522 U.S. 93 (1997), 96-976, Hudson v. United States

• Citation: 522 U.S. 93, 118 S.Ct. 488, 139 L.Ed.2d 450, 66 U.S.L.W. 4024
• Party Name: HUDSON et al. v. UNITED STATES
• Case Date: December 10, 1997
• Court: U.S. Supreme Court

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522 U.S. 93 (1997)

118 S.Ct. 488, 139 L.Ed.2d 450, 66 U.S.L.W. 4024

HUDSON et al.

v.

UNITED STATES

Case No. 96-976

United States Supreme Court

December 10, 1997

Argued October 8, 1997

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

Syllabus

The Office of the Comptroller of the Currency (OCC) imposed monetary penalties and occupational debarment on petitioners for violating 12 U.S.C. §§ 84(a)(1) and 375b by causing two banks in which they were officials to make certain loans in a manner that unlawfully allowed petitioner Hudson to receive the loans' benefit. When the Government later criminally indicted petitioners for essentially the same conduct, they moved to dismiss under the Double Jeopardy Clause of the Fifth Amendment. The District Court ultimately dismissed the indictments, but the Court of Appeals reversed, relying on United States v. Halper, 490 U.S. 435, 448-449.

Held:

The Double Jeopardy Clause is not a bar to petitioners' later criminal prosecution because the OCC administrative proceedings were civil, not criminal. Pp. 98-105.

(a) The Clause protects only against the imposition of multiple criminal punishments for the same offense. See, e. g., Helvering v. Mitchell, 303 U.S. 391, 399. Halper deviated from this Court's longstanding double jeopardy doctrine in two key respects. First, it bypassed the traditional threshold question whether the legislature intended the particular successive punishment to be "civil" or "criminal" in nature, see, e. g., United States v. Ward, 448 U.S. 242, 248, focusing instead on whether the sanction was so grossly disproportionate to the harm caused as to constitute "punishment." The Court thereby elevated to dispositive status one of the factors listed in Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168-169, for determining whether a statute intended to be civil was so punitive as to transform it into a criminal penalty, even though Kennedy itself emphasized that no one factor should be considered controlling, id., at 169. Second, Halper "assess[ed] the character of the actual sanctions imposed," 490 U.S., at 447, rather than, as Kennedy demanded, evaluating the "statute on its face" to determine whether it provided for what amounted to a criminal sanction, 372 U.S., at 169. Such deviations were ill considered. Halper' s test has proved unworkable, creating confusion by attempting to distinguish between "punitive" and "nonpunitive" penalties. Moreover, some of the ills at which it was directed are addressed by other constitutional provisions.

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Thus, this Court largely disavows Halper 's method of analysis and reaffirms the previous rule exemplified in Ward. Pp. 98-103.

(b) Applying traditional principles to the facts, it is clear that petitioners' criminal prosecution would not violate double jeopardy. The money penalties statutes' express designation of their sanctions as "civil," see §§ 93(b)(1) and 504(a), and the fact that the authority to issue debarment orders is conferred upon the "appropriate Federal banking agenc[ies]," see §§ 1818(e)(1)-(3), establish that Congress intended these sanctions to be civil in nature. Moreover, there is little evidence— much less the "clearest proof" this Court requires, see Ward, supra, at 249—to suggest that the sanctions were so punitive inform and effect as to render them criminal despite Congress' contrary intent, see United States v. Ursery, 518 U.S. 267, 290. Neither sanction has historically been viewed as punishment, Helvering, supra, at 399, and n. 2, 400, and neither involves an affirmative disability or restraint, see Flemming v. Nestor, 363 U.S. 603, 617. Neither comes into play "only" on a finding of scienter, Kennedy, 372 U.S., at 168, since penalties may be assessed under §§ 93(b) and 504, and debarment imposed under § 1818(e)(1)(C)(ii), without regard to the violator's willfulness. That the conduct for which OCC sanctions are imposed may also be criminal, see ibid., is insufficient to render the sanctions criminally punitive, Ursery, supra, at 292, particularly in the double jeopardy context, see United States v. Dixon, 509 U.S. 688, 704. Finally, although the imposition of both sanctions will deter others from emulating petitioners' conduct, see Kennedy, supra, at 168, the mere presence of this traditional goal of criminal punishment is insufficient to render a sanction criminal, as deterrence "may serve civil as well as criminal goals," e. g., Ursery, supra, at 292. Pp. 103-105.

92 F.3d 1026, affirmed.

Rehnquist, C. J., delivered the opinion of the Court, in which O'Connor, Scalia, Kennedy, and Thomas, JJ., joined. Scalia, J., filed a concurring opinion, in which Thomas, J., joined, post, p. 106. Stevens, J., post, p. 106, and Souter, J., post, p. 112, filed opinions concurring in the judgment. Breyer, J., filed an opinion concurring in the judgment, in which Ginsburg, J., joined, post, p. 115.

