Opinion
S1 00 Cr. 653 (RWS)
February 8, 2001
Attorney for Plaintiff, HONORABLE MARY JO WHITE United States Attorney for the Southern District of New York Attorney for United States of America One St. Andrew's Plaza New York, NY. By: WILLIAM C. SILVERMAN, AUSA of Counsel.
Attorneys for Defendant: COBLENCE WARNER 415 Madison Avenue New York, NY. By: KENNETH E. WARNER, ESQ. of Counsel, NEWMAN GREENBERG 950 Third Avenue New York, NY. By: RICHARD A. GREENBERG, ESQ. KARL E. PFLANZ, ESQ. STEVEN Y. YUROWITZ, ESQ. of Counsel.
OPINION
Defendant Eric King ("King") has moved for an order dismissing the indictment, pursuant to Federal Rule of Criminal Procedure 12 and the Tenth Amendment of the United States Constitution. The government opposes the motion. For the reasons set forth below, the motion is granted.
Prior Proceedings
On January 25, 2000, a complaint was issued in the Southern District of New York charging King, a Texas resident, with one count of willful failure to make child support payments with respect to a child who lives in another state, in violation of the Child Support Recovery Act of 1992 (the "CSRA"), 18 U.S.C. § 228(a)(3), as amended by the Deadbeat Parents Punishment Act of 1998 (the "DPPA") (collectively, the "CSRA").
The record does not reveal the history of any investigation which resulted in the determination to prosecute this defendant, whose father is a well-known participant in litigation in this district. See, e.g., United States v. King, 134 F.3d 1173 (2d Cir. 1998); King v. American Broadcasting Companies, Inc., No. 97 Civ. 4963, 1998 WL 88745 (S.D.N.Y. Feb. 27, 1998). Nor is the number of cases in New York of noncompliance with interstate child support orders known, although according to a report entitled "Family Justice Program — Phase II," issued by the Office of the New York State Unified Court System, there are over 10, 000 cases involving interstate support in the New York Family Courts. See Family Justice Program — Phase II, Office of New York State Uniform Court System, available at http://www.courts.state.ny.us/phase2.htm.
A superseding indictment issued December 12, 2000, charging King with one misdemeanor count under the CSRA, for conduct committed between November 1992 and July 23, 1998, and one felony count under the DPPA, for conduct beginning July 24, 1998, the effective date of the DPPA. The conduct alleged in the superseding indictment is the same as that alleged in the complaint.
The original indictment, issued June 12, 2000, contained one felony count and charged King based on conduct from in or about April 1992 through the date of the indictment. Thus, the indictment included conduct occurring before the enactment of the DPPA. King challenged the indictment as violative of the ex post facto clause of the United States Constitution, on the ground that it subjected him to prosecution and enhanced punishment for conduct predating the enactment of the DPPA, which among other things added a felony provision to what had previously been a misdemeanor provision under the CSRA. The government subsequently filed the superseding indictment, and King withdrew his ex post facto challenge.
The instant motion was filed on November 27, 2000, and oral argument was heard on December 13, 2000, at which time the matter was deemed fully submitted. Time was excluded, on consent, for purposes of the Speedy Trial Act, through and including February 5, 2001.
Facts
According to the indictment, King failed to make support payments of approximately $3,000 a month for his child for an eight-year period beginning in or about November 1992, totaling over $300,000, despite a default order of the New York Family Court, entered in April 1992. During this eight-year period the child and her mother, Ana Carril ("Carril"), resided in New York, and King resided in Texas.
