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SUPREME COURT OF THE UNITED STATES
_________________
No. 18–1059
_________________
BRIDGET ANNE KELLY, PETITIONER
v.
UNITED STATES
on writ of certiorari to the united states
court of appeals for the third circuit
[May 7, 2020]
Justice Kagan delivered the opinion of the
Court.
For four days in September 2013, traffic ground
to a halt in Fort Lee, New Jersey. The cause was an unannounced
realignment of 12 toll lanes leading to the George Washington
Bridge, an entryway into Manhattan administered by the Port
Authority of New York and New Jersey. For decades, three of those
access lanes had been reserved during morning rush hour for
commuters coming from the streets of Fort Lee. But on these four
days—with predictable consequences—only a single lane was set
aside. The public officials who ordered that change claimed they
were reducing the number of dedicated lanes to conduct a traffic
study. In fact, they did so for a political reason—to punish the
mayor of Fort Lee for refusing to support the New Jersey Governor’s
reelection bid.
Exposure of their behavior led to the criminal
convictions we review here. The Government charged the responsible
officials under the federal statutes prohibiting wire fraud and
fraud on a federally funded program or entity. See 18
U. S. C. §§1343, 666(a)(1)(A). Both those laws target
fraudulent schemes for obtaining property. See §1343 (barring
fraudulent schemes “for obtaining money or property”);
§666(a)(1)(A) (making it a crime to “obtain[ ] by fraud
. . . property”). The jury convicted the defendants, and
the lower courts upheld the verdicts.
The question presented is whether the defendants
committed property fraud. The evidence the jury heard no doubt
shows wrongdoing—deception, corruption, abuse of power. But the
federal fraud statutes at issue do not criminalize all such
conduct. Under settled precedent, the officials could violate those
laws only if an object of their dishonesty was to obtain the Port
Authority’s money or property. The Government contends it was,
because the officials sought both to “commandeer” the Bridge’s
access lanes and to divert the wage labor of the Port Authority
employees used in that effort. Tr. of Oral Arg. 58. We disagree.
The realignment of the toll lanes was an exercise of regulatory
power—something this Court has already held fails to meet the
statutes’ property requirement. And the employees’ labor was just
the incidental cost of that regulation, rather than itself an
object of the officials’ scheme. We therefore reverse the
convictions.
I
The setting of this case is the George
Washington Bridge. Running between Fort Lee and Manhattan, it is
the busiest motor-vehicle bridge in the world. Twelve lanes with
tollbooths feed onto the Bridge’s upper level from the Fort Lee
side. Decades ago, the then-Governor of New Jersey committed to a
set allocation of those lanes for the morning commute. And (save
for the four days soon described) his plan has lasted to this day.
Under the arrangement, nine of the lanes carry traffic coming from
nearby highways. The three remaining lanes, designated by a long
line of traffic cones laid down each morning, serve only cars
coming from Fort Lee.
The case’s cast of characters are public
officials who worked at or with the Port Authority and had
political ties to New Jersey’s then-Governor Chris Christie. The
Port Authority is a bi-state agency that manages bridges, tunnels,
airports, and other transportation facilities in New York and New
Jersey. At the time relevant here, William Baroni was its Deputy
Executive Director, an appointee of Governor Christie and the
highest ranking New Jersey official in the agency. Together with
the Executive Director (a New York appointee), he oversaw “all
aspects of the Port Authority’s business,” including operation of
the George Washington Bridge. App. 21 (indictment). David Wildstein
(who became the Government’s star witness) functioned as Baroni’s
chief of staff. And Bridget Anne Kelly was a Deputy Chief of Staff
to Governor Christie with special responsibility for managing his
relations with local officials. She often worked hand-in-hand with
Baroni and Wildstein to deploy the Port Authority’s resources in
ways that would encourage mayors and other local figures to support
the Governor.