Bernard J. Rothbaum argued the cause for petitioners. With him on the briefs were Jack L. Neville, Jr., Lawrence S. Robbins, C. Merle Gile, James A. Rolfe, and Lynn Pringle.

Deputy Solicitor General Dreeben argued the cause for the United States. With him on the briefs were Acting

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Solicitor General Dellinger, Acting Assistant Attorney General Keeney, and Paul R. Q. Wolfson. ^[*]

Chief Justice Rehnquist delivered the opinion of the Court.

The Government administratively imposed monetary penalties and occupational debarment on petitioners for violation of federal banking statutes, and later criminally indicted them for essentially the same conduct. We hold that the

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Double Jeopardy Clause of the Fifth Amendment is not a bar to the later criminal prosecution because the administrative proceedings were civil, not criminal. Our reasons for so holding in large part disavow the method of analysis used in United States v. Halper, 490 U.S. 435, 448 (1989), and reaffirm the previously established rule exemplified in United States v. Ward, 448 U.S. 242, 248-249 (1980).

During the early and mid-1980's, petitioner John Hudson was the chairman and controlling shareholder of the First National Bank of Tipton (Tipton) and the First National Bank of Hammon (Hammon).^[1] During the same period, petitioner Jack Rackley was president of Tipton and a member of the board of directors of Hammon, and petitioner Larry Baresel was a member of the board of directors of both Tipton and Hammon.

An examination of Tipton and Hammon led the Office of the Comptroller of the Currency (OCC) to conclude that petitioners had used their bank positions to arrange a series of loans to third parties in violation of various federal banking statutes and regulations. According to the OCC, those loans, while nominally made to third parties, were in reality made to Hudson in order to enable him to redeem bank stock that he had pledged as collateral on defaulted loans.

On February 13, 1989, OCC issued a "Notice of Assessment of Civil Money Penalty." The notice alleged that petitioners had violated 12 U.S.C. §§ 84(a)(1) and 375b (1982 ed.) and 12 CFR §§ 31.2(b) and 215.4(b) (1986) by causing the banks with which they were associated to make loans to nominee borrowers in a manner that unlawfully allowed Hudson to receive the benefit of the loans. App. to Pet. for Cert. 89a. The notice also alleged that the illegal loans resulted in losses to Tipton and Hammon of almost $900,000 and contributed to the failure of those banks. Id., at 97a. However, the notice contained no allegation of any harm to the Government

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as a result of petitioners' conduct. "After taking into account the size of the financial resources and the good faith of [petitioners], the gravity of the violations, the history of previous violations and other matters as justice may require, as required by 12 U.S.C. §§ 93(b)(2) and 504(b)," OCC assessed penalties of $100,000 against Hudson and $50,000 each against Rackley and Baresel. Id., at 89a. On August 31, 1989, OCC also issued a "Notice of Intention to Prohibit Further Participation" against each petitioner. Id., at 99a. These notices, which were premised on the identical allegations that formed the basis for the previous notices, informed petitioners that OCC intended to bar them from further participation in the conduct of "any insured depository institution." Id., at 100a.

In October 1989, petitioners resolved the OCC proceedings against them by each entering into a "Stipulation and Consent Order." These consent orders provided that Hudson, Baresel, and Rackley would pay assessments of $16,500, $15,000, and $12,500 respectively. Id., at 130a, 140a, 135a. In addition, each petitioner agreed not to "participate in any manner" in the affairs of any banking institution without the written authorization of the OCC and all other relevant regulatory agencies.^[2] Id., at 131a, 141a, 136a.

In August 1992, petitioners were indicted in the Western District of Oklahoma in a 22-count indictment on charges of conspiracy, 18 U.S.C. § 371, misapplication of bank funds, §§ 656 and 2, and making false bank entries, § 1005.^[3] The violations charged in the indictment rested on the same lending

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transactions that formed the basis for the prior administrative actions brought by OCC. Petitioners moved to dismiss the indictment on double jeopardy grounds, but the District Court denied the motions. The Court of Appeals affirmed the District Court's holding on the nonparticipation sanction issue, but vacated and remanded to the District Court on the money sanction issue. 14 F.3d 536 (CA10 1994). The District Court on remand granted petitioners' motion to dismiss the indictments. This time the Government appealed, and the Court of Appeals reversed. 92 F.3d 1026 (1996). That court held, following Halper, that the actual fines imposed by the Government were not so grossly disproportional to the proved damages...