In 2012, an international investigation revealed that global banks, including Barclays, Deutsche Bank, Rabobank, the Royal Bank of Scotland, and UBS rigged the London Interbank Offered Rate (LIBOR) underpinning hundreds of trillions of dollars in securities and loans to increase traders’ profits.
As part of a greater effort to combat financial crime after the 2008 financial crisis, U.S. prosecutors have pursued numerous criminal cases against foreign banks and individuals for LIBOR manipulation.
But increasing numbers of cases against foreign individuals who remain at home abroad have raised concerns of prosecutorial overreach, especially in light of the Supreme Court’s long-standing presumption against extraterritoriality.
On August 24, 2017,
U.S. prosecutors charged Muriel Bescond, the then-head of Société Générale’s Paris treasury desk, for LIBOR manipulation in violation of the Commodity Exchange Act (CEA).
Bescond is a French citizen living in France who has never resided in the United States.
During the time period covered by the indictment, Bescond did not travel to the United States.
France refused to extradite her to the United States pursuant to its nonextradition policy.
Bescond filed motions to dismiss, alleging that the indictment violated her due process rights, selectively prosecuted women, and was based on an invalid extraterritorial application of the CEA.
The Eastern District of New York denied Bescond’s motions to dismiss, concluding that Bescond was a fugitive subject to disentitlement—thus foreclosing her ability to challenge criminal charges without submitting to U.S. jurisdiction.
Left standing, this decision would have subjected Bescond to two equally harsh choices: submit to U.S. jurisdiction and risk prolonged pretrial detention in a foreign country or remain in France under the stigma of fugitive status.
Bescond subsequently appealed to the Second Circuit.
In United States v. Bescond, the Second Circuit reversed the Eastern District of New York and created a new circuit split with the Sixth and Eleventh Circuits by holding that fugitive disentitlement orders are immediately appealable under the collateral order doctrine.
This case Comment examines Bescond ’s implications for interlocutory challenges by foreign defendants who live abroad, conducted their violative conduct abroad, and have not come to the United States to surrender to jurisdiction. Part I describes the origins of the collateral order doctrine and traces its uneven application throughout the history of Supreme Court jurisprudence. Part II explains the Sixth and Eleventh Circuits’ analyses of the collateral order doctrine’s nonapplicability to fugitive disentitlement orders. It then discusses the main points of contention arising from Bescond ’s split from the Sixth and Eleventh Circuits, as well as the response from Bescond ’s dissenting opinion. Part III argues that in light of the confusion arising from the collateral order doctrine, the Supreme Court should exercise its rulemaking powers to grant interlocutory appeal to fugitive disentitlement orders involving extraterritorial applications of U.S. law to foreign defendants who remain at home abroad.
I. The Development of the Collateral Order Doctrine
This Part provides background on the collateral order doctrine. Section I.A describes Cohen v. Beneficial Industrial Loan Corp.’s invention of the collateral order doctrine, albeit under an unsatisfying legal justification, as an exception to the rule of finality.
Section I.B traces how Cohen has spawned inconsistency and confusion based on a chronological selection of Supreme Court cases on the collateral order doctrine that have been cited by Bescond ’s majority and dissenting opinions.
A. The Collateral Order Doctrine’s Weak Legal Footing in Cohen
Congress, through codifying 28 U.S.C § 1291 in 1948, limited the jurisdiction of courts of appeal to final decisions from district courts
to limit piecemeal appellate intervention, avoid opening the floodgates of innumerable pretrial orders for appellate review, and prevent adversaries from harassing litigants with the time and expense of multiple appeals before final judgment.
But Congress also created exceptions to § 1291 in cases where potential harm from an erroneous decision outweighs the costs of piecemeal appeals.
Cohen went further, construing § 1291 to also allow pre-final judgment appeal for a “small class” of claims that were “separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.”
Cohen justified its vague collateral order standard with minimal and remote caselaw.
The first cited case, Bank of Columbia v. Sweeny, only supports the nonapplication of exceptions to the final judgment rule.
The second cited case, United States v. River Rouge Improvement Co., only applies the principle that an appeal can arise from a partial final judgment involving multiple parties.
The final cited case, Cobbledick v. United States, only recognized in dictum that immediate appeal is allowed only if the issue would be moot post-final judgment.