The fateful lane change arose out of one mayor’s
resistance to such blandishments. In 2013, Governor Christie was up
for reelection, and he wanted to notch a large, bipartisan victory
as he ramped up for a presidential campaign. On his behalf, Kelly
avidly courted Democratic mayors for their endorsements—among them,
Mark Sokolich of Fort Lee. As a result, that town received some
valuable benefits from the Port Authority, including an expensive
shuttle-bus service. But that summer, Mayor Sokolich informed
Kelly’s office that he would not back the Governor’s campaign. A
frustrated Kelly reached out to Wildstein for ideas on how to
respond. He suggested that getting rid of the dedicated Fort Lee
lanes on the Bridge’s toll plaza would cause rush-hour traffic to
back up onto local streets, leading to gridlock there. Kelly agreed
to the idea in an admirably concise e-mail: “Time for some traffic
problems in Fort Lee.” App. 917 (trial exhibit). In a later phone
conversation, Kelly confirmed to Wildstein that she wanted to
“creat[e] a traffic jam that would punish” Mayor Sokolich and “send
him a message.”
Id., at 254 (Wildstein testimony). And after
Wildstein relayed those communications, Baroni gave the needed
sign-off.
To complete the scheme, Wildstein then devised
“a cover story”—that the lane change was part of a traffic study,
intended to assess whether to retain the dedicated Fort Lee lanes
in the future.
Id., at 264. Wildstein, Baroni, and Kelly all
agreed to use that “public policy” justification when speaking with
the media, local officials, and the Port Authority’s own employees.
Id., at 265. And to give their story credibility, Wildstein
in fact told the Port Authority’s engineers to collect “some
numbers on how[ ] far back the traffic was delayed.”
Id., at 305. That inquiry bore little resemblance to the
Port Authority’s usual traffic studies. According to one engineer’s
trial testimony, the Port Authority never closes lanes to study
traffic patterns, because “computer-generated model[ing]” can
itself predict the effect of such actions.
Id., at 484
(testimony of Umang Patel); see
id., at 473–474 (similar
testimony of Victor Chung). And the information that the Port
Authority’s engineers collected on this singular occasion was
mostly “not useful” and “discarded.”
Id., at 484–485 (Patel
testimony). Nor did Wildstein or Baroni show any interest in the
data. They never asked to review what the engineers had found;
indeed, they learned of the results only weeks later, after a
journalist filed a public-records request. So although the
engineers spent valuable time assessing the lane change, their work
was to no practical effect.
Baroni, Wildstein, and Kelly also agreed to
incur another cost—for extra toll collectors—in pursuit of their
object. Wildstein’s initial thought was to eliminate all three
dedicated lanes by not laying down any traffic cones, thus turning
the whole toll plaza into a free-for-all. But the Port Authority’s
chief engineer told him that without the cones “there would be a
substantial risk of sideswipe crashes” involving cars coming into
the area from different directions.
Id., at 284 (Wildstein
testimony). So Wildstein went back to Baroni and Kelly and got
their approval to keep one lane reserved for Fort Lee traffic. That
solution, though, raised another complication. Ordinarily, if a
toll collector on a Fort Lee lane has to take a break, he closes
his booth, and drivers use one of the other two lanes. Under the
one-lane plan, of course, that would be impossible. So the Bridge
manager told Wildstein that to make the scheme work, “an extra toll
collector” would always have to be “on call” to relieve the regular
collector when he went on break.
Id., at 303. Once again,
Wildstein took the news to Baroni and Kelly. Baroni thought it was
“funny,” remarking that “only at the Port Authority would [you]
have to pay a toll collector to just sit there and wait.”
Ibid. Still, he and Kelly gave the okay.
The plan was now ready, and on September 9 it
went into effect. Without advance notice and on the (traffic-heavy)
first day of school, Port Authority employees placed traffic cones
two lanes further to the right than usual, restricting cars from
Fort Lee to a single lane. Almost immediately, the town’s streets
came to a standstill. According to the Fort Lee Chief of Police,
the traffic rivaled that of 9/11, when the George Washington Bridge
had shut down. School buses stood in place for hours. An ambulance
struggled to reach the victim of a heart attack; police had trouble
responding to a report of a missing child. Mayor Sokolich tried to
reach Baroni, leaving a message that the call was about an “urgent
matter of public safety.”
Id., at 323. Yet Baroni failed to
return that call or any other: He had agreed with Wildstein and
Kelly that they should all maintain “radio silence.”
Id., at
270. A text from the Mayor to Baroni about the locked-in school
buses—also unanswered—went around the horn to Wildstein and Kelly.
The last replied: “Is it wrong that I am smiling?”
