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Nos. 08-40, 08-58 and 08-67

In the Supreme Court of the United States




JOSEPH HIRKO, PETITIONER
v.
UNITED STATES OF AMERICA




REX SHELBY, PETITIONER
v.
UNITED STATES OF AMERICA




F. SCOTT YEAGER, PETITIONER
v.
UNITED STATES OF AMERICA




ON PETITIONS FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT




BRIEF FOR THE UNITED STATES IN OPPOSITION






GREGORY G. GARRE
Solicitor General
Counsel of Record
MATTHEW W. FRIEDRICH
Acting Assistant Attorney
General
JOSEPH C. WYDERKO
Attorney
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217



QUESTION PRESENTED
Whether, under the collateral estoppel component of the Double Jeopardy Clause, the jury's verdict that pe titioners were not guilty on some counts bars the gov ernment from retrying petitioners on other counts on which the jury was unable to reach a verdict.



In the Supreme Court of the United States





No. 08-40
JOSEPH HIRKO, PETITIONER
v.
UNITED STATES OF AMERICA



No. 08-58
REX SHELBY, PETITIONER
v.
UNITED STATES OF AMERICA



No. 08-67
F. SCOTT YEAGER, PETITIONER
v.
UNITED STATES OF AMERICA




ON PETITIONS FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT




BRIEF FOR THE UNITED STATES IN OPPOSITION




OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-28a) is reported at 521 F.3d 367.1 The opinion of the district

court denying petitioner Hirko's motion to dismiss (Pet. App. 29a-59a) is reported at 447 F. Supp. 2d 734. The opinion of the district court denying petitioner Shelby's motion to dismiss (08-58 Pet. App. 29a-60a) is reported at 447 F. Supp. 2d 750. The opinion of the district court denying petitioner Yeager's motion to dismiss (08-67 Pet. App. 29a-66a) is reported at 446 F. Supp. 2d 719.

JURISDICTION

The judgment of the court of appeals was entered on March 17, 2008. A petition for rehearing was denied on April 14, 2008 (Pet. App. 60a-61a). The petition for a writ of certiorari in No. 08-40 was filed on July 8, 2008, and the petitions for a writ of certiorari in Nos. 08-58 and 08-67 were filed on July 14, 2008 (Monday). The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

In November 2005, a grand jury sitting in the South ern District of Texas returned a seventh superseding indictment against petitioners Hirko and Shelby and an eighth superseding indictment against petitioner Yea ger. Hirko was charged with conspiracy to commit wire fraud and securities fraud, in violation of 18 U.S.C. 371 (2000); securities fraud, in violation of 15 U.S.C. 78j(b) (2000), 15 U.S.C. 78ff (2000 & Supp. 2002), and 17 C.F.R. 240.10b-5; two counts of wire fraud, in violation of 18 U.S.C. 1343 (Supp. II 2002); and five counts of insider trading, in violation of 15 U.S.C. 78j(b) (2000), 15 U.S.C. 78ff (2000 & Supp. II 2002), and 17 C.F.R. 240.10b-5. Seventh Superseding Indictment paras. 23-29, 34-35. Shelby was charged with conspiracy to commit wire fraud and securities fraud, securities fraud, and four counts of insider trading. Id. paras. 23-27, 32-33. Yea ger was charged with five counts of insider trading and eight counts of money laundering in violation of 18 U.S.C. 1957 (2000). Eighth Superseding Indictment paras. 26-29. Petitioners moved to dismiss the bulk of those charges on the ground that the collateral estoppel component of the Fifth Amendment's Double Jeopardy Clause barred their prosecution. See Pet. App. 5a. The district court denied petitioners' motions. Id. at 29a-59a (Hirko); 08-58 Pet. App. 29a-60a (Shelby); 08-67 Pet. App. 29a-66a (Yeager). The court of appeals affirmed. Pet. App. 1a-28a.

1. Petitioners were executives at Enron Broadband Services (EBS), a unit of Enron Corporation engaged in the telecommunications business. In late 1998, EBS sought to develop an advanced "intelligent" communica tions network and the software necessary to run the network. According to the indictments, petitioners pur posely sought to deceive the public and to drive up the price of Enron stock by making false statements about EBS's progress and financial condition. At the same time, the indictments allege, petitioners enriched them selves by selling millions of dollars of Enron stock. The indictments charge that petitioners made the false claims in press releases between 1999 and 2000 and at Enron's annual analyst conference in January 2000. Pet. App. 3a-4a; Gov't C.A. Br. 5-12.

