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In Hudson v. U.S., 118 S. Ct. 488 (1997), the Supreme Court disavowed in large part its decision in U.S. v. Halper, 490 U. S. 435 (1989), and eliminated for all practical purposes a double jeopardy challenge to successive civil and criminal sanctions for the same conduct. In Halper, the Court determined that False Claims Act penalties imposed in a civil proceeding after Halper's criminal conviction violated the double jeopardy clause of the United States Constitution because the penalty authorized by the False Claims Act was disproportionate to the harm caused by Halper's actions.

Halper led to innumerable challenges to the federal government's authority to take both civil and criminal action against an individual based on the same activity, the vast majority of which were unsuccessful. Despite the lack of success, the likelihood of a challenge based on Halper affected enforcement efforts in cases in which parallel criminal proceedings arising from the same conduct were likely. Government agencies had to justify any requested penalties based on the agency's costs of investigation and may have hesitated to bring both the civil and criminal proceedings authorized by Congress.

On occasion, Halper also led to the dismissal of portions of indictments. In U.S. v. D'Uva, 1996 WL 359517 (9th Cir. 1996), for example, the Ninth Circuit assumed that civil penalties imposed in a securities fraud case were punishment for the purposes of double jeopardy. The court then determined that seven of the indictment's 26 counts involved the same conduct involved in the civil action; thus, those seven counts were barred by double jeopardy. Similarly in U.S. v. Morse, 1997 WL 181043 (S.D.N.Y. 1997), the court applied Halper and dismissed portions of an indictment for securities fraud because the SEC had previously obtained penalties under the 1990 Remedies Act for the same activities. According to the court, the civil penalties constituted double jeopardy because penalties under the Remedies Act varied based on the severity of the defendant's actions. The court, again relying on Halper, viewed the civil penalties as punishment because the amount was disproportionate to the actual expenses incurred by the government for investigating and prosecuting the case.

Hudson makes future challenges even less likely to succeed. In Hudson, the petitioners argued that the double jeopardy clause barred their criminal prosecution for the same conduct that led to the imposition of monetary penalties and occupational debarment under the federal banking statutes. The Court looked at the language of the statutes in question and concluded that Congress intended the penalties to be civil in nature. It also rejected the notion that such penalties were "so punitive in form and effect as to render them criminal despite Congress' intent."

In reaching its decision, the Court rejected the analysis used in Halper that focused on "whether the sanction . . . was so grossly disproportionate to the harm caused as to constitute `punishment.'" According to the Court, that analysis deviated from traditional double jeopardy principles and spawned too many novel double jeopardy claims. Instead, the Court returned to its earlier decisions and emphasized that the double jeopardy analysis looks only to the statute on its face.

The Hudson decision already has had an impact. In light of Hudson, the Seventh Circuit reversed its conclusion that civil penalties imposed for violation of the Occupational Safety and Health Act ("OSHA") after a criminal conviction violated the double jeopardy clause. S.A. Healy Co. v. Occupational Safety & Health Review Comm'n, 1998 WL 105475 (7th Cir. 1998). S.A. Healy Co. was convicted of three misdemeanor violations of OSHA and fined $750,000. The Secretary of Labor also cited S.A. Healy for 68 OSHA violations and assessed civil penalties. Based on Halper, the Seventh Circuit had initially refused to enforce the penalties on double jeopardy grounds. On remand from the Supreme Court, the Seventh Circuit applied the analysis in Hudson and reversed its earlier decision.

Also relying on Hudson, the Second Circuit rejected a double jeopardy challenge to a disgorgement and civil penalty imposed in a civil proceeding after a securities fraud conviction. SEC v. Palmisano, 135 F.3d 860 (2d Cir. 1998). Palmisano pleaded guilty to 44 counts of mail fraud, wire fraud, money laundering and securities fraud. He was sentenced to 188 months of imprisonment and ordered to make restitution in the amount of $3.8 million. In the subsequent civil action, the court ordered Palmisano to disgorge his unlawful gains and pay a $500,000 civil penalty. The appellate court rejected Palmisano's reliance on Halper to support his double jeopardy claim. Instead, the court analyzed the claim based on Hudson and found "little indication, and certainly not the `clearest proof,' . . . that the disgorgement and the fines provided by the Remedies Act are criminal punishments."