While Cobbledick may provide some support for Cohen’s mootness rationale, there is relatively little support for the finality and separateness prongs of Cohen’s analysis.
B. Inconsistencies Within Post- Cohen Supreme Court Jurisprudence on the Collateral Order Doctrine
Although Cohen purported to delineate a narrow scope for the collateral order doctrine, its unclear reasoning has resulted in both expansion and contraction of the doctrine throughout later Supreme Court jurisprudence.
In Abney v. United States,
the Supreme Court adopted a liberal construction of the collateral order doctrine by relaxing Cohen’s separability and mootness requirements.
The Abney Court distinguished the defendants’ double-jeopardy challenge to being haled into court from the merits of the charge,
even though assessing double-jeopardy claims can require a trial on the merits.
For instance, in a double-jeopardy challenge alleging that multiple prosecutions are based on the same conduct, evidence presented at trial would be necessary to parse out the defendant’s precise conduct.
Additionally, a trial’s sentencing phase is required to determine whether a defendant would be subject to multiple punishments.
Abney therefore departed from a stricter Cohen standard, which demands complete analytical nonoverlap. Moreover, while Cohen predicated unreviewability on the mootness of claims due to the lengthy time required to reach final judgment,
the Abney Court was willing to find unreviewability when the defendant’s rights would be “significantly undermined” were the appellate review to be postponed until after conviction and sentencing.
Even if a defendant’s conviction were to be reversed post-final judgment on double-jeopardy grounds, it is the risk of conviction—namely, being forced to “endure the personal strain, public embarrassment, and expense of a criminal trial more than once”—that sufficiently constitutes a loss of rights satisfying Abney’s unreviewability standard.
The Supreme Court’s effort to contract the collateral order doctrine without overruling contradictory expansionist jurisprudence has resulted in a contortionistic legal analysis. Coopers & Lybrand v. Livesay proposed a narrower reformulation of Cohen’s vague collateral order doctrine: Decisions eligible for interlocutory appeals “must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from final judgment.”
But this reformulation failed to reconcile conflicting interpretations of unreviewability. Contractionist cases rejecting additional collateral orders such as United States v. MacDonald
and United States v. Hollywood Motor Car Co.
fabricated coherence with Abney by construing Abney’s unreviewability standard as a more limited right not to be tried (which could only be enjoyed if vindicated before trial) as opposed to a right whose remedy requires the dismissal of charges
—a distinction that was not part of the original Cohen factors. Furthermore, if Abney’s application of the collateral order doctrine only protects the right not to be tried, then Abney also contradicts that proposition in protecting personal interests threatened by double jeopardy that exist both before and during trial.
The Supreme Court’s struggle with applying the collateral order doctrine has therefore resulted in its disputed applications, which persist in lower courts tasked with evaluating new categories for interlocutory appeal.
II. The Circuit Split
This Part explains the circuit split arising from Bescond ’s holding that fugitive disentitlement orders are immediately appealable under the collateral order doctrine. Section II.A describes the Sixth and Eleventh Circuits’ rulings that disentitlement orders are ineligible for interlocutory appeal. Section II.B then describes Bescond ’s majority opinion along with its responses to the Sixth and Eleventh Circuits. Section II.C describes Bescond ’s dissenting opinion.
A. The Sixth and Eleventh Circuits’ Opinions
Apart from the Second Circuit, only the Sixth and Eleventh Circuits have dealt with the eligibility of fugitive disentitlement orders for the collateral order doctrine.
United States v. Shalhoub is an Eleventh Circuit case involving a Saudi Arabian resident citizen charged with parental kidnapping for taking his child from the United States to Saudi Arabia.
Having been labeled as a fugitive by the district court, the defendant sought interlocutory appeal after the district court denied his motion to dismiss, without prejudice to his right to appear and seek dismissal of his indictment in person.
Shalhoub held that fugitive disentitlement orders are not subject to the collateral order doctrine because they do not satisfy the unreviewability and separateness factors.
Shalhoub first cited Abney as an example of a right that would be destroyed if not vindicated before trial. Noting that Abney specifically concerned “the very authority of the Government to hale [the defendant] into court,”
Shalhoub then ironically ignored Abney’s liberal application of the Cohen factors in further limiting unreviewable rights to the right not to be tried or the right against excessive bail.
