Sanchez v. United States, No. 19-288–On Petition for Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit.

Bob Connolly
Law Office of Robert Connolly

A petition for review is before the Supreme Court filed by three California real estate investors who were convicted after trial under Section 1 of the Sherman Act for bid rigging at real estate foreclosure auctions.  The defendants preserved their objection that the application of the per se rule was unconstitutional because it took an element of the offense [was the agreement in restraint of trade?] away from the jury once the court decided the per se rule applied.

Background

In a recent published opinion the Ninth Circuit again found the per se rule applied to auction bid rigging.  United States v. Joyce, 895 F.3d 673, 677 (9th Cir. 2018).  Joyce was an appeal by an individual who conspired to rig bids at real estate foreclosure auctions. The Joyce court explained, “the government is relieved of any obligation to prove the unreasonableness of the specific scheme at issue” in a bid-rigging case because bid rigging violates Section 1’s per se rule. Joyce, 895 F.3d at 677.  In a similar auction collusion appeal that followed shortly thereafter the Ninth Circuit again found he per se rule to be constitutional. United States v. Sanchez, No. 17-10519 (9th Cir. January 25, 2019) (not for publication memorandum ).  At oral argument in Sanchez, one panel member noted: “I think if it’s going to get straightened out [whether the per se rule is constitutional] it’s going to have to require an en banc panel of this court or more likely the Supreme Court itself.”  Mlex, Joshua Sisco, January 16, 2019 “In foreclosure auction appeal, court questions applicability of per se standard, (behind pay firewall)]

Cert Petition

The cert petition (here) was filed on behalf of defendants Javier Sanchez, Gregory Casoro and Michael Marr by the law firms Riordan & Horgan and O’Melveny & Meyers.  On October 24, 2019, two amicus briefs were filed in support of the cert petition; one by National Association of Criminal Defense Lawyers NACDL Sanchez Amicus, and another by the Due Process Institute Sanchez v. US — DPI Amicus Brief.  Law 360 published an article on October 25, 2019 discussing the cert petition and amicus briefs (here—but behind a paywall).  I was quoted in the article for agreeing that the per se rule in criminal cases unconstitutionally deprives the defendant of his/her right to have the jury decide every element of the offense.  Because the jury does not decide whether the agreement was a restraint of trade, the defense is unconstitutionally barred from proffering procompetitive evidence.

While much could be written (and has) the argument is simple:There are three elements to a Section 1 Sherman Act offense:  1) an agreement; 2) in restraint of trade, 3) that affects interstate or foreign trade or commerce.  In civil cases the jury decides all three elements, including whether the agreement was in restraint of trade (i.e. procompetitive or anticompetitive).  In a criminal case, however,  the jury is instructed by the court that the agreement [if proven] is a restraint of trade and their job is to find whether the defendant knowingly joined the charged agreement.  The language of Section 1 of the Sherman Act, however, is the same for a civil or criminal violation; so it is odd, and unconstitutional, that in a criminal Sherman Act case, the jury does not decide whether the agreement was “in restraint of trade.”

On November 25, 2019 the United States filed its brief in opposition to the cert petition. (here).  In its opposition brief, the United States urged the Supreme Court not to take cert arguing that “the per se rule is an interpretation of the Sherman Act, not an evidentiary presumption, and that it can be constitutionally applied in a criminal antirust protection.”  The government’s brief recounts the history of major Supreme Court per se rule cases and concludes:

“As those decisions illustrate, the per se rule is an interpretation of the Sherman Act; it provides that certain anticompetitive conduct falls “within the purview of ” Section 1 as a matter of law because it categorically constitutes an unreasonable restraint of trade. Standard Oil, 221 U.S. at 65; see id. at 59-60 (interpreting the “language of ” Section 1 in light of the common law).”

Will the Supreme Court Take Cert? 

As the United States notes in its brief,there is no split among the circuits and the per se rule is well established law.  The cert petition, however, does raise a constitutional question, and one that is of seeming importance to “progressive” Supreme Court Justice Sonia Sotomayor and “textualist” Justice Neil Gorsuch.  To quote one commentator, in an article titled Sotomayor and Gorsuch Resume Their Fight for the Future of the Sixth Amendment, “they are on a mission to restore criminal defendants’ constitutional rights:” Mark Joseph Stern, Slate, January 7, 2019; see also Mark Joseph Stern, “Neil Gorsuch and Sonia Sotomayor Team Up to Protect Criminal Defendants,” Slate November 19, 2018.  The per se rule’s origins date back to 1927, when the Court determined that because “[t]he aim and result of every price-fixing agreement, if effective, is the elimination of one form of competition,” such agreements “may well be held to be in themselves unreasonable.” United States v. Trenton Potteries, 273 U.S. 392, 397 (1927). Today, a Sherman Act conviction carries a maximum ten year prison sentence and simply being indicted will land a foreign executive on an Interpol Red Notice.  The stakes to liberty have been dramatically raised and so the case may catch the eye of enough Justice to revisit the per se rule for the first time in a century.