SKILLING v. UNITED STATES
561 U. S. ____ (2010) (2010)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The federal honest-services fraud statute, 18 U.S.C. § 1346, criminalizes only bribery and kickback schemes, not undisclosed conflicts of interest or other forms of misconduct. A presumption of juror prejudice arises from pretrial publicity only in extreme cases, and a thorough voir dire process is generally sufficient to empanel an impartial jury even in a high-profile case.
Facts:
- Jeffrey Skilling began working for Enron Corporation in 1990 and rose through the ranks to become Chief Executive Officer in February 2001.
- Throughout his tenure, Skilling and other executives engaged in a scheme to mislead the public about Enron's true financial performance to artificially inflate the company's stock price.
- Skilling unexpectedly resigned from Enron on August 14, 2001, just six months after becoming CEO.
- Less than four months after his departure, Enron declared bankruptcy, causing its stock price to plummet from over $90 per share to pennies.
- The company's collapse resulted in thousands of lost jobs and wiped out billions of dollars in shareholder value and employee retirement savings, causing significant economic and emotional impact in the Houston community where Enron was headquartered.
Procedural Posture:
- A federal grand jury indicted Jeffrey Skilling in the U.S. District Court for the Southern District of Texas.
- Skilling moved to transfer the trial to another venue, arguing that pretrial publicity and community hostility in Houston made a fair trial impossible; the district court denied the motion.
- After a co-defendant pleaded guilty, Skilling renewed his change-of-venue motion; the district court again denied it.
- Following a four-month trial, a jury convicted Skilling on 19 counts, including the honest-services fraud conspiracy charge, and acquitted him on 9 insider-trading counts.
- Skilling (appellant) appealed his convictions to the U.S. Court of Appeals for the Fifth Circuit, with the United States as appellee.
- The Fifth Circuit affirmed the convictions, holding that while a presumption of prejudice had arisen, it was rebutted by a thorough voir dire process, and that Skilling's conduct constituted honest-services fraud.
- The U.S. Supreme Court granted certiorari to review the case.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
First, does pervasive, negative pretrial publicity and widespread community animus in a large metropolitan area create a presumption of juror prejudice that requires a change of venue? Second, does the 'honest-services' wire fraud statute, 18 U.S.C. § 1346, criminalize a corporate officer's fraudulent misrepresentation of company performance to inflate stock prices, in the absence of a bribe or kickback?
Opinions:
Majority - Justice Ginsburg
On the first issue, no. A presumption of juror prejudice did not arise because the circumstances of Skilling's trial did not meet the high bar set by precedent. The Court reasoned that several factors distinguished this case from those where prejudice was presumed: Houston's large and diverse jury pool diluted the effects of media coverage; the publicity, while negative, did not include a confession or other 'blatantly prejudicial information'; over four years passed between Enron's collapse and the trial, lessening the intensity of public passion; and the jury's acquittal of Skilling on nine counts demonstrated its ability to deliberate impartially. The voir dire process, including a detailed questionnaire and individual questioning, was sufficient to seat a fair jury. On the second issue, no. The 'honest-services' statute does not criminalize Skilling's alleged misconduct. The Court held that § 1346, which was enacted to overrule McNally v. United States, is unconstitutionally vague if read broadly. To save the statute, the Court applied a limiting construction, paring it down to its 'core' meaning derived from pre-McNally case law. This core is confined to fraudulent schemes involving bribes and kickbacks. Because the government did not allege that Skilling participated in any bribery or kickback scheme, his conduct did not fall within the statute's proscription.
Concurring-in-part-and-dissenting-in-part - Justice Sotomayor
On the first issue, yes. Skilling did not receive a fair trial because the majority understated the extreme community hostility in Houston and the deficiencies in the jury selection process. The collapse of Enron was a deeply personal and financial blow to the Houston community, creating an atmosphere of intense prejudice that was confirmed by juror questionnaires. The five-hour voir dire was too cursory and superficial to adequately probe for this deep-seated bias, and the trial court was too quick to accept jurors' assurances of fairness without sufficient scrutiny. On the second issue, Justice Sotomayor joined the majority's opinion.
Concurrence - Justice Scalia
On the first issue, Justice Scalia joined the majority's opinion. On the second issue, no. The statute is unconstitutionally vague and should be invalidated, not rewritten by the Court. The majority's decision to 'pare down' the statute to only cover bribery and kickbacks is not a permissible judicial interpretation but an act of legislative invention. The pre-McNally 'honest-services' doctrine was a hopelessly undefined 'hodgepodge' of conflicting holdings, and by referencing it, Congress enacted a standardless, and therefore unconstitutional, criminal law. The proper remedy is to strike down the statute for vagueness, not to create a new, narrower crime.
Concurrence - Justice Alito
On the first issue, Justice Alito joined the majority's judgment, arguing that the Sixth Amendment right to an impartial jury is satisfied as long as no biased juror is actually seated. He rejected the concept of presumed prejudice, stating that if the jury that returns a verdict is impartial, the defendant has received what the Constitution requires, regardless of the level of pretrial publicity. On the second issue, Justice Alito joined the majority's opinion.
Analysis:
This decision significantly curtailed the scope of a key tool used by federal prosecutors against corporate and public corruption. By limiting 18 U.S.C. § 1346 to only bribery and kickback schemes, the Court effectively eliminated its use for prosecuting undisclosed self-dealing and conflicts of interest that do not involve a quid pro quo payment. This narrowing requires Congress to legislate with much greater clarity if it wishes to criminalize other forms of fiduciary breach. The fair trial holding reinforces the high bar for presuming juror prejudice, affirming that in large, modern media markets, careful jury selection is the preferred remedy over a change of venue.