According to information contained in the complaint, at all relevant times King has been a self-employed consultant to a mortgage company in Dallas, Texas. King is a registered agent for Investment Consultants Group, Inc. ("Investment Consultants") According to the records of Investment Consultants, King's income between 1995 and September 1999 totaled approximately $135,000, and in some years he earned as little as $18,000. However, also according to the complaint, King directed the mortgage company for which he was consulting to make checks payable to "Investment Consultants Group, Inc." for work King performed, and bank records for an Investment Consultants account indicate that King wrote checks from that account for items such as rent, food, and clothing. Under the New York Domestic Relations Law, the maximum child support obligation for one minor child is 17% of the combined parental income, less applicable taxes. See N.Y. Dom. Rel. L. § 240(1-b)(b)(3)(i).
Prior to King's arrest in January 2000, King's civil counsel had negotiated a compromise settlement with the Attorney General of Texas, who was acting on behalf of the New York Commissioner of Social Services pursuant to an interstate compact concerning child support obligations.
King's civil counsel appeared before this Court on February 5, 2001, and represented that all pending matters in the New York Family Court have now been settled. Pursuant to this settlement, King will repay the City of New York for all welfare payments made to Carril during the relevant period, and will pay approximately $100,000 to Carril. All judgments, warrants, and garnishments have been vacated. King's civil counsel also represented that King has an application pending before the Family Court to reduce the child support award from the current figure of approximately $3,000 a month to a lower figure commensurate with New York law. The government has not disputed these representations, but avers that the civil settlement merely affects the restitution element of any punishment that might be imposed if King were convicted. Discussion
The misdemeanor provision of the CSRA under which King is charged carries a maximum penalty of six months imprisonment, and the felony provision of the DPPA under which he is charged carries a maximum penalty of two years imprisonment.
The CSRA makes it a federal criminal offense, punishable by up to two years' imprisonment, to fail to pay a child support obligation imposed by a state court order or order of a state "administrative process," whenever the defendant and the child to be supported reside in different states. See 18 U.S.C. § 228(a)(3), (c)(2), (f)(3). King raises a facial constitutional challenge to the section of the CSRA under which he has been charged, contending that it violates the Tenth Amendment because it exceeds Congress's power to regulate commerce among the states, pursuant to Article I, Section 8, of the United States Constitution.
In 1996, the Second Circuit considered a Tenth Amendment challenge to the CSRA and held that the statute was constitutional. See United States v. Sage, 92 F.3d 101 (2d Cir. 1996). Sage was decided after the Supreme Court's decision in United States v. Lopez, 514 U.S. 549 (1995), in which the Supreme Court struck down the Gun-Free School Zones Act of 1990 on Tenth Amendment grounds. In Lopez, the Supreme Court's federalism jurisprudence arguably shifted to an approach that is more skeptical, as compared with the approach employed by the Court in recent history, of Congressional attempts to regulate spheres where "the States historically have been sovereign." Id. at 564. This new approach was also employed in a more recent Supreme Court decision, United States v. Morrison, 120 S.Ct. 1740 (2000), which was decided after Sage and in which the Court struck down on Tenth Amendment grounds the civil remedy provisions of the Violence Against Women Act of 1994 (the "VAWA"). In Morrison,
the Supreme Court warned against overly elastic conceptions of the Commerce Clause that would give Congress authority over "family law and other areas of traditional state regulation since the aggregate effect of marriage, divorce, and childrearing on the national economy is undoubtedly significant."United States v. Faase, 227 F.3d 660, 671-72 (6th Cir. 2000), rehearing en banc granted, opinion vacated by 234 F.3d 312 (6th Cir. 2000) (quoting Morrison, 120 S.Ct. at 1744). Lopez articulated three categories of activity subject to regulation by Congress under the Commerce Clause: (1) the use of the channels of commerce; (2) instrumentalities of, or persons or things in, interstate commerce; and (3) activities having a substantial relation to interstate commerce. See Lopez, 514 U.S. at 558-59. The "substantial relation" prong requires that the activity have a "substantial effect" on interstate commerce. Id. at 563-564.
