Crandon v. United States

494 U.S. 152, 110 S. Ct. 997, 108 L. Ed. 2d 132, 1990 U.S. LEXIS 1173
Supreme Court of the United States·Decided February 27, 1990·No. 88-931·Published·Cited by 695 cases

Opinions

Justice Stevens

delivered the opinion of the Court.

In 1981 and 1982, five executives of The Boeing Company, Inc. (Boeing), resigned or took early retirement to accept important positions in the Executive Branch of the Federal Government. Upon termination of employment by Boeing, and shortly before formation of an employment relationship with the Government, Boeing made a lump-sum payment to each in an amount that was intended to mitigate the substantial financial loss each employee expected to suffer by reason of his change in employment. The question we must decide is whether these payments violated a provision of the Criminal Code that prohibits private parties from paying, and Government employees from receiving, supplemental compensation for the employee’s Government service.1

The essential facts are not disputed. Each employee resigned because he planned to accept a specific federal position. These shifts required forgoing the higher salaries that each employee would have earned at Boeing and also [155]*155severing all financial connection with the company. Thus, petitioner Paisley, who took early retirement to become Assistant Secretary of the Navy for Research, Engineering and Systems — an office that requires confirmation by the United States Senate — estimated that the financial cost to him of separating from Boeing would be approximately $825,000, including approximately $77,000 in lost stock options and $250,000 in lost retirement benefits.2 Boeing’s severance payment to Paisley amounted to $183,000.3 The comparable estimate of petitioner Crandon, who resigned to become a computer scientist for the North Atlantic Treaty Organization, was $150,000; his severance payment was $40,000.4 The other three individual petitioners’ payments were higher than Crandon’s but lower than Paisley’s.5 Boeing paid the five departing employees a total of $485,000.6

[156]*156None of the five individual petitioners was a Government employee at the time he received his severance payment.7 Moreover, each payment was made unconditionally. None of the employees promised to return to Boeing at a later date nor did Boeing make any commitment to rehire them. After entering Government service, none of the individual petitioners provided Boeing with any favored treatment or, indeed, participated in any source selection or procurement decision that affected Boeing. It is stipulated that all five were competent and faithful Government servants. Apart from the fact of the payments themselves, there is no charge in this case of any misconduct by any of the petitioners.

In 1986 the United States filed a civil complaint alleging that the payments had been made “to supplement each individual defendant’s compensation as a federal employee” and that they “created a conflict of interest situation which induced the breach of the fiduciary duty of undivided loyalty [which] each individual defendant owed to the United States, as measured by 18 U. S. C. §209 and/or the common law.” App. 12. The complaint sought relief from Boeing in the aggregate amount of the payments made and the imposition of a constructive trust on the moneys received by each of the individual petitioners.

After a full trial, the District Court ruled against the Government on several alternative grounds. 653 F. Supp. 1381 (ED Va. 1987). First, it held that § 209(a) had not been vio[157]*157lated because the payments were made before the recipients had become Government employees and were not intended to compensate them for Government service. Second, it held that there was no violation of any fiduciary standard of conduct established by common-law principles of agency because the payments were disclosed to responsible Government officials and because they did not “tend to subvert the loyalty of the individual defendants to the United States government.” Id., at 1387. Finally, the District Court concluded that the payments “created neither the appearance of nor an actual conflict of interest,” and that the Government had not been injured by the payments and was therefore not, in any event, entitled to recover damages. Ibid.

A divided panel of the Court of Appeals reversed. 845 F. 2d 476 (CA4 1988). It held that employment status at the time of payment is not an element of a § 209(a) violation and that the District Court’s finding that the payments were not intended to be supplemental compensation for services as employees of the United States was clearly erroneous. Id., at 480. It further held that the prophylactic character of the conflict of interest laws made it unnecessary for the Government to prove any actual injury and that the defendants’ disclosure of the payments did not constitute a defense to an action for their recovery. It therefore concluded that both the individual defendants and Boeing were liable, “although double recovery by the government is not permitted.” Id., at 482.8

We granted certiorari to review the Court of Appeals’ construction of this important statute. 490 U. S. 1003 (1989).

I

At the outset, we note that Congress has not created an express civil remedy for violations of § 209(a). The Govern[158]*158ment does not, in so many words, argue that the enactment of the statute implicitly created a damages remedy. Rather, the Government begins with the common-law rule that an agent who secretly profits from a breach of a fiduciary obligation to his principal must disgorge his ill-gotten gains. It then replaces the common-law definition of fiduciary obligation with the stricter standard of § 209(a), arguing that because concealment of a payment is not an element of the statutory offense, disclosure of payments is no defense. Regardless of whether the Government’s amalgamation of common-law and statutory concepts describes a tenable theory of recovery, it is at least clear that the Government must prove a violation of § 209(a) to prevail in these cases. We proceed therefore to consider whether § 209(a) applies to a severance payment that is made to encourage the payee to accept Government employment, but that is made before the payee becomes a Government employee.

In determining the meaning of the statute, we look not only to the particular statutory language, but to the design of the statute as a whole and to its object and policy. K mart Corp. v. Cartier, Inc., 486 U. S. 281, 291 (1988); Pilot Life Ins. Co. v. Dedeaux, 481 U. S. 41, 51 (1987). Moreover, because the governing standard is set forth in a criminal statute, it is appropriate to apply the rule of lenity in resolving any ambiguity in the ambit of the statute’s coverage. To the extent that the language or history of § 209 is uncertain, this “time-honored interpretive guideline” serves to ensure both that there is fair warning of the boundaries of criminal conduct and that legislatures, not courts, define criminal liability. Liparota v. United States, 471 U. S. 419, 427 (1985); see also United States v. Bass,

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Crandon v. United States, 494 U.S. 152, 110 S. Ct. 997, 108 L. Ed. 2d 132, 1990 U.S. LEXIS 1173 (1990).

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