In Southern Union Co. v. United States, No. 11-94 (June 21, 2012), the Supreme Court held that the rule it had established in Apprendi v. New Jersey, 530 U.S. 466, 120 S. Ct. 2348, 147 L. Ed. 2d 435 (2000) – that the Sixth Amendment’s jury trial guarantee requires that any fact (other than of a prior conviction) that increases the maximum punishment for a particular crime must be proven to a jury beyond a reasonable doubt – applies to the imposition of criminal fines as well as to imprisonment.
At trial, Southern Union Co., a natural gas distributor, was found guilty of unlawfully storing liquid mercury at a subsidiary’s facility in Rhode Island. At sentencing, the probation office calculated a maximum fine of $38.1 million, based on its determination of the duration of the violation. Southern Union Co. argued that the jury was not asked to determine the precise duration of the violation, and any fine greater than one single-day statutory penalty of $50,000 violated the Apprendi rule. The government acknowledged that the jury was not asked to specify the duration of the violation, but argued that Apprendi does not apply to criminal fines. The District Court disagreed. It ruled, as Southern Union had argued, that Apprendi applied to criminal fines, but concluded from the “content and context of the verdict all together” that the jury had found the length of the violation (762 days) that the probation office’s fine was based on, and approved the maximum fine. The District Court then imposed a fine of $6 million and a “community service” obligation of $12 million. On appeal, the First Circuit disagreed with the District Court that the jury verdict necessarily contained within it a finding of a 762-day violation, but nevertheless affirmed the sentence, holding that the Apprendi rule does not apply to criminal fines.
Unlike the First Circuit, other circuits had been applying the Apprendi rule to criminal fines, and the Supreme Court granted certiorari to resolve the conflict. In a 6-3 opinion, the Supreme Court reversed the First Circuit. Noting that Apprendi’s “core concern” is to reserve to the jury the determination of facts that warrant punishment for a specific statutory offense, the Court concluded that it saw “no principled basis under Apprendi for treating criminal fines differently” from sentences involving imprisonment. Writing for the majority, Justice Sotomayor stated that where a potential fine is sufficiently substantial to trigger the Sixth Amendment’s jury trial guarantee, Apprendi applies in full.
The decision is of particular relevance in corporate antitrust cases. The maximum fine for corporations under the Sherman Act (15 U.S.C. §1) is $100 million, but such antitrust violations are also subject to an alternative fine statute (18 U.S.C. § 3571) which permits a fine of up to twice the gross financial loss or gain resulting from a violation. Due to the size of losses typical in cartel cases, the alternative fine statute is frequently implicated. The Southern Union decision has no direct application to the fines the government may impose as a result of plea agreements, but companies or individuals face the risk of higher exposure under the alternative fine statute if they choose to fight charges and go to trial rather than entering into plea agreements.
Under the Court’s Southern Union ruling, the government will have to include in its charging documents the facts that could enhance a criminal fine and will bear the burden at trial of proving them to a jury beyond a reasonable doubt. Because the ruling will make it more difficult for the government to obtain such enhanced penalties at trial, it may afford companies more leverage in conducting their plea negotiations. It should be noted, however, that the government’s recent success in its trial against Taiwanese LCD panel producer AU Optronics – which resulted in a jury finding of at least $500 million in illegal gains due to the conspiracy – demonstrates that the heightened burden of proof is one that the government can meet.