Supreme Court Lets Fisherman Off the Hook re: Sarbanes-Oxley Act
The U.S. Supreme Court has limited the scope of the evidence destruction prohibition of the Sarbanes-Oxley Act (18 U.S.C. § 1519) (“SOX”), a plurality holding that a “tangible object” within the meaning of the section making it illegal for an individual to knowingly destroy or conceal “any record, document, or tangible object” with the intent to impede a federal investigation is one used to preserve or record evidence and declining to extend the meaning to other objects: in the case before it…fish. Yates v. United States, No. 12-7451 (Feb. 25, 2015).
John Yates, a commercial fisherman, was aboard the fishing boat Miss Katie in the Gulf of Mexico. An officer from the Florida Fish and Wildlife Conservation Commission boarded the Miss Katie to verify the ship’s compliance with fishing rules. While on board, the officer noticed three red grouper, which appeared to be undersized, hanging from a hook. Federal conservation regulations at the time required the immediate release of red grouper less than 20 inches long and allowed imposition of penalties, including fines and license suspension, for violation of the rules.
The officer measured all of the fish that appeared undersized. He concluded 72 fish did not meet the length requirements and placed them in wooden crates. The officer issued Yates a citation for the undersized fish and directed him to leave the fish in the crates until the ship returned to port.
Something seemed fishy when, four days later, the ship docked and the officer again measured the red grouper in the wooden crates. Although the fish were still less than 20 inches long, they exceeded the lengths the officer had recorded while at sea on August 23rd. A crew member admitted Yates directed him to throw the cited fish overboard and replace them with other fish from the catch.
Allegedly impeding a federal investigation, Yates was indicted for violating the Act’s evidence destruction provision in getting rid of the undersized fish and for his attempt to cover up his actions.
SOX Section 1519 provides criminal penalties if an individual “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence a federal investigation.”
A federal jury convicted Yates for violation of § 1519 by disposing of the undersized fish and obstructing a federal investigation. He was sentenced to imprisonment of 30 days. Yates appealed the verdict and sentence. The U.S. Court of Appeals for the Eleventh Circuit, in Atlanta, upheld his conviction.
Interpretation of “Tangible Object”
By a 5-4 vote, the U.S. Supreme Court reversed the Eleventh Circuit decision. Writing for the plurality, Justice Ruth Bader Ginsberg, joined by Chief Justice John Roberts and Justices Stephen Breyer and Sonia Sotomayor, said a “tangible object” under § 1519 must be one used to record or preserve information. Using traditional statutory interpretation tools, the opinion explained it was necessary to reject an aggressive interpretation of “tangible object.”
In coming to this conclusion, the plurality examined Congress’ intent when enacting the Sarbanes-Oxley Act, the surrounding words, headings and placement of the provision and the rule of lenity. In 2002, Congress enacted the Sarbanes-Oxley Act in response to the corporate fraud scandals involving WorldCom and Enron. The purpose of the Act was to prevent financial deception and protect investors in public companies. If Congress intended for “tangible object” to be taken in its broadest meaning, the opinion asserts, it would not have needed to refer to “record” or “document.” Therefore, the plurality declined to read “tangible object” broadly to encompass all objects in the physical world, deferring that decision to Congress.
Concurring, Justice Samuel Alito found the statute’s list of nouns, verbs, and title, when examined together, warranted rejecting the Government’s argument for a broad interpretation. He explained that interpreting the language beyond file-keeping would be illogical, inquiring, for example, “[h]ow does one make false entry in a fish?”
Justice Elena Kagan, joined by Justices Antonin Scalia, Anthony Kennedy, and Clarence Thomas, dissented, declaring the plurality’s “fishing expedition comes up empty,” with no support for its interpretation of § 1519. Justice Kagan explained that the expression, “tangible object,” is clear and should be accorded its plain meaning, which would encompass fish.
The Court reversed and remanded the case for further consideration consistent with its opinion.
After Yates, prosecutors will have difficulty pursuing claims for impeding a federal investigation under § 1519 unless the matter deals with records, documents, or other objects used to record or preserve information, such as hard drives or logbooks.
However, other statutes still penalize offenders for destroying evidence during a federal investigation, beyond the narrowed ambit of SOX Section 1519. Indeed, in this case, Yates acknowledged the Government could have prosecuted him for tampering with evidence under sections of the U.S. Criminal Code. Therefore, regardless of Yates, preservation of evidence must still be taken seriously.