Despite conceding that the defendant’s fugitive status is “likely unreviewable” after final judgment, Shalhoub found fugitive disentitlement challenges to be distinguishable in that they do not rest on an explicit statutory or constitutional right.
Without constitutional regulations on fugitive disentitlement, Shalhoub then found no separable due process rights. Declaring that “[a] fugitive has no more of a freestanding right not to be labelled a fugitive, than a criminal defendant has a freestanding right not to be labelled a defendant,” Shalhoub narrowly defined due process as merely notice and the opportunity to be heard, both of which are satisfied at trial.
The Sixth Circuit followed Shalhoub in United States v. Martirossian, also holding that fugitive disentitlement orders are not subject to the collateral order doctrine because they do not satisfy the three Cohen factors, that is, “the order must (1) finally resolve the question at hand, (2) involve a significant issue separate from the merits of the action, and (3) be unreviewable on appeal from final judgment.”
In Martirossian, an Armenian citizen living in China who conducted his violative conduct abroad refused to answer criminal money laundering and bribery charges in the Southern District of Ohio, resulting in the district court labeling him a fugitive.
The defendant moved to dismiss his indictment, but the district court temporarily held the motion in abeyance until the defendant submitted to jurisdiction.
The defendant then appealed the ruling.
First, Martirossian held that there was no final resolution under Cohen because the motion to dismiss was in abeyance and the defendant refused to “accept the potential benefit or burden of any ruling.”
Second, the Sixth Circuit found insufficient separability and importance.
Citing Shalhoub, it argued that there are no freestanding due process rights against fugitive disentitlement.
Additionally, the court held that the defendant’s goal of removing his fugitive status to contest the money laundering statute’s extraterritorial validity functioned as a concession that the court’s evaluation of fugitivity is interrelated to the merits of the case.
Third, although the defendant’s fugitive status would be moot after submitting to the court’s jurisdiction, the Martirossian court declared that this issue is not particularly unique.
Post trial, contestations of all defendants who do not want to answer to an indictment or arrest would be moot.
Furthermore, many trial court decisions are uncorrectable on appeal and are not immediately appealable.
Martirossian also dismissed the defendant’s argument that he would have a right not to be tried if the money laundering statute did not apply extraterritorially.
Invoking Hollywood Motor’s distinction between a right not to be tried and a right whose remedy requires the dismissal of charges, Martirossian warned that collapsing the distinction would result in all rights that could be enforced by pretrial dismissal becoming rights not to be tried.
B. The Bescond Majority Opinion
Bescond deviated from the Sixth and Eleventh Circuits in holding that fugitive disentitlement orders do indeed fulfill the Cohen requirements for collateral orders.
Finding no dispute that fugitive disentitlement satisfies Cohen’s finality requirement, Bescond focused on the separability and unreviewability factors.
In response to Shalhoub’s holding that there is no cognizable constitutional right against fugitivity,
the Bescond court argued that Bescond’s challenge to fugitive disentitlement actually asserts the distinct constitutional right to defend herself in court.
The Bescond court highlighted disentitlement’s uniquely weighty policy implications for foreign defendants’ liberty interest.
As a disentitled fugitive, Bescond could not defend herself without risking lengthy pretrial detention and trial in a foreign country—all of which would have resulted in an extended absence jeopardizing her banking career and cutting off her income as the sole earner of her family.
But if Bescond were to remain in France, whose nonextradition policy imposes no obligation for her to submit to U.S. jurisdiction, her indefinitely looming fugitive status would ruin her career as well—a “penalty for staying home” whether or not her disentitlement is actually merited.
The court explained that Bescond is entitled to due process even as a foreigner because if she were only to gain due process rights after coming to the United States, she would have already irrevocably lost her due process right to contest U.S. jurisdiction.
Recognizing that Bescond raises a “nonfrivolous extraterritoriality claim,” the Bescond court further noted that coercing submission to U.S. jurisdiction contradicts the presumption against extraterritoriality: “[I]f our law does not reach Bescond or her conduct, can it be said that she is in flight from it?”
Yet, without interlocutory review, courts are precluded from evaluating extraterritoriality.
Moreover, the Bescond court rendered disentitlement separable from the merits of the case because disentitlement only bears on Bescond’s ability to defend herself, not whether she violated the CEA.
