Stanford student Samantha Bateman previews next Monday’s argument in Yeager v. US (08-67).

Under the doctrine of collateral estoppel, a prior court's decision on an issue necessary to its judgment can preclude relitigation of that same issue in a future case. The Supreme Court held in Ashe v. Swenson (1970) that criminal defendants may invoke that doctrine as part of the protections accorded to them by the Fifth Amendment's Double Jeopardy Clause. On Monday, March 23, 2009, in Yeager v. United States, No. 08-67, the Court will consider whether collateral estoppel bars retrial of a defendant who was acquitted by a jury on some counts when that same jury failed to reach a verdict on other, factually related, counts in the indictment.

This case stems from one of several criminal prosecutions of white-collar executives in the wake of the Enron scandal. Petitioner F. Scott Yeager, an executive at Enron Broadband Services ("EBS"), an Enron telecommunications unit, was charged with wire fraud, securities fraud, insider trading, money laundering, and conspiracy to engage in securities fraud and wire fraud. The indictment alleged that Yeager participated in a conspiracy to deceive the public and drive up the price of Enron stock, and that he sold large amounts of Enron shares based on insider knowledge.

At trial, the government's theory was that Yeager and other executives defrauded Enron investors and shareholders by purposely making misrepresentations and material omissions about EBS's revenues, business performance, and technological capabilities. Yeager relied upon a good-faith defense, arguing that he was not responsible for any false statements or material omissions and that indeed he could not have participated in any scheme to defraud investors because he had a good-faith, reasonable belief in EBS's financial stability and promising future.

After a three-month trial, the jury acquitted Yeager on the conspiracy, securities fraud, and wire fraud counts, but it failed to reach a verdict on the insider trading and money laundering charges.

The government then issued a superseding indictment re-charging Yeager with several of the same insider trading and money laundering offenses. Yeager moved to dismiss those charges, arguing that collateral estoppel precluded the government from re-trying him on those counts because the only rational interpretation of the jury's acquittals was that he acted in good faith and did not possess insider knowledge "“ a finding that would bar any further prosecution for insider trading. The district court denied Yeager's motion, and Yeager appealed to the Fifth Circuit.

The Fifth Circuit affirmed. It acknowledged that the acquittals, standing alone, could lead to the rational assumption that the "jury must have found . . . that Yeager himself did not have any inside information." However, the Fifth Circuit reasoned that collateral estoppel did not bar retrial in this case because the hung counts, which shared common elements with the charges on which the jury acquitted, created a "potential inconsistency, making it impossible . . . to decide with any certainty what the jury necessarily determined."

After Yeager's request for a rehearing en banc was denied, he filed a petition for a writ of certiorari, which was granted on November 14, 2008.

Yeager argued that the Court should grant certiorari because the courts of appeals are divided on the question whether, under collateral estoppel analysis, a jury acquittal on some counts precludes retrial on other counts on which the jury deadlocked but which share a common element with the acquitted charges. The Sixth, Seventh, Ninth, and Eleventh Circuits have held that hung counts do not affect the collateral estoppel analysis, such that a jury's failure to reach a verdict on some counts does not prevent the application of collateral estoppel. Under that interpretation, Yeager emphasized, his retrial for insider trading or money laundering would be barred. By contrast, the First and D.C. Circuits have joined the Fifth Circuit in concluding that the presence of hung counts sharing common elements with acquitted counts is relevant to, and indeed in some circumstances can preclude, the application of collateral estoppel.

Yeager next argued that the Fifth Circuit's decision was wrong on the merits, because a proper collateral estoppel analysis must focus on the counts on which the jury actually reached a verdict, not on speculation as to whether the jury may have acted irrationally in failing to reach a decision on related counts. In his view, the Fifth Circuit placed an "impossible burden" on him to reconcile the hung counts with the acquitted counts and show "definitively why [the] jury hung" to demonstrate "that the jury necessarily determined that he did not have insider information." Moreover, such a burden was inconsistent with the Fifth Amendment's protections against double jeopardy and the Court's holding in Ashe. Thus, he concluded, Supreme Court review was necessary to "restore the collateral estoppel protections afforded to defendants when juries return partial verdicts."

