Tuesday, December 8, 2009

Oral Arguments: Black v. US and Weyhrauch v. US

Guest Blogger - Timothy O'Toole - Miller & Chevalier

This morning's arguments before the Supreme Court raised important questions related to a species of federal mail and wire fraud known as "honest services" fraud.  The statutory basis for this theory is 18 U.S.C. 1346, a 28 word law passed in 1988 that essentially says that depriving someone of the intangible right of honest services can be a form of wire or mail fraud. The law has engendered considerable confusion in the federal courts of appeal, but the Supreme Court had never interpreted the statute before this term.  This morning's arguments were the first glimpse into what the Supreme Court's thinks the honest services fraud statute means and whether the Court thinks that the statute is unconstitutionally vague.  

1.    In both cases argued this morning, the Court had granted review on fairly narrow questions, but the real issue at both arguments was whether the Court could "save" the statute from constitutional challenges by narrowing its reach.  In Black, the Court had granted certiorari to decide the question of whether a private individual could be prosecuted for honest services fraud without any proof that his allegedly deceitful conduct economically harmed his employer.  In Weyhrauch, the question presented was whether a state public official (an Alaskastate legislator) could be prosecuted for honest services fraud for failing to disclose a conflict of interest, even though he had no duty under state law to disclose the conflict.  Both grants, however, were made against the backdrop of an opinion by Justice Scalia in February suggesting that the statute was invalid because there was no way to meaningfully distinguish lawful conduct from unlawful.   

2.    In both arguments, at least 8 justices (Justice Stevens dissented from a1987 decision striking down a prior version of the law, and he seemed the least troubled by the current statute) seemed to want to focus on the constitutional question Justice Scalia had identified, and all seemed to be really struggling with how to make sense of the vague statutory text.  Most justices expressed some discomfort with having the Court identify a "core" of conduct that the statute outlaws when Congress utterly failed to do so.  In the Black argument, counsel for Petitioner focused directly on this constitutional vagueness problem even though his briefing did not.  In the Weyhrauch argument, counsel for Petitioner tried mightily to avoid the constitutional issues, arguing that he should win the case regardless of whether the statute was constitutional because any sensible view of the statute would require a state law-based disclosure duty, and he had none.  The government sought to avoid the constitutional issues in both cases, faulting petitioner in Black for raising the question at argument, and repeatedly pointing out that Weyhrauch had not pursued the constitutional issues either.   Amicus briefs in both cases, by the NACDL and by the Chamber of Commerce (in Black only) had squarely challenged the statute on vagueness grounds. 

3. Ultimately, most members of the Court seemed resigned to the fact that the constitutional issue is one that cannot go away because it is an essential prerequisite to the statutory interpretation issues, and because it is raised in another pending case involving Jeffrey Skilling.   Justice Kennedy described the issue as "lurking."  The Chief Justice at one point noted the unfairness that would occur if the Court said to Mr. Weyhrauch and Mr. Black, no disclosure duty is required and no economic harm is required, and then held in Skilling that the statute was unconstitutional.  Justice Sotomayor kept wanting to discuss the Skilling scenario, particularly with the Solicitor General.  Justice Scalia told the Solicitor General that he didn't think that the Court's hands would be tied if it tried to find a limiting construction of the statute but could not do so because the statute was unconstitutional; under those circumstances, Justice Scalia suggested that the Court could act to strike down the statute.  Justice Breyer repeatedly asked the Solicitor General in both cases whether it would like the opportunity to fully brief the constitutionality of the statute, in order to address any concerns raised by the failure to squarely address the issue in the question presented.  

4.    Two primary concerns stand out from today's argument:  (1) all justices expressed unease with identifying what sort of "bad conduct" is covered by the statute in the absence of any meaningful guidance from Congress; and (2) the Solicitor General's proposed test is not going to sufficiently narrow the statute.  No one, in fact, seemed particularly inclined to adopt the SG's interpretation of the statute.  At one point, Justice Breyer suggested that 140,000,000 people throughout the country had probably violated the honest services law as the SG described it, by fibbing to an employer in order to do something his or her boss wouldn't like.  Justice Scalia described a similar scenario in which an employee tells the boss he is going to work hard all afternoon if the boss leaves him alone, but makes this misstatement so the boss will go away and he can sit at his desk and read the racing form.  The government had a very hard time explaining why this conduct would not fall within the statute as it had defined it, and ultimately suggested that prosecutors wouldn't bring those sort of cases and/or jurors wouldn't convict.  That answer did not engender a positive response.  No one seemed comfortable with leaving such broad, undefined discretion in the hands of prosecutors and juries. 

Conclusion:  In the end, its really hard to tell how the cases will come out because, while there was general consensus that the Court has a mess on its hands, there was not much seeming consensus on how to fix it.  One interesting thing to note is that, just yesterday, the Court denied certiorari in an honest services fraud out of Las Vegas (United States v. Kincaid Chauncey), which may provide some indication that it is not inclined to invalidate the statute entirely.  But the Court is clearly struggling with how "save" what on its face is an utterly standardless law, and nothing that it heard at argument seemed to provide a way out.  It would not be surprising if the Court's next step after argument is to ask for additional briefing aimed directly at the Constitutional issues that were the focus of today's argument.  

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