The VAWA provides civil remedies against for victims of "crime[s] of violence motivated by gender," 42 U.S.C. § 13981(b), that is, "committed because of gender or on the basis of gender, and due, at least in part, to an animus based on the victim's gender," 42 U.S.C. § 13981(d)(1), against the perpetrators of such crimes.
Although the Faase panel decision has been vacated, and is scheduled for rehearing en banc later this spring, the panel decision is considered herein for its persuasive value.
In Sage, the Second Circuit recognized that where a parent fails to meet child support obligations, by definition, "no payments are 'in' interstate commerce." 92 F.3d at 107. Nonetheless, the court concluded that "the transaction the parent is obligated to consummate is . . . in interstate commerce" and, therefore, that the CSRA is constitutional because it falls within the second Lopez category, i.e., it regulates instrumentalities of, or persons or things in, interstate commerce. Id.
King contends, however, that since the Sage decision the Supreme Court's jurisprudence of federalism has continued to develop and be clarified in such a way that, if the same question were before the Second Circuit now, the Court of Appeals would conclude that the CSRA exceeds Congress's powers under the Commerce Clause. King relies primarily on the Supreme Court's decision in Morrison, 120 S.Ct. 1740, which further articulated the Supreme Court's thinking in Lopez on the critical, structural distinction in the Constitution "between what is truly national and what is truly local." Morrison, 120 S.Ct. at 1754.
King also relies on the Sixth Circuit's recent decision in Faase, which was decided after Morrison and in which the court held that the CSRA exceeds Congress's powers to regulate interstate commerce. See 227 F.3d 660. The Sixth Circuit concluded that the CSRA fails to meet any of the three prongs articulated in Lopez. First, the court concluded that the CSRA is not a regulation of the use of a "channel of interstate commerce." Faase, 227 F.3d at 668. Second, the court concluded that, even if a debt or contract could be considered a "thing in interstate commerce," a failure to make a child support payment owed to a person in another state is a "passive failure . . . to engage in interstate commerce, " and thus falls outside of the second Lopez category relating to "things in interstate commerce." Id. at 669. Third, the court concluded that the activity criminalized by the CSRA does not substantially affect interstate commerce, and thus fails the third Lopez prong. Id.
The Sixth Circuit is the only Court of Appeals to hold the CSRA unconstitutional under the Tenth Amendment. Indeed, this statute has been upheld by eight circuits, including the one that governs this Court. The question, then, is whether developments in the Supreme Court's federalism jurisprudence warrant the result sought by King.
In Sage, the Second Circuit concluded that a failure to make a child support payment for a child residing in another state is a failure "to comply with an obligation to make payments in interstate commerce."Sage, 92 F.3d at 107. The court further observed that "Congress . . . surely has power to prevent the frustration of an obligation to engage in commerce." Id. at 105-06. Therefore, according to Sage, the failure to make child support payments obstructs interstate commerce, and Congress may regulate this failure pursuant to its power to regulate "things in interstate commerce," i.e., under the second Lopez prong. See id.
In Morrison, however, the Supreme Court held that VAWA's civil remedies could not be justified based on Congressional findings that gender-motivated violence "'deter[s] potential victims'" from engaging in various forms of interstate commerce, "'diminish[es] national productivity, increas[es] medical and other costs, and decreas[es] the supply of and the demand for interstate products.'" 120 S.Ct. at 1752 (quoting H.R. Conf. Rep. No. 103-711, at 385, U.S. Code. Cong. Admin. News 1994, pp. 1803, 1853). The Supreme Court found these findings insufficient because they reflected merely a "but-for causal chain from the initial occurrence of violent crime (the suppression of which has always been the prime object of the States' police power) to every attenuated effect upon interstate commerce." Id. at 1752. What was required, held the Supreme Court, was that the conduct which Congress sought to regulate — gender-related violence — have a "substantial effect" on such commerce. Id. at 1752-53. This requirement was not met with "but-for" reasoning. See id.
