Stayton v. United States , 766 F. Supp. 2d 1260 ( 2011 )

766 F. Supp. 2d 1260 (2011)

Jeffrey Howard STAYTON, BOP No. 11914-002, Movant,
v.
UNITED STATES of America, Respondent.
William Curtis Childree, BOP No. 11913-002, Movant,
v.
United States of America, Respondent.

Civil Action Nos. 1:09-CV-157-WSD, 1:09-CV-209-WSD. Criminal Action No. 1:06-CR-66-1-WSD, 1:06-CR-66-2-WSD.

United States District Court, M.D. Alabama, Southern Division.

February 28, 2011.

Henry I. Frohsin, James Fredrick Barger, Jr., James Elliott Walthall, Ronald Ray Brunson, Frohsin & Barger LLC, Birmingham, AL, for Movant.

Eric Olshan, Mariclaire Rourke, Matthew L. Stennes, United States Department of Justice, Washington, DC, for Respondent.

ORDER

WILLIAM S. DUFFEY, JR., District Judge.

Jeffrey Stayton and William "Curt" Childree were convicted in December 2007 of honest-services fraud, in violation of 18 U.S.C. § 1343 & 1346 [Criminal 135].^[1] Stayton was also convicted of obstruction of justice (for lying to a grand jury), in violation of 18 U.S.C. § 1503 [id.]. Both men were acquitted on bribery charges under 18 U.S.C. § 201 [id.]. Neither Stayton nor Childree filed a direct appeal. Both men instead filed motions, that they later amended, to vacate, set aside or correct their sentences under 28 U.S.C. § 2255.

After Stayton and Childree's amended § 2255 motions were filed, the United States Supreme Court decided Skilling v. United States, ___ U.S. ___, 130 S. Ct. 2896, 177 L. Ed. 2d 619 (2010). Skilling resolved a "void for vagueness" challenge to 18 U.S.C. § 1346 by "par[ing] that body of precedent down to its core" and holding that convictions for honest-services fraud may be returned only for "fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who had not been deceived." Skilling, 130 S.Ct. at 2928. This Court ordered Stayton, Childree, and the Government to brief the application of Skilling to this case.

This matter is now before the Court on Stayton and Childree's § 2255 motions, as amended and briefed, the Government's responses, and the supplemental briefing ordered by the Court [Stayton 1, 15, 24, 26, 27, 35, 36 & 37; Childree 1, 2, 12, 14, 22, 29, 46, 47, 48 & 49]. After a thorough review of the record, the Court vacates the honest-services fraud convictions of Stayton and Childree. Stayton's conviction for obstruction of justice is not vacated and his motion for § 2255 relief on this Count of conviction is denied.

I. BACKGROUND

Jeffrey Stayton was "the Aviation Officer for the Army Test and Evaluation Command in Alexandria, Virginia" [Stayton 1 at 14]. Among his "primary functions was coordinating the acquisition of foreign aircraft for use by the Department of Defense" [id.]. William Childree was "the principal of Maverick Aviation," an Alabama business [Childree 12 at 1]. Stayton and Childree were close friends. So close, that Stayton intended one day to take over Maverick Aviation [Tr. Trans. at 429].

In the wake of September 11, 2001, the United States Government sought a military contractor to purchase, modify, and deliver "two Russian Mi-17 helicopters . . . on an extremely expedited schedule" [Stayton 15 at 1]. The contract—which was classified—had a final value of approximately $5 million [Tr. Trans. at 318-22]. Based in significant part on Stayton's input, Maverick was selected as the contractor [Tr. Trans. at 260-65].

Soon after Stayton, Childree, and others returned from Siberia in December 2001, $1 million in helicopter contract funds were released from escrow based on Stayton's (premature) certification that certain contract requirements had been completed [Tr. Trans. at 322-27]. Less than two weeks later, Childree directed the Government's escrow agent to use a portion of those contract funds to pay off Childree's home mortgage. Childree also directed the Government's escrow agent to wire $61,071.75 in contract funds from Alabama to California to pay off the second mortgage on Stayton's Virginia home. Childree told the escrow agent that "he wanted us to wire this money to payoff the loan for Mr. Stayton in payment for some work that Mr. Stayton had done for him on some parts that had been purchased for the helicopters" as "payment for the part he played" [Tr. Trans. at 74].

