Cases & Deals

Delaware Supreme Court Reverses Chancellor's <i>Chicago Bridge</i> Ruling

Jones Day secures Supreme Court decision unanimously reversing "Bridgegate" convictions

Clients Kelly, Bridget Anne

In a victory for Jones Day client Bridget Kelly, the Supreme Court unanimously reversed Ms. Kelly's convictions for federal property fraud, decisively rejecting the Department of Justice's legal theory. In 2013, Ms. Kelly was a Deputy Chief of Staff to New Jersey Governor Chris Christie. In an effort to punish the mayor of Fort Lee, New Jersey for not supporting the Governor's re-election bid, Ms. Kelly along with other officials had lanes of the George Washington Bridge realigned. That realignment snarled traffic in Fort Lee for days. The incident was assigned the moniker "Bridgegate."

When federal prosecutors learned of the scheme, they charged Ms. Kelly with federal property fraud. After the jury convicted, Jones Day took over the case, fresh off its victory for former Virginia Governor Robert McDonnell in the Supreme Court. Jones Day developed a theory that an official cannot commit property fraud when the object of her scheme is to use the state's regulatory power for some illicit end. Here, the Bridgegate scheme was not to obtain any property that belonged to the state, but simply to use the state's regulatory power to exact political revenge. Thus, the convictions could not stand.

On May 7, 2020, the Supreme Court agreed wholeheartedly with Jones Day and tossed out Ms. Kelly's convictions. Writing for all nine Justices, Justice Kagan explained that "not every corrupt act by state or local officials is a federal crime." To amount to property fraud, the object of the fraud must be property. And lane "realignment [is] a quintessential exercise of regulatory power," it is not property. The Court also firmly rejected the government's argument that the scheme caused property loss because the state lost money. Again adopting Jones Day's argument, the Court held that a "property fraud conviction cannot stand when the loss to the victim is only an incidental byproduct of the scheme." The Court recognized that the Bridgegate scheme was ill-advised, but the Court admonished that federal prosecutors "may not use property fraud statutes to set standards of disclosure and good government for local and state officials."

This ruling will have far-reaching consequences in many white-collar prosecutions. No longer can the government secure a property fraud conviction based merely on bad acts that happen to cause a loss of money. Instead, the government will have to prove that the object of the defendant's scheme was to obtain property.

This also closes a painful chapter in Ms. Kelly's life and allows her to look forward to better days.

Kelly v. United States, No. 18-1059 (U.S.)

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