Although Martirossian considered fugitivity and the extraterritoriality of a criminal statute to be interrelated,
the Bescond court countered that extraterritoriality analysis is limited to the statutory text.
On the other hand, fugitivity analysis distinctly inquires into whether a defendant qualifies as a fugitive and whether disentitlement furthers the doctrine’s broader policy aims.
The Bescond court also deemed Martirossian’s concession that a defendant’s fugitive status becomes moot after submitting to U.S. jurisdiction to be a fatal one.
Disentitlement thus satisfies the unreviewability requirement because post-trial appeal and acquittal will not undo its harm.
Contesting Shalhoub’s holding that only the right not to be tried and the right against excessive bail can be subject to the collateral order doctrine, the Bescond court identified other rights protected by interlocutory appeal that fall outside that ambit.
For instance, the Supreme Court allowed immediate appealability for the involuntary administration of antipsychotic drugs because of privacy and security interests.
The Second Circuit allowed interlocutory appeal of an order designating a juvenile as an adult in criminal cases since it deprives the defendant of legal benefits such as record sealing and pretrial detention.
C. The Bescond Dissenting Opinion
In her dissent, Chief Judge Debra Livingston argued that Bescond’s disentitlement failed to satisfy Cohen’s separability and unreviewability requirements. Echoing Martirossian and Shalhoub, Chief Judge Livingston declared that “Bescond has no ‘more a freestanding right not to be labeled a fugitive, than a criminal defendant has a freestanding right not to be labeled a defendant’”
because, like the defendant in Shalhoub, Bescond was afforded due process by receiving notice and being granted the opportunity to be heard at trial.
In addition, Chief Judge Livingston disputed disentitlement’s separability from the merits of Bescond’s case.
Analogizing Bescond to the defendant in Martirossian, who similarly challenged U.S. money laundering charges since he had never traveled to the United States and the entirety of his charged conduct occurred abroad, Chief Judge Livingston reiterated Martirossian’s holding that a disentitlement decision considerably overlaps with the relevant facts and arguments involved in determining the permissibility of a statute’s extraterritorial application.
As a result, declining to appear should not increase the interlocutory appealability of issues that would otherwise be resolved at trial.
While the majority opinion determined Cohen’s unreviewability requirement to be satisfied upon a finding of mootness, Chief Judge Livingston argued that mootness alone is insufficient.
Despite Martirossian’s concession that fugitive status becomes moot after submitting to federal court jurisdiction, Chief Judge Livingston deemed it nonfatal because Martirossian also recognized that moot fugitive status alone has never warranted interlocutory appeal.
Moreover, Bescond lacked a constitutional right cognizable under the collateral order doctrine that could be deemed unreviewable post final judgment.
Characterizing Bescond’s challenge to disentitlement as merely a desire to litigate from a convenient location of her choice,
Chief Judge Livingston chose Hollywood Motor’s narrow reading of Abney to distinguish Bescond’s claims to due process.
In contrast to Abney, which found unreviewability when rights would be significantly undermined, Hollywood Motor read Abney to limit collateral orders to rights that “must be upheld prior to trial if it is to be enjoyed at all”
—and there is no right to convenient litigation.
Chief Judge Livingston also warned that predicating a grant of interlocutory appeal on Bescond’s status as a foreign citizen remaining “at home abroad” risked creating a slippery slope where foreign defendants are given better protections than American citizens.
For instance, under the majority’s analysis, an American citizen at home in Paris who is charged with the same crime as Bescond would not be able to claim interlocutory appeal for a disentitlement order.
Additionally, Chief Judge Livingston argued that the majority opinion’s lack of a clear definition for remaining at home abroad potentially grants interlocutory appeal of disentitlement to overseas criminals who commit cybercrimes and direct terrorist attacks on the United States.
Although the majority opinion distinguished Bescond from conventional fugitives in that she had not concealed herself, Chief Judge Livingston found this argument unconvincing when applied to foreign terrorists and cybercriminals who can live openly with state support.
III. Supreme Court Rulemaking as a Solution
In 1988, as a response to concerns about overburdened federal courts, Chief Justice William Rehnquist appointed a Federal Courts Study Committee with Congress’s authorization.
Motivated by concerns that the collateral order doctrine “strikes many observers as unsatisfactory” and “may in some instances restrict too sharply the opportunity for interlocutory review,” the Committee recommended that Congress should delegate rulemaking authority to the Supreme Court to clarify the scope of final decisions and grant immediate appeal to nonfinal orders.