As a senior government official involved in procurement and government contracts, Stayton was required to attend annual ethics training [Tr. Trans. at 704-06]. Stayton was further required to file annual financial disclosure statements [id.]. Despite these disclosure requirements, Stayton did not disclose the 2002 payoff of his second mortgage by Childree in his annual disclosure statements (or otherwise) until at least 2006.

The Maverick contract first came under close scrutiny in 2002. Over the next few years, both Stayton and Childree received document requests and subpoenas aimed at uncovering financial transactions between them. Neither Stayton nor Childree revealed the 2002 loan payoff in response to those requests and subpoenas [Tr. Trans. at 516-20 & 528-31]. As late as 2005, Stayton affirmatively stated in a cover note in a response to a subpoena: "I have no business dealings or financial interests that would or have made payments of [sic] or toward my home or other debts" [Tr. Trans. at 531].

When confronted in 2006 with documentary evidence that Childree had wired contract funds to pay off Stayton's second mortgage, Stayton told investigators and grand jurors that it was a "loan." Stayton acknowledged, however, that there was "no documentation on the loan" and "no terms that were agreed," including, for instance, an interest rate, a maturity date, an amortization schedule, or security [Tr. Trans. at 520-22 & 926 & 943-49]. There was no evidence that Stayton, between 2002 and 2007, ever made any payments of principal or interest on the "loan." In contrast, when Childree loaned his own daughter money, he required payments, if not always monthly, at least "close to clockwork" [Tr. Trans. at 1054-55].

Stayton never listed the "loan" as a liability and Childree never listed the "loan" as an asset on their own later loan applications or personal financial statements, even when those documents called for the information [Tr. Trans. at 644-51]. Stayton's only explanation for why the "loan" was never documented was that—eleven months after his second mortgage was paid off by Childree and after the investigation into the Maverick contract was initiated—his supervisor issued a "no contact" order forbidding Stayton from communicating with Childree. In rebuttal, the Government introduced evidence indicating that Stayton repeatedly violated that "no contact" order [Tr. Trans. at 928]. The Government also introduced evidence that, in 2002, Childree sold Stayton a 1974 Corvette for $5,000, despite having paid $15,000 for the car just a year earlier [Tr. Trans. at 1071].

Stayton and Childree were both summoned to appear before a grand jury. Childree declined to appear. Stayton, however, elected to testify. Stayton's grand jury testimony, which was played at trial, was evasive, equivocal, and self-contradictory [Tr. Trans. at 542-639]. In March 2006, Childree and Stayton were indicted in the Middle District of Alabama for honest-services fraud and bribery, and Stayton was also indicted for obstruction of justice (with respect to his grand jury testimony) [Criminal 1].

After several months of pre-trial proceedings, the Honorable Mark Fuller recused himself and requested that the case be assigned to a judge from outside the Middle District of Alabama [Criminal 68]. Pursuant to 28 U.S.C. § 292(b), the United States Court of Appeals for the Eleventh Circuit designated this Court (Duffey, J.) to preside over the litigation [Criminal 69]. Because a classified contract was involved, motions practice and hearings were held pursuant to the Classified Information Procedures Act ("CIPA"), 18 U.S.C.App. 3. Through trial counsel, the parties, as allowed by CIPA, negotiated stipulations to be admitted at trial.^[2]

In July 2007, trial counsel for Childree produced a copy of a note dated January 9, 2002, in which Stayton "thanked" Childree for the $61,071.75 "loan." In part because the note was first produced 5-1/2 years after it had allegedly been written—despite earlier document requests and subpoenas directed to Stayton and Childree—the Government submitted the note to the United States Secret Service for analysis. The Secret Service's August 2007 report "determined that the black ink used . . . matched a standard that was commercially available prior to 2002 and is still widely available" [Stayton 24-2 at 3]. In other words, the note might have been written in 2002, as Stayton and Childree contended, or it might have been written in 2007, as the Government believed. The Secret Service report opined: "Therefore, no conclusion could be rendered regarding the authenticity of Exhibit Q1 with respect to the first production date of the writing ink" [id.].

The Secret Service also conducted a watermark analysis and an indented writing analysis of the note. The watermark analysis was inconsequential because there was no discernable watermark in the note paper. The indented writing analysis showed only that at some point the word "Curt" was written and double underscored on a piece of paper placed on top of the note. Neither of these additional two forms of analysis indicate whether the note was written in 2002 or 2007. The Government did not share the Secret Service's report with Stayton or Childree before trial.

