Supreme Court Decides Skilling v. United States and Weyhrauch v. United States

On June 24, 2010, the Supreme Court decided Skilling v. United States, No. 08-1394, holding that the publicity surrounding the downfall of Enron Corporation did not prevent an officer of the corporation from receiving a fair trial, but his conviction for "honest-services fraud" was flawed and may have to be set aside because the relevant statute, 18 U.S.C. § 1346, applies only to bribery or kickback schemes and his conduct involved neither of these.

Before Jeffrey Skilling, an officer of Enron, was tried on a large number of charges arising from the corporation's collapse, he moved for a change of venue, arguing that the extensive publicity about Enron's demise, coupled with hostility toward him personally, made it impossible for him to receive a fair trial in Houston, where the company had been headquartered. The district court denied the motion, but it took extensive steps to screen potential jurors for bias—including sending a 77-question, 14-page questionnaire to the entire jury pool and excluding for cause every prospective juror who said that a preexisting opinion about Enron or the defendants personally would prevent him or her from being impartial. The court also questioned the prospective jurors who passed this screening process both as a group and individually and permitted limited follow-up questioning by the lawyers for both sides. The resulting jury convicted Skilling, after a four-month trial, on 19 counts, including conspiracy to violate 18 U.S.C. § 1346, which proscribes fraudulent deprivations of "the intangible right to honest services," but it acquitted him on another nine counts.

On appeal, Skilling argued, among other things, that pretrial publicity and community prejudice prevented him from obtaining a fair trial and that the jury had improperly convicted him of honest-services fraud. The Fifth Circuit affirmed the conviction, holding that, although the volume and negative tone of media coverage in connection with Enron's failure created a rebuttable presumption of juror prejudice, the district court's "proper and thorough" voir dire procedures had enabled it to empanel an impartial jury. The Fifth Circuit also rejected Skilling's claim that his conduct did not constitute depriving Enron of his honest services, but it did not address his further argument that, if the honest-services statute applied to his conduct, it was unconstitutionally vague.

The Supreme Court affirmed in part, reversed in part, and remanded the case for further proceedings. It first held, in a holding in which six justices joined, that pretrial publicity and community prejudice had not prevented a fair trial. The Court stressed that juror exposure to news accounts of a crime does not presumptively deprive a defendant of a fair trial. Such a presumption arises only in extreme circumstances. Here, the large and diverse jury pool available in Houston, the fourth largest city in the country, dispelled the likelihood that 12 impartial jurors could not be found. The news stories about Enron and Skilling, although extensive, contained no blatantly prejudicial information. More than four years had passed between Enron's bankruptcy and Skilling's trial, and the extent of the news coverage diminished during that time. Finally, the jury's acquittal of Skilling on nine counts, as well as the fact that earlier Enron trials had not resulted in uniform success for the government, made it difficult for an appellate court to presume prejudice. The Court also praised the district court's efforts to screen the jury pool for actual prejudice and held that no prejudice had contaminated the jury that convicted Skilling. Justice Sotomayor, joined by Justices Stevens and Breyer, dissented from this aspect of the Court's judgment, asserting that Skilling did not receive a fair trial because of the pretrial publicity.

In a second part of the Court's opinion, in which a different group of six justices joined, the Court held that the honest-services fraud statute applies only to bribery and kickback schemes and that, because Skilling's conduct entailed no such scheme, the jury should not have been allowed to consider that theory. Noting that it must, where possible, "construe, not condemn, Congress's enactments," the Court declined to invalidate the statute on vagueness grounds. Instead, it construed the statute in a way that it held eliminated any grounds for constitutional challenge. It noted that section 1346 had been passed in direct response to the decision in McNally v. United States, 483 U.S. 350 (1987), which had held that the mail-fraud statute did not extend to fraudulent deprivations of intangible rights, and that the statute apparently was intended to restore the law as developed in lower court decisions before McNally. The core of the doctrine under those cases involved fraudulent schemes to deprive another of honest services through bribes and kickbacks paid by a third party who had not been deceived. In enacting section 1346, Congress clearly intended to reach at least this sort of conduct. Reading the statute more broadly would present vagueness concerns that the Court chose to avoid by construing it to apply only to this bribe-and-kickback core, the illegality of which was well-known to potential defendants.

The Court rejected the government's suggestion that the statute should also be read as proscribing undisclosed self-dealing by a public official or a private employee—that is, as essentially criminalizing conflict-of-interest principles. That conduct was not part of the core of misconduct recognized pre-McNally. The Court noted that excluding self-dealing from the statute was consisted with the rule that ambiguities as to the scope of criminal statutes should be resolved in favor of lenity. Justice Scalia, joined by Justices Thomas and Kennedy, disagreed with the Court's limiting construction of the statute, arguing that it should instead be declared unconstitutionally vague.

The Court noted that the indictment accused Skilling of a conspiracy having as its objects not only honest-service wire fraud but also money-or-property wire fraud and securities fraud, and it emphasized that its holding that the honest-services-fraud theory was improper did not necessarily require reversal of the conspiracy conviction. It left to the lower courts on remand the question whether the error in submitting the case on the honest-services theory was harmless or whether reversal of the conspiracy conviction would affect other aspects of Skilling's conviction.

Justice Ginsburg delivered the opinion of the Court, in which Chief Justice Roberts joined fully and other justices joined in various parts. Justice Scalia filed an opinion concurring in part and concurring in the judgment, in which Justice Thomas joined fully and Justice Kennedy joined in part. Justice Alito filed an opinion concurring in part and concurring in the judgment. Justice Sotomayor filed an opinion concurring in part and dissenting in part, in which Justices Stevens and Breyer joined.

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In Weyhrauch v. United States, No. 08-1196, another case involving similar issues, the Court issued a per curiam opinion vacating the judgment and remanding for reconsideration in light of Skilling.

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