2. In November 2004, a fifth superseding indictment charged petitioners with conspiracy to commit wire fraud and securities fraud, in violation of 18 U.S.C. 371 (2000) (Count 1); securities fraud, in violation of 15 U.S.C. 78j(b) (2000), 15 U.S.C. 78ff (2000 & Supp. II 2002), and 17 C.F.R. 240.10b-5 (Count 2); and four counts of wire fraud, in violation of 18 U.S.C. 1343 (Supp. II 2002) (Counts 3-6). In addition, each peti tioner was charged with insider trading under 15 U.S.C. 78j(b) (2000), 15 U.S.C. 78ff (2000 & Supp. II 2002), and 17 C.F.R. 240.10b-5: Hirko was charged with seven counts (Counts 23-26, 172-174), Shelby was charged with eight counts (Counts 47-54), and Yeager was charged with 20 counts (Counts 27-46). Each petitioner was also charged with money laundering under 18 U.S.C. 1957 (2000): Hirko was charged with 14 counts (Counts 55-66, 175-176), Shelby was charged with six counts (Counts 166-171), and Yeager was charged with 99 counts (Counts 67-165). Pet. App. 3a n.2; Gov't C.A. Br. 2-3.

After a trial in the United States District Court for the Southern District of Texas, the jury found petition ers not guilty on some counts but was unable to reach a verdict on the remaining counts. The jury found Hirko not guilty on two counts of insider trading (Counts 23- 24) and 12 counts of money laundering (Counts 55-66). The jury found Shelby not guilty on four counts of in sider trading (Counts 51-54). And the jury found Yea ger not guilty on the conspiracy count (Count 1), the se curities fraud count (Count 2), and the four counts of wire fraud (Counts 3-6). The jury was unable to reach a verdict on the other counts. The district court granted judgments of acquittal for Shelby on the four wire fraud counts (Counts 3-6) and on the six money laundering counts (Counts 166-171). The court declared a mistrial on the remaining counts. Pet. App. 4a; Gov't C.A. Br. 3- 4.

3. Subsequently, in November 2005, the grand jury returned the seventh and eighth superseding indict ments, which essentially deleted the counts on which petitioners were acquitted and re-alleged some, but not all, of the counts on which the jury had deadlocked. The first two counts of the seventh superseding indictment charged Hirko and Shelby with conspiracy to commit wire and securities fraud as well as securities fraud, and those counts rested on essentially the same facts as Counts 1 and 2 of the fifth superseding indictment. The seventh superseding indictment also re-alleged against Hirko two of the wire fraud counts and five of the in sider trading counts that had been charged in the fifth superseding indictment, and it charged Shelby with four insider trading counts that had been alleged in the fifth superseding indictment. Neither Hirko nor Shelby was charged with any money laundering counts. The eighth superseding indictment charged Yeager with five counts of insider trading and eight counts of money laundering, all of which had been alleged in the fifth superseding indictment. Pet. App. 4a-5a; Gov't C.A. Br. 4, 11-12.

4. Petitioners Hirko and Shelby moved to dismiss some of the counts charged in the seventh superseding indictment, and petitioner Yeager moved to dismiss all of the counts charged in the eighth superseding indict ment. Petitioners claimed that the collateral estoppel component of the Double Jeopardy Clause barred fur ther prosecution on those counts because, according to petitioners, facts essential to conviction on the counts had been resolved in their favor by the acquittals at the prior trial. The district court denied the motions. Pet. App. 4a-5a, 29a-59a; 08-58 Pet. App. 29a-60a; 08-67 Pet. App. 29a-66a.

a. Hirko moved to dismiss the securities fraud count, the two wire fraud counts, and two of the insider trading counts. Pet. App. 5a, 31a-34a.2 He argued that the jury at the prior trial had necessarily found that he did not engage in the misrepresentations that formed the fac tual basis of those counts when it found him not guilty of the 12 money laundering and two other insider trading counts. Id. at 44a-45a; Gov't C.A. Br. 17.

The district court denied Hirko's motion. Pet. App. 29a-59a. The court concluded that the prior acquittals on the money laundering counts had no preclusive effect because, "[u]nder the circumstances of this case, the jury could have acquitted [Hirko] for any number of rea sons," including that the funds that he allegedly laun dered "were derived from the sale of stock that did not involve the proceeds of criminal activity." Id. at 45a. The court concluded that the prior acquittals on the in sider trading counts likewise had no preclusive effect because the court could not determine "what particular issues the jury necessarily decided" when it found Hirko not guilty of those charges. Id. at 51a.

b. Shelby moved to dismiss the securities fraud count and the four insider trading counts. 08-58 Pet. App. 4a-5a, 31a-34a.3 He argued that those counts were barred by collateral estoppel because the jury at the prior trial had necessarily decided that he did not act with the requisite intent to defraud when it found him not guilty on four other insider trading counts. Id. at 34a-35a, 43a.