The trial commenced in December 2007. In light of then applicable Eleventh Circuit precedent—and consistent with precedent from circuits across the country—this Court instructed the jury that it could find Stayton and Childree guilty of honest-services fraud for "accepting a bribe, taking a kickback, or receiving a personal benefit from an undisclosed conflict of interest" [Tr. Trans. at 1226].^[3] The Eleventh Circuit's honest-services pattern jury instruction was used to charge the jury.

Both men were convicted of honest-services fraud, and Stayton was also convicted of obstruction of justice. As also noted above, both men were acquitted of bribery. Neither Stayton nor Childree filed a direct appeal.^[4] Both men filed § 2255 motions, which they later amended, in the Middle District of Alabama, and are represented by new counsel. Stayton opposed the referral of his § 2255 motion to this Court (Duffey, J.) [Stayton 9], delaying the transfer for roughly one year. Ultimately, however, both Stayton and Childree's § 2255 motions were referred [Stayton 30; Childree 39]. Stayton and Childree later asked that their § 2255 motions be considered together.

II. DISCUSSION

Federal law provides that:

A prisoner in custody under a sentence of a court established by Act of Congress claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States . . . may move the court which imposed the sentence to vacate, set aside or correct the sentence.

28 U.S.C. § 2255(a). Federal law further provides:

If the court finds that . . . there has been such a denial or infringement of the constitutional rights of the prisoner as to render the judgment vulnerable to collateral attack, the court shall vacate and set the judgment aside and shall discharge the prisoner or resentence him or grant a new trial or correct the sentence as may appear appropriate.

Id. at (b).

A one-year period of limitation applies to § 2255 motions. That period runs from the latest of four specified events, one of which is "the date on which the right asserted was initially recognized by the Supreme Court, if that right has been newly recognized by the Supreme Court and made retroactively applicable to cases on collateral review." Id. at (f)(3). The Government has conceded that the decision in Skilling is retroactively applicable on collateral review. See Bousley v. United States, 523 U.S. 614, 620, 118 S. Ct. 1604, 140 L. Ed. 2d 828 (1998); see also Schriro v. Summerlin, 542 U.S. 348, 351-55, 124 S. Ct. 2519, 159 L. Ed. 2d 442 (2004). Stayton and Childree's challenge under Skilling of their honest-services fraud convictions is timely, as is Stayton's challenge of his obstruction of justice conviction.

A. Procedural default

The Government contends, however, that Stayton and Childree procedurally defaulted their opportunity to challenge their honest-services fraud convictions under Skilling because they did not have the foresight to raise this challenge before or at trial. The Government concedes, as it must, that procedural default does not apply "if the petitioner establishes cause for the waiver and shows actual prejudice resulting from the alleged violation." Reed v. Farley, 512 U.S. 339, 354, 114 S. Ct. 2291, 129 L. Ed. 2d 277 (1994). The Government does not argue that Stayton and Childree have not suffered "prejudice," only that they have not shown "cause."

The United States Supreme Court has "not given the term ``cause' precise content." Reed v. Ross, 468 U.S. 1, 13, 104 S. Ct. 2901, 82 L. Ed. 2d 1 (1984). However, the Supreme Court has clearly recognized that "when the state of the law at the time . . . did not offer a ``reasonable basis' upon which to challenge the jury instructions," that constitutes "cause for failing to raise the issue at that time." Id. at 16-17, 104 S. Ct. 2901. That condition is met, for instance, where the United States Supreme Court later issues a decision with retroactive effect "``[overturning] a longstanding and widespread practice to which [the Supreme Court] has not spoken, but which a near-unanimous body of lower court authority has expressly approved.'" Id. at 17, 104 S. Ct. 2901 (quoting United States v. Johnson, 457 U.S. 537, 551, 102 S. Ct. 2579, 73 L. Ed. 2d 202 (1982)).