The Supreme Court's inquiry focused on the third prong of Lopez "[g]iven § 13981's focus on gender-motivated violence wherever it occurs (rather than violence directed at the instrumentalities of interstate commerce, interstate markets, or things or persons in interstate commerce)." Morrison, 120 S.Ct. at 1749.
Deterrence to engaging in interstate commerce, increases in medical and other costs, and decreases in supply and demand all relate to the obstruction of interstate commerce. Thus, the holding in Morrison clarified that Congress may regulate conduct that obstructs interstate commerce through the Commerce Clause only where that conduct has a "substantial effect" on such commerce — i.e., under the third prong of Lopez.
In Faase, the government argued that a failure to make child support payments is an obstruction of interstate commerce, and that Congress may regulate such conduct pursuant to its power to regulate "things in interstate commerce," i.e., the second Lopez prong. Faase, 227 F.3d at 668-69. The Sixth Circuit acknowledged that "Congress has power to remove impediments to interstate commerce, " noting as examples the Civil Rights Act of 1964, which prohibits racial discrimination that obstructs the flow of interstate commerce, the Hobbs Act, which criminalizes violent actions that interfere with interstate commerce, and the Sherman Act, which prohibits restraints of trade that obstruct interstate commerce.Id. at 669. However, after noting the doubtfulness of the proposition that a person's "passive failure . . . to engage in interstate commerce" is an "obstruction" of interstate commerce subject to Congressional prohibition, the court observed:
[m]ore importantly, the obstruction argument conflates the Lopez categories. A prohibition on obstruction of commerce does not regulate 'a thing' in commerce, nor does obstruction constitute a 'use' of the channels of interstate commerce. . . . Rather, Congress has authority to prohibit activities that interfere with commerce because those activities, taken in the aggregate, substantially affect commerce.Id. at 669.
The Sixth Circuit's reasoning is in accordance with the Supreme Court's federalism jurisprudence as articulated in Lopez and further clarified inMorrison. As previously explained, the Sage court adopted the same reasoning as that urged by the government in Faase, namely, that Congress may regulate the "frustration," i.e., obstruction, of interstate commerce, pursuant to its power to regulate things in interstate commerce. Sage, 92 F.3d at 105-06. When the Second Circuit decided Sage, however, Morrison had not yet been decided, and the Supreme Court's standards for regulating the "obstruction" of interstate commerce were not as clear as they are now. Thus, contrary to the government's contention here, Faase did not apply a different Commerce Clause standard than did Sage or the other Courts of Appeals which have upheld the CSRA. There is only one standard, the one articulated by the Supreme Court articulated in Lopez and Morrison.
The Sixth Circuit's analysis also answers the concerns raised by the Second Circuit that if the CSRA were unconstitutional than so would be legislation such as the Sherman Act and the Hobbs Act. Compare Sage, 92 F.3d at 105 with Faase, 227 F.3d at 669.
The government has not argued that the conduct regulated by the CSRA has a substantial effect on interstate commerce. Instead, the government relies on the holding in Sage that the CSRA regulates things in interstate commerce. See 92 F.3d at 107. The Faase decision, however, is a persuasive articulation of why, under the Supreme Court's current federalism jurisprudence, the CSRA exceeds the permissible bounds of the Commerce Clause, including, specifically, why it does not satisfy the second prong of Lopez. Of course, Faase does not control this Court, nor can it justify a decision by this Court that is contrary to the law in this circuit. However, in light of the Supreme Court's recent jurisprudence, the Sage holding is in doubt.
Nor would such an argument be convincing. As the Faase court reasoned, there is "considerable doubt" that interstate commerce is substantially effected since "[i]n the aggregate, any given state should have about as much money from support payments leaving its borders as entering." Faase, 227 F.3d at 671." Nor can federal regulation be predicated on the possibility of individuals becoming dependent on programs funded with federal money, since this type of "costs of crime" and "national productivity" argument was rejected in Lopez. Id. This type of argument was also rejected in Morrison. See 120 S.Ct. at 1752-53.
