United States v. Laudani

Background

Laudani was a company foreman on a public works project paid in part with federal funds. He was indicted under the federal Kickback Act for allegedly forcing his subordinates to give up part of their wages by threatening to fire them. The District Court denied his motion to quash and a jury convicted him, but the Circuit Court of Appeals reversed and ordered the indictments dismissed, prompting review by the Court.

Reasoning

The central question was whether the Kickback Act applies only to employers or also to other persons, like foremen, who can hire and fire workers. The Court looked at the Act’s language, including the broad word “whoever,” and the legislative history showing Congress wanted federal wages to reach workers. The Court concluded that a foreman vested with power to employ and discharge subordinates can be within the Act’s reach if his coercion affects their employment contracts. The Court rejected the appeals court’s narrow reading that limited the law to those with direct contractual “privity,” while noting the law was not meant to sweep in ordinary blackmailers who lack employment-based power.

Real world impact

As a result, supervisors on federally financed projects who use hiring or firing power to force kickbacks can be criminally charged under the Act. The Court reversed the appeals court and sent the case back for further proceedings on remaining issues. The opinion does not set the outer limits of the law, so some future fact patterns may still raise questions about who is covered.