The district court denied Shelby's motion. 08-58 Pet. App. 29a-60a. The court concluded that "the record con tain[ed] no clear indication" that the jury's acquittals on the insider trading counts at the prior trial were "based on a finding that [Shelby] lacked knowledge or an intent to defraud." Id. at 49a. "Rather," the court explained, "the jury could have found that the government failed to prove beyond a reasonable doubt that [Shelby] actually used material non-public information that he had in his possession at the time that he made [the] trades [in volved in those counts], or that the government failed to establish that [he] employed or devised a scheme to de fraud during that time period." Ibid. The court ob served that the government's evidence that Shelby had acquired material, nonpublic information at the time he made the stock sales was stronger for the counts on which the jury had hung than for the counts on which it had found Shelby not guilty. Id. at 49-50a.

c. Yeager moved to dismiss the five insider trading counts and the eight money laundering counts. 08-67 Pet. App. 5a, 31a-36a. He argued that those counts were barred by collateral estoppel because the jury at the prior trial had necessarily found that he did not use ma terial, nonpublic information in his sales of Enron stock when it found him not guilty on the conspiracy count, the securities fraud count, and the four wire fraud counts. Id. at 39a-40a, 49a-50a.

The district court denied Yeager's motion. 08-67 Pet. App. 29a-66a. The court concluded that the jury's not- guilty verdicts at the prior trial "necessarily determined that [Yeager] did not knowingly and wilfully participate or agree to participate in a scheme to defraud in connec tion with the alleged false statements or material omis sions made at the analyst conference and press releas es." Id. at 59a. The court stressed, however, that this determination did not "negate the government's evi dence and contention that Yeager possessed and used material nonpublic information at the time he made trades of Enron stock." Ibid. Because the government was not required to prove Yeager's participation in the scheme to defraud in order to establish his guilt on the insider trading counts, the court ruled that the prior ac quittals did not collaterally estop the government from retrying Yeager on the insider trading and money laun dering counts. Id. at 58a-59a, 62a.

5. The court of appeals affirmed. The court held that, on the facts of this case, the acquittals at the prior trial did not collaterally estop the government from re trying petitioners on any of the counts on which the jury was unable to reach a verdict. Pet. App. 1a-28a.

a. The court of appeals first concluded that Shelby failed to show that the jury, in finding him not guilty on four insider trading counts, had necessarily made a fac tual determination that would bar a retrial on the other four insider trading counts and the securities fraud count. Pet. App. 8a-13a. The court observed that the four insider trading acquittals at the prior trial involved sales of Enron stock during the summer of 2000, while the four insider trading counts on which the jury hung involved sales between January and March 2000. Id. at 8a. After an "extensive" examination of the record, id. at 9a, the court found that the acquittals could have been based on the jury's determination that Shelby "did not 'use' undisclosed, material information when he made the sales" during the summer of 2000 but instead made those sales because of discomfort with the stock market. Ibid. That determination, the court explained, would not bar a retrial on the insider trading counts involving sales between January and March, because it would not preclude a finding that Shelby made those trades be cause he possessed insider information. Id. at 9a-11a. The court also concluded that the four insider trading acquittals did not bar a retrial on the securities fraud count because "'[u]sing' insider information in making trades is not an element of securities fraud." Id. at 12a.

b. The court concluded that Hirko likewise failed to show that the jury, in acquitting him on the 12 money laundering counts and two insider trading counts, neces sarily made a factual determination that would bar a retrial on the securities fraud count, the two wire fraud counts and the other five insider trading counts. Pet. App. 15a-18a. The court rejected Hirko's argument that the jury must have found that he did not commit the latter offenses because they were the predicate offenses for the 12 money laundering counts on which the jury acquitted. Ibid. The court observed that the jury was instructed that it could find Hirko guilty of money laun dering only if the government proved that he engaged in transactions with funds "derived from a specified unlaw ful activity," and the instructions defined "specified un lawful activity" as "wire fraud" and "fraud in the sale of securities" (including insider trading). Id. at 17a & n.17. The court concluded that, based on those instructions, the jury could have acquitted Hirko on the money laun dering counts because it was unable to decide whether the government had proved that he had committed secu rities fraud, wire fraud, and insider trading. Id. at 17a- 18a.

c. Finally, the court concluded that Yeager failed to show that the jury, in acquitting him on the conspiracy count, the securities fraud count, and the four wire fraud counts, necessarily made a factual determination that would bar a retrial on the five insider trading counts and eight money laundering counts. Pet. App. 18a-28a. Based on its review of the record, the court initially con cluded that "the jury could have acquitted Yeager of securities fraud for two reasons: (1) there were no ma terial misrepresentations or omissions made at the [2000 annual analyst] conference; or (2) Yeager did not know ingly make misrepresentations or omissions because he believed the presentations were truthful." Id. at 21a. "Under either rationale," the court reasoned, "the jury must have found when it acquitted Yeager that Yeager himself did not have any insider information that contra dicted what was presented to the public." Ibid. The court observed that, if one considered the acquittals in isolation, it would appear that the jury "made a finding that precludes the Government from now prosecuting him on insider trading and money laundering." Id. at 22a.

