The Supreme Court will hold a single hearing on Wednesday, continuing the never-ending task of determining how to give legal meaning to laws passed by Congress. This case involves a law designed to stop international money-laundering.
The Court will broadcast “live” the audio (no video) of the hearing on its homepage, supremecourt.gov To listen, click on “Live Audio” and follow the prompt when the courtroom scene appears lower on the page. The audio also will be available, under the title of the case, on C-Span TV at this link: cspan.org/supremecourt
Wednesday’s case: Bittner v. U.S. The hearing is scheduled for one hour and begins at 10 a.m.
Background: When Congress enacts a new law, it is almost always the result of compromise. With 535 politicians, each with a different constituency, it is folly to assume that they were in unison on the meaning of legislation they pass. That reality shifts it to the courts to decide, case by case, how to apply the enactment to given factual situations.
Judges, though, are not allowed to substitute their own views or values for those of Congress, so they are inevitably led into a pursuit of evidence of what Congress actually had done. Do they look at committee hearings and reports? To the testimony of witnesses before Congress? To debates on the floor of the House and Senate? Yes, all of those, but there is at least one more: the text, the language that was written into law. For years, Justices have debated whether text should always govern, or whether purpose, too, should play a role.
The case being heard tomorrow focuses on a single word, “violation,” in a 1970 law known as the Bank Secrecy Act. Designed to help the government track down those who, trying to avoid paying U.S. taxes or seeking to “launder” funds obtained illegally, put money into foreign bank accounts or foreign investment accounts. A Treasury Department implementing the law requires the filing of an annual report to disclose foreign financial accounts.
This case involves a wealthy businessman, Alexander Bittman, a native of Romania who has lived in the U.S. from time to time; he has become a U.S. citizen. For years, he has been an active user of foreign accounts, including in Swiss banks.
To see how significant the definition of a single word in a law can be, consider this: if the word “violation” is interpreted one way, Bittman may have to pay financial penalties of at least $2.7 million, plus added fees for late payment and interest; if defined another way, the penalties would be only $50,000. It is obvious, then, why he has taken his case to the Supreme Court, seeking an interpretation of the law that would mean he would face only $50,000 in penalties.
What explains the difference? The Bank Secrecy Act sets a financial penalty of $10,000 for each violation, but does not specify what kind of violation triggers the punishment. The Treasury’s view is that a failure to report the existence of a foreign financial account becomes a violation for each separate account that goes unreported. Bittman, however, argues that the penalty should apply only to failure to file an annual report, no matter how many accounts were not reported.
The Treasury found that Bittman had failed to file five annual reports, and that he had upwards of 50 separate accounts in each of those five years. A federal trial judge ruled for Bittman, concluding that he had to pay only one penalty for each year. A federal appeals court ruled for the Treasury, concluding that the penalty is to be assessed on an account-by-account basis.
After Bittman appealed to the Supreme Court, the Justice Department joined him in urging the Court to settle the dispute, noting that federal appeals courts have reached conflicting decisions on the point.
The question before the Court: Under the Bank Secrecy Act, are failures to report holdings in bank or financial accounts overseas calculated on a failure to file each annual report, or on a failure to report each account held during a year?
Significance: This case is a good illustration of the duty that falls to the courts when Congress passes a law but does not fill in all the blanks or key details that might exist in imposing legal duties on people or institutions. In deciding against Bittman, the appeals coursaid that it was guided in its decision by “the text, structure, history, and purpose” of the Act’s imposition of a penalty.
“The term ‘violation,’ “ that court concluded, “most naturally reads as referring to the statutory requirement to report each account – not the regulatory requirement to file reports in a particular manner.”
The Treasury told the Court that “the question presented is important and will often recur, and this case would be an appropriate vehicle in which to address it.”
After Wednesday’s hearing, the Court will be back on the bench next Monday, when it will examine two very significant cases testing the constitutionality of the basic methods used by two agencies – the Federal Trade Commission and the Securities and Exchange Commission – in deciding cases before them.