Id., at
990 (Kelly text message). The three merrily kept the lane
realignment in place for another three days. It ended only when the
Port Authority’s Executive Director found out what had happened and
reversed what he called their “abusive decision.”
Id., at
963 (e-mail of Patrick Foye).
The fallout from the scheme was swift and
severe. Baroni, Kelly, and Wildstein all lost their jobs. More to
the point here, they all ran afoul of federal prosecutors.
Wildstein pleaded guilty to conspiracy charges and agreed to
cooperate with the Government. Baroni and Kelly went to trial on
charges of wire fraud, fraud on a federally funded program or
entity (the Port Authority), and conspiracy to commit each of those
crimes. The jury found both of them guilty on all counts. The Court
of Appeals for the Third Circuit affirmed, rejecting Baroni’s and
Kelly’s claim that the evidence was insufficient to support their
convictions. See
United States v.
Baroni, 909 F.3d
550, 560–579 (2018). We granted certiorari. 588 U. S. ___
(2019).
II
The Government in this case needed to prove
property fraud. The federal wire fraud statute makes it a
crime to effect (with use of the wires) “any scheme or artifice to
defraud, or for obtaining money or property by means of false or
fraudulent pretenses, representations, or promises.” 18
U. S. C. §1343. Construing that disjunctive language as a
unitary whole, this Court has held that “the money-or- property
requirement of the latter phrase” also limits the former.
McNally v.
United States,
483
U.S. 350, 358 (1987). The wire fraud statute thus prohibits
only deceptive “schemes to deprive [the victim of] money or
property.”
Id., at 356. Similarly, the federal-program fraud
statute bars “obtain[ing] by fraud” the “property” (including
money) of a federally funded program or entity like the Port
Authority. §666(a)(1)(A). So under either provision, the Government
had to show not only that Baroni and Kelly engaged in deception,
but that an “object of the[ir] fraud [was] ‘property.’ ”
Cleveland v.
United States,
531 U.S.
12, 26 (2000).[
1]
That requirement, this Court has made clear,
prevents these statutes from criminalizing all acts of dishonesty
by state and local officials. Some decades ago, courts of appeals
often construed the federal fraud laws to “proscribe[ ]
schemes to defraud citizens of their intangible rights to honest
and impartial government.”
McNally, 483 U. S., at 355.
This Court declined to go along. The fraud statutes, we held in
McNally, were “limited in scope to the protection of
property rights.”
Id., at 360. They did not authorize
federal prosecutors to “set[ ] standards of disclosure and
good government for local and state officials.”
Ibid.
Congress responded to that decision by enacting a law barring
fraudulent schemes “to deprive another of the intangible right of
honest services”—regardless of whether the scheme sought to divest
the victim of any property. §1346. But the vagueness of that
language led this Court to adopt “a limiting construction,”
confining the statute to schemes involving bribes or kickbacks.
Skilling v.
United States,
561
U.S. 358, 405, 410 (2010). We specifically rejected a proposal
to construe the statute as encompassing “undisclosed self-dealing
by a public official,” even when he hid financial interests.
Id., at 409. The upshot is that federal fraud law leaves
much public corruption to the States (or their electorates) to
rectify. Cf. N. J. Stat. Ann. §2C:30–2 (West 2016)
(prohibiting the unauthorized exercise of official functions). Save
for bribes or kickbacks (not at issue here), a state or local
official’s fraudulent schemes violate that law only when, again,
they are “for obtaining money or property.” 18 U. S. C.
§1343; see §666(a)(1)(A) (similar).
The Government acknowledges this much, but
thinks Baroni’s and Kelly’s convictions remain valid. According to
the Government’s theory of the case, Baroni and Kelly “used a lie
about a fictional traffic study” to achieve their goal of
reallocating the Bridge’s toll lanes. Brief for United States 43.
The Government accepts that the lie itself—
i.e., that the
lane change was part of a traffic study, rather than political
payback—could not get the prosecution all the way home. See
id., at 43–44. As the Government recognizes, the deceit must
also have had the “object” of obtaining the Port Authority’s money
or property.
