This case is the rare exception to the rule that bad facts make bad law. The facts were terrible. Here is the first sentence of the opinion: "Michael Pepe, a U.S. citizen, drugged and raped seven children in Cambodia, where he claims to have resided for several years."
The defendant prevailed based on an argument that the statute -- as then written -- did not encompass his conduct because, as a resident of Cambodia, he had ceased “travel[ing] in foreign commerce.” In other words, when he committed the acts, he was no longer traveling.
The Ninth previously rejected a nearly identical argument in United States v. Clark, 435 F.3d 1100 (9th Cir. 2006) (concluding that § 2423(c) “does not require that the conduct occur while traveling in foreign commerce”).
BUT, congress then amended the statute to apply to a U.S. citizen “who travels in foreign commerce or resides, either temporarily or permanently, in a foreign country, and engages in any illicit sexual conduct with another person.”
The Court held that in light of the amendment it was evident the version of § 2423(c) in effect at the time of the defendant’s illicit sexual conduct was inapplicable to U.S. citizens living abroad unless they were traveling—meaning something more than being in transit—when they had illicit sex.
Accordingly, Clark was clearly irreconcilable with the intervening authority of the amendment, and no longer good law.
On that issue, there is helpful language:
We have a rule that “where the reasoning or theory of our prior circuit authority is clearly irreconcilable with the reasoning or theory of intervening higher authority, a three-judge panel should consider itself bound by the later and controlling authority, and should reject the prior circuit opinion as having been effectively overruled.” The “intervening higher authority” is generally the federal or state court of last resort or an en banc panel of this court. However, Congressional amendments to a statute can also “constitute ‘intervening’ authority for the purposes of our rule.” In particular, “the rule is applicable in cases involving statutory interpretation where Congress has retroactively clarified the meaning of the statute at issue.” If our case law interpreting a statute is clearly irreconcilable with the text and history of subsequent legislation, we are not bound by the decisions of prior panels. We are dealing with such a case here.
Next, in United States v. Joyce, --- F3d ---, No. 17-10269 (9th Cir. 2018), the Court affirmed the defendant's conviction for conspiring to suppress and restrain competition by rigging bids, in violation of the Sherman Act, 15 U.S.C. § 1.
This case addresses the distinction between agreements subject to the "rule of reason" and those considered "per se" unreasonable restraints of trade.
As the Court explained:
Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.” 15 U.S.C. § 1. Despite the broad language used in the statute, the Supreme Court has held that Section 1 prohibits only agreements that unreasonably restrain trade. Typically, the determination of whether a particular agreement in restraint of trade is unreasonable involves a factual inquiry commonly known as the “rule of reason.” “The rule of reason weighs legitimate justifications for a restraint against any anticompetitive effects.”
The rule of reason inquiry, however, is inapplicable if “the restraint falls into a category of agreements which have been determined to be per se illegal.” The “per se rule is applied when the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output.” Such agreements or practices are “conclusively presumed to be unreasonable” because of their “pernicious effect on competition and lack of any redeeming virtue.” If a business arrangement is a type conclusively presumed to be unreasonable, the government is relieved of any obligation to prove the unreasonableness of the specific scheme at issue and any business justification for the defendant’s conduct is neither relevant nor admissible.
The Court concluded that "bid rigging," as alleged in the indictment, fell within the "per se" rule.