The court concluded, however, that its precedent re quired it also to consider the hung counts, along with the acquitted counts, in examining what the jury actually determined. Pet. App. 22a-24a (citing United States v. Larkin, 605 F.2d 1360, 1370 (5th Cir. 1979), modified on other grounds, 611 F.2d 585 (5th Cir.), cert. denied, 446 U.S. 939 (1980)). The court observed that, "if Yeager is correct that the jury found that he did not have insider information, then the jury, acting rationally, would have acquitted him of insider trading and money laundering." Id. at 24a. Because it did not, the jury's action produced a "discrepancy." Ibid. The court believed that there were at least four possible explanations for that discrep ancy but that it was "impossible" to determine which was the actual explanation. Id. at 25a. For that reason, the court concluded that Yeager could not carry his bur den to show what the jury necessarily determined and thus collateral estoppel did not bar a retrial. Ibid.

The court expressly rejected the government's argu ment, based on United States v. Powell, 469 U.S. 57 (1984), that collateral estoppel never applies when a jury has found a defendant not guilty on some counts but the jury has hung on other counts at the same trial. Pet. App. 25a-28a. The court agreed with decisions of other circuits that had rejected that argument. Id. at 26a-27a. The court stated, however, that it parted ways with those circuits to the extent that "they ignored the mistried counts after they determined that Powell did not apply." Id. at 27a.

ARGUMENT

Petitioners contend (08-40 Pet. 13-28; 08-58 Pet. 8- 25; 08-67 Pet. 9-21) that collateral estoppel bars a retrial on the counts on which the jury was unable to reach a verdict at their first trial. They further contend (08-40 Pet. 16-23; 08-58 Pet. 12-16; 08-67 Pet. 12-17) that the circuits are in conflict on whether a court may consider the jury's failure to reach a verdict on one count in de termining the basis for a jury's acquittal on another count. The court of appeals correctly concluded that collateral estoppel does not bar retrial of petitioners on the counts on which the jury hung at petitioners' first trial. Although there is tension among the decisions of the courts of appeals on the proper application of the doctrine of collateral estoppel in the context of a mixed verdict, this Court's review is not warranted in this case.

1. In Ashe v. Swenson, 397 U.S. 436 (1970), this Court held that the Double Jeopardy Clause of the Fifth Amendment "embodie[s]" the doctrine of collateral estoppel, or issue preclusion, which bars a prosecution that would require the relitigation of ultimate factual is sues that were resolved against the government in an earlier prosecution. Id. at 445; see Schiro v. Farley, 510 U.S. 222, 232 (1994). A jury's acquittal of a defendant on one charge precludes the government from proceeding against him on a second charge, however, only if the jury necessarily found a fact in the defendant's favor that is an essential element of the second charge (i.e., a fact that the government must prove beyond a reasonable doubt). See Ashe, 397 U.S. at 443-445; Dowling v. Uni ted States, 493 U.S. 342, 347-348, 350-352 (1990). The defendant bears the burden of identifying the factual issue necessarily decided at the first trial that precludes a second trial. Id. at 350-351; see Schiro, 510 U.S. at 233.

a. In the government's view, the doctrine of collat eral estoppel should never bar the government from retrying a defendant on a count on which a jury was un able to reach a verdict when the same jury acquitted him on another count. See Gov't C.A. Br. 21-32. There are two reasons for that conclusion.

First, this Court has held that a "retrial following a 'hung jury' does not violate the Double Jeopardy Clause." Richardson v. United States, 468 U.S. 317, 324 (1984). As the Court explained in Richardson, "the pro tection of the Double Jeopardy Clause by its terms ap plies only if there has been some event, such as an ac quittal, which terminates the original jeopardy," id. at 325, but "a mistrial following a hung jury is not an event that terminates the original jeopardy," id. at 326. It thus follows that, as this Court has observed in a slightly different context, "where the State has made no effort to prosecute the charges seriatim, the considerations of double jeopardy protection implicit in the application of collateral estoppel are inapplicable." Ohio v. Johnson, 467 U.S. 493, 500 n.9 (1984). In the mixed verdict con text, the government is forced to retry some charges only because they were not resolved by the jury when all the charges were pursued together. Accordingly, there is no reason to preclude the retrial.

Second, the rationale behind collateral estoppel does not apply when a jury renders a mixed verdict of acquit tal on some counts and hangs on others at the same trial. That kind of mixed verdict has only two explanations, neither which supports application of collateral estoppel.