Id., at 44. The scheme met that requirement,
the Government argues, in two ways. First, the Government claims
that Baroni and Kelly sought to “commandeer[ ]” part of the
Bridge itself—to “take control” of its “physical lanes.” Tr. of
Oral Arg. 58–59. Second, the Government asserts that the two
defendants aimed to deprive the Port Authority of the costs of
compensating the traffic engineers and back-up toll collectors who
performed work relating to the lane realignment. On either theory,
the Government insists, Baroni’s and Kelly’s scheme targeted “a
‘species of valuable right [or] interest’ that constitutes
‘property’ under the fraud statutes.” Brief for United States 22
(quoting
Pasquantino v.
United States,
544 U.S.
349, 356 (2005)).
We cannot agree. As we explain below, the
Government could not have proved—on either of its theories, though
for different reasons—that Baroni’s and Kelly’s scheme was
“directed at the [Port Authority’s] property.” Brief for United
States 44. Baroni and Kelly indeed “plotted to reduce [Fort Lee’s]
lanes.”
Id., at 34. But that realignment was a
quintessential exercise of regulatory power. And this Court has
already held that a scheme to alter such a regulatory choice is not
one to appropriate the government’s property. See
Cleveland,
531 U. S., at 23. By contrast, a scheme to usurp a public
employee’s paid time is one to take the government’s property. But
Baroni’s and Kelly’s plan never had that as an object. The use of
Port Authority employees was incidental to—the mere cost of
implementing—the sought-after regulation of the Bridge’s toll
lanes.
Start with this Court’s decision in
Cleveland, which reversed another set of federal fraud
convictions based on the distinction between property and
regulatory power. The defendant there had engaged in a deceptive
scheme to influence, to his own benefit, Louisiana’s issuance of
gaming licenses. The Government argued that his fraud aimed to
deprive the State of property by altering its licensing decisions.
This Court rejected the claim. The State’s “intangible rights of
allocation, exclusion, and control”—its prerogatives over who
should get a benefit and who should not—do “not create a property
interest.”
Ibid. Rather, the Court stated, those rights
“amount to no more and no less than” the State’s “sovereign power
to regulate.”
Ibid.; see
id., at 20 (“[T]he State’s
core concern” in allocating gaming licenses “is
regulatory”). Or said another way: The defendant’s fraud
“implicate[d] the Government’s role as sovereign” wielding
“traditional police powers”—not its role “as property holder.”
Id., at 23–24. And so his conduct, however deceitful, was
not property fraud.
The same is true of the lane realignment.
Through that action, Baroni and Kelly changed the traffic flow onto
the George Washington Bridge’s tollbooth plaza. Contrary to the
Government’s view, the two defendants did not “commandeer” the
Bridge’s access lanes (supposing that word bears its normal
meaning). They (of course) did not walk away with the lanes; nor
did they take the lanes from the Government by converting them to a
non-public use. Rather, Baroni and Kelly regulated use of the
lanes, as officials responsible for roadways so often do—allocating
lanes as between different groups of drivers. To borrow
Cleveland’s words, Baroni and Kelly exercised the regulatory
rights of “allocation, exclusion, and control”—deciding that
drivers from Fort Lee should get two fewer lanes while drivers from
nearby highways should get two more. They did so, according to all
the Government’s evidence, for bad reasons; and they did so by
resorting to lies. But still,
what they did was alter a
regulatory decision about the toll plaza’s use—in effect, about
which drivers had a “license” to use which lanes. And under
Cleveland, that run-of-the-mine exercise of regulatory power
cannot count as the taking of property.
A government’s right to its employees’ time and
labor, by contrast, can undergird a property fraud prosecution.
Suppose that a mayor uses deception to get “on-the-clock city
workers” to renovate his daughter’s new home.
United States
v.
Pabey, 664 F.3d 1084, 1089 (CA7 2011). Or imagine that a
city parks commissioner induces his employees into doing gardening
work for political contributors. See
United States v.
Delano,
55 F.3d 720, 723 (CA2 1995). As both defendants agree, the cost
of those employees’ services would qualify as an economic loss to a
city, sufficient to meet the federal fraud statutes’ property
requirement. See Brief for Respondent Baroni 27; Tr. of Oral Arg.
16. No less than if the official took cash out of the city’s bank
account would he have deprived the city of a “valuable
entitlement.”
Pasquantino, 544 U. S., at 357.
