Johnson v. United States

United States Court of Appeals for the Second Circuit · 2025 · Evidence

Evidencegeneral verdictinvalid legal theoryright-to-control theorymisappropriation theoryharmless errorgrave doubtKotteakos

Facts

Johnson, an HSBC foreign-exchange executive, was convicted of wire fraud and conspiracy after HSBC executed a large pound purchase for Cairn Energy at a benchmark fix rate. At trial, the government presented two fraud theories: an invalid right-to-control theory and a valid misappropriation theory based on Johnson's alleged use of Cairn's confidential information for HSBC's proprietary benefit. The parties' written agreements expressly disclaimed any fiduciary or advisory relationship, although the government relied on Johnson's statements during the negotiations to argue that a quasi-fiduciary relationship nevertheless existed. The jury returned a general verdict, so it was impossible to tell which theory it relied upon.

Issue

When a jury returns a general verdict after being instructed on both a legally invalid right-to-control fraud theory and a legally valid misappropriation theory, may Johnson's conviction stand on coram nobis review because the error was harmless? More specifically, did the government show that submission of the invalid theory did not substantially influence the verdict?

Rule

A Yates error arises when a jury is given both a legally invalid and a legally valid basis for conviction and returns a general verdict that does not reveal which basis it adopted. Such an error is not structural and is subject to harmless-error review; in this case, the court held that the government failed to satisfy even the less demanding Kotteakos standard because the record left grave doubt whether the jury actually convicted on the valid misappropriation theory. In assessing misappropriation fraud, a fiduciary or quasi-fiduciary relationship cannot be lightly implied, especially where contracts expressly disclaim such duties, and use of confidential information is not enough unless the defendant used it in an impermissible, misappropriative way for his own benefit and to the other's detriment.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In the Eastern District of New York, Leo Mercer was convicted of wire fraud on a general verdict after the jury was instructed on two theories: a disclosure-based property theory later declared legally invalid, and a misappropriation theory. The written deal documents between Leo's trading firm and the customer said the parties were acting at arm's length and that the firm was not an adviser or fiduciary, while the government's proof of misappropriative use of the customer's information was heavily disputed.

Leo later seeks coram nobis after finishing his sentence. Under the majority's approach, which is the best argument for granting relief?

Explanation. A general verdict after submission of both an invalid and a valid theory creates a Yates error. The majority held such an error is not structural but is subject to harmless-error review, and relief is warranted when the government cannot show the invalid theory did not substantially influence the verdict. Where the valid misappropriation theory is weak—especially on fiduciary duty and misuse—and the court has grave doubt about what this jury actually did, coram nobis relief is appropriate.