The jury may have found that the government failed to prove a fact that, although essential for conviction on the count on which the defendant was acquitted, was not essential for conviction on the count on which the jury deadlocked. Collateral estoppel would not be applicable in that context because an acquittal on one charge collat erally estops the government from prosecuting another charge only if the jury, in finding the defendant not guilty, necessarily decided some fact that the govern ment must prove beyond a reasonable doubt in order to convict on the second charge. See Ashe, 397 U.S. at 443- 445; Dowling, 493 U.S. at 347-348, 350-352.

Alternatively, the jury may have found that the gov ernment failed to prove a fact that was essential for con viction on both counts. Collateral estoppel would not be applicable in that circumstance because the jury's fail ure to acquit on the hung count would be inconsistent with its acquittal on the other count. This Court has rec ognized that "principles of collateral estoppel-which are predicated on the assumption that the jury acted rationally and found certain facts in reaching its ver dict-are no longer useful" when a jury's verdicts are inconsistent. United States v. Powell, 469 U.S. 57, 68 (1984); see Standefer v. United States, 447 U.S. 10, 23 n.17 (1980) (inconsistency in jury verdicts "is reason, in itself, for not giving preclusive effect to the acquittals"). When a jury has reached inconsistent verdicts, a defen dant has no right to argue that the verdict of acquittal was "the one the jury 'really meant.'" Powell, 469 U.S. at 68. The same is true when the jury inconsistently acquits on one count and hangs on another. In that case, the presumption of rationality that underlies the doc trine of collateral estoppel does not apply.

b. Although the court of appeals rejected the argu ment that the doctrine of collateral estoppel should never bar a retrial of a defendant on a hung count based on an acquittal on another count by the same jury, Pet. App. 25a-27a, the court correctly concluded that collat eral estoppel did not bar a retrial on the hung counts in this case.4

Contrary to petitioners' claims (08-40 Pet. 14-15, 24- 28; 08-58 Pet. 16-18, 23-25; 08-67 Pet. 13, 19-21), assum ing that collateral estoppel can ever apply in this con text, the court of appeals was correct to consider the counts on which the jury deadlocked as well as the counts on which the jury acquitted in ascertaining what facts the jury necessarily found in petitioners' favor.5 As this Court explained in Ashe, to determine whether a de fendant's prosecution is barred by the collateral estop pel component of the Double Jeopardy Clause, a court must "examine the record of [the] prior proceeding, tak ing into account the pleadings, evidence, charge and other relevant matter, and conclude whether a rational jury could have grounded its verdict upon an issue other than that which the defendant seeks to foreclose from consideration." 397 U.S. at 444 (citation omitted). The court's "inquiry must be set in a practical frame and viewed with an eye to all the circumstances of the pro ceedings." Ibid. (internal quotation marks and citation omitted). A jury's failure to reach a verdict on certain counts, while acquitting the defendant on other counts, is among the "relevant matter" that a court may con sider in determining what facts the jury necessarily found in the defendant's favor.6

There is no merit in petitioners Hirko and Shelby's claim that consideration of hung counts "turn[s] the pro tective function of the Double Jeopardy Clause on its head" by encouraging prosecutors to "overcharge" a case. 08-40 Pet. 26; see 08-58 Pet. 18-20. As this Court explained in Schiro, the Double Jeopardy Clause's protections against a second prosecution following an acquittal or conviction "stem from the underlying prem ise that a defendant should not be twice tried or pun ished for the same offense." 510 U.S. at 229. The Dou ble Jeopardy Clause is thus not designed to limit the number of charges that prosecutors bring. Instead, its primary purpose is to "guard[] against * * * succes sive prosecutions." Id. at 230; see Johnson, 467 U.S. at 498-499. A retrial on a hung count is not a "successive" prosecution because, unlike a verdict of conviction or acquittal, "a trial court's declaration of a mistrial follow ing a hung jury is not an event that terminates the origi nal jeopardy to which [a defendant] was subjected." Richardson, 468 U.S. at 326; see Green v. United States, 355 U.S. 184, 187-188 (1957). Indeed, giving collateral estoppel effect to a jury's acquittal on one count to bar a retrial on a hung count would undermine "society's interest in giving the prosecution one complete opportu nity to convict those who have violated its laws." Rich ardson, 468 U.S. at 324 (quoting Arizona v. Washington, 434 U.S. 497, 509 (1978)); see Wade v. Hunter, 336 U.S. 684, 688-689 (1949).

The Fifth Circuit's analysis in this case is similar to the approaches taken by the First, Eighth, and District of Columbia Circuits. See United States v. Howe, 538 F.3d 820, 827-829 (8th Cir. 2008); United States v. Aguilar-Aranceta, 957 F.2d 18, 24-25 (1st Cir.), cert. denied, 506 U.S. 834 (1992); United States v. White, 936 F.2d 1326, 1328-1329 (D.C. Cir.), cert. denied, 502 U.S. 942 (1991). In each of those cases, the defendant was charged with multiple counts that involved a common issue. The jury acquitted the defendant on one count and deadlocked on another count. The court of appeals, taking into account both the jury's verdict of acquittal on one count and the jury's failure to reach a verdict on the other count, declined to hold that the verdict of ac quittal rested on a finding in the defendant's favor on the common issue. The court instead reasoned that the verdict of acquittal could more rationally be explained as resting on the jury's finding on an issue that was not common to both counts. Howe, 538 F.3d at 828-829; Aguilar-Aranceta, 957 F.2d at 24-25; White, 936 F.2d at 1329. The court below followed essentially the same approach here.