The government points out that Morrison only struck down the civil remedies of the VAWA, and the Supreme Court noted that the Courts of Appeals that have considered the issue have uniformly upheld the VAWA's criminal provisions. See 120 S.Ct. at 1752 and n. 5. The VAWA's criminal provisions make it a federal offense to abuse "spouses . . . during interstate travel and crimes committed by spouses . . . who cross State lines to continue the abuse." Id. at 1752 n. 5. The constitutionality of the criminal provisions was not, however, before the Supreme Court. Rather, the Supreme Court simply noted how the Courts of Appeals have held, and explained that these decisions are based on the ground that the VAWA provision falls with the first Lopez category, i.e., regulation of the use of channels of interstate commerce. Id.
The Supreme Court did not delve into the constitutionality of the VAWA criminal provisions in depth, and such an inquiry would not be fruitful here. However, it should be recognized that the statutory language of the CSRA and the VAWA criminal provisions is different. Thus, the constitutionality of the VAWA criminal provisions is not determinative of the constitutionality of the CSRA. The Faase court points out that the CSRA is not merely concerned with recovering child support payments avoided by interstate flight, but seeks to regulate "obligations owed by one family member to another, using diversity of residence as a jurisdictional 'hook.'" Faase, 227 F.3d at 664. Mere diversity of residence is a weaker predicate for federal regulatory jurisdiction than is abusing "[a] spouse . . . during interstate travel and crimes committed by spouses . . . who cross State lines to continue the abuse." Indeed, Faase reasons that the CSRA "hook" is insufficient under the first Lopez prong because the CSRA thereby seeks to "regulate an activity that merely 'implicates' or 'invokes' the use of channels of interstate commerce," and "to hold otherwise would be to collapse the first and second Lopez categories; any regulation of a thing in interstate commerce would necessarily be a regulation of the use of the channels of interstate commerce." 227 F.3d at 668. The Second Circuit did not decide in Sage whether the CSRA satisfies the first Lopez prong. See 92 F.3d at 107. The reasoning of the Faase court is persuasive.
If the CSRA were concerned with individuals who cross state lines in order to avoid their child support obligations, it would be more akin to the VAWA criminal provisions and, arguably, would withstand constitutional scrutiny.
of course, the VAWA civil provisions lack even the jurisdictional hook present in the CSRA, since "§ 13981's focus [is] on gender-motivated violence where it occurs." Morrison, 120 S.Ct. at 1749. For the reasons just stated, however, this does not render mere diversity of residence a sufficient basis for the exercise of Congress's Commerce Clause powers.
Finally, it is obvious that the issue of child support payments is an issue of family law and, thus, traditionally an area of state rather than federal concern. Although King raises a facial challenge, it is worth noting that despite King's having entered into a civil settlement regarding the matter to the satisfaction of the New York State authorities he is still subject to federal criminal prosecution. In other words, the federal government has chosen to regulate a matter traditionally within the states' purview in a matter that is markedly different from how the relevant state has itself chosen to deal with this matter. See Faase, 227 F.3d at 665 (pointing out that under CSRA the defendant, a Michigan resident, was subject to federal criminal prosecution where Michigan's only pertinent criminal statute was rarely enforced and, in any event, did not link criminal liability to judicial child support orders).
The Supreme Court's current federalism jurisprudence teaches that the CSRA, by making it a federal crime to fail to make child support payments — a matter of family law — based merely on the fact that the parent and child reside in different states, upsets the delicate balance "between what is truly national and what is truly local."Morrison, 120 S.Ct. at 1754. Therefore, the CSRA exceeds the permissible limits of Congress's powers under the Commerce Clause, in violation of the Tenth Amendment, and King's indictment must be dismissed.
Conclusion
Therefore, for the reasons set forth above, the motion to dismiss the indictment is granted.