Citizens United v. Fed. Election Comm'n., No. 08-205, slip op. (U.S. Jan. 21, 2010)

AuthorGregory Sobczak
Pages76-77
B u s i n e s s L a w B r i e f | S p r i n g / S u m m e r 2 0 1 07 6
United States v. Skilling, 554 F.3d
529 (5th Cir. 2009)
By: Tanjima Islam, Junior Editor
Defendant Jeffrey Skilling is the
infamous former CEO of Enron. Skilling
became the CEO of Enron in February
of 2001 and resigned in August of 2001.
1
Four months after Skilling’s resignation,
Enron went bankrupt without warning.
2
An investigation led to an allegation that
Skilling was at the center of a conspiracy
to mislead investors about the actual
state of the company, by hugely overstat-
ing how well the company was actually
doing.
3
The Fifth Circuit upheld Skill-
ing’s convictions of wire and mail fraud,
which included the honest services fraud
charge.
4
The Supreme Court has granted
certiorari to this case to review the honest
services statute generally.
This case is interesting because it is
the third recent case on honest services
fraud that the Supreme Court has opted
to review in the past year.
5
The Fifth
Circuit in its decision explains that the
honest services statute is worded vaguely,
since the statute does not provide an
actual definition of “honest services.”
6
This case differs slightly from the other
cases heard by the Court because the peti-
tion for certiorari raised an issue regarding
the constitutionality of the case.
7
The
other honest services case in the private
sector involved a discussion of the theory
of what could be considered the depriva-
tion of honest services for the purpose
of private gain.
8
Although the Skilling
case addresses this question, the petition
also raises the argument that the honest
services fraud is unconstitutionally vague
and cannot be corrected with the imposi-
tion of limitations.
9
The Court’s focus in Black is to
determine how to better define, narrow,
and implement the honest services stat-
ute, however, in his petition, Skilling is
arguing that the statute should be struck
down as unconstitutional. If the statute
were struck down as unconstitutional,
the question is whether Congress would
step in with a new statute related to and
specifying the definition of intangible
honest services in a new statute. The ben-
efit of recognizing the deprivation of the
intangible honest services as fraud is that
it provides a measure for the damage done
to a corporation beyond mere money and
property fraud. It implicates the fact that
an executive owes a fiduciary duty to his
corporation, shareholders, and third par-
ties. Although the term “honest services
is a broad term, Congress may have left
the term open on purpose, finding it dif-
ficult to specify exactly what constitutes
a “deprivation of honest services” and
placing the burden on the government to
prove that something is one of these so-
called honest services.
On the other hand, honest services
may be such a broad term that it allows
prosecutors to get an easy conviction of
fraud in almost any case. The govern-
ment may be able to demonstrate that
any corporate action is an honest services
fraud, which may result in unnecessary
convictions and sentencing. Even with
limitations, the term “honest services”
may still be too broad, and if Congress
did intend the term to be broad, strict and
defined limitations may be inconsistent
with the legislative purpose of the statute.
In this case, it may be better for the Court
to find the honest services statute uncon-
stitutionally vague and force Congress to
start with a clean slate and better illustrate
its legislative purpose.
Endnotes
1 United States v. Skilling, 554 F.3d 529, 534 (5th
Cir. 2009).
2 Id.
3 Id.
4 Id. at 594.
5 Black v. United States, 530 F.3d 596 (7th Cir.
2008); Weyhrauch v. United States, 548 F.3d 1237
(9th Cir. 2008).
6 Skilling, 554 F.3d at 543; 18 U.S.C. §1346 (West
2010).
7 Posting of Lyle Denniston to SCOTUSblog,
http://www.scotusblog.com/ (Feb. 26, 2010, 17:32
EST).
8 Black, 530 F.3d at 600.
9 See Posting of Lyle Denniston to SCOTUSblog,
supra note 7.
Citizens United v. Fed. Election
Comm’n, 130 S. Ct. 876 (2010)
By: Gregory Sobczak, Junior Editor
In a 5 to 4 decision, the Supreme
Court in Citizens United v. Federal Elec-
tion Commission1 found that a limita-
tion on a corporation’s ability to make
independent expenditures in a political
election is an unconstitutional ban on
free speech.2
Citizens United, a nonprofit cor-
poration, sought to release Hillary: The
Movie, a video critique of then presiden-
tial candidate Hillary Clinton, within
thirty days of the last date of the Demo-
cratic primaries.
3
Citizens United chal-
lenged the federal limits found in section
203 of the Bipartisan Campaign Reform
Act of 2002 (BCRA) for the amount
of independent expenditures corpora-
tions can make within thirty days of the
final primary.
4
Ultimately, the petitioners
sought declaratory and injunctive relief
against the Federal Election Commis-
sion (FEC) and argued that current FEC
limits on corporate independent expendi-
tures resulted in an unreasonable chilling
effect on free speech.
5
First, the court did not find a narrow
ground on which to rule such as deeming
the movie as not publically distributed or
not the functional equivalent of express
advocacy.
6
The Court then considered
the entire facial validity of section 203
of the BCRA and its chilling effects on
political speech.
7
The Court reasoned
that because there is much uncertainty
caused by the government’s position of
just treating these types of cases as an
as-applied challenge, there would be sub-
stantial time involved in trying to avoid
any free speech deterrents that result
from improper statutory interpretation.
8
In addition, the Court asserted that since
free speech is so crucial to the election
process, the Court should reconsider its
prior ruling in Austin v. Michigan State
Chamber of Commerce
9
— a case that held
speech by corporations could be limited

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