92 F.3d 1444 (6th Cir. 1996), 95-5007, United States v. Wall

Docket Nº:Nathan WALL (95-5007) and Donald Wall (95-5008),
Citation:92 F.3d 1444
Party Name:UNITED STATES of America, Plaintiff-Appellee, v.
Case Date:August 15, 1996
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 1444

92 F.3d 1444 (6th Cir. 1996)

UNITED STATES of America, Plaintiff-Appellee,

v.

Nathan WALL (95-5007) and Donald Wall (95-5008),

Defendants-Appellants.

Nos. 95-5007, 95-5008.

United States Court of Appeals, Sixth Circuit

August 15, 1996

Argued Oct. 2, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Oct.

22, 1996.[*]

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Van S. Vincent, Asst. U.S. Atty. (argued and briefed), Office of U.S. Atty., Nashville, TN, for plaintiff-appellee.

Cecil D. Branstetter (briefed), Carrol Kilgore (argued and briefed), Branstetter, Kilgore, Stranch & Jennings, Nashville, TN, for defendant-appellant.

Before: BOGGS and SILER, Circuit Judges, and COFFMAN, District Judge. [*]

SILER, J., delivered the opinion of the court, in which COFFMAN, D.J., joined. BOGGS, J. (pp. 1454-85), delivered a separate opinion concurring in part and dissenting in part.

SILER, Circuit Judge.

Defendants Nathan and Donald Wall appeal the district court's denial of their motion to dismiss the information charging them with operating an illegal gambling business. They entered conditional pleas of guilty to a violation of 18 U.S.C. § 1955. 1 Defendants aver constitutional and statutory construction issues in this appeal. First, they attack the constitutionality of § 1955. Next, they contend that two essential requirements for conviction under § 1955 were not met: five persons did not "conduct" a gambling operation, and no state offense was violated. Finally, defendant Donald Wall alleges that the district court misapplied the United States Sentencing Guidelines in enhancing his sentence. For reasons stated hereafter, we affirm the district court.

Defendants owned and operated Amusement, Inc., a business that leased video poker machines to various establishments in Nashville, Tennessee. In addition to defendants, Amusement, Inc. had seven employees: a president, a junior technician, two route men, an office secretary, a part-time bookkeeper, and a manual laborer. The video poker machines were of a type that displayed the number of accumulated "credits" that players won. These credits could be used for replays or, at the player's request, the lessee of the machine would disburse money for the credits. Amusement, Inc. would reimburse the lessee for any money distributed in this manner.

I. The Constitutionality of 18 U.S.C. § 1955

Section 1955 of Title 18 of the United States Code criminalizes illegal gambling operations of a certain size. Defendants contend that § 1955 is void as a prohibited exercise of congressional power.

This century has seen the aggrandizement of power by the legislative branch of our government heretofore unknown. Nonetheless,

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the power of Congress is by no means absolute: it may exercise only those powers enumerated in the Constitution. McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 4 L.Ed. 579 (1819). Expressly delegated to Congress is the ability "[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." U.S. CONST., art. I, § 8, cl. 3. The interpretation of this seemingly innocuous clause has a storied history in Supreme Court jurisprudence that is well-documented elsewhere. 2

Action by Congress pursuant to the Commerce Clause must be examined by the courts to verify that the legislative body acted within its Constitutional authority. This court has examined and upheld the constitutionality of 18 U.S.C. § 1955. United States v. Pack, 16 F.3d 1222, No. 92-3872, 1994 WL 19945, at ** 1-** 2 (6th Cir. Jan. 25, 1994) (per curiam); United States v. Leon, 534 F.2d 667, 673-74 (6th Cir.1976). Other circuits have similarly upheld § 1955 as an appropriate exercise of Congress's power. See, e.g., United States v. Sacco, 491 F.2d 995, 999-1001 (9th Cir.1974) (en banc). To this court's knowledge, no other court has found § 1955 to be constitutionally infirm.

Before April 1995, a discussion on the constitutional viability of § 1955 would have terminated at this point. This statute would have been summarily upheld as a valid exercise of congressional power under the Commerce Clause. For the first time in over fifty years, however, the Supreme Court invalidated a federal statute because Congress had exceeded its authority under the Commerce Clause. United States v. Lopez, 514 U.S. 549, ----, 115 S.Ct. 1624, 1634, 131 L.Ed.2d 626 (1995). Thus, this court must renew its examination of § 1955.

In Lopez, the Supreme Court invalidated the Gun-Free School Zones Act, 18 U.S.C. § 922(q). 3 Canvassing past Commerce Clause decisions, the Court identified three categories of activities that Congress may regulate under its commerce power: (1) "the use of the channels of interstate commerce"; (2) "the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities"; and (3) "those activities having a substantial relation to interstate commerce, i.e., those activities that substantially affect interstate commerce." Lopez, 514 U.S. at ---- - ----, 115 S.Ct. at 1629-30 (citation omitted). The Court concluded that § 922(q), classified in the third category, failed to substantially affect interstate commerce.

