Supreme Court Overturns Enron CEO’s Conviction, Strikes “Honest Services” Law

The Supreme Court Thursday unanimously ruled that a federal law often used in corruption prosecutions is unconstitutionally vague. The law in question, making it illegal “to deprive another of the intangible right of honest services,” was used in cases where there the accused had not clearly stolen money or had not provided a concrete benefit in exchange for money.

Jeffery Skilling, former CEO of Enron, was convicted in 2006 of—among other things—depriving shareholders of his “honest services” when he made false statements about Enron's financial state and benefitted from Enron's inflated stock price. Skilling appealed his conviction, arguing that the “honest services” law was unconstitutionally vague.

Justice Ruth Bader Ginsburg, writing for the Court, said that when Congress passed the “honest services” law it had not intended the law to reach this broadly. Instead, she wrote, Congress had likely intended the law to codify language in an earlier Supreme Court decision regarding bribery and kickback schemes. The law should therefore be limited to those kinds of schemes, she wrote, and under that interpretation the law does not cover Skilling's actions.

Justice Antonin Scalia, joined by Justices Clarence Thomas and Anthony Kennedy, wrote separately but agreed with Ginsburg’s conclusion. Rather than limit the law to bribery and kickbacks, though, Scalia argued the Court should have thrown out the law entirely.

In either case, all 9 Justices agreed that the “honest services” law cannot be applied in cases like Skilling’s.

In a separate section of Ginsburg’s opinion, the Court decided that Skilling had received a fair trial in Houston, the city of Enron’s former headquarters, despite significant media coverage and the economic impact on the city from Enron’s collapse. Justice Sonia Sotomayor, the only former trial judge on the Supreme Court, disagreed, faulting the trial court for inadequately screening potential jurors for bias. Justices John Paul Stevens and Stephen Breyer agreed on this point.

The case will now return to lower courts, where judges will have to decide whether any of the charges on which Skilling was convicted can stand without the “honest services” conviction. If not, Skilling will likely face a new trial.

The case is Skilling v. US.

Former Enron Executive Argues Against Biased Juries, "Honest Services" Law

Today in the Supreme Court lawyers for former Enron executive Jeff Skilling argued that the federal law criminalizing depriving someone "of the intangible right of honest services," one of the laws under which Skilling was convicted in 2006, was unconstitutionally vague and should be thrown out.

Skilling's lawyer told the Justices that the "honest services" law applies so broadly that it must fall under the Constitution's prohibition against vague laws. The lawyer, Sri Srinivasan, gave the example of an employee who uses office computers for personal use, contrary to an office policy against personal use. Srinivasan asked whether that is a violation of federal law, prompting Chief Justice John Roberts to respond that the law may be broad, but it is not vague.

The Justices overall seemed much more interested in Skilling's challenge to the method by which his jury was picked, possibly because the Court heard arguments about "honest services" in two cases this past December. When the jury was picked for Skilling's trial, each potential juror was asked to complete a 14-page questionnaire, and some jurors were then questioned directly by the judge for an average of 4.5 minutes. Srinivasan argued that that a brief interview was not long enough to properly determine if jurors would be able to give Skilling a fair chance. In addition, Srinivasan pointed to several jurors who indicated they had some pre-existing opinions of Skilling on the form, but were not asked to explain why they felt they could still give Skilling a fair trial.

Several of the Justices, most notably Justices Stephen Breyer and Sonia Sotomayor, seemed to agree that there was something wrong with the trial judge's lack of follow-up, but all the Justices were hesitant to overrule an experienced trial judge who seemed to otherwise know what he was doing. Justice Sotomayor is the only sitting Justice who has served as a trial judge. Additionally, Justice Breyer did not seem to know what kind of future guidance the Court could give trial judges as to what kind of juror questioning is needed.

The Supreme Court will decide the case before its summer recess.