Yesterday, in one of the more unique legal arguments it has been presented with in recent years, the Supreme Court ruled that fish are not “tangible things” for purposes of the Sarbanes-Oaxley law:
WASHINGTON — A narrowly divided Supreme Court on Wednesday sided with a Florida fisherman, throwing out his conviction for tossing evidence — undersize grouper — back into the Gulf of Mexico under a federal law aimed mostly at white-collar crime.
The fisherman, John L. Yates, was convicted of violating the Sarbanes-Oxley Act of 2002, which imposes a maximum sentence of 20 years for the destruction of “any record, document or tangible object” in order to obstruct an investigation.
In two opinions, five justices accepted Mr. Yates’s argument that fish were not the sort of tangible objects with which the law was concerned. Their analysis was based on a close reading of the words and structure of the law.
The case arose from a 2007 search of the Miss Katie, Mr. Yates’s fishing vessel. A Florida field officer, John Jones, boarded it at sea and noticed fish that seemed less than 20 inches long, which was under the minimum legal size of red grouper at the time.
Mr. Jones, an officer with the Florida Fish and Wildlife Conservation Commission and a federal deputy, measured the fish and placed the 72 he deemed too small in a crate. He issued a citation and instructed Mr. Yates to take the crate to port for seizure.
But Mr. Yates had the fish thrown overboard and replaced with larger ones. A second inspection in port aroused suspicions, and a crew member eventually told law enforcement officials what had happened.
Mr. Yates was prosecuted under the financial fraud law, which was enacted after the collapse of Enron, the giant energy company. He was convicted and sentenced to 30 days’ imprisonment.
Justice Ruth Bader Ginsburg, writing for four justices, seemed to concede that the term “tangible objects” might in some settings encompass fish.
“Ordinarily,” she wrote, “a word’s usage accords with its dictionary definition. In law as in life, however, the same words, placed in different contexts, sometimes mean different things.”
In announcing her opinion from the bench, Justice Ginsburg used more colorful language. “Fish one may fry,” she said, “but may one falsify, or make a false entry in the sea dwelling creatures?” Chief Justice John G. Roberts Jr. and Justices Stephen G. Breyer and Sonia Sotomayor joined her opinion.
Justice Samuel A. Alito Jr. concurred on similar grounds. When one hears the term “tangible object,” he said, “a fish does not spring to mind — nor does an antelope, a colonial farmhouse, a hydrofoil or an oil derrick.”
In dissent, Justice Elena Kagan wrote that the real issue in the case, Yates v. United States, No. 13-7451, was that the law is too harsh. It is, she wrote, “too broad and undifferentiated, with too-high maximum penalties, which give prosecutors too much leverage and sentencers too much discretion.”
She added, “And I’d go further: In those ways,” the law “is unfortunately not an outlier, but an emblem of a deeper pathology in the federal criminal code.”
Still, she said, “this court does not get to rewrite the law.” She said it was “broad but clear.”
“A fish is, of course, a discrete thing that possesses physical form,” Justice Kagan wrote, citing as authority the Dr. Seuss classic “One Fish Two Fish Red Fish Blue Fish.”
It does not matter, she said, that what Mr. Yates destroyed was not a document.
Lyle Denniston summarizes the opinion, and notes that it could have closes for how the Court may rule in another case that it will hear oral argument in next month:
Aside from those flights of aquatic rhetoric, the three opinions the Court issued — the third was by Justice Samuel A. Alito, Jr., seemingly intending to narrow the scope of the outcome — will not make easy reading for ordinary readers. They are filled with Latin phrases, and arcane musings about modes of “statutory interpretation.” The two main opinions go on for pages in that way.
Even so, close students of the Court’s work will be poring over those opinions, in search of clues for how the Justices might line up when they confront the issue of how to interpret the language Congress used in writing the new federal health care law — an issue the Justices confront next Wednesday in the case of King v. Burwell. There are, indeed, many clues here, but how they point on the Affordable Care Act controversy is far from clear. The Court’s usual ideological line-up was scrambled this time, and that may not be the case on health care, whether other influences may be at work.
The case decided Wednesday involved a Florida commercial fisherman, John L. Yates, who served thirty days in jail after his conviction for violating a section of the so-called Sarbanes-Oxley Act — a law passed almost thirteen years ago to deal with the Enron Corporation accounting scandal. That episode involved prosecutors’ claims, among others, that corporate files were destroyed when executives began to fear criminal prosecution.
Specifically at issue in the case was the Act’s provision making it a crime to destroy or alter “any record, document, or tangible object” with the aim of obstructing or influencing any federal investigation. The Court, with Justice Alito making a fifth vote along with the four-Justice plurality in favor of only the result, focused on the phrase “tangible object” and found that it applies only to an object “used to record or preserve information.” That, the ruling stressed, does not include a batch of red grouper tossed into the sea from a boat like the Miss Katie.
Without getting into the details of the Court’s opinion, it seems fairly clear that the majority in this case got the result correct here. Whatever one might think about the Sarbanes-Oaxley law, it was fairly clear from the beginning that the intent of the law was to address crime and fraud in the financial system. The fact that law was worded so broadly that Federal prosecutors found it possible to charge a fisherman with violating the law because he returned some fish that were apparently not legal to catch under a completely separate Federal law to the sea is simply another example of the problems that are created when a legislature drafts a law that is so overly broad that it can be conceivably used to charge someone with a crime under a law that was meant to go after Wall Street bankers rather than Gulf Coast fisherman. More likely than not, though, the prosecutors decided to use this statute as the basis for an indictment due to the fact that the most that Yates could have been charged with otherwise would have been violation of some Federal regulations that only impose a civil penalty of some kind unlike the criminal penalties that would have befallen him under Sarbanes-Oaxley. In that sense, this case is yet another example of the troubling practice of prosecutors at the Federal and state levels to overcharge defendants for the purpose of gaining leverage over them in plea negotiations. Had they merely charged Yates with violations of the appropriate Federal laws regarding overfishing, or whatever offense Yates might have committed, then this case wouldn’t have made it anywhere near the Supreme Court. Hopefully, cases like this will send a message to prosecutors not to overcharge based on such an absurdly “inventive” reading of the law.
As Denniston hints, the opinion in this case is likely to be scrutinized by many legal analysts for what it may or may not tell us about how the Court is likely to rule in King v. Burwell, the case challenging IRS regulations that allow those who have purchased health insurance in the Federal exchanges established by the Affordable Care Act to obtain the same subsidies that are available to those who purchased insurance on a state-based exchange. As I’ve noted before, the argument of the Plaintiff in that case is based largely on the wording of the PPACA itself which, at least at a basic level, appears to clearly say that subsidies are only authorized for insurance purchased on exchanges established by the individual states. As I noted at the time the Court accepted the case for appeal, a ruling in favor of the Plaintiffs could end up having serious implications for the fiscal viability of the entire PPACA scheme while a ruling in favor of the IRS would essentially mean the end of any real chance of repealing the law before President Obama leaves office. While Sarbanes-Oaxley and the PPACA are obvious very different laws, and the factual situations that the Court is presented with in these two cases is quite different, the fact that there seems to be a majority on the Court favoring a more restrictive reading of Federal law could bode ill for the Administration’s argument as we approach oral argument on Wednesday.
Here’s the Yates opinion:
