stories we can’t get to in person.

REICHARD: And for the stories we can get to, those are out in the field, so we have to go get them. That means plane tickets, rental cars, hotel nights.

Besides all that, reporters have to be paid, as do editors and producers and engineers. And they work long, hard hours because they love what they do. So often they go above and beyond. They volunteer their time to teach WJI and run internship programs, because they squeeze that work in while doing their regular jobs.

So there’s much more to this than meets the ear.

EICHER: And we could of course go on, because it takes many people to support all this work and we’re grateful to each one. But the point is, we have more than 100 people all rowing in the same direction, working to honor Christ in the profession of journalism, and all of that depends on you. So I hope you’ll think about the value WORLD is to you, and of course it has to fit your budget. We know you have serious responsibilities of your own, you have families to support, and in your charitable giving, your church comes first. But beyond that if you’re able, I hope you’ll consider your part in this June Giving Drive.

REICHARD: Please go to wng.org/donate. That stands for World News Group. wng.org/donate. And thank you.

EICHER: It’s time for Legal Docket.

The U.S. Supreme Court handed down five opinions last week. We’ll cover those as well as one oral argument today.

REICHARD: That’s right. In a 7-2 decision, the Supreme Court upheld the constitutionality of the Indian Child Welfare Act. That’s a federal law that aims to keep Indian children who enter foster or adoptive care with Indian families.

In this case, a white couple caring for an Indian child sued, joined in the effort by the child’s biological mother and others. One argument centered on the 10th Amendment: that prevents the federal government from issuing commands to the states.

The Supreme Court held the Indian Child Welfare Act doesn’t violate the 10th Amendment because the law applies evenhandedly to both states and private actors. The court declined to address the merits of a separate challenge that centered on racial discrimination.

You can hear the eventual decision in this from Justice Elena Kagan during argument in November:

JUSTICE KAGAN: Congress is very clear in this statute that it thinks that this statute is critical to the continuing existence of the tribe as a political entity. And that's, in fact, one of the reasons it passes this statute, is the political entity is itself being threatened because of the way decisions on the placement of children are being made.

EICHER: The second decision arises from a case we covered last week related to a Native Tribe and bankruptcy. A band of Chippewa Indians made a loan of 11-hundred dollars to a man who later filed for bankruptcy. At that point, the law requires debt-collection efforts to stop.

But the tribe kept trying to collect. It argued tribal sovereign immunity. Meaning, it’s not subject to the Bankruptcy Code the way state and federal governments are.

The high court disagreed in an 8-1 opinion. The definition of governmental unit in bankruptcy law shows Congress intended it to be a catchall phrase, and that means it includes federally recognized tribes.

REICHARD: In another 8-1 opinion, the court ruled against an employee who thought his company was committing Medicare fraud. The employee brought a legal action that allows a whistleblower to sue on behalf of the government and then receive a portion of the award.

The government investigated the claims, waffled about whether to intervene, then eventually moved to dismiss the case, over the employee’s objections. The court held that the government can intervene at any point, and once it does, it has unilateral authority to dismiss the case.

EICHER: Next, a unanimous decision by the Supreme Court in a double jeopardy case.

Here, a computer scientist hacked into a private company’s website and stole information. He was found guilty. But as it turned out, the trial venue was improper. In other words, that the wrong district court held the trial.

The defendant made the argument that to retry him in the proper district court would violate the double-jeopardy clause of the Constitution. But the Supreme Court disagreed. It said that the reason for the second trial here is unrelated to the defendant’s guilt or innocence, so it’s okay to go after him again, in the proper place.

REICHARD: That was the case where Justice Sonia Sotomayor called the case law a “mixed up platypus.” So, now there’s some clarity.

The final opinion is also unanimous. It revolves around a man who committed a crime that resulted in multiple convictions. Efrain Lora was sentenced 25 years for one set of crimes and five years for another. Lora wants his sentences to run concurrently and not consecutively. In other words, 25 total, not 30. And federal judges do typically have discretion to allow that.

But not here. The court held that the relevant statute requires his sentences to run consecutively, so he’ll serve 30 years.

EICHER: Alright, now on to the final oral argument we’ll cover of the term! Legal correspondent Jenny Rough joins us to talk about that. Hi, Jenny!

JENNY ROUGH, CORRESPONDENT: Hi, Mary and Nick. Well, this case involves the RICO Act. That’s the Racketeer Influenced and Corrupt Organizations Act.

I talked with an international expert on the RICO act named Jeff Grell. He explained that Congress passed the act in 1970 to go after the Mob, the Don Vito Corleones of the world, the guy who manages the criminal enterprise, but at a distance, sitting in his office petting his cat instead of getting his hands bloody.

This guy doesn’t know the exact details of the murder or bribery or extortion needed to carry out his demands. RICO was just what was needed to establish the guilt of someone like that. But a statute that confers guilt on a person who didn’t overtly commit the act was a novel concept in criminal law.

REICHARD: Well, the RICO statute also allows for private actors to cast a wide net in civil cases. And that’s the case today.

The main characters are Russian citizens by the names of Vitaly Smagin and Ashot Yegiazaryan. Smagin owned shares in a joint real-estate project, but Yegiazaryan was able to steal them and flee the country. Ever since, Smagin has been chasing Yegiazaryan around the world trying to recover the stolen money. First, Smagin obtained an $84 million arbitration award in London. But Yegiazaryan failed to pay.

Yegiazaryan now lives in California. So Smagin pursued him in U.S. courts. A district court in California confirmed the London arbitration award and entered a judgment to allow Smagin to collect on the debt.

So that’s lawsuit number one.

ROUGH: The second one is where RICO comes in.

In this one Smagin says Yegiazaryan hid his assets with relatives in California and made fraudulent conveyances to try to make himself judgment proof.

So Smagin brought a RICO claim against Yegiazaryan.

But under the statute, a foreign plaintiff can only bring a private RICO action in the U.S. if he’s suffered injury in the U.S., a domestic injury. That’s the legal question here: What constitutes a domestic injury?

Yegiazaryan argues Smagin lives in Russia, so he didn’t suffer a domestic injury. His injury happened over there.

Here’s Vincent Levy arguing for Yegiazaryan before the Supreme Court:

VINCENT LEVY: Considering the plain text, the Court's precedents, and the common law, it is clear that a civil RICO plaintiff is injured at its domicile. The common law instructs that the nature of the property here being intangible, it's a judgment and a debt, it follows the person of the plaintiff creditor, and that is where it is located. So the injury here was in Russia and not the United States.

Chief Justice John Roberts asked about all the ways the case touches on activities that did occur in the U.S.

JUSTICE ROBERTS: Well, here the plaintiff obtained a California judgment to collect California property against someone living in California based on conduct in California. Why can't we consider, with all those connections, that that's a domestic injury?

LEVY: A property right that is intangible, such as a debt, follows the creditor, and it does not matter that the debt can be enforced in California. The injury here is a failure to pay. That was felt at Mr. Smagin's wallet in Russia.

On the other side, Nicholas Kennedy argued for Smagin. He said such a bright-line rule leads to absurd results. Instead, the RICO statute should be interpreted to focus on Yegiazaryan’s domestic conduct that caused Smagin’s injury. You can’t divorce the two.

NICHOLAS KENNEDY: This case is deeply domestic on both fronts. First, the conduct. The RICO violations occurred in California. The scheme was orchestrated by an international fugitive living in Beverly Hills. Second, the property. This RICO enterprise targets a California judgment against California debtors that confers rights only in California.

Justice Elena Kagan said circumstances giving rise to this case seem odd.

JUSTICE KAGAN: Yes, there's a California judgment and acts. But all of that is derivative on a dispute that was fundamentally foreign in nature between foreign parties involving foreign conduct initially adjudicated in another foreign country. So the fact that this has migrated, if you will, to the United States, you know, comes about only with respect to enforcing the first judgment.

True, Kennedy said. But it can’t be that only one side of the law would apply to the defendant, the side in his favor.

KENNEDY: You're correct, Your Honor, that the original arbitration award was the genesis of a, came from a foreign dispute. But that's not dispositive here. Mr. Yegiazaryan moved to California and has lived in California, enjoying the benefits and the protections of U.S. law for over a decade.

But Justice Kagan kept pushing.

JUSTICE KAGAN: Would you agree that your test is harder to apply than your friend's? It might make more sense, but it sounds a lot harder to apply.

KENNEDY: I do agree that a test that is context-specific, is slightly harder to apply than a bright-line test. But our cases tell us that, and history tells us, that while bright-line rules may be desirable, they’re not desirable when they violate precedent or the statute's text. And the bright line here does that.

There’s a lot of money at stake here. Not only the $84 million dollar arbitration award. Successful RICO claims allow for triple damages.

Given the defendant’s crafty ways of gaming the system and the courts for years, this treasure hunt must be frustrating for plaintiff Smagin.

My RICO expert told me that in our transient world and modern economy, the idea of looking solely to where the plaintiff resides no longer makes sense.

But historically, that’s how the law’s been applied. We’ll soon learn what the justices decide.

That’s this week’s Legal Docket. I’m Jenny Rough.

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