But that property must play more than some bit
part in a scheme: It must be an “object of the fraud.”
Id.,
at 355; see Brief for United States 44;
supra, at 6–7. Or
put differently, a property fraud conviction cannot stand when the
loss to the victim is only an incidental byproduct of the
scheme.[
2] In the
home-and-garden examples cited above, that constraint raised no
problem: The entire point of the fraudsters’ plans was to obtain
the employees’ services. But now consider the difficulty if the
prosecution in
Cleveland had raised a similar employee-labor
argument. As the Government noted at oral argument here, the fraud
on Louisiana’s licensing system doubtless imposed costs calculable
in employee time: If nothing else, some state worker had to process
each of the fraudster’s falsified applications. But still, the
Government acknowledged, those costs were “[i]ncidental.” Tr. of
Oral Arg. 63. The object of the scheme was never to get the
employees’ labor: It was to get gaming licenses. So the labor costs
could not sustain the conviction for property fraud. See
id., at 62–63.
This case is no different. The time and labor of
Port Authority employees were just the implementation costs of the
defendants’ scheme to reallocate the Bridge’s access lanes. Or said
another way, the labor costs were an incidental (even if foreseen)
byproduct of Baroni’s and Kelly’s regulatory object. Neither
defendant sought to obtain the services that the employees
provided. The back-up toll collectors—whom Baroni joked would just
“sit there and wait”—did nothing he or Kelly thought useful. App.
303; see
supra, at 5. Indeed, those workers came onto the
scene only because the Port Authority’s chief engineer managed to
restore one of Fort Lee’s lanes to reduce the risk of traffic
accidents. See
supra, at 5. In the defendants’ original
plan, which scrapped all reserved lanes, there was no reason for
extra toll collectors. And similarly, Baroni and Kelly did not hope
to obtain the data that the traffic engineers spent their time
collecting. By the Government’s own account, the traffic study the
defendants used for a cover story was a “sham,” and they never
asked to see its results. Brief for United States 4, 32; see
supra, at 5. Maybe, as the Government contends, all of this
work was “needed” to realize the final plan—“to accomplish what
[Baroni and Kelly] were trying to do with the [B]ridge.” Tr. of
Oral Arg. 60. Even if so, it would make no difference. Every
regulatory decision (think again of
Cleveland, see
supra, at 11) requires the use of some employee labor. But
that does not mean every scheme to alter a regulation has that
labor as its object. Baroni’s and Kelly’s plan aimed to impede
access from Fort Lee to the George Washington Bridge. The cost of
the employee hours spent on implementing that plan was its
incidental byproduct.
To rule otherwise would undercut this Court’s
oft- repeated instruction: Federal prosecutors may not use property
fraud statutes to “set[ ] standards of disclosure and good
government for local and state officials.”
McNally, 483
U. S., at 360; see
supra, at 7. Much of governance
involves (as it did here) regulatory choice. If U. S.
Attorneys could prosecute as property fraud every lie a state or
local official tells in making such a decision, the result would
be—as
Cleveland recognized—“a sweeping expansion of federal
criminal jurisdiction.” 531 U. S., at 24. And if those
prosecutors could end-run
Cleveland just by pointing to the
regulation’s incidental costs, the same ballooning of federal power
would follow. In effect, the Federal Government could use the
criminal law to enforce (its view of ) integrity in broad
swaths of state and local policymaking. The property fraud statutes
do not countenance that outcome. They do not “proscribe[ ]
schemes to defraud citizens of their intangible rights to honest
and impartial government.”
McNally, 483 U. S., at 355;
see
supra, at 7. They bar only schemes for obtaining
property.
III
As Kelly’s own lawyer acknowledged, this case
involves an “abuse of power.” Tr. of Oral Arg. 19. For no reason
other than political payback, Baroni and Kelly used deception to
reduce Fort Lee’s access lanes to the George Washington Bridge—and
thereby jeopardized the safety of the town’s residents. But not
every corrupt act by state or local officials is a federal crime.
Because the scheme here did not aim to obtain money or property,
Baroni and Kelly could not have violated the federal-program fraud
or wire fraud laws. We therefore reverse the judgment of the Court
of Appeals and remand the case for further proceedings consistent
with this opinion.
It is so ordered.
