RESPONDENT: United States
DOCKET NO.: 08-876
DECIDED BY: Roberts Court (2009-2010)
LOWER COURT: United States Court of Appeals for the Seventh Circuit
CITATION: 561 US 465 (2010)
GRANTED: May 18, 2009
ARGUED: Dec 08, 2009
DECIDED: Jun 24, 2010
Michael R. Dreeben - Deputy Solicitor General, Department of Justice, for the respondent
Miguel A. Estrada - for the petitioners
Facts of the case
Four former executives of Hollinger International were convicted of mail and wire fraud under 18 U.S.C. Section 1346 by an Illinois federal district court. In part, they had paid themselves $5.5 million in fees without the knowledge of the company's audit committee or board of directors. At trial, the jury was instructed that it could find the defendants guilty if it deemed they had schemed to deprive Hollinger and its shareholders "of their intangible right to the honest services of the corporate officers, directors, or controlling shareholders of Hollinger," and if the objective of the scheme was "private gain." On appeal, the defendants explained that while their objective was "private gain," the compensation had been crafted in order to avoid paying taxes to the Canadian government. Therefore, they argued that because their "private gain" was intended to be purely at the expense of the Canadian government and not the company, their actions did not violate the intent of Section 1346.
The U.S. Court of Appeals for the Seventh Circuit disagreed and affirmed the district court. It held that the deprivation of honest services owed to an employer is not mitigated simply because the inducement was a tax benefit obtained from a third party. The court reasoned that had the defendants disclosed to Hollinger's audit committee and board of directors that the compensation was meant to bring about tax benefits, the committee and board very well may have reduced the pay-out in light of the tax benefits.
1) Does 18 U.S.C. Section 1346 apply to private individuals whose alleged "scheme to defraud" did not intend harm to the private party to whom "honest services" were owed?
2) May a court of appeals avoid review of a prejudicial jury instruction by retroactively imposing a verdict preservation requirement that is not found in the federal rules?
Media for Black v. United StatesAudio Transcription for Oral Argument - December 08, 2009 in Black v. United States
Audio Transcription for Opinion Announcement - June 24, 2010 in Black v. United States
Ruth Bader Ginsburg:
I next announce the decision in Number 08-876, Black versus United States.
As In Skilling the defendants in this case were charged with fraud.
At trial the Government pursued alternative theories, money or property fraud and honest-services-fraud.
The government sought to pinpoint the theory or theories on which the jury relied in the event of a conviction.
To that purpose the government proposed special verdict forms asking the Jury to say whether the verdict rested on money or property fraud or honest-services-fraud or both.
The defendants resisted and the government ultimately acquiesced in submitting the case to the jury for an unelaborated general verdict.
On appeal the defendants urged the invalidity of the honest-services-fraud instructions.
The Seventh Circuit found no infirmity in those instructions but went on to move that in any event the defendants had forfeited their objection to the instructions.
Defendants did show the Court of Appeal said by opposing the government proposed special verdict forms which would have revealed whether the jury found honest-services-fraud or only money or property fraud.
We reverse the Seventh Circuit's judgment under our decision today In Skilling; the honest-services instructions given to the Jury in this case were incorrect.
By timely objecting to those instructions at trial, the defendants secure their right to challenge them on appeal.
The defendants did not forfeit that right by declining to acquiesce in the government proposed special verdict forms.
As In Skilling however, we leave for consideration on remand, the question whether the instructional error was ultimately harmless.
Justices Scalia, joined by Justice Thomas has filed an opinion concurring in part and concurring in the judgment.
Justice Kennedy has also filed an opinion concurring in part and concurring in the judgment.