848 F.2d 1485 (10th Cir. 1988), 87-2865, United States v. Shelton

Docket Nº:87-2865, 88-1017.
Citation:848 F.2d 1485
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Fred A. SHELTON, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Marvin JAMES, Defendant-Appellant.
Case Date:May 26, 1988
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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848 F.2d 1485 (10th Cir. 1988)

UNITED STATES of America, Plaintiff-Appellee,


Fred A. SHELTON, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee,


Marvin JAMES, Defendant-Appellant.

Nos. 87-2865, 88-1017.

United States Court of Appeals, Tenth Circuit

May 26, 1988

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Gerhard Kleinschmidt, Fort Worth, Tex., for defendant-appellant shelton.

Charles Gaunce of Stipe, Gossett, Stipe, Harper, Estes, McCune & Parks, Oklahoma City, Okl., for defendant-appellant James.

Roger Hilfiger, U.S. Atty., E.D. Oklahoma, and Sara Criscitelli, Atty., Dept. of Justice, Washington, D.C., for plaintiff-appellee.


SEYMOUR, Circuit Judge.

Fred A. Shelton and Marvin James brought habeas corpus actions pursuant to 28 U.S.C. Sec. 2255 (1982), asserting that their convictions under the mail fraud statute, 18 U.S.C. Sec. 1341 (1982), are invalid in light of the Supreme Court's decision in McNally v. United States, --- U.S. ----, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). The district court ruled that McNally should not be given retroactive effect in the context of a section 2255 proceeding, and denied relief. We heard the resulting appeals en banc, and we now hold that McNally should be applied retroactively. We also hold that each petitioner had cause for failing to raise the issue earlier and has established prejudice entitling him to issuance of the writ.


In McNally, the defendants were charged with committing mail fraud by participating in a scheme whereby they gave state insurance business to an insurance agency that agreed to split the resulting commissions with them. "The prosecution's principal theory of the case ... was that petitioners' participation in a self-dealing patronage scheme defrauded the citizens and government of Kentucky of certain 'intangible rights,' such as the right to have the Commonwealth's affairs conducted honestly." McNally, 107 S.Ct. at 2877. The Supreme Court observed that the case before it was one of a "line of decisions from the Courts of Appeals holding that the mail fraud statute proscribes schemes to defraud citizens of their intangible rights to honest and impartial government." Id. at 2879. The Court, however, construed the statute to reach only frauds involving money or property. Id. at 2881. Because the jury instructions in McNally permitted a guilty verdict based solely on loss of the right to honest government, and did not require the jury to find that the victims of the fraud had lost money or property, the Court reversed the convictions.

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In Carpenter v. United States, --- U.S. ----, 108 S.Ct. 316, 320, 98 L.Ed.2d 275 (1987), the Court reiterated its holding that the right to "honest and faithful service [is] an interest too ethereal in itself to fall within the protection of the mail fraud statute."

Shelton and James are former Oklahoma county commissioners who were tried and convicted on indictments charging them with, inter alia, committing mail fraud by accepting kickbacks in connection with county purchases, thereby defrauding county citizens of the right to have county business conducted free from corruption and undue influence. The frauds are set out in more detail in the opinions affirming their convictions on direct appeal. See United States v. Shelton, 736 F.2d 1397, 1399 (10th Cir.), cert. denied, 469 U.S. 857, 105 S.Ct. 185, 83 L.Ed.2d 119 (1984); United States v. James, 728 F.2d 465, 466 (10th Cir.), cert. denied, 469 U.S. 826, 105 S.Ct. 106, 83 L.Ed.2d 50 (1984). Both convictions in the instant proceedings became final before the Supreme Court decided McNally, and neither defendant raised the McNally issue at trial or in his direct appeal.

Shelton and James maintain that McNally invalidates their convictions, and that the district court erred in refusing to apply that decision retroactively when considering their section 2255 motions. On appeal, the Government concedes that McNally applies retroactively in a federal habeas proceeding. The Government contends, however, that relief is nonetheless barred because petitioners have failed to satisfy the cause and prejudice inquiry mandated by United States v. Frady, 456 U.S. 152, 102 S.Ct. 1584, 71 L.Ed.2d 816 (1982), when a federal prisoner asserts a defaulted claim in a collateral challenge to his conviction under section 2255. Although the Government concedes that Shelton and James had the requisite cause for their failure to raise the issue earlier, it argues that neither petitioner has established sufficient prejudice to entitle him to relief. Subsumed in this argument is the contention that there is no possibility, as there was in McNally, that either Shelton or James was convicted of conduct that does not constitute a federal crime.

