forth in McNally because his conviction was final prior to the announcement of the Court's decision in McNally and because he did not raise the issue of statutory interpretation decided in McNally in this Court or in his direct appeals. See United States v. Osser, 1987 U.S. Dist. LEXIS 9210, Cr. No. 72-384 (E.D. Pa. Oct. 7, 1987) (McNally does not apply retroactively in petition for writ of error coram nobis where petitioner did not raise error on direct appeal.).
In Sunal v. Large, 332 U.S. 174, 91 L. Ed. 1982, 67 S. Ct. 1588 (1947), the United States Supreme Court held that defendants may not collaterally attack convictions that under later Supreme Court precedent would have been invalid because they had not raised the issues on direct appeal which they sought to raise in their collateral attack. The defendants in Sunal were convicted of failure to submit to induction into the Army in 1945. At trial they were prevented from introducing evidence showing that their selective service classifications were invalid. In 1946, the Supreme Court decided Estep v. United States, 327 U.S. 114, 90 L. Ed. 567, 66 S. Ct. 423 (1946), in which it held that the defense of improper classification was a valid one. Relying on the new law, the Sunal defendants sought collaterally to attack their convictions by way of petition for writ of habeas corpus. The Supreme Court denied the petitions because the defendants had not appealed their convictions. The defendants argued that they did not appeal because "the state of the law made the appeals seem futile." Sunal, 332 U.S. at 178. Although the Court acknowledged that lower court decisions had consistently ruled that no defense of improper classification could be raised in a prosecution for failure to submit to induction, it refused to allow the petition for writ of habeas corpus to substitute for an appeal particularly since the asserted error did not violate any specific constitutional guarantees. Sunal, 322 U.S. at 179.
The procedural history of the case sub judice is not unlike that in Sunal. The difference is that Smith did not raise the issue here and did not object to the instruction given by this Court upon which he bases his motion whereas the defendants in Sunal did raise in the trial court the issue upon which they based their habeas corpus petition. And like the Defendants in Sunal, Smith did not raise as error on direct appeal the error he raises in this collateral attack. Also like Sunal, the law on the issue of intangible rights and the mail fraud statute was not only well settled in this circuit, United States v. Clapps, 732 F.2d 1148, 1152-1153 (3d Cir. 1984) at the time of Smith's conviction but also in every other circuit that had addressed the issue. McNally, U.S. at , 107 S. Ct. at 2883-2884 (Stevens, J. dissenting) (footnotes collecting cases). Therefore, Smith may have determined that any appeal raising the invalidity of the intangible rights theory of mail fraud would have been futile. That argument was not successful in Sunal and we see no reason for it to be successful here. Under the reasoning of Sunal, it is our view that McNally should not be applied retroactively to Smith's conviction.
The Supreme Court's recent decision in Allen v. Hardy, 478 U.S. 255, 106 S. Ct. 2878, 92 L. Ed. 2d 199 (1986), also supports our view. In Allen the Supreme Court held that its rule in Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986), should not be applied retroactively on collateral review to convictions that became final before Batson was decided. In Batson, a case implicating the Constitution, the Court overruled a portion of Swain v. Alabama, 380 U.S. 202, 13 L. Ed. 2d 759, 85 S. Ct. 824 (1985), and changed the standard for proving unconstitutional abuse of peremptory challenges. Although the Supreme Court's views on retroactivity are far from clear and settled, see, e.g., Griffith v. Kentucky, 479 U.S. 314, 107 S. Ct. 708, 93 L. Ed. 2d 649 (1987) and cases cited therein, it appears reasonable to conclude that a more stringent test as to retroactivity should be applied in cases relating to constitutional guarantees than in cases such as the one now before us concerning statutory interpretation.
Another case and the test set forth therein worthy of mention here is United States v. Davis, 417 U.S. 333, 41 L. Ed. 2d 109, 94 S. Ct. 2298 (1974), although, unlike Smith, the defendant in Davis raised the relevant issue at trial and on direct appeal. In Davis, a selective service case concerning statutory and regulatory interpretation, the Supreme Court granted relief after conviction pursuant to 28 U.S.C. § 2255 because of a subsequent change in the law. However, in reaching its decision, the Davis court made it clear that not every asserted error of law can be raised on a 28 U.S.C. § 2255 motion. Davis, 417 U.S. at 346. The appropriate inquiry is whether "the claimed error . . . was a 'fundamental defect which inherently results in a complete miscarriage of justice,' and whether 'it . . . present[s] exceptional circumstances where the need for the remedy afforded by the writ of habeas corpus is apparent.'" Davis, 417 U.S. at 346 quoting from Hill v. United States, 368 U.S. 424, 428-429, 7 L. Ed. 2d 417, 82 S. Ct. 468 (1962).
Smith is not entitled to relief pursuant to 28 U.S.C. § 2255 because of his failure to raise the "intangible rights" issue prior to the finality of his conviction; however, even if Smith had raised the issue, it does not appear that our "intangible rights" instruction would require retroactive application of McNally because the indictment in this case charged the property loss required by McNally and the proof at trial established that the scheme to defraud would bring financial loss to the Commonwealth of Pennsylvania.
The indictment charged that it was part of the conspiracy that:
The Defendants would obtain lucrative contracts from state and local government without competitive bidding, notwithstanding the fact that others were willing to perform substantially identical FICA recovery work at a much lower cost.