In its brief in opposition, the United States acknowledged the "tension" among the courts of appeals as to the proper application of collateral estoppel in cases involving mixed or partial verdicts. However, it argued that the Court's review was not warranted because collateral estoppel cannot bar the government from retrying a defendant on a count on which the jury was unable to reach a verdict, even when that same jury acquitted the defendant on other counts.<

First, the United States explained, under the Court's prior holding in Richardson v. United States (1984), retrial following a hung jury does not violate the Double Jeopardy Clause. Second, the rationale behind the collateral estoppel doctrine does not apply when a jury renders a mixed verdict, deadlocking on some counts and acquitting on others. That mixed verdict either means that the government simply failed to prove a fact essential to the acquitted counts but not required for the hung counts, or that the jury was inconsistent in its verdicts; in either case, collateral estoppel does not apply. The Fifth Circuit thus correctly considered the counts on which the jury deadlocked in assessing whether Yeager's retrial was barred by facts "necessarily found" in his favor.

Finally, the United States argued that any "tension" between the circuits did not rise to the level of an actual conflict, because none of the decisions of the Sixth, Seventh, Ninth, or Eleventh Circuits found that jury deadlock is always irrelevant in determining whether collateral applies, nor did the Fifth Circuit hold that collateral estoppel could never be applied to bar retrial in a mixed verdict context.

In his reply brief, Yeager countered that there was a direct conflict as to whether hung counts should be factored in as part of the collateral estoppel assessment; indeed, the Fifth Circuit itself noted that its decision "parted ways" with other circuits that had found such hung counts legally irrelevant.

In his opening brief on the merits, Yeager elaborates on the arguments made in his petition for certiorari. First, he argues that criminal collateral estoppel under the Double Jeopardy Clause prohibits the government from re-prosecuting him on the counts on which the jury deadlocked. He begins by contending that applying collateral estoppel here would further important double jeopardy protections, ensuring that the government cannot require him to again defend himself against factual allegations that were already determined in his favor. Moreover, deference to the jury's sovereignty and its verdicts requires honoring acquittals and "appropriately refusing to give equivalent value to its failure to make a decision." He relies on the Court's holding in United States v. Powell (1984) for the proposition that speculation about a jury's deliberations, even when its verdicts appear facially inconsistent, is both impractical and an "intru[sion] on the jury's deliberative process."

First, hung counts have not historically been viewed as decisions by the jury and thus are not entitled to deference or consideration as part of the Ashe analysis. Second, because courts do not typically attribute decisional significance to hung counts, the Court should find in his case that the hung counts determined nothing about the charges against him.

Finally, Yeager argues that re-trial was prohibited because he had met his burden of establishing that an essential element of the pending charge for insider trading "“ whether he had insider knowledge of the "truth" regarding EBS "“ was already decided in his favor by the jury's acquittals.

In response, the United States argues that since a defendant remains in continuing jeopardy on all hung counts after a mistrial, the collateral estoppel component of the Double Jeopardy Clause does not bar re-trial on those counts, even when the jury acquits on other charges. It further argues that courts can properly consider a jury's failure to reach a verdict on certain counts as part of the Ashe analysis, in light of the Court's command that the collateral estoppel inquiry must take into account "all the circumstances" of the prior proceeding.

The government's position boils down to two basic claims. First, a holding in this case that a re-trial is prohibited would conflict with the well-established rule that the government may retry the case when a jury deadlocks because it is entitled to "a complete opportunity for a verdict on a charged offense." Second, as it did in its brief in opposition, the government argues that the mixed outcome (acquittals and hung counts) in Yeager's case can mean only one of two things: either the jury acted consistently and rationally "“ in which case Yeager cannot establish the required factual predicate of a prior decision on a common element shared by the charges "“ or the jury acted inconsistently and irrationally "“ in which case the underlying rationales for the collateral estoppel doctrine are not implicated.

Finally, the United States argues that even if collateral estoppel can sometimes preclude retrial in mixed-verdict cases, Yeager has not carried his burden to establish that such preclusion is warranted in his case. Specifically, he has not shown that the jury, by finding in his favor on the conspiracy and fraud charges, "necessarily found" a fact that is required for conviction on the insider trading and money laundering counts on which the government seeks to retry him.

The case is set for oral argument on March.

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