Skilling represents just the sort of "clear break with the past" that the United States Supreme Court contemplated as giving rise to "cause." Id. (quoting Johnson, 457 U.S. at 549, 102 S. Ct. 2579). Although this Court has not undertaken an independent review of every honest-services fraud decision since the enactment of § 1346 in 1988, it notes that in 2009 the Solicitor General represented to the Supreme Court that "courts have defined the two major categories (bribes/kickbacks and undisclosed self-dealing/conflicts-of-interest) that fall within the [honest-services fraud] paradigm" and that "courts have universally characterized as ``core misconduct' covered by the statute cases . . . based on a public official's undisclosed conflict of interest." Brief for United States at 24 & 35 Black v. United States, 130 S. Ct. 2963 (2010) (No. 08-876), 2009 WL 3155001, at *24, 2009 U.S. S.Ct. Briefs LEXIS 1009 at *26-27 & *43-44; see also Brief for United States at 55 Skilling v. United States, 130 S. Ct. 2896 (2010) (No. 08-1394), 2010 WL 302206 at *45, 2010 U.S. S.Ct. Briefs LEXIS 33 at *76 ("both forms of undisclosed self-dealing are core honest services frauds"). Neither Skilling's lawyers nor the Skilling Court identified any court of appeals case decided in the twenty-plus years after § 1346 was enacted in which conflicts of interest were found to be outside the scope of the honest-services fraud statute. The Skilling Court acknowledged that "[u]niformly, [the courts of appeal] . . . have declined to throw out the statute as irremediably vague." Skilling, 130 S.Ct. at 2928.^[5]

Instead, by terming "conflict of interest" prosecutions as "relative[ly] infrequent" and "amorphous," the Skilling Court elected to define them out of the "core" of honest-services fraud. Skilling, 130 S.Ct. at 2932.^[6] But as Justice Scalia observed, in recognition of the fact that, before Skilling, no circuit had limited § 1346's scope to just bribes and kickbacks: "Until today, no one has thought (and there is no basis for thinking) that the honest-services statute prohibited only bribery and kickbacks," Skilling, 130 S.Ct. at 2940 (Scalia, J., concurring in part). Thus, when the United States Supreme Court "pare[d] down" the scope of § 1346 to cover only bribes or kickbacks, it overturned a "longstanding and widespread practice" by holding that prosecutions premised on conflicts of interest must be "exclude[d]" from the ambit of § 1346. Skilling, 130 S.Ct. at 2932. That was a watershed change.

This Court acknowledges that the Eleventh Circuit has generally declined to find "novelty" where "a number of others before had raised the claim before the petitioner failed to do so." Howard v. United States, 374 F.3d 1068, 1072-73 (11th Cir.2004) (citing cases). But Alabama v. Shelton, 535 U.S. 654, 122 S. Ct. 1764, 152 L. Ed. 2d 888 (2002), the retroactive Supreme Court decision before the Eleventh Circuit in Howard, was one that resolved a circuit split. See id. at 1073 ("That is why the Shelton Court was able to observe that ``courts have divided on the Sixth Amendment question presented in this case.'"). Thus, in Howard, the Eleventh Circuit did not have before it a decision that marked a "clear break" with a "long-standing and widespread practice . . . which a near-unanimous body of lower court authority has expressly approved." Reed v. Ross, 468 U.S. at 16-17, 104 S. Ct. 2901. Rather, it had a case in which defendants in other parts of the country had successfully raised a constitutional claim that was still "live." Because it was reasonable to have expected Howard to have done the same, his Shelton-based-claim fell outside the scope of Reed v. Ross and did not excuse his procedural default.^[7]

The issue presented here is not chalked on a clear slate. Twenty-four years ago, the United States Supreme Court decided McNally v. United States, 483 U.S. 350, 107 S. Ct. 2875, 97 L. Ed. 2d 292 (1987). That case "rejected the theory that the mail-fraud statute protects the intangible right of the citizenry to good government." Dalton v. United States, 862 F.2d 1307, 1308 (8th Cir.1988).^[8] For defendants who had been convicted on the theory that McNally rejected, the same procedural default issue that this Court now faces in the wake of Skilling arose. Observing that "[a]t the time of her conviction, every federal court of appeals to consider the issue, including our Court, had approved the ``intangible rights' theory of mail-fraud prosecutions," the Honorable Richard Arnold concluded that "[t]he McNally decision represented precisely the kind of ``clear break with the past, . . . overturn[ing] a long-standing and widespread practice . . . which a near-unanimous body of lower court authority has expressly approved' which will excuse a prior failure to raise a claim." Id. at 1310 (citing Reed v. Ross, 468 U.S. at 17, 104 S. Ct. 2901). What was true in the wake of McNally, is equally true in the wake of Skilling. There has been a "clear break" that supplies the requisite "cause."

