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Supreme Court limits scope of 'honest service' doctrine in Enron, Conrad Black cases

By Sarah Miley

[JURIST] The US Supreme Court [official website; JURIST news archive] on Thursday ruled [opinion, PDF] in Skilling v. United States [Cornell LII backgrounder; JURIST report] that the "honest services" doctrine [18 USC § 1346 text] is not unconstitutionally vague under a limited construction of the statute and that the district court adequately "detected and diffused" juror prejudice in the pre-trial publicity of former Enron CEO Jeffrey Skilling [JURIST news archives]. The court subsequently reversed and remanded the conviction of Canadian media mogul Conrad Black [JURIST news archive] and former Alaskan congressmen Bruce Weyhrauch, after the court held in Skilling that the honest service statute was limited to bribery and kickbacks. Under Part I of the opinion in Skilling, the court ruled that pre-trial publicity and community prejudice did not prevent Skilling from having a fair trial because Houston, where the trial was held, had a large pool of jurors and was not subjected to "blatantly" prejudiced news. The court also noted that the jurors displayed their ability to be impartial by acquitting Skilling of nine insider trading counts. In Part II of the opinion, the court limited the honest services doctrine to the protection of intangible rights of honest service deprived through bribery and kickbacks and vacated Skilling's conviction under the statute since his misconduct did not fall under either category. The court refused the government's request to include "undisclosed self-dealing by a public official or private employee" under the statute. Justice Ruth Bader Ginsburg, writing the opinion for the court, defended the court's interpretation of the honest services statute:

Interpreted to encompass only bribery and kickback schemes, § 1346 is not unconstitutionally vague. A prohibition on fraudulently depriving another of one's honest services by accepting bribes or kickbacks presents neither a fair-notice nor an arbitrary-prosecution problem. As to fair notice, it has always been clear that bribes and kickbacks constitute honest-services fraud, and the statute's mens rea requirement further blunts any notice concern. As to arbitrary prosecutions, the Court perceives no significant risk that the honest-services statute, as here interpreted, will be stretched out of shape. Its prohibition on bribes and kickbacks draws content not only from [precedent] case law, but also from federal statutes proscribing and defining similar crimes.

The court concluded that its determination to vacate Skilling's conviction under the honest services doctrine does not necessarily require reversal of the conspiracy conviction, which it remanded for harmless error review. The justices voted unanimously to vacate Skilling's conviction, but Justices Antonin Scalia, Clarence Thomas and Anthony Kennedy would have ruled that the honest services statute is unconstitutional. Scalia and Kennedy both wrote concurring opinions. Justice Sonia Sotomayor wrote an opinion concurring in part and dissenting in part. In her dissent, joined by Justices John Paul Stevens and Stephen Breyer, Sotomayor disagreed with the court's conclusion that Skilling had a fair trial before an impartial jury.

Justice Ginsburg also authored Thursday's opinion [text, PDF] in Black v. United States [Cornell LII backgrounder; JURIST report], which vacated the conviction of the former chairman and CEO of Hollinger International Inc. under the honest services doctrine. In 2007, Black was convicted of mail fraud and obstruction of justice and sentenced [JURIST reports] to 78 months in prison. The Seventh Circuit rejected [opinion, PDF; JURIST report] Black's appeal, holding that § 1346 may be applied in a private setting regardless of whether the defendant's conduct risked any foreseeable economic harm to the victim. The Supreme Court held that Black had properly objected to the jury instructions at trial concerning the honest service doctrine and remanded the case to the circuit court for an opinion consistent with the judgment in Skillings. The judgment to vacate Black's conviction was unanimous, but both Scalia and Thomas wrote separate concurring opinions.

In the final "honest service" decision this session, the Supreme Court issued a per curiam opinion [text, PDF] in Weyhrauch v. United States [Cornell LII backgrounder], vacating the Ninth Circuit ruling [opinion, PDF] that no state law violation is required in a federal honest services mail fraud prosecution under 18 USC §§ 1341 and 1346 and remanded the case for further consideration in light of Skilling.The case involves former Alaska state representative Bruce Weyhrauch and whether he should have disclosed that he was seeking legal work from oil company Veco Corp. while he was voting on an oil tax.

Full post as published by JURIST - The Paper Chase on June 24, 2010 (boomark / email).