1 15-2686-pr
Whitman v. United States

UNITED STATES COURT OF APPEALS
FOR THE SECO ND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AF TER JANUARY 1, 2007, IS PERM ITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROC EDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPEND IX OR AN ELECTRONIC DATAB ASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Cour t of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courth ouse, 40 Foley Square, in the City of New York, on the 25 th day of October, two thousand sixteen.

PRESENT: J ON O. N EWMAN

, G ERARD E. L YNCH

, C HRISTOPHER F. D RONEY

, Circuit Judges

,

---------------------------- ---------------------------- -------------- D OUG W HITMAN

, AKA S EALED D EFENDANT 1, Plaintiff-Appellant

,

v.

No. 15-2686-pr
U NITED S TATES OF A MERICA Defendant-Appellee.

---------------------------- ---------------------------- --------------

FOR PETITIONER: D ENNIS P. R IORDAN , Riordan & Horgan, San Francisco, California(Theodore Sampsell-Jones, SampsellJones Law, Alexandra A.E. Shapiro, Shapiro Arato LLP, on the brief ).2 FOR RESPONDENT: S ARAH E DDY M C C ALLUM

, Assistant United States Attorney (Margaret
Garnett on the brief ).

Appeal from a July 22, 2015, judgment of the United States District Court for the Southern District of New York (Rakoff, J .).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the district court is AFFIRMED

.

Doug Whitman appeals from the denial of his petition to vacate a prior conviction under 28 U.S.C. § 2255. He asserts that our decisions in United States v. Newman , 773 F.3d 438 (2d Cir. 2014), and United States v. Martoma

, 894 F.3d 64 (2d Cir. 2018),
establish a new rule of law that renders incorr ect a jury instruction gi ven at his trial. We begin with a summary of prior proceedings to explain our decision, but otherwise assume the parties’ familiarity with th e facts and the record. For the r easons stated below, we affirm the district court’s judgment.

I. Background

On August 20, 2012, Whitman was convicted by a jury of two counts of conspiracy
to commit securities fraud unde r 18 U.S.C. § 371 and two co unts of securities fraud under 15 U.S.C. §§ 78j(b) and 78ff fo r his role as a tippee in an insider trading scheme. Whitman appealed his conviction, challenging “the di strict court’s evidentiary rulings and jury instructions,” but, importantly, not the court’s instruction defi ning “personal benefit,” as
he had done before the trial court. United States v. Whitman , 555 F. App’x 98, 101-07 (2d Cir. 2014). We affirmed the district court. Id.

After deciding Whitman’s di rect appeal, we decided United States v. Newman , 773 F.3d 438 (2d Cir. 2014), which na rrowed the definition of “perso nal benefit” trial courts
should use to instruct juries in insider trading cases involving tippees, such as Whitman. On March 25, 2015, Whitman filed a motion un der 28 U.S.C. § 2255, claiming that the holding announced in Newman entitled him to a new trial because it rendered the jury
instruction in his trial in error. The district court denied his motion. United States v.
Whitman , 115 F. Supp. 3d 439, 446 (S.D.N.Y. 2015 ). The court explained that Whitman’s claim was procedurally defaulted because he had not raised it on direct appeal, and
therefore Whitman had to show cause and prejudice to maintain his challenge. Id. at 443.3 Because Whitman had not shown his challenge was “so novel that its legal basis [was] not reasonably available to counsel” at the ti me of the procedural default—“indeed he advanced the[] argument[] . . . during trial before abandoning [it] on appeal”—the court
held that he had failed to show suffi cient cause to excuse his default. Id. (internal quotation marks omitted).

After the district court denied Whitman a certificate of appealability, we granted him a certificate on the following questions: (1) “whether the instructi on defining ‘personal benefit’ at [Whitman’s] trial was erroneous under United States v. Newman , and whether [as a result] [Whitman’]s right to have a jury find each elemen t of the offense was denied thereby; (2) whether the defendant’s prior coun sel’s failure to raise this issue on direct appeal was justified or excused by cause; a nd (3) whether the defendant’s prior counsel’s failure to raise this issue on direct appeal constituted ineffective assistance of counsel.” ECF Nos. 6, 32.

While Whitman’s appeal of the denial of his § 2255 petition was pending, our
decision in Newman was abrogated by Salman v. United States , 137 S. Ct. 420 (2016), but, both parties agree, our subs equent amended decision in United States v. Martoma , 894 F.3d 64 (2d Cir. 2018), has sufficiently narrowed the definition of “personal benefit” to render Whitman’s jury instruc tion unlawful if it were given t oday. We thus treat Whitman’s appeal of his § 2255 denial as if it had relied on the new rule announced in Martoma

.