2. Petitioners contend (08-40 Pet. 16-19, 22-23; 08-58 Pet. 12-16; 08-67 Pet. 12-17) that the decision below con flicts with decisions of the Sixth, Seventh, Ninth and Eleventh Circuits. Although there is tension between the decisions of those circuits and the decision of the court of appeals in this case, this Court's review is not warranted at this time.

In United States v. Frazier, 880 F.2d 878, 885-886 (1989), cert. denied, 493 U.S. 1083 (1990), the Sixth Cir cuit applied collateral estoppel to bar retrial on a hung count based on a simultaneous acquittal on another count. The court rejected the government's argument that a jury's simultaneous acquittal and failure to reach a verdict amounted to the kind of inconsistency that would trigger the Powell rule that no factual finding in the defendant's favor can be deduced from inconsistent verdicts. Id. at 882-883.

In United States v. Bailin, 977 F.2d 270 (1992), the Seventh Circuit reached a similar result in a slightly different context. In that case, the jury was unable to reach a verdict on counts charging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961 et seq., but it acquitted the de fendant on other counts charging offenses that were also among the predicate acts in the RICO counts. The Sev enth Circuit held that, although the government could retry the defendant on the RICO counts, the govern ment could not base the RICO counts on predicate acts of which the defendant had been acquitted. Bailin, 977 F.2d at 275-283. In so holding, the court declined to ap ply the Powell rule, finding that "the jury's failure to reach a verdict [was] too inconclusive to qualify as incon sistent [with the acquittals] for the purposes of issue preclusion." Id. at 280 (internal quotation marks and citation omitted).

In United States v. Romeo, 114 F.3d 141 (1997), the Ninth Circuit held that the defendant's acquittal on a drug possession count barred his retrial on a drug im portation count on which the jury failed to reach a ver dict. The court concluded that "a rational jury could [not] have grounded its verdict upon an issue other than that which the defendant seeks to foreclose from consid eration," i.e., that the defendant did not know that mari juana was in the trunk of the car that he drove from Mexico to the United States. Id. at 143 (citation omit ted). The court declined to apply the Powell rule, ob serving that "[t]he inquiry under Ashe is what the jury actually decided when it reached its verdict, not on why the jury could not agree on the deadlocked count." Id. at 144.

There is tension between the decisions in Frazier, Bailin, and Romeo and the court of appeals' decision in this case, but there is no conflict. None of those deci sions holds that a jury's failure to reach a verdict on one count is always irrelevant in determining what facts the jury necessarily found in acquitting the defendant on another count. Rather, those decisions merely found that, on the particular facts of those cases, the defen dants had made out their collateral estoppel claims. Moreover, the court of appeals in this case made clear that it was not holding that the doctrine of collateral estoppel could never be applied to bar a retrial in the mixed verdict context. Pet. App. 25a-28a.7

More recently, the Eleventh Circuit held in United States v. Ohayon, 483 F.3d 1281, 1288-1291 (2008), that a jury's failure to reach a verdict on a hung count is not relevant to the determination whether the defendant has made out a collateral estoppel claim based on an acquit tal on another count. The court held that the jury's ac quittal on a charge of attempt to possess ecstasy with the intent to distribute it collaterally estopped the gov ernment from retrying the defendant on a charge of drug conspiracy, because the jury necessarily found that the defendant did not know that drugs were in the bag he received from a confidential informant. Id. at 1286- 1287. In rejecting the government's argument that the partial mixed verdict showed that jury did not acquit on that basis, the court stated that "[a] partial verdict does not comprise two decisions that we must try to reconcile, because the mistried count is not a decision for which we can discern, or to which we can impute, a single, rational basis." Id. at 1289.