In Lopez, the Court distinguished § 922(q) from other regulatory statutes. 4 First, it

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emphasized the non-commercial nature of the statute:

Section 922(q) is a criminal statute that by its terms has nothing to do with "commerce" or any sort of economic enterprise, however broadly one might define those terms. Section 922(q) is not an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated. It cannot, therefore, be sustained under our cases upholding regulations of activities that arise out of or are connected with a commercial transaction, which viewed in the aggregate, substantially affects interstate commerce.

Lopez, 514 U.S. at ---- - ----, 115 S.Ct. at 1630-31 (footnote omitted). On its face, § 922(q) did not regulate commercial activity; it did not regulate commercial actors. The statute was therefore non-commercial.

The second distinction hailed by the Court was that § 922(q) "contains no jurisdictional element which would ensure, through case-by-case inquiry, that the firearm possession in question affects interstate commerce." Lopez, 514 U.S. at ----, 115 S.Ct. at 1631. The Court emphasized that "[n]either the statute nor its legislative history contain[s] express congressional findings regarding the effects upon interstate commerce of gun possession in a school zone." Id. at ----, 115 S.Ct. at 1631 (quotation omitted). 5 In sum, "unlike the earlier cases to come before the Court here neither the actors nor their conduct have a commercial character, and neither the purposes nor the design of the statute have an evident commercial nexus." Lopez, 514 U.S. at ----, 115 S.Ct. at 1640 (Kennedy, J., concurring).

Significantly, the Court rejected two arguments that would justify the lack of congressional findings. First, § 922(q) represented a "sharp break" with prior firearm regulation. The "importation of previous findings ... [would therefore be] especially inappropriate." Lopez, 514 U.S. at ----, 115 S.Ct. at 1632. Second, and more important, the Court was unwilling to construct a tenuous argument that possession of a firearm in a school zone results in violent crime, which affects interstate commerce through increasing insurance costs and decreasing educational opportunities. Id. at ----, 115 S.Ct. at 1632. 6 Were this argument successful, the Court reasoned, "it is difficult to perceive any limitation on federal power, even in areas such as criminal law enforcement or education where States historically have been sovereign." Id. at ----, 115 S.Ct. at 1632.

The potential reach of Lopez has been debated. 7 The Supreme Court itself conceded that Lopez would result in legal uncertainty. Id. at ---- - ----, 115 S.Ct. at 1633-34 ("These [determinations of whether an

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activity is commercial] are not precise formulations, and in the nature of things they cannot be."). Criminal defendants across the country have exploited this uncertainty, citing Lopez in hopes that the statutes underlying their convictions will similarly be invalidated. Most courts have resisted urgings to extend Lopez beyond § 922(q). See, e.g., United States v. Chesney, 86 F.3d 564 (6th Cir.1996) (upholding 18 U.S.C. § 922(g), which prohibits the possession of a firearm by a felon); United States v. Turner, 77 F.3d 887 (6th Cir.1996) (same); United States v. Michael R., 90 F.3d 340 (9th Cir.1996) (upholding 18 U.S.C. § 922(x)(2), which prohibits juvenile possession of a handgun); United States v. Staples, 85 F.3d 461 (9th Cir.1996) (upholding 18 U.S.C. § 924(c)(1), which prohibits the use of a firearm while engaged in drug trafficking); United States v. Folen, 84 F.3d 1103 (8th Cir.1996) (upholding 18 U.S.C. § 842(i), which prohibits felons from possessing explosives); United States v. Lomayaoma, 86 F.3d 142 (9th Cir.1996) (upholding the Indian Major Crimes Act, 18 U.S.C. § 1153); United States v. Wilson, 73 F.3d 675 (7th Cir.1995) (upholding the Freedom of Access to Clinic Entrances Act, 18 U.S.C. § 248(a)(1)); United States v. Sherlin, 67 F.3d 1208 (6th Cir.1995) (upholding federal arson statute, 18 U.S.C. § 844(i)), cert. denied, --- U.S. ----, 116 S.Ct. 795, 133 L.Ed.2d 744 (1996) and --- U.S. ----, 116 S.Ct. 1548, 134 L.Ed.2d 650 (1996); United States v. Bolton, 68 F.3d 396 (10th Cir.1995) (upholding the Hobbs Act, 18 U.S.C. § 1951), cert. denied, --- U.S. ----, 116 S.Ct. 966, 133 L.Ed.2d 887 (1996); United States v. Leshuk, 65 F.3d 1105 (4th Cir.1995) (upholding 21 U.S.C. § 841(a)(1)...

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