Skilling v. United States

PETITIONER: Jeffrey Skilling
RESPONDENT: United States
LOCATION:

DOCKET NO.: 08-1394
DECIDED BY: Roberts Court (2009-2010)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 561 US 358 (2010)
GRANTED: Oct 13, 2009
ARGUED: Mar 01, 2010
DECIDED: Jun 24, 2010

ADVOCATES:
Michael R. Dreeben - Deputy Solicitor General, Department of Justice, for the respondent
Sri Srinivasan - for the petitioner

Facts of the case

A Texas federal district court convicted Jeffrey Skilling of conspiracy, securities fraud, making false representations to auditors, and insider trading. Mr. Skilling was the former C.E.O. of Enron Corp. On appeal, he argued that the government prosecuted him under an invalid legal theory and that the jury was biased.

The United States Court of Appeals for the Fifth Circuit affirmed the conviction, but vacated Mr. Skilling's sentence and remanded the case for resentencing. The court first held that the government's theory under the "Honest Services" fraud statute was valid. It reasoned that it was immaterial whether Enron's board of directors knew or even tacitly approved of Mr. Skilling's fraudulent conduct when he withheld information that would lead a reasonable employer to change its conduct. Moreover, the court held that while Mr. Skilling proved that there was sufficient inflammatory and pervasive pretrial publicity to require a presumption that prejudice tainted the jury, the government met its burden to show that jury screening was adequate, and that the district court did not empanel any juror who was unconstitutionally prejudiced.

Question

1) Does the "Honest Services" fraud statute, 18 U.S.C. Section 1346, require the government to prove that defendant's conduct was intended to achieve "private gain", and, if not, is Section 1346 unconstitutionally vague?

2) When the presumption of jury prejudice arises because of widespread community impact of the defendant's alleged conduct and widespread inflammatory pretrial publicity, may the government rebut the presumption of prejudice, and, if so, must the government prove beyond a reasonable doubt that no juror was actually prejudiced?

Media for Skilling v. United States

Audio Transcription for Oral Argument - March 01, 2010 in Skilling v. United States

Audio Transcription for Opinion Announcement - June 24, 2010 in Skilling v. United States

John G. Roberts, Jr.:

Justice Ginsburg has the opinion in -- opinions in three related cases this morning.

Ruth Bader Ginsburg:

First of the decisions I will announce is number 08-1394 Skilling v. United States.

In 2001, Enron Corporation, then one of the world's leading energy companies crashed into bankruptcy.

This opinion considers two questions arising from the prosecution of Jeffrey Skilling, a longtime top Enron Executive, for crimes committed before the corporation's collapse.

First, did pretrial publicity and community prejudice prevent Skilling from obtaining the fair trial of the Sixth Amendment guarantees and second, was Skilling properly charged with and convicted of conspiracy to commit honest services wire fraud.

The Fifth Circuit answering no to the first question and yes to the second, affirmed Skilling's convictions.

We agree with the Fifth Circuit's ruling on Skilling's fair trial claim, but we disagree with that court’s opinion on Skilling's honest services conviction.

We therefore affirm in part and vacate in part.

On the fair trial issue, Skilling argues that his prosecution never should have proceeded in Houston, Enron's home base.

Pointing to the heavy media coverage and the community outrage attending Enron's collapse, he urges this Court to presume that prejudice infected his jury.

Critical differences, however, separate Skilling's trial from those in which we have presumed juror prejudice.

First in contrast to the small-town settings at issue in prior cases, Houston is the fourth most populous city in the nation, the suggestion that 12 impartial jurors could not be found there is hard to sustain.

Second, news stories about Skilling reported no smoking gun evidence, nothing comparable to the murder confessions broadcast in prior cases.

Third, media attention diminished somewhat in the four years between Enron's collapse and Skilling’s trial and finally Skilling's jury acquitted him of nine insider trading charges.

Those not guilty verdicts hardly suggested jury incapable of weighing the evidence impartially.

We conclude in short that no presumption of prejudice should have disqualified Houston as a place appropriate for Skilling's trial.

We further hold that no actual prejudice contaminated Skilling's jury.

The jury selection process, we are satisfied, adequately detected and defused potential juror bias.

The District Court initially screened venire members by using a comprehensive questionnaire drafted in large part by Skilling’s counsel.

That 77-question, 14-page document was designed to probe potential jurors’ exposure to pretrial publicity and their opinions about Enron and Skilling.

During voir dire the court questioned each venire member individually, focusing on questionnaire answers that raised a red flag signaling possible bias.

Once done, the Court allowed counsel to ask follow-up questions.

Careful consideration of the questionnaires and voir dire of the seated jurors satisfies us that the fact triers in Skilling’s case were largely uninterested in and personally untouched by Enron's collapse.

Accordingly we reject Skilling's claim that he was denied his Sixth Amendment right to trial by an impartial jury.

We next consider whether Skilling was improperly convicted of conspiracy to commit honest services wire fraud.

To understand how honest services fraud works, consider the following example.

A mayor accepts a bribe from a third party in exchange for awarding that party a city contract.

If the contract terms are the same as any that could have been negotiated at arm's length, the city suffers no tangible loss of money or property, but the citizens are harmed because they have been deprived of their right to the Mayor’s honest services.

Beginning in the 1940s, the Court of Appeals one after the other upheld fraud convictions of both public and private employees based on facts resembling those in the bribed Mayor's example.

By 1982, all Federal appellate courts had embraced the honest services theory of fraud.