As a result, Congress amended 28 U.S.C. § 2072 and 28 U.S.C. § 1292 to respectively grant the Supreme Court the power to define finality and “expand the appealability of interlocutory determinations by the courts of appeals.”
The Supreme Court has favorably recognized Congress’s delegation of rulemaking authority. In Swint v. Chambers County Commission, the Court declined to expand the collateral order doctrine by court decision because Congress made rulemaking available.
Similarly, in Mohawk Industries, Inc. v. Carpenter, the Court declared that “[a]ny further avenue for immediate appeal of such rulings should be furnished, if at all, through rulemaking,” especially since the rulemaking process “draws on the collective experience of the bench and bar” in addition to “facilitat[ing] the adoption of measured, practical solutions.”
In a concurring opinion, Justice Clarence Thomas even suggested that rulemaking renders Cohen’s analysis unnecessary.
Yet, despite its stated enthusiasm for rulemaking as a replacement for the collateral order doctrine, the Supreme Court has only exercised its rulemaking authority once to allow interlocutory appeal of class action certification orders.
Whether fugitive disentitlement orders qualify for interlocutory appeal is thus an issue ripe for Supreme Court rulemaking, especially in light of conflicting judicial applications of the collateral order doctrine as embodied throughout Supreme Court jurisprudence and in Bescond ’s majority and dissenting opinions.
The Supreme Court should exercise its rulemaking power to grant interlocutory appeal to fugitive disentitlement orders involving extraterritorial applications of U.S. law to foreign defendants who remain at home abroad. Because fugitive status becomes moot once a foreign defendant submits to U.S. jurisdiction, disentitlement is an overly blunt tool compelling foreign defendants to undergo the large personal costs of trial even in cases of questionable extraterritorial authority. While domestic defendants can live at home while awaiting trial, foreign defendants who submit to U.S. jurisdiction must uproot their lives until final adjudication.
Foreign defendants who cannot afford to live in the United States while awaiting trial often plead guilty for lessened jail time or remain a fugitive under the risk of detention and extradition during international travel.
Although Chief Judge Livingston warned that expanding the collateral order doctrine to include disentitlement orders would lead to a slippery slope where even terrorists can dispute their fugitive status,
her concern actually highlights the need for courts to have an opportunity to determine statutory extraterritoriality—which, in Bescond’s case, would be extinguished by fugitive disentitlement without interlocutory appeal. The presumption against extraterritoriality, which demands that courts avoid construing statutes to apply on foreign soil, imposes varying degrees of limitations on statutes depending on whether there is congressional intent for extraterritorial application.
Foreign terrorists targeting the United States would likely violate the Antiterrorism Act of 1990, which explicitly provides for extraterritorial reach.
But in Prime International Trading, Ltd. v. BP P.L.C., the Second Circuit held that private plaintiffs cannot bring suit based on a “ripple effects” theory of predominately foreign conduct because the CEA is silent on extraterritorial effect
—which, according to the Bescond majority, indicated that Bescond brought a nonfrivolous extraterritoriality claim.
Especially in cases where prosecutorial overreach has resulted in potentially invalid extraterritorial applications of U.S. law, interlocutory appeal of disentitlement orders is a necessary defensive tool for foreign defendants at home abroad because it empowers courts to answer the threshold question of whether the defendant violated any laws in the first place.
Bescond’s triumph in the Second Circuit may only be a pyrrhic victory as the Second Circuit only decided that it had jurisdiction over deciding the applicability rather than the merits of her motions to dismiss.
Although Bescond’s case was reversed, it was remanded back to the district court,
which had already stated that it would reject Bescond’s claims of extraterritoriality and due process.
Nevertheless, Bescond recognized the need for interlocutory appeal of overly harsh fugitive disentitlement orders in the context of foreign, modern-day financial crimes that inevitably touch the U.S. financial market in some remote way. Cohen’s unclear guidance on the collateral order doctrine has produced inconsistent Supreme Court jurisprudence and confusion among lower courts. The time is ripe for the Supreme Court to exercise its woefully underused rulemaking powers to grant interlocutory appeal to fugitive disentitlement orders involving extraterritorial applications of U.S. law to foreign defendants who remain at home abroad.