On March 1 the Supreme Court heard arguments challenging the constitutionality of a law so broadly worded that nobody — not even the nation’s most respected legal experts — can understand or explain its provisions. This law, known as the “honest services fraud” statute, makes it a federal crime to “deprive another of the intangible right of honest services” — whatever that means.
The case — one of three now before the Court involving this statute — arose from the prosecution of Enron CEO Jeffrey Skilling, who was convicted in 2006 of several charges stemming from that company’s scandalous collapse. He and his company may indeed have defrauded people, but the question here isn’t whether Enron broke the law, it’s what actions will federal prosecutors target next? Or are there boundaries to protect innocent citizens from being branded criminals?
The statute’s elastic language makes this a real threat. Last year Justice Antonin Scalia pointed out that if taken literally the honest services law would make it a crime to call in sick to work and go to a ball game instead. Other federal courts have tried to improvise: In 2003 a team of seven judges wrote a long decision patching together a complicated test for determining whether a person is in violation. But six judges on that same court dissented. How can average Americans be expected to understand the law if even federal appellate judges are divided on its meaning?
The Supreme Court has often declared that the Constitution prohibits the enforcement of vague laws. But the justices have been reluctant to use this “void for vagueness” rule to protect businesses on the theory that business owners can afford to pay lawyers for expert advice. Yet even the nation’s best attorneys and judges have no idea what this law prohibits or allows.
Other vague laws have also been used to harass and intimidate businesses. The “wiretapping statute,” for example, prohibits the interception of transmitted messages. But in one case, the owner of an Internet service provider was prosecuted under this law after he made backup copies of e‐mails stored on the company’s server — regardless of the fact that stored files aren’t being “transmitted” in any way. It was nearly a decade before he was brought to trial and finally acquitted.
Combine vagueness with the ever expanding number of statutes and regulations affecting businesses and entrepreneurs on a daily basis and the result is a government bureaucracy with almost unlimited power to intimidate and blackmail citizens with the threat of prosecution — or to punish practically any conduct they choose to declare “illegal.” Two centuries ago James Madison warned that it would be “of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood.” But every year Congress and federal regulators create new restrictions, often written in impenetrable jargon or broad mandates that cannot be understood until after charges are filed.
Even worse are vague laws that aren’t actually laws at all but common law concepts — most notably the theory of “public nuisance.” This is an ancient legal concept that started out as a crime but is now regarded as a civil law matter. The exact definition of the term is anybody’s guess. The famous law professor William Prosser called it a “legal garbage can” full of “vagueness, uncertainty and confusion,” and one California court called it an “impenetrable jungle” that “has meant all things to all people and has been applied indiscriminately to everything from an alarming advertisement to a cockroach baked in a pie.”
That ambiguity makes “public nuisance” a powerful tool in the hands of ambitious politicians. California Attorney General Jerry Brown prosecuted General Motors for “public nuisance” on the ground that they make and sell cars, thereby contributing to pollution. Never mind that making cars is perfectly legal and that California itself operates a fleet of more than 100,000. Other public nuisance cases have been brought against gun makers, oil companies and manufacturers of paint for selling perfectly legal products. The goal isn’t to win cases but to give prosecutors headlines and obtain hefty settlements from intimidated corporations.
Vague laws aren’t just a threat to individual freedom. They constrict economic growth and discourage legitimate enterprise. As Justice Thurgood Marshall once wrote, vague laws “lead citizens to steer far wider of the unlawful zone … than if the boundaries of the forbidden areas were clearly marked.” Who wants to run the risk of a new business, not knowing whether federal prosecutors might file fraud charges the next day? Entrepreneurs and investors need to know that their money will be safe from the creativity of prosecutors who brandish powerful and unpredictable authority.
It is time for the Supreme Court to apply the “void for vagueness” to business regulations and common law theories as well as to criminal statutes. When a CEO commits fraud, it’s right to send him to jail. But it’s wrong to give government lawyers unlimited discretion to prosecute and threaten people under laws that leave even legal experts scratching their heads.