We are one of the first appellate courts to consider the issues conceded by the Government, namely the retroactivity of McNally in a habeas proceeding and the adequacy of cause for defaulting that claim. 1 In view of the large number of cases in this circuit which are likely to be affected by these legal issues, and the divergent views of the courts that have considered them, compare United States v. Smith, 675 F.Supp. 978 (M.D.Pa.1987) (McNally not retroactively applied) and United States v. Callanan, 671 F.Supp. 487 (E.D.Mich.1987) (same) with Ingber v. Enzor, 841 F.2d 450 (2d Cir.1988) (McNally retroactively applied) and United States v. Mandel, 672 F.Supp. 864 (D.Md.1987) (McNally retroactively applied in application for writ of coram nobis), we believe it appropriate to resolve these questions independently of the Government's concessions. Accord Strauss v. United States, 516 F.2d 980, 982 (7th Cir.1975).


In concluding that McNally could not be applied retroactively in motions brought under section 2255, the district court applied the three-step retroactivity test set forth in Allen v. Hardy, 478 U.S. 255, 106 S.Ct. 2878, 2880, 92 L.Ed.2d 199 (1986). In so doing, the court employed the wrong legal standard.

This test, which was first articulated in Linkletter v. Walker, 381 U.S. 618, 629, 85 S.Ct. 1731, 1737, 14 L.Ed.2d 601 (1965), is used to determine "the extent to which a decision announcing a new constitutional rule of criminal procedure should be given retroactive effect." Allen, 106 S.Ct. at 2880 (emphasis added). The Supreme Court has pointed out that the Linkletter

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test applies to "those constitutional interpretations bearing on the use of evidence or on a particular mode of trial," Robinson v. Neil, 409 U.S. 505, 508, 93 S.Ct. 876, 877-78, 35 L.Ed.2d 29 (1973), and that decisions which do not deal with procedural rights and methods of conducting trials "cannot, for retroactivity purposes, be lumped conveniently together in terms of analysis," id. In Robinson, the Court distinguished, for purposes of retroactivity, between a decision announcing a new procedural rule and a decision announcing a new substantive constitutional principle whose practical result "is to prevent a trial from taking place at all, rather than to prescribe procedural rules that govern the conduct of a trial." Id. at 509, 93 S.Ct. at 878. The Court concluded that in the latter situation, the Linkletter analysis is simply not appropriate. Id. at 508, 93 S.Ct. at 877.

In the instant case, we are concerned with the retroactivity of a substantive non-constitutional decision concerning the reach of a federal statute, rather than a substantive decision on the scope of a constitutional guarantee like that at issue in Robinson. However, the practical effect of both decisions is the same; the defendant is not subject to trial on the charge. Accordingly, we believe that the rationale articulated by the Court in Robinson in concluding that the Linkletter test was not appropriate is equally applicable here. See Ingber, 841 F.2d at 454 n. 1 (criminal procedure cases have no bearing on retroactivity of new rule of substantive law); McClain v. United States, 643 F.2d 911, 913 (2d Cir.1981) (Linkletter test not appropriate where defendant convicted for acts subsequently held not criminal), cert. denied, 459 U.S. 879, 103 S.Ct. 174, 74 L.Ed.2d 143 (1982).

Our conclusion is supported by Davis v. United States, 417 U.S. 333, 94 S.Ct. 2298, 41 L.Ed.2d 109 (1974), where the Supreme Court addressed whether a federal prisoner could assert, in a section 2255 motion, a change in circuit court law occurring after his conviction was affirmed. 2 The subsequent decision in Davis, like that in McNally, had interpreted the federal statute under which the petitioner was convicted so that it allegedly did not reach the petitioner's conduct. The Supreme Court stated that "the appropriate inquiry was whether the claimed error of law was 'a fundamental defect which inherently results in a complete miscarriage of justice,' and whether '[i]t ... present[s] exceptional circumstances where the need for the remedy afforded by the writ of habeas corpus is apparent.' " Id. at 346, 94 S.Ct. at 2305 (quoting Hill v. United States, 368 U.S. 424, 428, 82 S.Ct. 468, 471, 7 L.Ed.2d 417 (1962)). The Court then answered this inquiry in the affirmative, stating there could be no doubt that the above conditions were satisfied if the petitioner had in fact been convicted and punished for an act the law did not make criminal.

Two appellate decisions have relied on Davis to permit a federal habeas prisoner to assert a claim for collateral relief based on a subsequent Supreme Court opinion construing a federal criminal statute to exclude the conduct underlying the petitioner's conviction. See United States v. Bonnette, 781 F.2d 357, 362-64 (4th Cir.1986); Strauss, 516...

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