Moreover, application of the Reed v. Ross-standard to find "cause" to permit Stayton and Childree to bring a Skilling-challenge to their honest-services fraud convictions—rather than rejecting that challenge as procedurally defaulted because "a number of others before had raised the claim before the petitioner failed to do so," Howard, 374 F.3d at 1072-73—is consistent with the Supreme Court's direction to lower courts just last year not to "erroneously rel[y] on an overly rigid per se approach" in "cause and prejudice" determinations in habeas cases. Holland v. Florida, ___ U.S. ___, 130 S. Ct. 2549, 2565, 177 L. Ed. 2d 130 (2010). Applied too rigidly, the Howard-standard would prevent any defendant from relying on a Supreme Court decision to establish "cause." It is the nature of how the modern Supreme Court works that it waits for lower courts—usually many—to first "test and refine" constitutional questions before granting certiorari. See, e.g., Adams v. Robertson, 520 U.S. 83, 91, 117 S. Ct. 1028, 137 L. Ed. 2d 203 (1997) (dismissing writ of certiorari as improvidently granted where constitutional question had not been fully litigated). It will, therefore, almost always be true that "a number of others" will have "raised the claim" before the Supreme Court takes a representative case and issues a decision. That is why the significant issue—the nuance that reconciles Bousley with Reed v. Ross—is whether the constitutional claim has already met with nearly universal rejection in lower courts before the Supreme Court rules. See supra n.7. That is what determines whether there has been a "clear break" with the past.

Because Skilling marks such a "clear break," Stayton and Childree have shown "cause" for not having raised their constitutional challenge to § 1346 sooner. The Government has conceded "prejudice." This Court finds that Stayton and Childree may pursue their claims under Skilling.

B. Application of Skilling

A principal question in this case is whether Stayton and Childree's convictions for honest-services fraud must be vacated in the wake of Skilling. Although there is no question that the honest-services fraud instruction given to the jury in 2007 "was a good instruction before the Supreme Court ruled that honest-services fraud requires proof of a bribe or kickback," United States v. Black, 625 F.3d 386, 391-92 (7th Cir.2010), in hindsight that instruction was flawed. In light of Skilling, the jury should not have been instructed that it could convict Stayton and Childree of honest-services fraud based solely on "conflicts of interest." See supra at n.3. Following the Skilling court's holding in 2010 that § 1346 must be construed "to encompass only bribery and kickback schemes," Skilling, 130 S.Ct. at 2933, it is clear that the instruction given to the jury in 2007 in this case was overbroad.

The jury returned a general verdict [Criminal 135] on the form proposed by the Government [Criminal 121]. That general verdict form did not ask the jury to specify the basis on which it found Stayton and Childree guilty of honest-services fraud. Because the jury returned a general verdict, it is not possible to say with certainty whether Stayton and Childree were found guilty of honest-services fraud on the basis of "accepting a bribe," "taking a kickback," "receiving a personal benefit from an undisclosed conflict of interest," or some combination. While the jury might have concluded that the $61,071.75 payoff of Stayton's second mortgage by Childree amounted to a kickback, it might also have convicted Childree and Stayton for receiving a personal benefit from an undisclosed conflict of interest.^[9]

In a line of cases originating with Stromberg v. California, 283 U.S. 359, 51 S. Ct. 532, 75 L. Ed. 1117 (1931), and running through Griffin v. United States, 502 U.S. 46, 112 S. Ct. 466, 116 L. Ed. 2d 371 (1991), the Supreme Court has discussed the circumstances in which a general verdict must be set aside. Among other things, vacatur is "constitutionally compelled," Clark v. Crosby, 335 F.3d 1303, 1309 (11th Cir.2003), "where a provision of the Constitution forbids conviction on a particular ground [and] the general verdict may . . . have rested on that ground," Griffin, 502 U.S. at 53, 112 S. Ct. 466 (emphasis added). Given the overbreadth of the jury instruction and the resulting uncertainty about the basis for the verdict, the honest-services fraud convictions of Childree and Stayton under § 1346 must be set aside.^[10]

C. Stayton's obstruction of justice conviction

A further question in this case is what becomes of Stayton's obstruction of justice conviction. Only two of the grounds that Stayton raises in his amended § 2255 motion have any bearing on that issue. [See Stayton 15 ("Ground One C" and "Ground Three")]. Both are based on the argument that the Government violated his rights under Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10 L. Ed. 2d 215 (1963), when it failed to share before trial the results of the Secret Service's August 2007 analysis of the "thank you" note. See supra at 1264-65. Stayton's first claim is that there was a stand-alone Brady violation, and Stayton's second claim is that his trial counsel was ineffective for not asserting that there had been a Brady violation. That pair of claims fails for several reasons.