Although Ohayon appears to conflict with the deci sion in this case, this Court's review to resolve that ap parent conflict would be premature at this time. It is possible that the Eleventh Circuit might reconsider its decision in Ohayon in light of the decision in this case. In Ohayon, the Eleventh Circuit declined to follow cir cuit precedent that is consistent with the decision in this case because the court concluded that the precedent was inconsistent with an earlier precedent, United States v. Larkin, 605 F.3d 1360 (5th Cir. 1979), modified on other grounds, 611 F.2d 585 (5th Cir.), cert. denied, 446 U.S. 939 (1980).8 See Ohayon, 483 F.3d at 1288-1289 (declin ing to follow United States v. Quintero, 165 F.3d 831 (11th Cir.), cert. denied, 528 U.S. 963 (1999), and United States v. Bennett, 836 F.2d 1314 (11th Cir.), cert. denied, 487 U.S. 1205 (1988)). But the Fifth Circuit's decision in this case makes clear that the Eleventh Circuit misread Larkin. As the court below explained, Larkin actually requires that a hung count be taken into account in de termining the collateral estoppel effect of an acquittal. Pet. App. 23a-24a; see Larkin, 605 F.2d at 1370 ("No rational jury could have absolved Larkin of liability for Parker's crimes [on the vicarious liability counts] be cause of the absence of a conspiracy between the two, while it simultaneously failed to acquit Larkin on the conspiracy charge itself."). Accordingly, the Eleventh Circuit may be willing to re-examine its decision in Ohayon in an appropriate future case.9

3. a. This Court's review is also unwarranted at this time because the question presented arises relatively infrequently. We are aware of only two occasions other than this one in the last 20 years in which this Court has been asked to resolve the tension among the courts of appeals on the issue. The Court denied review in both of those cases. See Quintero v. United States, 528 U.S. 963 (1999) (No. 99-39); White v. United States, 502 U.S. 942 (1991) (No. 91-516). The Court should do the same here.10

b. Indeed, review would be particularly inappropri ate in this case because collateral estoppel would not bar petitioners' retrials even if petitioners were correct that the hung counts could not be considered. Even if only the acquittals are considered, none of the petitioners can show that the jury necessarily found a fact in his favor that is an essential element of the counts on which the jury deadlocked.

Contrary to petitioner Hirko's claim (08-40 Pet. 4-7), he cannot show that the jury's acquittals on the 12 mon ey laundering counts necessarily rested on a finding that he did not commit the predicate acts alleged in the secu rities fraud count, two wire fraud counts, and two in sider trading counts on which the jury deadlocked. As the government argued in the court of appeals, the in dictment and jury instructions could rationally have led the jury to believe that it had to convict Hirko on all of the predicate securities, wire fraud, and insider trading counts in order to convict him on the money laundering counts. The indictment and the jury instructions both defined "specified unlawful activity" for purposes of the money laundering charges as "wire fraud * * * and fraud in the sale of securities." Fifth Super seding Indictment para. 52; Pet. App. 17a n.17 (empha sis added). And neither the court nor the parties ever expressly explained to the jury that the funds that Hirko was alleged to have laundered need not be derived from both of those offenses. Accordingly, the jury may have felt compelled to acquit Hirko on the money laundering counts once it decided to acquit him on two of the predi cate insider trading counts that generated some of the funds that he allegedly laundered. See Gov't C.A. Br. 44-50.

Similarly, Shelby cannot show that the jury, in ac quitting him on four insider trading counts, necessarily made a factual determination that would bar a retrial on the other four insider trading counts and the securities fraud count. See Pet. App. 7a-14a; Gov't C.A. Br. 38-43. Indeed, as discussed above, the court of appeals held that a retrial on the hung counts was not barred because the jury's acquittals were based on a finding of fact on an element that the government was not required to prove to establish Shelby's guilt on the hung counts, i.e., that Shelby did not use insider information when he sold Enron stock in the summer of 2000. Pet. App. 9a-12a; see note 6, supra.

Finally, Yeager cannot show that the jury, in acquit ting him on the conspiracy count, the securities fraud count, and the four wire fraud counts, necessarily made a factual determination that would bar his retrial on the five insider trading counts and eight money laundering counts. Although the court of appeals believed that "the jury must have found when it acquitted Yeager that Yeager himself did not have any insider information," Pet. App. 21a, the record does not support that conclu sion. Instead, as the government argued in the court of appeals, the jury's acquittals on the conspiracy and fraud counts could have rested on the conclusion that Yeager did not participate in the failure to disclose the true state of EBS's business or that he lacked the requi site intent to defraud when those misrepresentations or omissions occurred. Those conclusions would not pre clude a finding that Yeager possessed insider informa tion and used it to trade in Enron stock. See Gov't C.A. Br. 32-38. Indeed, as the district court found, Yeager "did not deny proof of his possession of material, non public information." 08-67 Pet. App. 58a. Thus, the jury's acquittals do not bar a retrial on the five insider trading counts and eight money laundering counts on which the jury deadlocked.

Because petitioners cannot show that the jury neces sarily found facts in their favor that would bar a retrial on the hung counts even if only the acquittals are consid ered, petitioners' claims involve only fact-bound applica tions of the doctrine of collateral estoppel. Further re view of those claims by this Court is not warranted.

CONCLUSION

The petitions for a writ of certiorari should be denied.

Respectfully submitted.

