In Snyder v. United States, the Supreme Court of the United States held that it is not a federal crime for state and local officials to accept gratuities under 18 U.S.C. § 666. In so doing, the Court overturned the decision of the US Court of Appeals for the Seventh Circuit and resolved a split among the First, Second, Fifth, Sixth, Seventh and Eighth Circuits.

The majority opinion in Snyder, penned by Justice Brett Kavanaugh, used text-based principles of statutory interpretation, legislative history and notions of fairness to conclude that Congress only intended for 18 U.S.C. § 666 to criminalize the acceptance of bribes, not gratuities. According to the Court, bribes are payments to public officials made with the purpose of influencing that official before they act. Gratuities, on the other hand, are payments made to a public official after they act as a form of reward or token of appreciation.

The Court’s holding in Snyder is relatively narrow. The majority opinion does not affect 18 U.S.C. § 201(b) or (c), which prohibit federal officials from accepting bribes or gratuities. The opinion also does not affect any state or local laws that may independently prohibit state and local officials from accepting gratuities.

IN DEPTH

BACKGROUND

The Court based its holding in part on the statute prohibiting bribes and gratuities involving federal officials. In 1962, Congress passed 18 U.S.C. § 201(b) and (c), which respectively contain comprehensive prohibitions on the ability of federal officials to accept bribes and gratuities. Importantly, 18 U.S.C. § 201(b) establishes a 15-year maximum prison sentence for bribery, while 18 U.S.C. § 201(c) only establishes a two-year maximum prison sentence for the acceptance of gratuities.

In the 1980s, Congress extended the federal prohibition on bribery and gratuities to state and local officials by passing 18 U.S.C. § 666. However, just two years after the initial law was passed, Congress amended the statute. Under the current text, 18 U.S.C. § 666 makes it a crime for state and local officials to “corruptly” solicit, accept or agree to accept “anything of value” “intending to be influenced or rewarded in connection with” any official business or transaction worth $5,000 or more. That crime currently carries a 10-year maximum prison sentence.

The Court’s decision overturned the conviction of James Snyder, who served as the mayor of Portage, Indiana, during the early 2010s. In 2013, while Snyder was mayor, the city of Portage awarded two contracts to a local trucking company which were collectively valued at approximately $1.1 million. In 2014, the trucking company cut a $13,000 check to Snyder. Shortly thereafter, the Federal Bureau of Investigation and federal prosecutors charged Snyder, under 18 U.S.C. § 666, with illegally accepting a gratuity in connection with the city’s trucking contract. Snyder was ultimately convicted by a federal jury and sentenced to 21 months in prison. On appeal, the US Court of Appeals for the Seventh Circuit affirmed his conviction, but the Supreme Court granted certiorari to answer the question of whether 18 U.S.C. § 666 makes it a federal crime for state and local officials to accept gratuities for their past official acts.

OPINION OF THE SUPREME COURT

The Supreme Court reversed Snyder’s conviction in a 6-3 decision, with Justice Kavanaugh delivering the opinion of the Court, in which Justices Alito, Gorsuch, Roberts, Thomas and Barrett joined in full. Justice Gorsuch additionally wrote his own concurrence in the case, while Justices Jackson, Sotomayor and Kagan wrote in dissent.

The majority held that 18 U.S.C. § 666 does not make it a federal crime for state and local officials to accept gratuities. Justice Kavanaugh’s opinion listed a number of rationales for the majority’s conclusion but focused on the text of the statute and legislative history. Specifically, the majority’s reasoning focused on comparing and contrasting the language of 18 U.S.C. § 666 with the language of the federal bribery and gratuities statutes (18 U.S.C. § 201(b) and (c), respectively). Of note, 18 U.S.C. § 201(c) authorizes a maximum sentence of two years in prison for a federal official who accepts a gratuity; under the government’s reading of 18 U.S.C. § 666, a local official guilty of the same conduct would face a maximum sentence of 10 years. Ultimately, the court concluded that the similarities between 18 U.S.C. § 666 and 18 U.S.C. § 201(b) meant that Congress only intended the statute to prohibit state and local officials from accepting bribes, not gratuities. Any contrary outcome would deny “fair notice” of prohibited conduct and “create traps for unwary state and local officials.”

TAKEAWAYS

• Snyder held that it is not a federal crime for state and local officials to accept gratuities. However, it remains a federal crime for state and local officials to accept bribes and it is still a federal crime for federal officials to accept both forms of compensation.
• Section 666 applies to private citizens as well as public officials, so while the underlying case addressed a public official accepting a gratuity, it applies equally to a private individual paying a gratuity to a state or local official.
• The Snyder decision continues a trend in which the Supreme Court has narrowly interpreted federal anti-corruption statutes, chipping away at the tools used by federal prosecutors in public corruption cases.
• States and local governments may have their own laws that make it illegal for state and local officials to accept gratuities.
• Given this continuing exposure, it remains important for public companies and other entities to design and execute robust compliance polices to avoid the risks that come with government investigations and securities litigation.
• Those risks are heightened by recent US Department of Justice and Securities and Exchange Commission pronouncements focusing on the importance of compliance regimes.

Hallie Fox, a summer associate, contributed to the development of this On the Subject.

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