When the Government withholds evidence, there is a Brady violation only if that evidence is (1) favorable to the accused (because it is exculpatory or impeaching) and (2) material (so that its non-disclosure caused the defendant prejudice). See, e.g., Cone v. Bell, ___ U.S. ___, 129 S. Ct. 1769, 1782-83, 173 L. Ed. 2d 701 (2009); Strickler v. Greene, 527 U.S. 263, 281-82, 119 S. Ct. 1936, 144 L. Ed. 2d 286 (1999); Allen v. Sec'y, Fla. Dep't of Corr., 611 F.3d 740, 745-46 (11th Cir.2010). In this case, the Secret Service report is neither "favorable" to Stayton, nor "material" to his conviction for obstruction of justice.

The "thank you" note from Stayton that Childree belatedly produced in July 2007 bore a January 2002 date. Stayton argued that, in fact, the note had been written in 2002. The Government believed it might actually have been written in 2007. The Secret Service's August 2007 report did not resolve that disagreement. The Secret Service simply "determined that the black ink used . . . matched a standard that was commercially available prior to 2002 and is still widely available" [Stayton 24-2 at 3]. In other words, the note might have been written in 2002, as Stayton contended, or it might have been written in 2007, as the Government believed. The Secret Service report opined, quite accurately: "Therefore, no conclusion could be rendered regarding the authenticity of Exhibit Q1 with respect to the first production date of the writing ink" [id.].

The Secret Service's watermark and indented writing analysis added little, if any, more. Watermark analysis revealed nothing because there was no discernable watermark on the "thank you" note. Indented writing analysis showed only that at some point the word "Curt"—Childree's nickname—was written and double underscored on a piece of paper placed on top of the note. Neither of these additional two forms of analysis indicate whether the note was written in 2002 or written in 2007. In short, the Secret Service report is neutral; it favors neither the Government nor Stayton.

Even assuming for the sake of discussion that the report was "favorable" to Stayton, it would only be material if there was a "reasonable probability that the withheld evidence would have altered at least one juror's assessment [of the case]." Cone, 129 S.Ct. at 1783. That probability is judged not by viewing the withheld evidence in isolation, but rather in light of all other evidence. See Kyles v. Whitley, 514 U.S. 419, 436, 115 S. Ct. 1555, 131 L. Ed. 2d 490 (1995); see also Maharaj v. Sec'y for Dep't of Corr., 432 F.3d 1292, 1309-10 (11th Cir.2005). Stayton's own grand jury and trial testimony, as this Court previously observed at sentencing, was "not credible and . . . not believable" [Criminal 159 at 33]. "[T]he jury was free to reject the testimony . . . as a fabrication and use it as substantive evidence of his guilt." United States v. Artis, 261 Fed.Appx. 176, 180 (11th Cir.2008). "This rule applies with special force where the elements to be proved for a conviction include highly subjective elements: for example, the defendant's intent or knowledge. . . ." United States v. Brown, 53 F.3d 312, 315 (11th Cir.1995). In any event, Stayton's testimony was not the only evidence against him. In combination with the other testimony and exhibits, see supra 3-6, the obstruction of justice case against Stayton was overwhelming. The Secret Service report could not "``reasonably be taken to put the whole case in such a different light as to undermine confidence in the verdict.'" Strickler, 527 U.S. at 290, 119 S. Ct. 1936 (quoting Kyles, 514 U.S. at 435, 115 S. Ct. 1555). The Secret Service report was not "material" within the meaning of Brady, even if it was Brady material.