 

GREGORY G. GARRE
Solicitor General
MATTHEW W. FRIEDRICH
Acting Assistant Attorney
General
JOSEPH C. WYDERKO
Attorney

 

 

OCTOBER 2008

1 Unless otherwise noted, all references to "Pet. App." are to the ap pendix to the petition for a writ of certiorari in No. 08-40.

2 The two insider trading counts that Hirko moved to dismiss in volved transactions that occurred in 2000. Hirko did not move to dis miss three other insider trading counts that involved transactions that occurred in 2001. Hirko also did not move to dismiss the conspiracy count. Pet. App. 5a, 33a-34a.

3 Like Hirko, Shelby did not move to dismiss the conspiracy count. 08-58 Pet. App. 4a-5a, 34a.

4 Petitioners Hirko (08-40 Pet. 22-23) and Yeager (08-67 Pet. 19) con tend that the analysis adopted by the court of appeals will in practice produce the same result as a categorical rule that collateral estoppel never applies in mixed verdict cases. That may be true. Nevertheless, the court of appeals expressly rejected a categorical rule and left open the possibility that collateral estoppel may apply in mixed verdict cases. Accordingly, it would be premature to conclude that the Fifth Circuit has adopted a categorical rule barring the application of collateral estoppel.

5 The court of appeals explicitly applied that analysis only to peti tioner Yeager's collateral estoppel claim. Pet. App. 22a-25a. The gov ernment agrees with petitioner Hirko (08-40 Pet. 2, 11, 14-15) that the court's decision is most reasonably read to apply the same analysis to his collateral estoppel claim.

Contrary to petitioner Shelby's contention (08-58 Pet. 16-18), the court of appeals did not apply the same analysis in rejecting his col lateral estoppel claim. Rather, the court held that Shelby failed to show that the jury, in finding him not guilty on four insider trading counts, necessarily made a factual determination in his favor that would bar a retrial on the other four insider trading counts and the securities fraud count. See Pet. App. 8a-14a. After an "extensive examination of the record," the court concluded that the acquittals were based on a finding of fact on an element that the government was not required to prove with respect to the hung counts, i.e., that Shelby did not use insider in formation when he sold Enron stock in the summer of 2000. Id. at 9a- 12a. Thus, Shelby's collateral estoppel claim amounts to a fact-bound dispute about whether the court of appeals properly read the record in this case. See 08-58 Pet. 23-25. That claim does not warrant this Court's review.

6 Petitioner Shelby (08-58 Pet. 15) erroneously contends that the court of appeals' consideration of the hung counts conflicts with this Court's decision in Schiro, a capital case in which the defendant argued that the jury's failure to return a verdict on one count had collateral estoppel effect at the sentencing hearing. 510 U.S. at 232-236. In Schiro, the jury returned a verdict finding the defendant guilty on one out of three counts of murder, id. at 225-226, but the jury was not instructed to return verdicts on all of the counts. Id. at 233. "[S]ince it was not clear to the jury that it needed to consider each count inde pendently," the Court declined to "draw any particular conclusion from its failure to return a verdict on Count I." Id. at 234. Schiro thus does not address the relevance to collateral estoppel analysis of a jury's in ability to reach a verdict on a count that it was required to consider.

7 Petitioners Hirko (08-40 Pet. 23) and Yeager (08-67 Pet. 13) also re ly on United States v. Mespoulede, 597 F.2d 329 (2d Cir. 1979). That case is inapposite, however, because it involved the application of col lateral estoppel to bar the admission of evidence at a retrial, rather than to bar the retrial itself. Moreover, Mespoulede has been effectively overruled by this Court's decision in Dowling, which held that collateral estoppel does not bar the admission of evidence of a fact resolved in a defendant's favor at the first trial, provided that the government is not seeking to prove that fact beyond a reasonable doubt at the second trial. Compare Dowling, 493 U.S. at 347-350, with Mespoulede, 597 F.2d at 334-335.

8 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (1981) (en banc), the Eleventh Circuit adopted as binding precedent decisions of the former Fifth Circuit rendered before October 1, 1981.

9 As petitioner Hirko notes (08-40 Pet. 23-24), the government filed a petition for rehearing en banc in Ohayon. The Eleventh Circuit's issuance of its decision on April 12, 2007, and denial of the government's petition on August 7, 2007, occurred before the court of appeals decided this case on March 17, 2008.

10 The issue has also arisen in a few other cases in which the peti tioner did not raise a conflict claim. See, e.g., Aguilar-Aranceta v. Uni ted States, 506 U.S. 834 (1992) (No. 91-7995); Ashley Transfer & Stor age Co. v. United States, 490 U.S. 1035 (1989) (No. 88-1305); Campbell v. United States, 488 U.S. 993 (1988) (No. 88-479); Bennett v. United States, 487 U.S. 1205 (1988) (No. 87-1751). The Court denied review in those cases as well.