We review conclusions of law in a district court’s denial of habeas relief under 28 U.S.C. § 2255 de novo. Harrington v. United States , 689 F.3d 124, 129 (2d Cir. 2012). For the reasons set forth below, we affi rm the district court’s decision.

I. Procedural Default

On appeal, Whitman renews his argument that subsequent lega l developments have rendered his jury instruction on personal benefit in error. Ne vertheless, Whitman concedes that his “[f]ailure to adequately” raise his ju ry instruction challenge on direct appeal “is
classified as procedural default, ” Bloomer v. United States , 162 F.3d 187, 191 (2d Cir. 1998), and he is thus barred fro m raising it here unless he “can . . . demonstrate . . . cause and actual prejudice,” Cox v. United States , 783 F.3d 145, 150 (2d Cir. 2015) (per curiam) (internal quotation marks omitted). 1

1 Although actual innocence also will allow a defendant to a raise procedurally defaulted claim, See Schlup
v. Delo , 513 U.S. 298 (1995), Whitman has not argued in this appeal that his default should be excused on that ground.4 To demonstrate cause, a defendant must s how “that some objective factor external to the defense,” Murray v. Carrier , 477 U.S. 478, 488 (1986), such as a claim that “is so novel that its legal basis [was] not reasonably available to counsel” kept him from raising the claim on direct appeal, Reed v. Ross , 468 U.S. 1, 16 (1984). Novelty, however, “cannot constitute cause if it means simp ly that a claim was unacceptable to that particular court at that particular time.” Bousley v. United States , 523 U.S. 614, 623 (1998) (internal quotation marks omitted).

Whitman claims that his jury instruction challenge is novel because at the time of his appeal it “was not available and was not di ctated by prior precedent.” App. Br. at 35- 36. But “the question is not wh ether subsequent legal devel opments have made counsel’s task easier, but whether at the time of the default the cl aim was ‘available’ at all.” United
States v. Thorn , 659 F.3d 227, 233 (2d Cir. 2011) (quoting Smith v. Murray , 477 U.S. 527, 537 (1986)). There is no doubt that it was. Our decision in Newman

, and then in Martoma

, to substantially narrow the defi nition of “personal benefit” re sted on an argument, raised on direct appeal in those cases, that our definition of “persona l benefit” was too expansive.
And Whitman’s trial counse l raised the same argument in district court. See United States
v. Whitman , No. 12-cr-125, ECF No. 57. If other counsel were able to raise the argument, including Whitman’s own form er attorney, we cannot say the same argument was unavailable to his appellate counsel.

As a result, Whitman has no t shown that his challenge is “novel,” and therefore he has not shown cause to excuse his procedural default. We affirm the district court’s decision on that basis, and therefore need not address the issue of “prejudice.”

II. Ineffective Assist ance of Counsel

Whitman also argues that his former c ounsel’s failure to challenge the jury instruction on direct appeal constitutes ine ffective assistance of counsel. A claim of ineffective assistance of counsel may be raised for the first time in a § 2255 motion “whether or not the petitioner could have raised the claim on direct appeal.” Massaro v.
United States , 538 U.S. 500, 504 (2003). To succee d with an ineffective assistance of counsel claim under § 2255 a defendant “mus t demonstrate that: (1) his counsel’s representation fell below an objective standa rd of reasonableness; and (2) there is a reasonable probability that, but for counsel’ s unprofessional errors, the result of the proceeding would have been different.” McCoy v. United States , 707 F.3d 1 84, 187 (2d Cir. 2013) (per curiam) (citing Strickland v. Washington , 466 U.S. 668 ( 1984)). On appeal, while our “scrutiny of counsel’s perfo rmance must be highly deferential,” Strickland , 466 U.S. at 689, Whitman “may es tablish constitutionally inadequa te performance [of appellate5 counsel] if he shows that counsel omitted significant and obvious issues while pursuing issues that were clearly and significantly weaker,” Lynch v. Dolce , 789 F.3d 303, 311 (2d Cir. 2015) (internal quotation marks omitted).

Whitman argues that if we conclude the argument regarding the proper instruction for “personal benefit” was available to his counsel on appeal, then we al so should find that his appellate counsel’s failure to raise the argument constitutes ineffe ctive assistance of counsel. But even if the argu ment was available, as we find, it was not “significant and obvious” given the long-standing prior definition of “personal benefit” at the time, and we cannot find that choosing to attack Whitman’s conviction on other grounds, such as the sufficiency of the evidence, was a “clearly and significantly weaker” appellate strategy.
We thus also affirm the district court’s ru ling on ineffective assi stance of counsel.

* * *

We have considered Whitman’s remaining arguments and find th em to be without merit. Accordingly, we AFFIRM the judgment of the district court.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court