The Government's decision not to disclose the Secret Service report was not a Brady violation, and "it is axiomatic that the failure to raise nonmeritorious issues does not constitute ineffective assistance." Bolender v. Singletary, 16 F.3d 1547, 1573 (11th Cir.1994); see also Lockhart v. Fretwell, 506 U.S. 364, 374, 113 S. Ct. 838, 122 L. Ed. 2d 180 (1993) (O'Connor, J., concurring) ("today we hold that the court making the [ineffective assistance of counsel] determination may not consider the effect of an objection it knows to be wholly meritless under current governing law"). Because there was no stand-alone Brady violation, Stayton's trial counsel was not ineffective for failing to argue that there was.

Both "Ground One C" and "Ground Three" in Stayton's amended § 2255 motion, which raised the Brady issue as ineffective assistance of counsel and stand-alone claims respectively [Stayton 15 at 15 & 20-23], are without merit. Stayton's obstruction of justice conviction will not be disturbed. In light of the Court's decision to vacate Stayton's honest-services fraud conviction, this Court finds that it is appropriate to resentence Stayton on the obstruction of justice conviction. See 28 U.S.C. § 2255(b).

D. Certificate of Appealability

This Court "must issue or deny a certificate of appealability when it enters a final order adverse to the [movant]." Rule 11(a), Rules Governing Section 2255 Proceedings for the United States District Courts. A § 2255 movant "cannot take an appeal unless a circuit justice or a circuit or district judge issues a certificate of appealability under 28 U.S.C. § 2253(c)." Fed. R.App. P. 22(b)(1). "A certificate of appealability may issue . . . only if the [movant] has made a substantial showing of the denial of a constitutional right." 28 U.S.C. § 2253(c)(2). To make a substantial showing of the denial of a constitutional right, a § 2255 movant must demonstrate "that reasonable jurists could debate whether (or, for that matter, agree that) the petition should have been resolved in a different manner or that the issues presented were adequate to deserve encouragement to proceed further." Miller-El v. Cockrell, 537 U.S. 322, 336, 123 S. Ct. 1029, 154 L. Ed. 2d 931 (2003) (citations and quotation marks omitted).

With respect to their honest-services fraud convictions, both Stayton and Childree have been granted relief under § 2255, and certificates of appealability are not required to be issued. With respect to his obstruction of justice conviction, Stayton has not demonstrated that he has been denied a constitutional right or that the issue is reasonably debatable or deserves encouragement to proceed further. Issuance of a certificate of appealability is not warranted in this case.

III. CONCLUSION

For the reasons stated above,

IT IS HEREBY ORDERED that Childree's Motion to Vacate, Set Aside or Correct Sentence [Childree 14] is GRANTED and his honest-services fraud conviction is vacated;

IT IS FURTHER ORDERED that Stayton's Amended Motion under § 2255 [Stayton 12] is GRANTED IN PART AND DENIED IN PART. Stayton's motion with respect to his honest-services fraud conviction under 18 U.S.C. §§ 1343 and 1346 is GRANTED and his honest-services fraud conviction is VACATED. Stayton's motion with respect to his conviction for obstruction of justice under 18 U.S.C. § 1503 is DENIED, however, Stayton will be RESENTENCED on his obstruction of justice conviction; and

IT IS FURTHER ORDERED that Certificates of Appealability will not be issued.

NOTES

[1] References to [Criminal x at y] are to the combined criminal docket for both Stayton and Childree. References to [Tr. Trans. at x] are to the criminal trial transcript, which may be found in Documents 152-158 in the criminal docket. References to [Stayton x at y] and [Childree x at y] are to the separate civil dockets opened for their respective § 2255 motions.

[2] The parties devote a significant part of their § 2255 filings to arguments about the CIPA proceedings and the stipulations. Skilling controls the outcome of Stayton's and Childree's challenge to their honest-services fraud convictions, and the alleged errors in the CIPA proceedings are unrelated to Stayton's conviction for obstruction of justice.

[3] The court instructed the jury:

If instead the official or employee acts or makes a decision based on the official's own personal interest, such as accepting a bribe, taking a kickback or receiving a personal benefit from an undisclosed conflict of interest, the official has defrauded the government of the official's honest services even though the department, agency or other public entity may not have suffered any monetary loss in the transaction. Further, the government does not have to prove that a public official would have made different official decisions if he had avoided or disclosed the conflict of interest.

[Tr. Trans. at 1226-27 (emphasis added)].

[4] Although both Stayton and Childree initially charged their trial counsel with providing ineffective assistance for not taking direct appeals, Stayton and Childree have since abandoned those claims.

