Guest Commentary

Jonathan L. Marcus, Covington & Burling*

In a trio of decisions today, the U.S. Supreme Court sharply limited the reach of the “honest services fraud” statute, 18 U.S.C. § 1346, by restricting it to cases involving alleged bribes or kickbacks.  

In Skilling v. United States, Justice Ginsburg’s majority opinion acknowledged that in prior case law there was “considerable disarray” about what it means to deprive someone of honest services, at least at the outer boundaries of the doctrine.  But six justices agreed that at its core, the doctrine clearly prohibits schemes involving bribes and kickbacks.  The prototypical honest-services fraud case, according to the Court, involves a public official who accepts a bribe or kickback from a third party in exchange for awarding a contract; even if the government incurs no tangible loss, it has been deprived of the official’s honest services.  The Court held that whatever vagueness problems there might be in other applications of the law, there is no constitutional infirmity in cases involving “fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who [has] not been deceived,” including those involving private actors like Skilling and the defendants in Black

Justice Scalia, joined by Justices Thomas and Kennedy, concurred in the judgment reversing the Fifth Circuit, but for a different reason.  Instead of merely limiting the statute’s reach, Justice Scalia would have reversed Skilling’s conviction because, in his view, § 1346 provides no standard for the conduct it condemns and is unconstitutionally vague in all applications.  The Court stated that its responsibility, where possible, is “to construe, not condemn, Congress’ enactments,” and found honest-services fraud susceptible to a limiting construction.  Justice Scalia, however, accused the Court of improperly assuming the power to define new federal crimes. 

Justice Scalia also noted that the Court’s holding left many questions unanswered, including “the most fundamental indeterminacy:  the character of the ‘fiduciary capacity’ to which the bribery and kickback restriction applies.”  Justice Scalia’s concern is well-taken, because the Court, while identifying a few types of “special relationship[s]” from which a fiduciary duty may arise, did not address either the source or the scope of fiduciary duties.  Instead, the Court was content with the observation that the existence of a fiduciary relationship was “beyond dispute” in the cases on which it relied in identifying the “core” of honest-services fraud.  As a result, the boundaries of the statute even as limited by the Court are far from settled and will undoubtedly be the subject of challenges in future prosecutions. 

In Skilling and the two related cases decided today – Black v. United States and Weyhrauch v. United States – the government had advanced a view of honest services fraud that goes well beyond bribes and kickbacks.  As a result, in all three decisions, the Supreme Court vacated the lower-court judgments and remanded the cases for further proceedings in the courts of appeals. 

The Court did not require reversal of the convictions in Skilling or Black.  Instead, it called for the appellate courts to conduct a harmless-error analysis in each case, clarifying that a harmless-error standard applies to direct appeals just as it does on collateral review.  Weyhrauch involved an interlocutory appeal, so the effect of the decision will be to narrow the scope of the government’s honest-services fraud theory that it may present at trial. 

The implications of the Court’s holding that the honest-services theory of mail fraud encompasses only bribery and kickbacks are significant, to say the least.  The government should expect an avalanche of legal challenges on both direct and collateral review.  Any defendant whose conviction possibly rests on an honest-services theory, be it for mail fraud, wire fraud, conspiracy, or other crimes, has fertile ground for obtaining relief.  Even defendants whose conduct arguably involved bribery or self-dealing can argue that a jury instruction that was not so limited was prejudicial.  Moreover, as the Skilling and Black cases suggest, defendants convicted on multiple counts, some of which were not based on honest-services fraud, have a shot at getting reversal on all counts.  The theory is that the honest-services instruction could have had a prejudicial spillover effect on the other counts.  While the Court in Skilling clarified that a conviction that might have been based on a flawed honest-services theory is not subject to automatic reversal on direct review, the harmless-error standard the government faces, especially on direct review, will still be difficult for it to meet.  

Finally, any potential action on the legislative front will not have any effect on convictions already obtained and the legal challenges that are now available as a result of the Court’s construction of the honest-services provision today.

*Mr. Marcus is a member of the National Association of Criminal Defense Lawyers (NACDL), and was counsel of record on NACDL’s amicus brief in Black v. United States, but the opinions stated above reflect his own views and not necessarily those of NACDL.