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The Conrad Black Saga Part II



One of the charges that the prosecution added against Black was obstruction of justice. This charge was added at the last minute and was not in the initial indictment. The charge related to the fact that Black removed boxes of documents from the offices of Hollinger Inc. (which was the parent company of Hollinger International the American company based in Chicago). The order not to remove the boxes had been issued by a Canadian judge in Toronto. (As an aside, wouldn�t a simple contempt of court charge have sufficed?)

What jurisdiction did the United States have over Black for an event that took place on foreign soil? Putting aside the question of whether the prosecution already had these documents, so it is not clear that his removal obstructed any investigation; the more important and troubling aspect of this case is the creeping federalization of American law not just inside the United States but abroad. There have been many cases where the American courts and prosecutors have begun asserting jurisdiction over events that happen abroad. Traditionally they found a nexus to some event in the United States. The Blackberry injunction by NTP against RIM affected a relay station located in Canada. The arrest of a British executive for running an offshore online gambling site was used by Americans in the United States. But now, the courts and prosecutors are asserting jurisdiction over events abroad unconnected to any local victims whatsoever.

An American faces charges in the United States for sex tourism abroad. The Ninth Circuit affirmed another conviction under the Protect Act against another individual who engaged in sex tourism, holding that it was within Congress�s authority to regulate foreign commerce to have jurisdiction over such activities. (United States v. Clark, 435 F.3d 1100 (9th Cir. 2006).)

If you have heard this before (i.e. Congress�s authority to regulate commerce), you are correct! This is precisely what Congress and the Courts have used to eviscerate any meaningful federalism in the United States. The one blip of hope with Lopez disappeared after the Raich decision.

Americans should be concerned about this creeping external federalism. Just as we should be concerned about creeping federalism in corporate law (See Bainbridge or Ribstein on this for details) or any other areas of law, we should be concerned about this creeping federalism when it comes to foreign nations. The reason is as follows. When states were allowed to experiment, the citizens of the United States had the option of locating in those states where the local policies met their political preferences. With the rise of the federal state, this option was foreclosed. But at least, corporations and some individuals could locate in other countries to take advantage of competitive environments. This ensures that at least in the end, American corporations (and hence American consumers who can enjoy cheaper prices and American shareholders who can enjoy healthier profits) are not completely disadvantaged by the uniformity inside the U.S.

But now, will Congress seek to regulate the conduct of Americans and American corporations all over the world? The dissenting judge points out that even a strained reading of Raich does not give rise to the claim that criminalizing travel for the purpose of having sex with children is within Congress�s commerce clause powers. But as we have seen before, the courts cannot seem to find that magic bright line to constrain Congress. (Bruce Johnsen and myself offered one such solution in the arena of antitrust). Today Congress regulates sex tourism, truly a noble cause, but tomorrow what else will it decide on. Will it outlaw dog-fighting in foreign lands? Will Congress criminalize paying workers in developing countries less than the minimum wage in the United States? Will Congress criminalize not following the mandates of Sarbanes-Oxley even if the American company is only listed on a foreign exchange? What then will be the result? The answer depends on your view of whether federalism is good or bad. If the growth of Congressional power concerns you, then these latest cases should cause you more concern; if not, then not.

I hope to take a look at the political economy of why we have ended up where are today in terms of the growing federal criminal apparatus in tomorrow�s post, and what possible solutions can be offered.

 

 


Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.