[5] In the Eleventh Circuit, cases rejecting constitutional challenges to § 1346 included: United States v. Hasner, 340 F.3d 1261, 1268-69 (11th Cir.2003) (rejecting void for vagueness challenge), cert. denied, 543 U.S. 810, 125 S. Ct. 38, 160 L. Ed. 2d 12 (2004); United States v. Paradies, 98 F.3d 1266, 1282-83 (11th Cir.1996) (same), cert. denied, 522 U.S. 1014, 118 S. Ct. 598, 139 L. Ed. 2d 487 (1997); United States v. Castro, 89 F.3d 1443, 1455-56 (11th Cir.1996) (same), cert. denied, 519 U.S. 1118, 117 S. Ct. 965, 136 L. Ed. 2d 850 (1997); United States v. Waymer, 55 F.3d 564, 568-69 (11th Cir.1995) (same), cert. denied, 517 U.S. 1119, 116 S. Ct. 1350, 134 L. Ed. 2d 519 (1996).

[6] In the Eleventh Circuit, "conflict of interest" prosecutions under § 1346 were sufficiently common that language addressing them was included in the pattern jury instructions for criminal cases. See, e.g., Eleventh Circuit Pattern Jury Instructions—Criminal Cases 310-314 (2003) (instructing that a conviction should be returned for honest-services fraud if a defendant "benefit[ed] from an undisclosed conflict of interest"); Eleventh Circuit Pattern Jury Instructions—Criminal Cases 318-22 (2010) (same, but noting the grant of certiorari in Skilling). See also, e.g., Third Circuit Pattern Jury Instructions—Criminal Cases 476-78 (2009) (instructing that a conviction should be returned for honest-services fraud if a defendant did "not disclose material information regarding a conflict of interest").

[7] The Supreme Court's admonition that "futility cannot constitute cause if it means simply that a claim was unacceptable to [a] particular court at [a] particular time," first included in a footnote in Engle v. Isaac, 456 U.S. 107, 130 n.35, 102 S. Ct. 1558, 71 L. Ed. 2d 783 (1982), and later repeated in Bousley v. United States, 523 U.S. 614, 623, 118 S. Ct. 1604, 140 L. Ed. 2d 828 (1998), is not inconsistent with Reed v. Ross, 468 U.S. 1, 104 S. Ct. 2901, 82 L. Ed. 2d 1 (1984). Indeed, had the Bousley Court intended to overrule Reed v. Ross, it would have said so. The Bousley-standard—requiring a defendant to raise a constitutional claim if that claim is finding traction in other courts even if not the "particular court" in which the defendant is being tried—can be reconciled with the Reed v. Ross-standard—acknowledging that where "longstanding and widespread practice" in a "near-unanimous body of lower court authority" has indicated that a constitutional claim is meritless, a defendant need not continue to make it. What matters is whether rejection of a constitutional claim has been nearly universal. As the Supreme Court itself suggested, once it is plain that a "near-unanimous body of lower court authority" has rejected a constitutional claim, "we might actually disrupt . . . proceedings by encouraging defense counsel to include any and all remotely plausible constitutional claims that could, some day, gain recognition." Reed v. Ross, 468 U.S. 1 at 16, 104 S. Ct. 2901. After a certain point, it is not merely futile to raise an issue that a near-unanimous body of lower court authority treats as meritless, it is detrimental. The defendant, defense counsel, and courts are all better served by focusing their limited resources and time on issues to which courts remain open and receptive.

[8] Section 1346 was enacted promptly thereafter to reverse McNally legislatively. Skilling, 130 S.Ct. at 2926 (Congress "responded swiftly").

[9] In light of the acquittals on the stand-alone bribery counts, it seems unlikely that Childree and Stayton's honest-services fraud convictions rest on a finding that the $61,071.75 mortgage payoff was a bribe.

[10] This is not a finding that either man is "actually innocent" of honest-services fraud. Rather, in this case, the "guilty" verdict that was appropriately returned by the jury in 2007 now has to be set aside because the Supreme Court construed § 1346 in a new and significantly narrower fashion in 2010. The Government may elect to retry one or both men. In making that election, the Government may wish to consider the final paragraph of the opinion in United States v. Black, 625 F.3d 386, 394 (7th Cir.2010).